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The Disappointing Strategy Behind The Losing Battle To Force-Feed Set-Top Boxes To Consumers

By: Mike Montgomery

Despite the short window for public comment now being closed on the FCC’s unnecessary and harmful set-top box (STB) proceeding, efforts to rationalize and mislead the public continue in earnest. Yesterday, and likely in consultation with the FCC, a group of well-known individuals was assembled to push back on the massive group of detractors to the proposal.

We’re not talking about a few, scattered voices who dislike the FCC’s anti-innovation mandate. We’re talking about tech coalitions, business entities which would undoubtedly benefit from the proposed scheme, labor unions, broadcasters, content creators and an enormous bipartisan group of members of Congress (180 members!) that is seemingly growing by the day.

The best way for allies of the FCC’s ill-fated scheme to chip away at the groundswell of opposition that is rallying against the proposal is, apparently, to continue spewing erroneous facts and take personal potshots at members of Congress. It’s a strategy. But it’s not a mature strategy.

These proponents continue to bang away at the supposed size of the market, saying it’s a $20 billion dollar a year industry. They rely upon a Moore’s Law-ish theory that the price of consumer electronics falls over time and therefore the price of boxes should fall over time, but haven’t. These numbers and theories were pulled out of thin air. They fail to account for the innovation that has occurred. A few years ago, one couldn’t watch HD, couldn’t record a show and watch it later, and couldn’t watch video on demand. Today, I’m able to go all-HD, I can record, at the same time, far more programs than I can watch and can pull up an episode of Dora and Friends for my daughter or Mr. Robot for me — on demand. I can store hundreds of hours of programming. Do I love my box? Not really, but I don’t hate it either. I dream of a not-to-distant magical world where the box is marginalized, not demonized. I want a world where the box is unnecessary, not forced into my living room by government mandate.

Read the full post here.

Stuck in Wet Concrete: The Supreme Court Tells the Ninth Circuit to Rethink What Harms Our Privacy

By: Tim Sparapani

The US Supreme Court has just made the law of privacy in the US about as settled as wet cement. Now, neither consumers nor companies handling consumer data know where things stand.

This all came about when a data broker – a company that gathers data about individuals, typically without their knowledge or consent, and then resells that data – created a file of wholly inaccurate information about an individual for resale. Upon learning about the data broker, Spokeo’s, actions the individual sued Spokeo citing a violation of his rights under the Fair Credit Reporting Act. That federal statute creates a right to sue for violations. The trial court, nevertheless, dismissed the case but the US Court of Appeals for the Ninth Circuit allowed it to proceed. The Supreme Court overturned that decision and sent the case back for additional consideration because the Ninth Circuit had not determined whether the plaintiff’s alleged injury was sufficiently real, tangible, or, what it deemed “concrete” enough to meet Constitutional standards for sustaining a lawsuit.

The result of effectively a non-decision by the US Supreme Court coupled with it providing the barest of guidance has created tremendous privacy law controversy. Now a debate is raging in Washington and in the offices of General Counsels of corporations and plaintiffs attorneys nationwide about what it takes to satisfy this vague standard. Pitched battles are being waged to influence the interpretation of that non-decision and influence what happens next because so much is at stake in a time when our economy is driven by identifying and unlocking value from consumers’ data.

How do we know when a company’s actions using a consumer’s data – especially erroneous data – harmed that consumer’s privacy? The whole debate will turn now on the definition of the term “concrete.” It’s a word that’s hard to lock down. Dictionaries provide only slightly more help than the thin guidance provided by the US Supreme Court. “Concrete”, an adjective meaning, “based on sure facts or existing things rather than guesses or theories.” Cambridge English Dictionary. “Specific particular. Real, tangible.” Merriam Webster’s Dictionary.

This non-decision has corporate America celebrating because fewer privacy cases will be successful. Influential privacy and consumer advocates, in contrast, argue that giving the lower court a do over, in effect, changes nothing. The truth lies somewhere in between, of course.

This is, no doubt, a blow for plaintiffs trying to bring lawsuits. By forcing people who want to sue to describe a tangible injury – and perhaps barring ephemeral or hard to explain or quantify privacy harms, even when Congress created a statutory right to sue – the barrier is now higher to successfully sue to vindicate privacy invasions. While that’s not the end of all suits regarding privacy as some have erroneously claimed, it does mean that some privacy cases that would have gone forward in the past will not make the cut. That surely means that some not-well-articulated but nonetheless important privacy harms will go unaddressed in the courts.

Read the full article here.

With Screening Room, Sean Parker Shows He’s Become A More Mature Entrepreneur

By: Mike Montgomery:

CinemaCon is one of Hollywood’s biggest annual conventions. Every year in Las Vegas, studios hobnob with theater owners to peddle their upcoming movies. But this year, the best story wasn’t on-screen. Instead, it was the attendees’ murmurings about what some might consider to be a terrifying new technology: The Screening Room.

The new proposal, pitched by Napster and Facebook FB +0.30% whiz kid Sean Parker, would allow viewers to bring the multiplex to their living room TVs via a highly-secure box that will stream first-run movies. The price for this privilege? Parker is suggesting $50 per viewing, plus $150 for the device — a steal for families, or really anyone with a decent entertainment system who enjoys having large screening parties.

Many in Hollywood are less than enthusiastic about the idea. At CinemaCon, James Cameron publicly condemned Screening Room, saying he and producing partner Jon Landau were “committed to the sanctity of the in-theater experience.” Warner Bros. Entertainment chairman and CEO Kevin Tsujihara said, “I assure you, we are not going to let a third party or middleman come between us.”

It’s understandable that Parker makes Hollywood nervous. One of the most well-known names in technology, Parker is a venerable Magic 8-Ball in human form when it comes to seeing the future of media; he’s also on the board of music-streaming service Spotify and helped bring it to the U.S. His history of disrupting industries has been well-documented, though most people probably can’t separate the real Parker from his on-screen alter ego played by Justin Timberlake in director David Fincher’s 2010 film The Social Network.

The music industry hasn’t been the same since Napster titillated users with the idea of streaming music — with or without a fee. People in Hollywood are terrified of seeing history repeat itself in the movie world.

Read the full article here.

Three Lessons For Entrepreneurs On Getting People To Eat Insects (Or Try Anything New)

By: Mike Montgomery

“It is widely accepted that by 2050 the world will host 9 billion people. To accommodate this number, current food production will need to almost double.” So begins the 200-page United Nations Food and Agriculture Organization report from 2013 that advocates eating insects as an end run around a looming food crisis. When a handful of Western entrepreneurs read it, they sensed an opportunity.

Since then, startups in the U.S. and Canada have demonstrated that people can overcome their squeamishness and be persuaded to eat bugs such as crickets, lured by their high protein and low environmental impact. (In other parts of the world, of course, dining on insects is an accepted custom.) Exo, one of the leading makers of cricket-flour protein bars, announced in March that it had closed a $4 million round of Series A funding. The company, which I wrote about last year, will use the investment in part to increase production and expand its product line.

Chapul, another cricket-bar maker, recently moved into national distribution, selling products with flavors like Aztec (dark chocolate) and Thai (coconut, ginger and lime) in nearly 1,000 retail locations, including chains such as Sprouts and Publix. Chapul, which was featured on Shark Tank in 2014 — earning an investment from Mark Cuban — recently won a grant from the state of Utah to industrialize its process for making cricket flour.

It’s premature to say that eating crickets has gone mainstream, but the idea has lost its shock value. “For cricket farmers who were using their job as a pickup line, it’s not working anymore because it’s not as sexy,” jokes Mohammed Ashour, chief executive of Aspire Food Group, which sells cricket flour and whole crickets.

As the edible-bug industry has matured, here’s what its pioneers have learned about challenging cultural taboos and developing a new market.

Read the full article here.

Roku’s stance speaks volumes about problems with FCC’s set-top box proposal

By: Mike Montgomery

The Federal Communications Commission’s (FCC) plan to mandate technology standards for TV set-top boxes in the name of creating more retail competition is being opposed by an unlikely source: set-top box maker Roku.

On the face of it, the FCC’s scheme is designed to help companies like Roku. The mandate would deconstruct the video streams coming into your living room’s traditional set-top box so they could be repackaged and served to you by any company with an interest in building a set-top box.

Roku already makes a device that streams video to televisions. The FCC’s proposal would give Roku, already an established player in the market, access to a whole new source of video programming – the consumer pay-TV packages forced open by the FCC regulation. That would seem like a powerful supplement to Roku’s current line-up of streaming video from sites like Netflix, Hulu and Crackle as well as content that lives on apps from networks like ESPN, CNN and Fox. If the FCC proposal went into effect Roku could directly stream live feeds from every broadcast and cable network.

Despite this supposed opportunity, Roku submitted a filing with the FCC opposing the scheme. In an op-ed in The Wall Street Journal Roku CEO Anthony Wood said, “This might seem like a great deal for consumers and companies like mine, but once you start peeling back the layers, the picture changes.” In its FCC filing, Roku stated, “rather than accelerate the pace and change of innovation, the FCC’s proposed rules could actually inhibit the transition from traditional programming delivery models to OTT services.”

Read the full article here.

Proposed LA Airbnb Regulations Raise Serious Privacy Concerns

By Tim Sparapani:

Los Angeles is considering new regulations around Airbnb, and other home-sharing platforms, that should deeply worry anyone who cares about keeping their personal information private. If approved, the regulations would require people who rent out space via a home-sharing platform to hold on to three years’ worth of information about who rented their property for how long and at what price. The Office of Finance would have the right to inspect these records at any time.

It’s unclear exactly why the government is proposing this level of privacy invasion. The main thrust of the proposed legislation, which will eventually need to be approved by the LA City Council, is to set out guidelines and fines that would ensure a level of safety and accountability for home rentals. This market is growing quickly. According to a recent poll by Time magazine, 26% of the population has used a home-sharing service. As such, it’s not a stretch for the government to set some commonsense rules around the market and collect taxes from commercial activity.

But the invasion of privacy outlined in the Los Angeles proposal will create unnecessary risks for consumers.

Think about when you check into a hotel. If you pay with a credit card, the hotel will likely look at your driver’s license to make sure it matches the name on the card, but they don’t have to. If you pay with cash, they don’t need any kind of proof of identity. You pay your money and you get your room.

So why is the sharing economy potentially going to be held to a different standard?

Read the full article here.

ASCAP Just Proved The Continuing Need For The Consent Decrees

The licensing mega-group’s settlement with the DOJ is proof that the consent decrees are as important and relevant as ever.

By Mike Montgomery

On Friday, the American Society of Composers and Performers agreed to pay the Department of Justice $1.75 million to settle allegations of anticompetitive behavior. Despite the presence of consent decrees that specifically bar ASCAP (and BMI) from interfering with songwriters’ ability to strike direct deals for the licensing of their works, the licensing behemoth was caught red-handed flexing its oversized market muscle to block – not once, not twice, but 150 times – its songwriter and publisher members from licensing their performance rights directly to streaming services.

ASCAP is basically agreeing to do what it was legally required to do all along, but now throwing nearly $2 million down the drain that should instead have been distributed to songwriters.

It would be unbelievable were it not so typical of ASCAP’s consistent bad behavior.

ASCAP (and BMI, which collectively hold the rights to 90 percent of all music licenses) has proven how willing it is to wield its market power to squash competition, which harms songwriters and the prospects of a healthy, modern music marketplace. They trot their members out to Capitol Hill to cry poverty then report record annual royalty revenues of $1 billion – where is all that money going? They claim to have the best interest of their songwriters at heart, but at the same time leverage their enormous market power and comfy relationships with publishers on their Board (a clear conflict of interest that DoJ also is shutting down as a result of the settlement) to prevent songwriters from negotiating direct deals that may actually be in their best interest.

ASCAP’s response to DoJ? They had the audacity to say, “(w)ith these issues resolved, we continue our focus on…key reforms to the laws that govern music creator compensation.”

Why should the government award such behavior by even considering altering the consent decrees? The consent decrees have protected artists and helped enable the rise of music streaming, which is proving to be the most promising new revenue source for artists since the CD came along. Clearly they remain not only relevant, but essential.

Allowing a few big players at the top to use their market power to artificially increase the pricing of music won’t help songwriters. What it will help do is divert revenue opportunities from songwriters, chill innovation and competition, and turn consumers away from legal sources of music.

It doesn’t take a Berklee degree in Music Business to see that this will ultimately lead to a depression, not acceleration, in royalty revenues for songwriters and artists and what’s needed is increased transparency and a continuing adherence to the consent decrees.

Whether ASCAP likes it or not, the consent decrees work. They keep those tempted by untoward acts in-line. If anyone thinks that wouldn’t happen without the consent decrees, they need only to look to ASCAP’s settlement for proof.

Mike Montgomery is executive director of CALinnovates, a technology advocacy coalition.

This piece originally ran in Radio & Television Business Report, and can be viewed here.

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