Category: Media Law

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The Yale Law Journal Online: Citizens Not United: The Lack of Stockholder Voluntariness in Corporate Political Speech

 

yljonline

The Yale Law Journal Online is pleased to announce the publication of Citizens Not United: The Lack of Stockholder Voluntariness in Corporate Political Speech by Elizabeth Pollman, a Stanford Law Fellow and former practitioner at Latham & Watkins LLP.  Pollman’s piece covers the potential for sweeping changes to corporate political speech law in light of the Supreme Court proceedings in Citizens United v. Federal Election Commission.

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Danger Will Robinson: Google Book Deal Is at DEFCON 2

The Google Book Deal is suspended. Time to cheer, correct? No. As Pam Samuelson noted in the New York Times, that probably is too little time to resolve the issues at hand. In fact I think right now is when the GBD is at quite a dangerous stage.

First neither party represents the public. One cannot expect them to represent the public, and one ought not trust they will do the right thing for the public. To be clear, I am not making a moral judgment here. I expect, as we all should, that each party will seek to maximize its position. Understanding why I refuse to call this situation a settlement helps understand this point. As many know, this action encompasses far more than the claims at issue in the suit. Many think that Google was on strong grounds for its fair use clam and its original use. The Publishers (aka the Registry seeming to be working for authors) saw the chance to get ahead of the digital curve. Unlike music and film, they realized they could look good and capture publishing’s future. They offered Google a deal that Google did not need. Or did it? Although Google is a data vacuum and does well with the ad-based business model, the search giant has been searching for a new revenue stream. Online ads can’t be the only source of revenue from any viewpoint. That is a precarious position. Indeed, the online ad market just took a big dip. The Deal presents Google with the chance to make money from something other than ads.

With this perspective one sees that expecting or trusting either party to look out for the public’s interest is foolish. My guess is that the public choice literature could yield some useful ways to think about the problem too, but I have not thought that through as yet.

Second, Google and the Publishers now have a wave of information from all quarters that they can use to their benefit. Here is the strategy that I expect to see. Assess the most severe and some of the less severe criticisms. Incorporate some of them in changes. Keep the deal as is for the most part (Note that is precisely what the Registry said will be the case “the core agreement is going to stay the same.”). Then when the time to approve, deny, or move the Deal to another form comes, one claims “We acted in good faith. We can’t keep everyone happy. Without this deal no one wins. Can’t we get along, move forward, and sort the details later? That is a more reasonable way to proceed.”

More importantly, those who have kept paying attention to the problem may start to lose focus or fade out. People may become tired or say is this thing still going on?

And that is why I say Danger Will Robinson. The Google Book Deal is at Defcon 2.

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FTC and Blogger Disclosure Rules

As I argue in my essay Individual Branding the web presents important and amazing new possibilities for individuals to earn money and much of that potential will flow from one’s online reputation. In short, as one blogs or shares information in another form, one becomes a trusted source and can start extract money from those activities. I argue that those acts have the seeds of the possible destruction of Benkler’s world of sharing. Today the FTC has targeted a practice that arguably could increase the reliability of social network endorsements but will also upset many people.

As CNET reports, “Independent bloggers who fail to disclose paid reviews or freebies can face up to $11,000 in fines from the Federal Trade Commission, according to revisions to the agency’s “Guides Concerning the Use of Endorsements and Testimonials in Advertising” published Monday.” The FTC has not updated the Guidelines since 1980. The press release is here. The full text of the Guides are here (pdf). It is 81 pages, and I have not read it as yet but one thing people should know is that the effective date is December 1, 2009.

From the release it appears that the guides take am expansive view of what presents a moment to disclose “The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.” CNET suggests that celebrities and “mommy bloggers” could be in trouble under the new rules. (Here is my prediction on the riposte to come but that I don’t think is accurate: “The FTC hates moms. In a down economy and with more and more people needing new ways to earn, the FTC actions are a direct attack on the importance of moms.” Now back to our regularly scheduled blogging.)

There are a ton of oddly connected things here. First, I just blogged about CITP and its FedThread project. That project would allow one to track this sort of moment rather quickly. Second, I was just at the Works In Progress Intellectual Property Conference at Seton Hall (which was yet again an excellent conference and for which everyone at Seton Hall deserves many thanks) where Zahr Stauffer presented a fascinating paper called Novels for Hire: Branded Entertainment, Copyright and the Law that I think will have something to say about these changes. As one blog notes, the practice of giving journalists freebies is common. Zahr’s paper shows how advertising and novels have had a rather curious interaction over the years. I think the paper will help understand the way writing and advertising have co-existed in either good or bad ways at different times with the shift to blogging fitting in as part of that history. The paper should be available soon so keep an eye out for it.

Electronics and other big ticket items seem to be where the concerns are. I look forward to finding out whether book, film, and music reviewers have to tell readers whether they received a review copy of the book. In general if one only says nice things about a review subject, one might receive more books etc. I think that non-professional blogs and other online information sources such as rating systems and FaceBook will allow people to find out whether they should buy a product (i.e., one might use a personal network to ask whether a product is good). That practice could undercut the quiet payment model.

Here is a possible way to understand this turn of events. 1) Secret endorsements die out and full disclosure of what has been given is the norm. 2) Small bloggers and big agencies are no longer able to seem credible as reviewers. 3) If people want independent reviews, they must pay magazines or other pay sources who can afford to buy the review items and avoid the taint of being given free stuff. 4) The public does not want to pay and instead reads the blog reviews with the disclosures and augments the research with social networks and user ratings which are more difficult to fake and possibly more reliable. 5) Yet again paid, professional independent news and reviews seems to be squeezed out.

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Update to the Tale of the Ph.D. Rapper

About a week ago, the New York Daily News reported a happy tale of Dr. Roxanne Shante, a former rapper who won a legal battle to have her record label pay for a Ph.D. education at Cornell University. Deven blogged briefly about the story here at Concurring Opinions, and the blogosphere was generally pleased by the notion of a young artist winning her fight for an education against a corporate bully.  But now Slate is reporting that Shante by her own admission never received a Ph.D. from Cornell and that many other important elements of the story are untrue. Too bad. It was a great story but apparently one full of factual inaccuracies that undercut it completely.

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Saved By A Music Contract? Artist Invokes Clause and Gets Her PhD

As anyone who follows the music industry should know, the history of record labels, artists, and exploitation is long and a bit dirty. K.J. Greene has argued that the problems of race and music business practices should be part of the reparations debate. Today, however, it appears that a pioneer of hip-hop, Dr. Roxanne Shante, has her PhD from Cornell because of her recording contract. Now before one thinks that all was close and loving, know that Dr. Shante had to fight with the record label for quite some time before it honored the clause which stated that the label would fund her education for life. Luckily the Dean at Maymount Manhattan College allowed then Ms. Shante to attend the college while the bills were still sent to Warner Music and being debated by the company. Although there is a silver lining of sorts here, it is sad that Dr. Shante sold more than 250,000 records, saw little of the money she generated for the label, and left the business because “‘Everybody was cheating with the contracts, stealing and telling lies,’ …And to find out that I was just a commodity was heartbreaking.'”

As general take away, it seems that any corporate entity that is taking on a young talent in sports, music, or any other field, ought to consider such a clause as a good thing. Agents should at least insist on it. The odds are already stacked against many of these talents. In some cases they are giving up education time to help a sports program. In others, like Dr. Shante’s, the talent may “be a teenage mom, come from the projects, and be raised by a single parent, so as the article about her put it, the clause may be “a throwaway” because no thought it would come to anything. In other words, I hope these clauses persist and even appear more often. It seems quite fair and an oddly (or really unfortunately) low-risk bet for labels and other industry players in these deals.

You can go here to hear the entire song “Roxanne’s Revenge.” (imeem only had the 30 second clip for embedding).

Washington Post Fire Sale

As newspapers falter, we often hear about how terrible it would be if public funding supported them. Imagine the conflicts of interest! Well, we’re now getting an inside look at the “stealth marketing” media may need to engage in in order to survive:

Mike Allen at Politico.com [has] reported that Post publisher Katharine Weymouth has decided to solicit payoffs of between $25,000 and $250,000 from Washington lobbyists, in return for one or more private dinners in her home, where lucky diners will receive a chance for “your organization’s CEO” to interact with “Health-care reporting and editorial staff members of The Washington Post” and “key Obama administration and congressional leaders. . . .”

Though the Post’s leadership quickly backed away from the plan, we can only imagine what kinds of fire sales a few more years of economic hardship will bring:

Looks like Dan Froomkin got out just in time!

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Barnes v. Yahoo!, CDA Immunity, and Promissory Estoppel

yahooThe Ninth Circuit recently decided Barnes v. Yahoo!, a case with some very interesting holdings relating to the Communications Decency Act § 230 as well as promissory estoppel.  I wrote about this case briefly in my book, The Future of Reputation, long before it made it up to the Ninth Circuit.

Celia Barnes’ ex-boyfriend created fake profiles in her name on Yahoo.  Moreover, as the court relates:

The profiles contained nude photographs of Barnes and her boyfriend, taken without her knowledge, and some kind of open solicitation, whether express or implied is unclear, to engage in sexual intercourse. The ex-boyfriend then conducted discussions in Yahoo’s online “chat rooms,” posing as Barnes and directing male correspondents to the fraudulent profiles he had created. The profiles also included the addresses, real and electronic, and telephone number at Barnes’ place of employment. Before long, men whom Barnes did not know were peppering her office with emails, phone calls, and personal visits, all in the expectation of sex.

Barnes contacted Yahoo to get the profiles taken down:

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BRIGHT IDEA: Julia Angwin on Stealing MySpace: The Battle to Control the Most Popular Website in America

stealing my space.JPGAs some of you know, John Scalzi is a good friend of mine. His Big Idea series inspired our Bright Ideas series here at Concurring Opinions (John was gracious enough to let me ping off his series). John’s series usually focuses on science fiction, but a recent post highlighted Julia Angwin‘s new book, Stealing MySpace: The Battle to Control the Most Popular Website in America. As John notes, Julia is the Senior Technoloy Editor of WSJ.com, the Wall Street Journal’s web site.

Julia’s impressive experience makes her well positioned to offer insights about MySpace. She has covered technology for the San Francisco Chronicle in 1996 “including Microsoft’s antitrust woes”; was named “Outstanding Young Journalist of the Year” by the Northern California chapter of the Society of Professional Journalists; and won a Knight-Bagehot fellowship in journalism for studies at Columbia Business School. She obtained an MBA at Columbia in 2000 and then started her career with The Wall Street Journal in New York. As her bio explains she “cover[ed] technology and the dot-com boom from an East Coast perspective. The rise and fall of the AOL Time Warner merger was an important part of [her] beat. In 2003, [she] was on a team of reporters at The Wall Street Journal that was awarded the Pulitzer Prize in Explanatory Reporting for coverage of corporate corruption.”

I liked the post and luckily Julia and John said they did not mind me reposting the entire post. So here’s Julia.

JULIA ANGWIN:

As a nonfiction writer, I don’t get to choose the ‘big idea’ in my work. All the ideas – large and small – arise naturally from the facts I uncover. My job is to take the facts, stare at them hard and extract the ideas from them.

When I began writing Stealing MySpace, I thought that the ‘big idea’ that would emerge would be about the remix generation – the kids who were using MySpace to reshape their digital worlds. After all, weren’t they changing the world with their behavior?

But, in fact, the big idea that arose from my reporting was altogether different. It was this: what does it take to be a successful entrepreneur?

Early in my investigation, I discovered that the founders of MySpace were scammers. Before they started the social-networking site, they sent spam, distributed spyware, and peddled spy cameras you could hide in your shoe and e-books touting “how to grow taller” and “how to hypnotize people.” MySpace was just an idea they copied from a popular Web site at the time, Friendster.

MySpace’s parent company, Intermix, wasn’t much better. It made most of its money selling subscription wrinkle cream and diet pills online, had a spyware business of its own, and had a thriving animated greeting card business best known for its fart and poopy diaper jokes.

In the book, the venture capitalist who backed Intermix (and was initially reluctant to support MySpace) David Carlick says why he’s not worried about the unsavory parts of Intermix. “Marketing has always been on the scary edge of ethical.”

This was a vastly different story than the canonical tech startup tale. This oft-told narrative stars a Bill Gates genius-type founder dropping out of Harvard to work on his technological breakthrough in a garage somewhere.

This was the story that I absorbed into my pores as a kid growing up in Silicon Valley, and then as a reporter covering the industry.

Meeting this new type of success story I wondered: were the MySpace founders just lucky? Or was their hucksterism part of what it takes to succeed?

One solution presented itself to me: Web technology had finally become easy to use. No longer were Web companies going to be run by engineers; now they could be run by marketers, too.

But then, slowly, it dawned on me that the Silicon Valley tale I’d grown up on was a bit of a myth. Hadn’t these tech companies really been run by marketers all along? Bill Gates, although he was a brilliant programmer, was an even more brilliant marketer. Ditto for Steve Jobs, whose marketing prowess is such that he is considered a “reality distortion field.”

And thus I stumbled onto my big idea: The greatest entrepreneurs are hucksters who have simply crossed the line into brilliance.

—-

Stealing MySpace: Amazon | Barnes & Noble | Powell’s

Read an excerpt of Stealing MySpace (pdf link). Visit Julia Angwin’s blog. Follow Julia Angwin on Twitter.

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Rethinking Free Speech and Civil Liability

freespeech3.jpgWhen does civil liability for speech trigger First Amendment protections?

Recently, Professor Neil Richards and I posted on SSRN our new article exploring this question: Rethinking Free Speech and Civil Liability, 109 Columbia Law Review (forthcoming 2009).

Surprising, the issue of when civil liability for speech triggers First Amendment scrutiny is governed by two totally contradictory rules. Since New York Times v. Sullivan, the First Amendment applies to tort liability for speech, including defamation and invasion of privacy.

But in other contexts, the First Amendment does not apply to liability for speech. According to Cohen v. Cowles, there is no First Amendment scrutiny for speech restricted by promissory estoppel and contract. The First Amendment rarely requires scrutiny when property rules restrict speech.

In a large range of situations, however, these rules collide. Tort, contract, and property law overlap to a substantial degree, so formalistic distinctions between areas of law will not adequately resolve when the First Amendment should apply to civil liability.

This conflict is vividly illustrated by the law of confidentiality. We pose the following hypothetical in the article:

Suppose an attorney representing a client in a highly-publicized case discloses the client’s confidential information. The client sues under the breach of confidentiality tort. The attorney claims that she was engaging in free speech and that the First Amendment protects her right of expression. Does the Sullivan or Cohen rule apply? One could argue that the Sullivan rule applies because breach of confidentiality is a tort. On the other hand, breach of confidentiality remedies a contract-like harm. Even if never expressed orally or in writing, an implicit agreement exists between the attorney and client that the attorney will maintain the confidentiality of the client’s information. Perhaps this situation should fall under the Cohen rule because the breach of confidentiality claim more closely resembles an action for promissory estoppel rather than an action for public disclosure of private facts. If this were the case, then the First Amendment would not apply.

In our article, we explore how this problem can be resolved. We survey the way that existing doctrine and theories attempt to address the conflict between the Sullivan and Cohen rules, and we demonstrate why such approaches are lacking. We aim to develop a coherent approach for resolving when the First Amendment applies to civil liability for speech. To find out our solution, take a look at our article and let us know what you think.

“Weapons of Mass Distraction”

I’m beginning to think that Barack Obama might only be able to win the presidency in the midst of an economic crisis. That’s not because of any defects in his candidacy or ideas, but due to a shocking inadequacy of the press. They are actually willing to take at face value any outrageous claim made by a candidate and to run it as a headline story. As Eugene Robinson observes,

[W]e know that it’s not in the public interest to spend the rest of the campaign talking about fringe characters who once crossed paths with Obama, McCain, Palin or Joe Biden instead of debating the economy, the war on terror, health care or any of the other big issues that will define the next presidency.

We all understand that the strategy of the McCain campaign is one of distraction — his campaign aides have acknowledged that they want to shift the focus from the economy to character, which means personal attacks against Obama. Lacking any fresh mud to sling, the McCain people are trying to exhume guilt-by-association charges that were exhaustively examined months ago during the primaries.

There’s an obvious reason for this pattern of reporting on the most shocking claims–sensationalism sells. Yet at some point journalists are professionals, not mere stenographers. What are the limits to what they’re wiling to report?

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