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Publishing News: No dismissal for Apple, Macmillan and Penguin

A request to dismiss is denied, an attempt to end Internet piracy, and a look at reading behaviors.

gavel.pngThis week brought a couple of important updates in the lawsuits against Apple, Macmillan and Penguin. First, the antitrust lawsuit filed by 16 States’ Attorneys General saw 17 more states jump in, and several new details came to light as previously redacted content was made public in the amended complaint. Laura Hazard Owen takes a look at the highlights over at PaidContent, including how the Big Five got holdout publisher Six to get on board:

E-mails to Barnes & Noble: Once five publishers and Apple had enacted agency pricing, the complaint says the five publishers ‘worked together to force’ Random House to adopt it as well. On March 4, 2010, in an exchange also identified in the DOJ’s filing, Penguin CEO David Shanks sent Barnes & Noble’s then-CEO Steve Riggio an e-mail reading in part, ‘Random House has chosen to stay on their current model and will allow retailers to sell at whatever price they wish … I would hope that [Barnes & Noble] would be equally brutal to Publishers who have thrown in with your competition with obvious disdain for your welfare … I hope you make Random House hurt like Amazon is doing to people who are looking out for the overall welfare of the publishing industry.'”

Jane Litte over at Dear Author has a thorough analysis of the amended complaint as well, and also covers the second important lawsuit update of the week: U.S. District Judge Denise Cote denied Apple, Penguin, and Macmillan’s motion to dismiss the civil class action lawsuit. Litte offers highlights and analysis of both the amended complaint in the states’ lawsuit and from Judge Cote’s opinion. She says the emphasis on “windowing” — holding back ebook versions of hardcover books in order to sell more of the higher priced editions — is “genius of the DOJ/States’ Attorneys General to argue because it sets a pattern of concerted behavior regarding price controls.” Litte concludes:

“I think that the defendants (Apple, Penguin and Macmillan) have two options here. Settle now or take their slim chances to jury where I am convinced they will lose and hope that the 2nd Circuit slaps down Judge Cote’s per se finding on appeal.”

Litte’s post is a must-read this week. She also will talk more about the DOJ/States’ Attorneys General lawsuits with Kat Meyer on today’s Follow the Reader discussion at 4 p.m. eastern on Twitter. You can join in at #followreader.

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The anti-piracy holy grail?

What if piracy on the Internet could be shut down? That’s what Russian-based startup Pirate Pay is aiming to accomplish. The company, which was partially funded by a $100,000 investment from the Microsoft Seed Financing Fund, is targeting its technology at file sharing on BitTorrent. TorrentFreak reports:

“[Pirate Pay] has developed a technology [that] allows them to attack existing BitTorrent swarms, making it impossible for people to share files … The company doesn’t reveal how it works, but they appear to be flooding clients with fake information, masquerading as legitimate peers.”

Company CEO Andrei Klimenko talked a bit more in-depth in an interview at Russia Beyond the Headlines:

“It was not so hard to do from inside an I.S.P.’s network. But to turn the technology into global service, we had to convince all I.S.P.s to acquire our solution. This is, what someone could call, mission impossible. So to create a global service, we had to find the way to do it from the cloud. So we needed money for development.”

That’s where Microsoft came in. In the interview, Klimenko describes the success of the group’s first project, protecting the film “Vysotsky. Thanks to God I’m Alive” after its release in December:

“We used a number of servers to make a connection to each and every p2p client that distributed this film. Then Pirate Pay sent specific traffic to confuse these clients about the real I.P. addresses of other clients and to make them disconnect from each other. Not all the goals were reached. But nearly 50,000 users did not complete their downloads.”

Whether or not the technology will continue to work in the long term is questionable. The BBC reports: “[University of Cambridge security researcher Richard Clayton], who blogs about such issues, said peer-to-peer networks would eventually adapt, sharing information about ‘bogus’ peers such as those reportedly utilised by companies like Pirate Pay.”

“News you read is different than news you say you read”

In a post at at AdAge Digital, Steve Rubel mused this week on digital media, social sharing and news consumption. Inspired after an executive briefing at Fairfax Media’s headquarters in Sydney, he writes:

“‘News you read is different than news you say you read,’ said Darren Burden, general manager-news and digital publishing for Fairfax, one of Australia’s largest companies. The former is driven by what you want or need to know, and the latter by what you want your friends to think.

“Just like that, Burden nailed the psychology that drives subconscious and routine behaviors in the digital age. The media get it. They know that as social networks become a primary pathway to content, news that’s crafted to find you must indeed be different from news that’s intended for you to find.

“Few companies can execute both styles equally well, however, and the result is a stylistic continental divide as newsrooms tilt toward one or the other.”

Rubel’s analysis of how various brands are wrestling with the issue is an interesting read. He concludes that content producers are going to need to be “adept in both styles to create the resonance required to stand out in an age with too much content and not enough time.”

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