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Market mysteries: The case of Extra Innings

Major League Baseball is reportedly entering a deal that would shift its Extra Innings product, which has been available to up to 75 million customers, to being available exclusively on DirecTV, which currently has only 15 million subscribers, for the next seven years. My primary reaction to this has been genuine sadness. Watching baseball games is my number one hobby, and my house can’t get DirecTV signals because of nearby trees. It did occur to me that if I chopped down my neighbors’ trees, I would probably do a year in jail, which would leave me six years to enjoy the games. More likely, I’ll have to find a new hobby besides watching baseball. Other alternative approaches to following the Mets — going to a sports bar, watching on my laptop — just won’t cut it.

But I’m also intellectually puzzled. How is it possible that it ends up being more profitable for MLB to sell Extra Innings as an exclusive franchise? Even putting aside possible loss of fans and thus revenue on other products (such as tickets), I would have guessed that whatever MLB could have received in nonexclusive deals for 75 million customers would be greater than what MLB could receive in an exclusive deal for 15 million customers. Obviously, that guess would have been wrong. What explains this?

A partial explanation is that the subscriber base for DirecTV is not fixed. If all cable Extra Innings subscribers could be expected to just switch over to DirecTV, then the initial subscriber populations would be irrelevant to the revenue calculation. But many people won’t — either because they (like me) can’t get satellite, or because they have some preference for cable over satellite. So, on reasonable assumptions, the Extra Innings subscriber base will be much lower in the future — and yet DirecTV seems to be able to pay more than everyone combined in a nonexclusive arrangement.

The answer to this market mystery probably has to do with branding. DirecTV expects to have a hipper brand by virtue of its exclusive deals on MLB Extra Innings and NFL Sunday Ticket. The exclusive contract thus sends a signal to consumers. I suppose that this could be an efficient result if consumers somehow underappreciate the virtues of DirecTV, or if consumers who still buy Extra Innings will value it more because others don’t have it. But I’m more inclined to think that the property rule protection that MLB has for its copyrighted shows leads to an inefficient result here, even if one that genuinely benefits MLB and DirecTV.

I generally believe in property rights, but this deal is creating a personal crisis for me that is making me challenge my views. Should the law in some way seek to discourage such deals?

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Introducing Guest Blogger Scott Moss

Moss-Scott.jpgI’m very pleased to introduce Professor Scott Moss from Marquette Law School. Scott will be joining us for the next month. Scott received his J.D. from Harvard Law School, where he was an editor of the Harvard Civil Rights-Civil Liberties Law Review. He holds a B.A. in Economics and an M.A. in Media Studies from Stanford University. Scott clerked for U.S. District Judge Constance Baker Motley (S.D.N.Y.), and then worked as a plaintiff’s employment lawyer in New York City at Outten & Golden LLP. He joined the Marquette faculty in 2004.

Some of Scott’s publications include:

* The Advantages and Dangers of Having Procedural Rules and Substantive Rights Vary by Institutional Context, 54 U.C.L.A. L. Rev. ___ (forthcoming mid-2007)

* Illuminating Secrecy: A New Economic Analysis of Confidential Settlements, 105 Mich. L. Rev. __ (forthcoming spring 2007)

* Against “Academic Deference”: Keeping Title VII Alive to Redress Academic Discrimination, 27 Berkeley J. Emp. & Lab. L. 1 (2006)

* Where There’s At-Will, There Are Many Ways: Redressing the Increasing Incoherence of Employment At-Will, 67 U. Pittsburgh L. Rev. 295 (2005)

Our New Gizmo

Snap Previews.jpgAt Concurring Opinions, we never stop thinking about ways to improve your reading experience. Every so often, we actually come up with something. Our latest innovation: the Snap Tool, which turns your mouse into a previewing projector of any link on the page. Just roll it over a hyperlink, and a little pop-up will appear, displaying what the underlying webpage looks like. (The featured preview illustrated above is the link to “Paro” in my post below.)

We can thank some copyright exceptions for the tool. A copyright maximalist might deem Snap’s previews a “derivative work,” forcing anyone who uses it to ask for prior permission from the previewed website in order to display this thumbnail version. There’s a lot of good law for the opposite proposition–namely, that previews amount to a fair use that does little, if anything, to harm the value of the original work. But, as Ann Bartow has noted, there are some groups seeking to reverse that perfectly sensible doctrine. As far as I’m concerned, tools like Snap are one more reason why we should hope Google (perhaps the world’s premier image previewer) beats them. In today’s world, we need the best tools for processing and mapping information that we can get.

Island of the Crackberry Readers

lotuseaters.jpgSherry Turkle is an MIT scholar who’s written some fascinating reflections on how humans relate to computers. As director of the Initiative on Technology and Self at MIT, she’s been pretty enthusiastic about artificial intelligence (AI) and machines that (appear to) think. But she’s started to question the acceleration of these developments recently…in ways that might intrigue lawyers and just about anyone in technology-intensive industries.

Turkle’s research began as she watched children and the elderly interact with more and more sophisticated simulacra of animals:

Children approach a Furby or a My Real Baby and explore what it means to think of these creatures as alive or “sort of alive”; elders in a nursing play with the robot Paro and grapple with how to characterize this creature that presents

itself as a baby seal. They move from inquiries such as “Does it swim?” and “Does it eat?” to “Is it alive?” and “Can it love?”

As any fan of the movie AI knows, these are profound issues in themselves. Turkle worries about a society where children no longer appreciate the difference between the born and the made….and busy adults leave their aging parents with an array of sophisticated toys to entertain them, rather than visiting.

But Turkle’s latest work broadens this concern to the array of technological devices that are becoming indispensable to urban professionals. Have you ever been left “holding the bag” as a friend rifles through email messages or texts someone? If manners are “small morals,” such activities actually represent a shift in our moral lives–toward an intense connection with a cybernetwork, and away from the presence of those around us. The devices become an excuse for constant distraction. Even more importantly, we can get on a “positional treadmill” such that a device like the BlackBerry is less a form of advantage than a necessity to avoid falling behind.

Recalling Borsook’s book Cyberselfish, Turkle argues that these devices create a “new narcissism”–not mere self-concern, but narcissism in the technical sense, of persons who are so fragile they are in constant need of being “shored up.”

Read More

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Eat your broccoli and win a Nobel

Matthew D. Rablen and Andrew J. Oswald have written a very interesting paper comparing the life spans of Nobel Prize winners and individuals who were nominated but didn’t win. (Hat tip to the Economist.) They conclude that winning a Nobel confers about one or two years of extra longevity relative to being merely nominated for one.

The paper is admirably careful. For example, it exploits variation in the amount of purchasing power provided by the Nobel, factoring in cases in which someone wins only a portion of a Nobel, as a way of teasing out the possibility that extra longevity is a result of the money provided by a Nobel. In the end, the paper certainly seems to boost the conclusion that status is important for longevity, and more broadly, that status is something separate from money that people care greatly about.

Nonetheless, there is reason to be skeptical about results like these. Maybe the population of Nobel winners differs from the population of Nobel nominees. Perhaps the Nobel winners had better health than the also-rans, and this allowed them to do extra work that led to the Nobel, or maybe they had more or fewer children, or maybe they were smarter, or maybe they had better home lives, or just had better genes. The problem, of course, is it’s not feasible to control for all of these things, plus the many that one might not think of.

Here’s a suggestion for a study: How does winning a seat in Congress (or any other legislative body) affect longevity? An advantage of this study is that one might be able to exploit random variables that affect the probability of winning independent of the characteristics of the candidate, such as recent economic growth rates at the time of the election. In the second stage of the regression, the dependent variable would be the expected probability of victory given existing conditions exogenous to the candidate. I realize that it’s hard to assemble the data, though.

Searching for Search Law

I’ve been writing and speaking on search engines a bit this past week, first at Hofstra’s Reclaiming the First Amendment Conference and later on David Levine‘s Hearsay Culture radio show. If you want to hear that show, just hop on KZSU Live tonight at 8PM EST (5PM PST). Or you can wait till it shows up on iTunes…but due to copyright concerns, you’ll miss out on Dave’s superb selection of engine-related music that will accompany the live broadcast. (Nevertheless, any tech law fans will want to subscribe to Levine’s show–he has a knack for enlivening legal topics with all manner of social, political, and economic discussions.)

Whatever you think about government regulation here, search engines are one of the most important tech phenomena to be shaped by law in the 21st century. A few prophetic scholars (like Niva Elkin-Koren and Helen Nissenbaum) saw this about 5 years ago; I’m part of a group building on their work to theorize it now. Our guest blogger Eric Goldman just covered a search conference in Haifa (and a prior Yale confab); he’s also got some very interesting pieces promoting the wisdom of laissez-faire here. James Grimmelmann’s The Structure of Search Law does a nice job of simultaneously describing search law as it stands and proposing modest steps for its development.

As for my own views, I’m afraid I’ll have to refer you to my podcast (and a forthcoming paper I’m co-authoring with Oren Bracha). But if anyone wants to recommend other search law scholarship in the comments, please feel free. I hope to highlight some interesting European work on the topic in a future post.

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Doing Something about Darfur?

There has been a lot of anxiety, but little concrete action, from nation-states about the crimes committed in the Darfur region of Sudan. The powerful Security Council, in particular, has been woefully ineffective. While the U.S. Congress adopted a resolution in 2004 declaring the situation a “genocide,” China has played spoiler in the U.N. body, protecting Sudan from more concrete censure.

The one thing the Security Council could agree on was handing the problem off to the fledgling International Criminal Court (ICC). Even the United States, which for a time played arch enemy to the court, declined to veto the 2005 Security Council resolution referring the Darfur situation to the ICC. Given the hostility of the U.S. to the court, this failure to veto the resolution represented a major victory for the institution.

This referral, however, has had little effect on the crisis in Darfur. The long arm of international law has not yet reached far into the region. Although the ICC’s prosecutor has dutifully reported to the Security Council every six months about the progress of his investigation, he has thus far had fairly little to say.

To be fair, both the refusal of Sudanese authorities to allow the prosecutor to investigate in Darfur and the ongoing crisis in the region have made prosecuting potential perpetrators difficult. Nevertheless, there has been a growing sense of frustration with the desultory pace of the ICC’s investigation. The most visible manifestation of this discontent consists of documents requested by the ICC judge assigned to the investigation and submitted by Louise Arbour, the former prosecutor of the Yugoslav Tribunal (and now UN High Commissioner for Human Rights), and Antonio Cassese, the former president of the Yugoslav Tribunal and author of the UN’s report on Darfur. Each of these documents takes issue with the prosecutor’s conclusion that concerns over victim security precluded him from going forward with prosecutions. The prosecutor responded, disputing the conclusions of the Cassese and Arbour briefs and setting out his strategy on the Darfur investigation.

The ICC’s prosecutor finally has something to say beyond vague promises of future action. He announced this week that he plans to present his first case on Darfur to the ICC’s judges within a matter of days. This is an important step for the ICC. Whether the beginning of actual prosecutions for crimes committed in Darfur will help mitigate the human catastrophe occurring there is an open question. Certainly criminal prosecutions, standing alone, can do little in the short term. If they help galvanize political will to address the crisis, however, they may prove a critical step toward reaching the political solution that the inhabitants of Darfur desperately need.

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Shechem and Consideration

biblepage.jpgI have been thinking about the value of the Bible as a pedagogical tool. I am not much of a fan of the notion that the common law somehow rests on the Judeo-Christian tradition or that the Ten Commandments are the basis of our modern legal system. To be sure, I do think that the Bible has had its influence on our law, but if one is seeking for origins of the common law, I think that feuding norms among the pagan barbarians of northern Europe is a better bet. Still, the Bible is full of law, and I think that this law is useful for its very strangeness. (Also, as a Mormon, I labor under some religious guilt due to the fact that Brigham Young and other early Mormon authorities taught repeatedly that lawyers were the spawn of Satan and essentially on the road to hell. I take comfort in the fact that God is clearly a lawyer.)

For example, a few days ago I gave a brief lecture on the history of contract to my students. One of the points I wanted to make is that contract law is a relatively late development. Early legal systems seem to go to work immediately on issues like ownership of land, inheritance, and crime. Contract comes only later. I illustrated the point by noting that there is an enormous amount of law in the Pentateuch governing everything from ritual purity to what oxen may or may not eat while plowing the fields. There is not much in there, however, on contracts. To be sure there are rules about debt, and covenant, which is a vaguely contract-y idea, figures prominently in Biblical stories. Still, you’ll search Exodus to Deuteronomy in vain for anything like a general theory of contract.

Here is another possible example: Understanding the usefulness of consideration as a formality can be tricky. Fuller argued that forms serve an evidentiary function, but what exactly do we mean by an evidentiary function? Consider the following story from the Book of Joshua. At the end of his life, Joshua gathers the Children of Israel together at Shechem and offers them a choice: Will they promise to serve the God of Israel or not? The Children of Israel insist that they want to covenant to follow Yahweh, and Joshua then leads them through various formalities to make the commitment binding. The text says:

So Joshua made a covenant with the people that day, and made statutes and ordinances for them at Shechem. . . . And he took a great stone, and set it up there under the oak in the sanctuary of the Lord. And Joshua said to all the people, “Behold, this stone shall be a witness against us; for it has heard all the words of the Lord which he spoke to us; therefore it shall be a witness against you, lest you deal falsely with your God.” (Joshua 24:25-27 (RSV))

Why the rock? It is a formality that Joshua goes through to make the promise binding, and its purpose is to provide future evidence of the covenant. Should any Israelite in the future try to serve other gods, then Yahweh can insist that he or she has promised to serve only him. Should the erring Israelite have a convenient lapse of memory, then God can point to the rock. “Look,” he can say, “that rock stands there under the oak tree because you made the promise at Shechem with Joshua.” The formality reduces the problem of proving the contract ex post.

I love this story because of its strangeness. (I always imagine Dell and Microsoft entering into a licensing agreement and setting up a sacred rock someplace in Seattle to memorialize the deal.) Furthermore, it is precisely the strangeness of the story that makes it useful for thinking about the law. Our problem is that we forget how weird our own laws are and therefore can have a hard time seeing clearly what they are doing. In this sense, the Bible is pedagogically useful precisely because it has lost most of its salience in our culture. Most students (even in southern Virginia) are unlike to have the story of the Shechem Covenant at their fingertips. It sounds wierd to them, and that is useful.

Or it may simply be my perverse love of legal anachronism.

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Voting Rules for Best Picture nominations

The Academy Award nominations were announced this morning, and there was a big surprise: Dreamgirls, which was a Golden Globe winner and an early favorite to win the statuette, did not even receive a nomination. How could this happen? Let’s turn to Rule 17 of the 79th Academy Awards Rules:

1. A Reminder List of all eligible pictures shall be sent with a nominations ballot to all active and life members of the Academy who shall vote in the order of their preference for not more than five productions.

2. The five pictures receiving the highest number of votes shall become the nominations for final voting for the Best Picture Award.

I’m puzzled. Rule 17(1) instructs voters to “vote in the order of their preference,” but Rule 17(2) seems to indicate that order of preference is irrelevant. Perhaps the language “receiving the highest number of votes” masks some unrevealed process for taking preference into account, but I’ll assume that this is not the case.

What then might have happened to Dreamgirls? Some voters might have reasoned that they ought not waste their votes on movies that they saw as sure to get nominations, like Babel, The Departed, and Dreamgirls, seeking to maximize their influence by focusing on the marginal contenders. If some number of voters miscalculated the strength of Dreamgirls and reasoned this way, the movie could have lost a nomination that it would have won if all voters voted honestly.

What’s the remedy for this? Some kind of preferential voting system might help. There is no perfect system; the Gibbard-Satterthwaite Theorem tells us that any voting rule either must be dictatorial, rule out some candidates altogether, or provide some incentive for voters to reveal preferences other than their true ones. (The Theorem concerns votes to pick a single winner, but we can derive a corollary applying to elections with multiple winners, by recognizing that at some point the algorithm must identify the last-place winner.) Nonetheless, that should not blind us to the fact that some systems may do better than others. At least, we should hope for a system that identifies Condorcet winners when they exist.

Of course, imperfections in picking the nominees may not matter much. Dreamgirls probably wouldn’t have won Best Picture anyway. But the Oscars uses plurality voting for Best Picture as well, and this creates additional difficulties. The system may well maximize something more important than justice: entertainment value. But it’s a bit depressing that our voting regimes for public officials aren’t much better.

UPDATE: One of the commenters cites an article indicating that in fact there is a system for taking into account stated preference. It’s a little mysterious that the official rules don’t mention it. In any event, if you read the article, you’ll see that the preference aggregation approach isn’t a very good one. Voters who understand it should never put their first choice first if they’re pretty confident that it will be nominated anyway, because once your ballot helps to get a film nominated, it isn’t reused.

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Light Blogging

In what is going to be an annual tradition, I’ll be blogging less over the next month and change, as I attempt to get some writing projects out the door. One I’ve teased here. The other will be a part of the Wake Forest 2007 Business Law Symposium. More on both as they develop further. Progress in the meantime is incremental and sometimes painful. To quote a guy involved in potentially more socially productive enterprise:

“Of course, there is a toll. Even a day later my neck is killing me. My back is sore. My hands are claws and my eyes look like something out of the Reptile House at the Bronx Zoo. “