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What’s At Stake in the Aereo Case? Maybe the Future of the Cloud

On Tuesday, the Supreme Court heard oral arguments in a major technology case, ABC v. Aereo. The case attracted a huge amount of attention – “Aereo” was the #1 Google search on Tuesday. And that isn’t really surprising. What the Court decides in Aereo could have profound effects on the future not only of television, but of the Internet as well.

Aereo’s business model is clever and, potentially, very disruptive. As they have done since the dawn of television, the major networks – ABC, NBC, CBS, and FOX – broadcast their signals over the air. You can receive these signals with a digital antenna – the modern equivalent of rabbit ears – and millions of Americans who don’t subscribe to cable or satellite still do.

Aereo is nominally in the antenna business. Aereo owns thousands of tiny digital antennas – each about the size of a dime – on the roof of a building in Brooklyn. In exchange for a monthly fee that ranges from $8-$12, an Aereo subscriber can dial into one of these antennas to watch whatever she wants. Read More »



The Legality of “Dumb Starbucks”

By now, pretty much everyone has heard about how Comedy Central star Nathan Fielder opened his personal version of a Starbucks in an L.A. strip mall. Fielder’s “Dumb Starbucks” looked just like a real Starbucks – same logos, colors, store layouts, and similar products and menu. With the exception that everything was preceded by the word “dumb”, including the “Dumb Blonde Roast” coffee and the “Dumb Norah Jones” CDs on sale by the register.  Also, the coffee was free.

Fielder kept his involvement under wraps at first. But by Monday he revealed his ownership, and by Tuesday the L.A. County Board of Health had shut him down for operating without a license. And yet, while Dumb Starbucks lived, it created a sensation, with lines snaking down the street and Fielder invited onto Jimmy Kimmel to talk about his adventure.

Starbucks itself was not amused. “We are aware of this store, and it is not affiliated with Starbucks. We are evaluating next steps, and while we appreciate the humor, they cannot use our name, which is a protected trademark.” Starbucks spokeswoman Laurel Harper said in a statement. When pressed on whether Starbucks intends to take legal action, she replied, “That may happen. We’re not sure at this point.” Read More »



The Real Fake

Last week, we described how the famed U.K. street artist Banksy had set up a stand in New York’s Central Park selling real Banksy pieces – stenciled figures spray-painted on canvas – for $60. The art was worth a lot more than that, yet almost no one bought any. We asked how that could be – and got a lot of great reader responses in the comments. Thanks!

It turns out that there’s a second part to this story. One week after Banksy tried and failed to sell his art, a bunch of unrelated artists set up a stand selling fake Banksys for $60. The pieces were exact replicas of the ones Banksy had tried to sell in his stand.  But this time the artists told shoppers very clearly that the pieces were fake. And yet they sold out their stock in an hour. Read More »



When a Fake Banksy Is a Real Banksy

Many news outlets this week carried the story that Banksy, the celebrated British street artist, had set up an innocuous-looking booth near Central Park that offered original signed works for $60 each—despite their value being much closer to $60,000 apiece.  Even with this astounding discount, only a handful were sold—as the video in the post, from Banksy’s website, shows.

What’s interesting to us is what this says about art and the role of copies. While copying is a huge concern in many art forms—especially music and film—in fine art, it is comparatively insignificant. In China, there are whole villages full of artisans devoted to copying the great masters of Western art, and certainly fakes and frauds are well known in the West as well. Yet there is not a thriving black market in Banksy knockoffs—or, for that matter, in the work of other major contemporary artists.  Why is that? Read More »



Trader Joe’s vs. Pirate Joe’s

Vancouver is one of the world’s most lovely and livable cities.  It sits on a glittering Pacific inlet at the base of dramatic mountains, has a temperate, mild climate, and a diverse and affluent population.  But for people who love to eat, it has one glaring flaw. There is no Trader Joe’s. [Related: do you know who own's Trader Joe's?]

That has always rankled Vancouverite Michael Hallatt. So much so that a couple of years ago Hallatt decided to open a store in the affluent Vancouver neighborhood of Kitsilano. He named it “Pirate Joe’s.” Hallatt stocked his new store by making frequent trips across the border to Trader Joe’s around the city of Bellingham, Washington. Hallatt spent over $350,000 on Trader Joe’s items, including Charmingly Chewy Chocolate Chip Cookies, Milk Chocolate Covered Potato Chips, Gluten Free Rice Pasta, and Tea Tree Tingle Conditioner. Hallatt marks the products up by a couple of bucks and puts them on the shelves of Pirate Joe’s, where hungry Vancouverites have been snapping them up.

Which sounds like a decent business for Hallatt, and also a sweet deal for Trader Joe’s, which gets to sell a lot of its product in a market where it would otherwise sell nothing. But apparently Trader Joe’s doesn’t want Hallatt’s money. And now they’ve filed a lawsuit in Seattle claiming that Hallatt’s Pirate Joe’s business is infringing their trademarks.

Why on earth would Trader Joe’s be suing one of their best customers? And what, if anything, is wrong with reselling products?  Read More »



Does Copyright Make Books Disappear?

Copyright law has two main economic justifications. One is familiar—the idea that copyright promotes the production of creative work by ensuring that creators, and not copyists, gain the value of their creations. Yet production is not enough, since works also need to be distributed over time. And here lays the second main justification: copyright’s power does not end at the moment of creation, but instead provides a continuing incentive for creators (or their financial backers) to distribute and market works. Absent that incentive, creative works will not be readily available to the public.

In a fascinating new paper (available on SSRN) by Paul Heald analyzes this second claim. Here is a snippet from the introduction. We’ve bolded the most striking part of the study:

Influential copyright lobbyists presently circle the globe advocating ever longer terms of copyright protection based on this under-exploitation hypothesis–that bad things happen when a copyright expires, the work loses its owner, and it falls into the public domain. By analyzing present distribution patterns of books and music, this article tests the assumption that works will be under-exploited unless they are owned and therefore questions the validity of arguments in favor of copyright term extension… 

[Our research] collects data from a random selection of new editions for sale on www.amazon.com (“Amazon”) and music found on new movie DVD’s for sale on Amazon. By examining what is for sale “on the shelf,” the analysis of this data reveals a striking finding that directly contradicts the under-exploitation theory of copyright: Copyright correlates significantly with the disappearance of works rather than with their availability. Shortly after works are created and proprietized, they tend to disappear from public view only to reappear in significantly increased numbers when they fall into the public domain and lose their owners. For example, more than twice as many new books originally published in the 1890’s are for sale by Amazon than books from the 1950’s, despite the fact that many fewer books were published in the 1890’s.

Read More »



The Multiplex Strikes Back

In The Knockoff Economy,we wrote about how turning products into experiences is one way to blunt the detrimental effects of copies. Products – especially digital ones – are often very easy to copy. But experiences can be highly copy-resistant.  Just think of music: it’s easy to pirate a song, but it’s very difficult to effectively pirate a live show. Or movies: it’s easy to pirate a film, but it’s impossible to pirate the experience of watching a movie at a premium theater like The Arclight Hollywood in Los Angeles.  You can’t cheaply copy the comfy reserved seats, the fancy food and drink, the great sight lines and sound.

All this, of course, comes at a price. But it helps justify the idea of going to a movie theater in an age when home downloads, on a widescreen computer monitor, can be pretty good. Read More »



Why Are There Cronut Scalpers?

Between the din of the cicadas appearing up and down the East Coast and the media frenzy over the government’s mass surveillance programs, you might not have heard much about New Yorkers’ real obsession at the moment: the “cronut.” A cross between a croissant and a donut, the cronut is the invention of baker Dominique Ansel, who operates out of a shop in SoHo. Cronuts are so popular that lines form at 6 a.m. — 2 hours before the shop opens — and Ansel runs out within minutes. Thanks to the wonders of the Internet (and Craigslist) there is even a cronut black market, with unauthorized cronut scalpers charging up to $40 apiece for home delivery (a mark up of 700%). And of course there are cronut knockoffs appearing all over the world. Ansel has even trademarked the name “cronut.”

Which brings up two questions:

1. Why did it take so long for someone to invent a croissant-donut mash-up? 
2. And, perhaps more importantly for those who want to eat them, why do we see a cronut shortage? The genius of capitalism is that it matches supply with demand – and if there’s a lot of demand for cronuts, supply should quickly expand. Especially here. Cronuts aren’t especially hard to make, don’t require expensive equipment, and are currently unregulated (although give Mayor Bloomberg time.) Read More »