Re: DeCSS, crypto, law, and economics
"John S. Denker" <[EMAIL PROTECTED]> writes: > Eric Rescorla quoted Slate: > http://slate.msn.com/id/46376/ > > Here's a stylized example: Suppose some people (call > > them the "prudes") cherish their freedom of religion, but not > > half so much as they would cherish a general ban on > > pornography. Others (call them the "lewds") cherish their > > right to read Lady Chatterley's Lover but not half so much as > > they would cherish a general ban on religion. Then if you > > outlawed both pornography and religion, you'd make everyone > > happier, while simultaneously making everyone less free. > > Is that supposed to be a conundrum? Is that > supposed to cause headaches for economists > or anybody else? This did in fact cause headaches when Amartya Sen made this point. The original paper is considered a classic of the economics literature. It's in, for instance, Moser's "Rationality in Action". -Ekr -- [Eric Rescorla [EMAIL PROTECTED]] http://www.rtfm.com/ - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
I thought I made a fairly clear and cogent original synopsis, but apparently we're heading off into religious wars. I'm going to invert Eric's argument: Eric Rescorla wrote: > William Allen Simpson <[EMAIL PROTECTED]> writes: > > The question raised was whether the commodity would be produced. The > > producer knows that in the PAST there was sufficient income from these > > consumers for the goods to be profitable. > > > Of course, but the producer uses things like past experience and > marketing studies to decide what they expect. There may be errors, > but that doesn't invalidate the basic analysis, which is that if > the producer doesn't EXPECT to make a profit they won't produce > a product. > Look, I'm sure we are all in agreement on this point, with two caveats already expressed earlier: 1) producers don't just want any profit, they want the biggest possible profit, and are less likely to produce something when there is something else even more profitable. 2) we have examples where producers' desire for the biggest possible profit stopped development of a product, the public sector stepped in, and the resulting product created wealth far beyond the dreams of the original -- the Internet, Harry Potter. So, in the matter of DVDs, we all agree that the product _has_ been produced. There are only artificial barriers in the market. > > It is wrong, since it doesn't have any correspondence to the case at hand > > (DVDs, cryptography). In fact, it is directly contrary: (1) the producers > > are not omniscient, and (2) the consumers have knowledge about pricing, > > and (3) neither the producers nor the consumers act rationally. > > > > We can speculate forever about universes where we travel faster than the > > speed of light, but really, I don't see why we should bother with using > > such universes to model our current discussion. > Maybe you live in some alternate universe where companies don't > to practice price discrimination, but here on planet Earth, The model (you proposed quoting Varian) required perfect knowledge of the producer, and complete lack of knowledge by the consumer. That's not planet Earth. The model doesn't work on planet Earth. > companies routinely offer products at widely variable prices > to different consumers. Only when the consumers are unaware of the practice, and/or where the companies have raised a monopolistic legal barrier to *FORCE* the consumers to pay different prices. Note that some vendors are attempting to use the DMCA to prevent consumers learning about pricing differences, as reported Dec 2 on politechbot.com and http://www.law.berkeley.edu/cenpro/samuelson/news/pressrelease.pdf > > The points I was making here are (1) the terms used were wrong and (2) > > there were no net benefits (wealth) to "society" from the monopoly. > But that's wrong, because the monopoly allows market segmentation, > which allows new products to be introduced that otherwise would > not be. > There has been no conclusive evidence presented here. The Varian arguments presented are fallacious. And other legal opinion presented here concluded otherwise. Name us a DVD title that would not have been introduced without market segmentation, because it would have been unprofitable!?!? Or is this just a religious belief? Further deponent sayeth not. -- William Allen Simpson Key fingerprint = 17 40 5E 67 15 6F 31 26 DD 0D B9 9B 6A 15 2C 32 - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
William Allen Simpson <[EMAIL PROTECTED]> writes: > I thought I made a fairly clear and cogent original synopsis, Clear, cogent, and wrong. > Eric Rescorla wrote: > So, in the matter of DVDs, we all agree that the product _has_ been > produced. There are only artificial barriers in the market. No. Each individual DVD is a new product as far as this model goes. > > Maybe you live in some alternate universe where companies don't > > to practice price discrimination, but here on planet Earth, > > The model (you proposed quoting Varian) required perfect knowledge of the > producer, and complete lack of knowledge by the consumer. That's not > planet Earth. The model doesn't work on planet Earth. Actually, it works just fine. Varian gave a number of examples in his paper and I gave several (that you elided) in my response to you. > > companies routinely offer products at widely variable prices > > to different consumers. > > Only when the consumers are unaware of the practice, and/or where the > companies have raised a monopolistic legal barrier to *FORCE* the > consumers to pay different prices. I'm afraid that's not the case. Restaurants, for instance, quite frequently offer senior citizens discounts. They are widely advertised. They also offer early bird specials, also widely advertised. Bars offer lady's nights. Manufacturers offer "versioned" products. All of these are classic examples of market segmentation and they're not secret. Quite the contrary. -Ekr -- [Eric Rescorla [EMAIL PROTECTED]] http://www.rtfm.com/ - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
"John S. Denker" <[EMAIL PROTECTED]> writes: > Eric Rescorla wrote: > > > When there is a conflict between liberty and Pareto > > > dominance, economists get a headache. > > Really? Maybe some of them do, but I suspect most of > them wouldn't formulate it as a conflict at all; they > would just ask "how much do you want to pay for your > liberty?" I was thinking in particular of Sen's "Impossibility of the Paretian liberal". > Example: Suppose you have the choice of either carpooling > to work or taking your own car, solo. The latter gives > you more liberty as to when you drive home. But it comes > at a cost. That's not the context in which I mean liberty. Rather, I'm talking about global restrictions. Consider the following situation as described by Steven Landsburg (http://slate.msn.com/id/46376/) Here's a stylized example: Suppose some people (call them the "prudes") cherish their freedom of religion, but not half so much as they would cherish a general ban on pornography. Others (call them the "lewds") cherish their right to read Lady Chatterley's Lover but not half so much as they would cherish a general ban on religion. Then if you outlawed both pornography and religion, you'd make everyone happier, while simultaneously making everyone less free. -Ekr -- [Eric Rescorla [EMAIL PROTECTED]] http://www.rtfm.com/ - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
John Gilmore wrote in part: > firmware refuses to write in the key area of the disk, and the blank > disks are shipped with the key area obliterated. (And, DVD readers > will only let you read out the keys from a disk after you've reverse > engineered some simple bits that the industry wouldn't reveal.) So > you can't do any bit-for-bit copying of DVDs unless you have a very > expensive (and restrictively licensed) DVD mastering press. That's an interesting bit of technology, but it cannot be considered a cryptographically-strong anti-piracy scheme. Any (unPalladiated) software player could be patched to remap the "key area" to another part of the disk (with an insignificant loss of total disk capacity). As a general principle, it's hard to talk about security unless you are clear about what the security boundary is. As applied to DVDs, this means they didn't have a chance of being secure unless all the security-related processing steps were performed inside tamper-resistant hardware. Also note that if your goal is to make pirate disks that play on living-room-grade players, it is not even sufficient to have DeCSS||remapping, because of low-level hardware incompatibilities. You cannot play a home-made unencrypted disk in many living-room grade players. To summarize, the necessary condition for piracy is something like (DeCES||remapping) && low_level_compatibility The compatibility matrix for unencrypted disks is something like: living-room computer player RW drive --- commercially-pressed disksyes yes home-made DVD+R or DVD+RW often no yes > bit-copying ability No other major computer > storage technology has lacked it It depends on what you mean by "major" and "computer". The video-game industry is huge. Since its earliest days it has distributed many games on cartridges for which most consumers lack bit-for-bit copy capability. Not-easily-copyable media do not actually cause the earth to fall out of its orbit. Some people may object to them on political or philosophical grounds, but that's another matter. I wrote in part: >> We should try to avoid overwrought arguments about the >> "morality" of market segmentation and/or arbitrage. Unfortunately you set the wrong tone by starting as apologist for it. What's wrong with my "tone"? I was trying to set a tone of moderation. That will seem "wrong" to extremists on both sides, but complaining about the tone won't change the facts. I'm not even sure what "it" refers to (segmentation and/or arbitrage) but since I'm not an apologist for either I can reject this accusation without needing to fully parse it. Sometimes I'm a buyer. Sometimes I'm a seller. I see no reason to be an apologist for either extreme. IMHO extremists do everyone a disservice. In fact it is easy to demonstrate that _some_ market segmentation is good for society as a whole. How does this make me an "apologist"? It looks to me like an inalterable objective fact. The kind of segmentation your graphs rely on can easily be created by *time* segmentation. Yes. And by other means as well, such as (gasp!) genuine product differentiation. And I agree with all who have noted that it is highly ironic that while one part of the US government is busily negotiating free-trade zones, to remove geography-based barriers to trade, other parts of the government are enacting and enforcing new laws (!criminal! laws) that the studios exploit to erect novel geography-based barriers. == The "created wealth" is given by the length of the magenta line, the difference between the customer-value curve and the producer-cost curve. Wayne Allen Simpson wrote: This starts the thread, and the labels (and concepts) are wrong. The concepts are correct. Various labels are used by various authors; there is no standardization. The purpose of terminology is to facilitate communication. Given no terminology of any kind (standard or otherwise) that was a_priori well-known to the readership, I have tried to be clear about what I mean by the terms I use. I believe anybody who wants to understand will be able to understand. (Those who want to not understand will always find a way to not understand; there's nothing I can do about that.) >> http://www.monmouth.com/~jsd/econ/val-cost.gif Note that in the absence of market segmentation, the society as a whole is worse off. ... If the buyers insist on buying every unit at the lowest possible price, society loses. Not so! As long as the price is greater than the cost (far far left of your tick mark), there is no reason that the goods cannot be produced FOREVER. Society benefits FOREVER. Whether the goods can be produced forever is irrelevant, because the _demand_ is saturated at the point in question (left of the point of max created wealth, in the absence o
Re: DeCSS, crypto, law, and economics
William Allen Simpson <[EMAIL PROTECTED]> writes: > Eric Rescorla wrote: > > > > William Allen Simpson <[EMAIL PROTECTED]> writes: > > > Therefore, your graphs say to me: market segmentation is indicative of > > Of course. But the point that you seem to be missing is that there are > > situations where a monopoly can Pareto-dominate non-monopoly situations. > > > The points I was making here are (1) the terms used were wrong and (2) > there were no net benefits (wealth) to "society" from the monopoly. But that's wrong, because the monopoly allows market segmentation, which allows new products to be introduced that otherwise would not be. > > > The problem with this example, as is often the case with economists, is > > > it assumes perfect knowledge and rational behaviour. > > Of course. Because it's far harder to explain the principle without > > perfect information. That doesn't make it wrong, however. > > > It is wrong, since it doesn't have any correspondence to the case at hand > (DVDs, cryptography). In fact, it is directly contrary: (1) the producers > are not omniscient, and (2) the consumers have knowledge about pricing, > and (3) neither the producers nor the consumers act rationally. > > We can speculate forever about universes where we travel faster than the > speed of light, but really, I don't see why we should bother with using > such universes to model our current discussion. Maybe you live in some alternate universe where companies don't to practice price discrimination, but here on planet Earth, companies routinely offer products at widely variable prices to different consumers. > > Without the ability to get one consumer to pay > > more than another, we're back to the situation that we had before, > > namely that it's unprofitable to produce the commodity. Most consumer > > goods are not sold at auction and thus more subtle forms of price > > discrimination are required. > > > What you mean is FORCE the consumers to pay more than one another, > when everyone knows it a priori to be irrational. I'm not sure what you mean is irrational. (1) It's not irrational to pay a different price from other people. On the contrary, if the price isn't available to you for some reason, it's absolutely rational. (2) As stated many times, it IS rational to force people to pay different prices. I advise you to go back and read Varian's papers. Moreover, it's done all the time with things like educational discounts, senior citizens discounts, etc. > The question raised was whether the commodity would be produced. The > producer knows that in the PAST there was sufficient income from these > consumers for the goods to be profitable. > > The producer is not pre-cognitive. In the case at hand, producers know > that some movies/theatricals simply never make a profit, no matter how > wonderful. That's risk. Of course, but the producer uses things like past experience and marketing studies to decide what they expect. There may be errors, but that doesn't invalidate the basic analysis, which is that if the producer doesn't EXPECT to make a profit they won't produce a product. -Ekr -- [Eric Rescorla [EMAIL PROTECTED]] http://www.rtfm.com/ - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
Bill Stewart <[EMAIL PROTECTED]> writes: > It's fairly well-known that far more people died from > regulation-caused delays in deployment of several heart-attack drugs > than from active damage by failures such as misuse of thalidomide, > though some people still believe that we're better off because > the regulators also prevented wide deployment of > SideEffectOMycin and DidntWorkATol. Regulation is a qualitatively different kind of barrier from patents. I agree that it's rather more difficult to argue that FDA-style regulation has increased welfare. That's an empirical question that hasn't been determined. However, it's certainly the case that case that expensive drugs are better (Pareto dominant) than no drugs at all, which I claim is gthe outcome of removing patents. > But back to the DVD issue - it's not an issue of public safety; > this stuff is just television. Sure, but that doesn't make the economics much different. -Ekr -- [Eric Rescorla [EMAIL PROTECTED]] http://www.rtfm.com/ - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
> From: "Perry E. Metzger" <[EMAIL PROTECTED]>
> Date: 09 Jan 2003 16:03:00 -0500
>
> Matt Blaze <[EMAIL PROTECTED]> writes:
> > By the way, import region-free DVD players *are* available, quite
> > legally, within the US, as are non-region 1 disks. Kim's video in NYC
> > is one source. They are all unfamiliar off brands, however - you won't
> > find Sony or Matsushita (deliberately) producing one.
>
> Actually, that's not true. Kim's sells grey market units typically
> made without licenses to the DVD patent portfolio in places like
> China, and units that are more legal but that have been cracked. The
> latter are supplied with instruction sheets describing how to disable
> region coding. Some of these sheets actually say things like "we can't
> be responsible for the effects, but if you were to push the following
> buttons in the following sequence..."
>
> I am unaware of legal region-free players being generally available in
> the US, although I may be wrong on this.
How "illegal" are these grey market units? For unlicensed units made
legally in jurisdictions not subject to the patents, is the illegality
in the importing and/or selling? Are modified ("cracked") players
necessarily illegal?
It's legal to own several DVD players of differing regions so it seems
odd that it would be illegal to have them in a single package sharing
common components (everything but a byte of firmware). Manufacturers
are presumably prevented from doing this by the terms of their license
agreements (and some, like Sony, have vested interests).
-
The Cryptography Mailing List
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Re: DeCSS, crypto, law, and economics
Eric Rescorla wrote: > > William Allen Simpson <[EMAIL PROTECTED]> writes: > > Therefore, your graphs say to me: market segmentation is indicative of > Of course. But the point that you seem to be missing is that there are > situations where a monopoly can Pareto-dominate non-monopoly situations. > The points I was making here are (1) the terms used were wrong and (2) there were no net benefits (wealth) to "society" from the monopoly. > > The problem with this example, as is often the case with economists, is > > it assumes perfect knowledge and rational behaviour. > Of course. Because it's far harder to explain the principle without > perfect information. That doesn't make it wrong, however. > It is wrong, since it doesn't have any correspondence to the case at hand (DVDs, cryptography). In fact, it is directly contrary: (1) the producers are not omniscient, and (2) the consumers have knowledge about pricing, and (3) neither the producers nor the consumers act rationally. We can speculate forever about universes where we travel faster than the speed of light, but really, I don't see why we should bother with using such universes to model our current discussion. > You're implicitly assuming some method of price discrimination (in > this case auctions). I'm explicitly stating that the consumers have concurrent knowledge about pricing. The consumers may decide that their values are different. (That may not be rational.) > Without the ability to get one consumer to pay > more than another, we're back to the situation that we had before, > namely that it's unprofitable to produce the commodity. Most consumer > goods are not sold at auction and thus more subtle forms of price > discrimination are required. > What you mean is FORCE the consumers to pay more than one another, even when everyone knows it a priori to be irrational. The question raised was whether the commodity would be produced. The producer knows that in the PAST there was sufficient income from these consumers for the goods to be profitable. The producer is not pre-cognitive. In the case at hand, producers know that some movies/theatricals simply never make a profit, no matter how wonderful. That's risk. > Incidentally, it's not clear that an auction will produce the effect > you suggest. It's not necessarily your best strategy to bid up to > your true value on the first of a series of identical items. > Certainly. For example, each consumer could decide not to bid unless the commodity is a "bargain" -- a behaviour frequently seen in real life at flea markets or garage sales. In that case, the producer will not make his nut. So? Absent FORCE, there's never a guarantee of profit. -- William Allen Simpson Key fingerprint = 17 40 5E 67 15 6F 31 26 DD 0D B9 9B 6A 15 2C 32 - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
> Date: Thu, 09 Jan 2003 10:18:33 + > From: Pete Chown <[EMAIL PROTECTED]> > Alan wrote: > > > Another argument for the regions is the differing formats for TV > > signals. (NTSC v.s. PAL.) It is a bogus argument as you can find DVD > > players that will convert the signal with little or no problem. > > Actually my TV is happy with either. I always had the notion that I > wouldn't be able to play American videotapes, but then I tried it and it > works fine. So if I don't want to bother with region codes, the other > possibility is to buy films on video. This may be due to not only your TV but also your VCR. Some have "NTSC PLAYBACK ON PAL TV" (PAL60), which uses PAL color encoding but NTSC scanning rate, which most PAL TVs can handle. > When I play region-1 DVDs, the player doesn't convert the signal. This > would introduce a slight judder because of the differing frame rates. > Instead the TV just acts like a multisync monitor, and adjusts to the > signal it is given. The output of your player from a region 1 DVD is probably not NTSC but rather PAL60. A disc may be labeled NTSC (or PAL) if it is formatted for a scanning rate of 525/60 (resp. 625/50), but this is a bit of a misnomer because the encoding of the color signal is determined by the player and is not inherent to the disc. Ray - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
At 08:45 AM 01/08/2003 -0800, Eric Rescorla wrote: Maybe. Not necessarily if that meant that no new movies ever got made. Now, the UK isn't a big enough market for this, but consider what would happen if the US said "listen, free drugs would be great for consumers so let's get rid of all drug patents". This would probably dramatically increase social welfare at the moment, since there are quite a few people who would buy drugs if they were cheaper. (It's of course not Pareto dominant). However, it seems likely that this would have such a negative effect on future production that it would lower social welfare in the future. In the case of medicinal drugs (as opposed to recreational), the legal barriers to development and sale of new drugs have raised the cost to about $500-800 million, as well as adding a significant delay to availability dates, and there are fairly convincing arguments that those have at least as large a negative effect. It certainly focuses drug development in directions that can sustain big-hit marketing campaigns, plus a small amount that's covered by orphan-disease-drug loopholes. It's fairly well-known that far more people died from regulation-caused delays in deployment of several heart-attack drugs than from active damage by failures such as misuse of thalidomide, though some people still believe that we're better off because the regulators also prevented wide deployment of SideEffectOMycin and DidntWorkATol. But back to the DVD issue - it's not an issue of public safety; this stuff is just television. While I'm not particularly convinced that copyright and patent legislation actually accomplishes the goals of advancing science and the arts, or that the time periods that those protections give exactly count as "limited", it's certainly important to have "Fair Use" protections for what the public can do with the information. On the other hand, legislating against DRM because it prevents the public from exercising fair use seems wrong (especially because I prefer technical means of protection for that kind of material than legal protections), though legislation that bans public attempts to work around DRM also seems wrong as well, and failing to ban it just means that people who want to build DRM systems will just have to do a better job of it. - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
William Allen Simpson <[EMAIL PROTECTED]> writes: [..] > Therefore, your graphs say to me: market segmentation is indicative of Of course. But the point that you seem to be missing is that there are situations where a monopoly can Pareto-dominate non-monopoly situations. > Eric Rescorla wrote: > > The interesting thing about market segmentation (as Mr. Denker pointed > > out) is that it's often good for everyone, particularly in cases > > where marginal costs of production are low. > >... > > However, if he can price discriminate, he can sell two copies, > > one at 3 and one at 6. This makes it profitable for him to > > produce the book. > > > The problem with this example, as is often the case with economists, is > it assumes perfect knowledge and rational behaviour. Of course. Because it's far harder to explain the principle without perfect information. That doesn't make it wrong, however. > All the rest of the rationale is hogwash. Instead, at auction, the low > cost consumer will quit at $4 on the 1st book (the other purchaser will > have a bargain believing the book to be worth $6), and then purchase the > 2nd at $3. Wealth will be maximized (and profit will be minimized). You're implicitly assuming some method of price discrimination (in this case auctions). Without the ability to get one consumer to pay more than another, we're back to the situation that we had before, namely that it's unprofitable to produce the commodity. Most consumer goods are not sold at auction and thus more subtle forms of price discrimination are required. Incidentally, it's not clear that an auction will produce the effect you suggest. It's not necessarily your best strategy to bid up to your true value on the first of a series of identical items. -Ekr -- [Eric Rescorla [EMAIL PROTECTED]] http://www.rtfm.com/ - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
I hear that as new-zealand made it illegal to sell region restricted DVD players there (as John mentioned in his mail), that units (any brand) bought for the .nz market are all region players. Shouldn't be hard to get one mail order of your choice. (Or so a .nz person told me -- he's on the list). Adam On Thu, Jan 09, 2003 at 04:03:00PM -0500, Perry E. Metzger wrote: > Actually, that's not true. Kim's sells grey market units typically > made without licenses to the DVD patent portfolio in places like > China, and units that are more legal but that have been cracked. The > latter are supplied with instruction sheets describing how to disable > region coding. Some of these sheets actually say things like "we can't > be responsible for the effects, but if you were to push the following > buttons in the following sequence..." > > I am unaware of legal region-free players being generally available in > the US, although I may be wrong on this. - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
I've been composing this reply for days, and the thread just keeps getting longer, so I'll try to keep the response concise, and consolidate in a single message. Before it gets lost in the shuffle, I do want to thank John Gilmore for actual technical crypto information! I had no idea that they were selling DVD blanks with the key areas unusable. That has a profound effect on the whole debate, as it limits producer competition. "John S. Denker" wrote: > The "created wealth" is given by the length of the > magenta line, the difference between the customer-value > curve and the producer-cost curve. > This starts the thread, and the labels (and concepts) are wrong. It's been a long time since college, but even I can look up Adam Smith, chapter VII. The "wealth" created is only that based on the original new things, and valued at the "natural" price. Your graph shows a TRANSFER of wealth (meaning monopoly profits), as the consumer price rises. Stradivarius violins are thousands of times more expensive than they were a mere decade ago -- because of scarcity and extremely rare sales, not an increase in overall wealth they bring to society. > Note that in the absence of market segmentation, > the society as a whole is worse off. ... If the > buyers insist on buying every unit at the lowest > possible price, society loses. > Not so! As long as the price is greater than the cost (far far left of your tick mark), there is no reason that the goods cannot be produced FOREVER. Society benefits FOREVER. What you have indicated is where the *seller* maximizes gains, not where society maximizes gains. That is the optimum profits, not the optimum wealth. Rather, the optimum wealth will be created by the lowest possible price, as more consumers will be able to afford the commodity and more of the commodity will be produced! (Remember Henry Ford paying his workers enough to actually buy the cars they built, a novel concept at the time, setting off a transportation revolution.) Therefore, your graphs say to me: market segmentation is indicative of monopoly rents. Eric Rescorla wrote: > The interesting thing about market segmentation (as Mr. Denker pointed > out) is that it's often good for everyone, particularly in cases > where marginal costs of production are low. >... > However, if he can price discriminate, he can sell two copies, > one at 3 and one at 6. This makes it profitable for him to > produce the book. > The problem with this example, as is often the case with economists, is it assumes perfect knowledge and rational behaviour. In real life, all the publisher knows at the time of decision is that in the PAST, there have been similar books that have sold for $6 and $3, and that there are at least 2 purchasers. Therefore, the $7 costs of printing will be covered, and the book will be produced. All the rest of the rationale is hogwash. Instead, at auction, the low cost consumer will quit at $4 on the 1st book (the other purchaser will have a bargain believing the book to be worth $6), and then purchase the 2nd at $3. Wealth will be maximized (and profit will be minimized). Ian Brown wrote: > But I would like to think that the popular skepticism towards > price discrimination also reflects something much more rational. >... > what is good for the company will also be good for the nation, >... > http://law.vanderbilt.edu/lawreview/vol536/boyle.pdf > Ah yes, the old "What is good for General Motors is good for the Country" argument. Thanks for bringing this paper to our attention. "Karsten M. Self" wrote: > What's distinctive about the last several years of RIAA[1] and MPAA > actions is that these industries are seekin legal sanction to enforce > price discrimination. The basis for this legal sanction isn't > production-side differences, but an attempt to manage the demand-side > differntials which exist. > As my (former) congresscritter says, "Using the DMCA, they want to control the room you're in, the chair you sit in, and the lamp you use." > If an economist can be a rock star, Varian is one of 'em. Ahem, I beg to differ. I haven't forgotten the foolish papers he wrote on Internet pricing, (bringing us back to our topic) cryptographically signing every packet, and carrying an additional micro-payment payload, so that they could "bid" at every router. As I pointed out at the time, the functional equivalent of every little passenger vehicle dragging along a train of boxcars, just to pay tolls. Thoroughly impractical. BTW, while researching his articles on the topic, I discovered that he'd been peddling the same papers to multiple journals (slightly modified) and padding his C.V. Not intellectually honest, either. Phil Karn wrote: > Much movie piracy is driven by the strange practice of releasing new > movies in different countries at different times. This is a major form > of geographic market
Re: DeCSS, crypto, law, and economics
On Thursday 09 January 2003 01:03 pm, Perry E. Metzger wrote: > > I am unaware of legal region-free players being generally available in > the US, although I may be wrong on this. They are available at any "Best Buy" or "Fry's Electronics". They just can't advertise it on the boxes. See the following sites: http://www.vcdhelp.com/dvdhacks http://www.regionfreedvd.net/players.html http://www.nerd-out.com/forum/ My friend recently purchased the CyberHome 402 from Best Buy. It was $50 after $20 mail in rebate. I think he had to hit some 5 or 6 keys on the remote control, and after that it's completely region free. Someone earlier said that region free players are not popular in the US. This is just not true. They are extremely popular with immigrants in the US. Another myth here: Almost all pirate DVDs (at least sold in Russia) are region free. The region encoding hurts you, only when you pay more money for the licensed disks. Apparently professional DVD presses are not that hard to get your hands on, and pirates are not stupid. - Dima - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
on Wed, Jan 08, 2003 at 08:17:41AM -0800, Eric Rescorla ([EMAIL PROTECTED]) wrote: > "Karsten M. Self" <[EMAIL PROTECTED]> writes: > > on Tue, Jan 07, 2003 at 04:10:27PM -0800, Eric Rescorla ([EMAIL PROTECTED]) wrote: > > > However, if he can price discriminate, he can sell two copies, > > > one at 3 and one at 6. This makes it profitable for him to > > > produce the book. > > > > ...and the usual mechanism is to produce various versions of the book: > > > > - A premium hardcover. > > - A "trade paperback". > > - A pulp paperback. > > - A premeium, leather-bound, acid-free archival quality, hand-signed, > > and specially illustrated, collectors edition. > Well, that's certainly one option. However, there are certainly > other examples, such as senior citizens discounts. Or matinees. Or generic branding. Or outlet stores. Or rush-delivery premiums. Or personal shoppers. The point being that traditional price discrimination mechanimsms _work by appealing to preference differentials among buyers, not by arbitrarially, and with force of law, *imposing* such differentials_. > I think part of the point here is that legal measures to enforce price > discrimination might well be Pareto-dominant in some cases. When > there is a conflict between liberty and Pareto dominance, economists > get a headache. [1] "Pareto-dominant" isn't a term I'm familiar with (though Google returns some hits). Pareto efficient or optimal is: the "best that could be achieved without disadvantaging at least one group." (Allan Schick, in Louis C. Gawthrop, l970, p.32) http://pespmc1.vub.ac.be/ASC/PARETO_OPTIM.html ...and I can think of any number of reasons why legally mandated discrimination is *not* Pareto optimal ipso facto, starting with the fact that it violates several assumptions of the free market model. The classic test given by Varian is: [S]uppose that [a given allocation] were not [optimal]. Then there would be some other feasible allocation that gave everyone at lesat as large a utility, and someone strictly greater utility. But the welfare function is an increasing function of each agent's utiluty. Thus the new allocation would hav eto have higher welfare, which contradicts the assumption that we originally had a welfare maximum. Hal R. Varian, _Intermediate Microeconomics_, WH Norton & company, 1987. pp 534-535. Since CSS, ipso facto, prevents certain allocations, it is not Pareto efficient. Peace. -- Karsten M. Self <[EMAIL PROTECTED]>http://kmself.home.netcom.com/ What Part of "Gestalt" don't you understand? A guide to GNU/Linux partitioning: http://kmself.home.netcom.com/Linux/FAQs/partition.html - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
Matt Blaze <[EMAIL PROTECTED]> writes: > By the way, import region-free DVD players *are* available, quite > legally, within the US, as are non-region 1 disks. Kim's video in NYC > is one source. They are all unfamiliar off brands, however - you won't > find Sony or Matsushita (deliberately) producing one. Actually, that's not true. Kim's sells grey market units typically made without licenses to the DVD patent portfolio in places like China, and units that are more legal but that have been cracked. The latter are supplied with instruction sheets describing how to disable region coding. Some of these sheets actually say things like "we can't be responsible for the effects, but if you were to push the following buttons in the following sequence..." I am unaware of legal region-free players being generally available in the US, although I may be wrong on this. -- Perry E. Metzger[EMAIL PROTECTED] - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
In article <[EMAIL PROTECTED]>, Phil Karn <[EMAIL PROTECTED]> wrote: > Exactly. Time segmentation already practiced by the movie studios and > book publishers, and it's pretty hard to arbitrage -- until somebody > invents time travel. For books and CDs -- and as the region coding system breaks down, increasingly for DVDs as well -- only shipping costs and market illiquidity protect the segmentation. And markets are becoming more liquid, even at the consumer level. For example, I routinely order the European editions of books from amazon.co.uk, for example, instead of waiting for them to be published in the US. This is exactly as easy as buying from amazon.com; they even accept the same login. -- Shields. - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
On Thu, 2003-01-09 at 10:17, Birger Toedtmann wrote: > David Turner schrieb am Wed, Jan 08, 2003 at 01:29:39PM -0500: > > On Wed, 2003-01-08 at 05:50, Pete Chown wrote: > > > > > With DVDs we have a complex situation. Supposedly studios can make more > > > per film, so they can afford to make more marginal films. > > > > To make films which will not make money is not an economically rational > > action even if one is making other films which do make money. This is > > the point the 17 economists made in their Eldred amicus. > > It depends. In not-so-simple-scenarios, one may use it on behalf of > PR (attracting people to one's product portfolio) or bind a promising > new director who will later create a big profit-making film. Studios > and publishers use the latter quite frequently I guess. This is true (and I did mean to add a disclaimer to this effect, but couldn't find a good sentence structure which made it look non-awkward). However, attracting customers and developers needs to be done whether a studio is making tons and tons or just lots of money on its directly-profitable films. That is, making more money on a high-profit film doesn't encourage a studio to make more low-profit films in order to attract directors, since they have a need to attract directors anyway (in order to make *any* films). The demand for directors won't decrease with a modest decrease in profit for directly profit-producing films, since movie studios' needs for directors depends mainly on how many films they produce, a number which is limited mainly by consumer demand. Of course, consumer demand does depend on the quality of the available movies, which depends (among many other factors) on directors. So, assuming my analysis isn't completely off the wall, market segmentation doesn't produce more "marginal" films. On the other hand, I don't think that the 17 economists are dispositive on this issue, now that I've given it more thought. > From an economic point of view, excessive copying could result into > a situation where music/films become common goods because no one > is able to prevent others from using it. Exit Labels/Studios/Publish- > ers. The issue in this branch of the thread (to mix a metaphor) is not CSS as copy prevention (at which it does an abysmal job), but CSS as market segmentation (at which it does a somewhat better job). Disclaimer: I'm still not an economist. -- -Dave Turner Stalk Me: 617 441 0668 "On matters of style, swim with the current, on matters of principle, stand like a rock." -Thomas Jefferson - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
David Turner schrieb am Wed, Jan 08, 2003 at 01:29:39PM -0500: > On Wed, 2003-01-08 at 05:50, Pete Chown wrote: > > > With DVDs we have a complex situation. Supposedly studios can make more > > per film, so they can afford to make more marginal films. > > To make films which will not make money is not an economically rational > action even if one is making other films which do make money. This is > the point the 17 economists made in their Eldred amicus. It depends. In not-so-simple-scenarios, one may use it on behalf of PR (attracting people to one's product portfolio) or bind a promising new director who will later create a big profit-making film. Studios and publishers use the latter quite frequently I guess. If a product is definitely beyond any profit, it won't get produced by market forces, thus resulting in a pure common good. Society may then agree upon whether it wants that good to be produced anyway, paying it with taxes, presumably. You can see this with theatre, arts, opera etc. This is "economically rational" as well but works outside markets only. Don't mix rationality and market forces. [ The same applies to goods where a producer is not able to discriminate usage. If he cannot prevent some people (e.g. those who have not paid) to use his product, nobody would pay for it, everyone would freeride. A common example is the ordinary lamp post: How can I prevent someone using its light? As a consequence, market forces won't provide the public with street light, so it (the public) had to agree to pay taxes such that the community could set up the lamps. From an economic point of view, excessive copying could result into a situation where music/films become common goods because no one is able to prevent others from using it. Exit Labels/Studios/Publish- ers. (Just to summarize the very obvious, excuses.) ] Regards, Birger Tödtmann msg03314/pgp0.pgp Description: PGP signature
Re: DeCSS, crypto, law, and economics
Alan wrote: Another argument for the regions is the differing formats for TV signals. (NTSC v.s. PAL.) It is a bogus argument as you can find DVD players that will convert the signal with little or no problem. Actually my TV is happy with either. I always had the notion that I wouldn't be able to play American videotapes, but then I tried it and it works fine. So if I don't want to bother with region codes, the other possibility is to buy films on video. When I play region-1 DVDs, the player doesn't convert the signal. This would introduce a slight judder because of the differing frame rates. Instead the TV just acts like a multisync monitor, and adjusts to the signal it is given. (My TV is a middle of the road model, not the cheapest but nowhere near the most expensive either.) -- Pete - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
Matt Blaze wrote: Huh? DVD region coding doesn't prevent this at all; ripped decrypted DVD mpeg files could be played anywhere. I think that DRM mechanisms may increase piracy. A few years ago you could buy a CD, knowing that it was a standard product which you could use in certain ways. Now, you might get it home and find that you can play it in your hi-fi, but not in your car. Next time, you're not going to make that mistake, you'll just log on to Kazaa and download an MP3. -- Pete - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
John Gilmore wrote: The kind of segmentation your graphs rely on can easily be created by *time* segmentation. Producers start off charging high prices for their goods, and then gradually reduce the prices as they ramp up volumes, pay off their startup costs, learn the desires of their market better, etc. This gets the social benefit you desire, without propping up any artificial forms of segmentation. Exactly. Time segmentation already practiced by the movie studios and book publishers, and it's pretty hard to arbitrage -- until somebody invents time travel. Much movie piracy is driven by the strange practice of releasing new movies in different countries at different times. This is a major form of geographic market segmentation. If "Two Towers" had been released world-wide on the same day instead of only in the US and a few other countries, then there would have been little motivation for anxious fans around the world to get US collaborators to make a crappy videotape of the film in a US theater and export it. They'd just go to their local theaters and see it in its full glory. Phil - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
John Gilmore wrote: For "normal" products, market segmentation is neither forbidden by law nor protected by law. ... The law is silent on the issue. This is false. Market segmentation by country is deliberately outlawed by "free trade" laws and treaties, which exist to benefit consumers by letting them import whatever products they want from other countries. For example, in New Zealand, the DVD region-code system was found to violate their free-trade laws, and therefore New Zealand never permitted one-region players to be sold there. Can you cite a reference for that? I saw a claim about it on the opendvd.org web site some time back and tried to confirm by talking to the NZ embassy in Canada and then to someone in NZ that they referred me to. No-one I spoke to knew of such a law or ruling. New Zealanders I've spoken to do say players sold there are typically region-free. Australia's Competition Commissioner has done some good stuff on this: http://www.accc.gov.au//fs-search.htm To quote two speeches from that site: Difficulties between the pro-competitive community and Intellectual Property Mr Ross Jones, Commissioner Australian Competition & Consumer Commission | Australian consumers are currently suffering from an international cartel that | restricts their access to digital versatile discs (DVDs). The cartel, headed | by major film studios in agreement with the manufacturers of DVD players, has | divided the world into regions. This ensures that DVDs on sale in Australia | will only function on a DVD player licensed for region 4 that includes Australia. | The stated aim is to protect cinema ticket sales by preventing people viewing | movies on DVDs in their homes before distribution to cinemas. The Australian | subsidiaries of US film companies have been requested by the Commission to | explain their actions. It will then decide what action can be taken. Globalisation and Competition Policy Professor Allan Fels, Chairman Australian Competition & Consumer Commission | The Commission has requested the Australian subsidiaries of United States film | companies to explain why their regional restrictions on DVDs should not be deemed | a breach of the Trade Practices Act 1974. ... | | The Commission believes RPC is anti-competitive with Australian consumers lacking | a choice of DVD videos and possibly paying higher prices. These documents are a couple of years old. Does anyone have more recent news from Oz? In particular, how did the cartel respond to these questions and has the Commission actually taken any action against them? - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
> > Isn't it about a million times more probable that the industry's main > > concern was PEOPLE RIPPING DVDS AND TRADING THE FILES? > > Well, zone locking helps curb this because it *reduces* the market for each > copy. The finer the zone locking resolution, the more effort an attacker needs > to make in order to be able to trade more copies. Huh? DVD region coding doesn't prevent this at all; ripped decrypted DVD mpeg files could be played anywhere. The DVD region code scheme would, however, be mildly effective in reducing the utility of (encrypted) DVD images by making them playable only on players from the original market. But as others have pointed out, there aren't any consumer DVD writers that can write out an entire image, so this wouldn't happen anyway with current products. By the way, import region-free DVD players *are* available, quite legally, within the US, as are non-region 1 disks. Kim's video in NYC is one source. They are all unfamiliar off brands, however - you won't find Sony or Matsushita (deliberately) producing one. The main reason such players aren't more popular or commonly available here is not the DMCA, but rather lack of consumer demand. Most popular movies are available and cheapest on a region 1 version of the release. It's people outside North America who buy most of the multi-region players, primarily to take advantage of the region 1 market. North American consumers of multi-region players and other regions' disks are mostly just fanatics like me who have less mainstream taste and want the few disks that aren't available for region 1. - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
Nomen Nescio wrote: > John S. Denker writes: > > The main thing the industry really had at stake in > > this case is the "zone locking" aka "region code" > > system. > > I don't see much evidence for this. As you go on to admit, multi-region > players are easily available overseas. You seem to be claiming that the > industry's main goal was to protect zone locking when that is already > being widely defeated. > > Isn't it about a million times more probable that the industry's main > concern was PEOPLE RIPPING DVDS AND TRADING THE FILES? Well, zone locking helps curb this because it *reduces* the market for each copy. The finer the zone locking resolution, the more effort an attacker needs to make in order to be able to trade more copies. Cheers, Ed Gerck - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
On Wed, 2003-01-08 at 05:50, Pete Chown wrote: > With DVDs we have a complex situation. Supposedly studios can make more > per film, so they can afford to make more marginal films. To make films which will not make money is not an economically rational action even if one is making other films which do make money. This is the point the 17 economists made in their Eldred amicus. Disclaimer: I'm not an economist. -- -Dave Turner Stalk Me: 617 441 0668 "On matters of style, swim with the current, on matters of principle, stand like a rock." -Thomas Jefferson - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
-- It is easy to imagine situations where some government intervention will improve efficiency. But who will lobby for such interventions? Of course, situations where government interventions will create monopoly profits at the expense of considerable loss of efficiency are far more common, and have lobby groups. Thus whenever some clever economist claims to have discovered a situation of the first kind, chances are it is a situation of the second kind, thinly disguised. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG ycWZHQlgKti6MMd4J3O4W7WPmUH38C4yaakLV93r 4w2zz8RnIPwcoBeYSdkQfFKWGB5DFqTtDR+iru6cQ - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
On Wed, 8 Jan 2003, Pete Chown wrote: >One last point is that governments serve the interests primarily of >their own people. So the job of Britain's government is to get me, and >other Brits, the best possible deal on films within the UK. This might >mean balancing the interests of British consumers against British film >producers. It doesn't mean balancing British consumers against foreign >film producers. If no films were made in Britain, the government would >logically insist on a completely free market that allowed parallel >imports and circumvention measures. Ah, but you're forgetting the whole "globalization" issue. Governments aren't answering to their own people any more; they're all striving to become a part of the "new world order" where a norwegian can be brought to court for a supposed violation of american copyright laws or where the Russian Dmitri Sklyarov can be jailed in the USA for DOING HIS JOB IN RUSSIA. We're moving forward into a glorious new world where governments can impose laws upon their own people, not by the fickle and divisive will of those governed, but rather in response to international treaties and agreements with other nations promoting global unity and harmony. Cryptography is a part of that wonderful vision... if the people of different nations can be prevented from communicating effectively with one another, or exercising their freedoms in ways that affect one another, then effective opposition to global unity may be reduced, and we can all become better servants and markets to our corporate masters. All power to the dromedariat! Bear PS. If you happen to be mentally defective, you may not recognize the foregoing as sarcasm. Please take this into account when composing your reply. - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
Pete Chown <[EMAIL PROTECTED]> writes: > One last point is that governments serve the interests primarily of > their own people. So the job of Britain's government is to get me, > and other Brits, the best possible deal on films within the UK. This > might mean balancing the interests of British consumers against > British film producers. It doesn't mean balancing British consumers > against foreign film producers. If no films were made in Britain, the > government would logically insist on a completely free market that > allowed parallel imports and circumvention measures. Maybe. Not necessarily if that meant that no new movies ever got made. Now, the UK isn't a big enough market for this, but consider what would happen if the US said "listen, free drugs would be great for consumers so let's get rid of all drug patents". This would probably dramatically increase social welfare at the moment, since there are quite a few people who would buy drugs if they were cheaper. (It's of course not Pareto dominant). However, it seems likely that this would have such a negative effect on future production that it would lower social welfare in the future. -Ekr -- [Eric Rescorla [EMAIL PROTECTED]] http://www.rtfm.com/ - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
"Karsten M. Self" <[EMAIL PROTECTED]> writes: > on Tue, Jan 07, 2003 at 04:10:27PM -0800, Eric Rescorla ([EMAIL PROTECTED]) wrote: > > However, if he can price discriminate, he can sell two copies, > > one at 3 and one at 6. This makes it profitable for him to > > produce the book. > > ...and the usual mechanism is to produce various versions of the book: > > - A premium hardcover. > - A "trade paperback". > - A pulp paperback. > - A premeium, leather-bound, acid-free archival quality, hand-signed, > and specially illustrated, collectors edition. Well, that's certainly one option. However, there are certainly other examples, such as senior citizens discounts. > Where I see a fundamental conflict on the two classic cypherpunk issues > of free access to data, but protection of privacy, is this: > > - Much of the fair use / DRM industry activity seeks to limit > access to data which is inherently public. > > - Much of the privacy debate (now wrapped in the mantel of national > security, though marketing data still plays a major role) seeks to > make public data which is inherently private, anonymous, or both. > > I see the traditional cypherpunks line in both cases as being more > closely aligned with "natural state" -- how things would be without > major intervention -- and thus more sympathetic. I think part of the point here is that legal measures to enforce price discrimination might well be Pareto-dominant in some cases. When there is a conflict between liberty and Pareto dominance, economists get a headache. [1] -Ekr [1] Obligatory reference. Amartya Sen "On the impossibility of the Paretial liberal". -- [Eric Rescorla [EMAIL PROTECTED]] http://www.rtfm.com/ - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
> The truly amazing thing about this case is that the
> "crime" would not have occured if the studios had used
> decently-strong crypto. It's ironic that in an age when
> for cryptographers enjoy a historically-unprecedented
> lopsided advantage over cryptanalysts, the industry
> adopted a system that could be cracked by amateurs.
> This probably wasn't simply due to stupidity in the
> industry; it is more plausibly attributed to stupidity
> in the US export regulations which induced the industry
> to use 40-bit keys.
Actually, the scheme was invented in Japan, and the
"predecessor-in-interest to the DVD-CCA", Matsushita, designed it to
be weak because Japanese export laws prevented the export of more than
40-bit encryption.
The US had pressured Japan to impose 40-bit crypto export controls.
The Japanese laws didn't change, even after EFF's Bernstein lawsuit
and commercial firms' political pressure forced US policy to become
sensible. Last I heard, crypto export is still a morass in Japan.
> US law is not the same as Norwegian law. You should
> not imagine that this case sets a precedent for US
> courts.
Correct, but. One of the basic prongs of the entire DVDCCA "trade
secret" series of cases was that the reverse-engineering had been
illegal in Norway. If it wasn't illegal to do it, it wasn't illegal
to reproduce the results of it. Since Norwegian courts have
determined that it wasn't illegal to reverse-engineer it, there is no
case against any of the defendants. Like Matt Pavlovich, Andrew
Bunner, and many dozens of other people who DVDCCA have been trying to
drag into California courts. You may not have noticed, but EFF and its
pro-bono partners have been spending major time on winning these cases.
The Norwegian decision will make it much easier.
> For "normal" products, market segmentation is neither
> forbidden by law nor protected by law. ... The law is silent on
> the issue.
This is false. Market segmentation by country is deliberately
outlawed by "free trade" laws and treaties, which exist to benefit
consumers by letting them import whatever products they want from
other countries.
For example, in New Zealand, the DVD region-code system was
found to violate their free-trade laws, and therefore New Zealand
never permitted one-region players to be sold there.
The Coors brewery tried to limit distribution of their beer to certain
Western states. They failed. My local liquor store in Washington, DC
made a ton of money bringing in semi-loads of Coors, in violation of
Coors company policy, and selling them to thirsty expatriate Rocky
Mountainers.
Similarly, the US Supreme Court recently struck down laws in many US
states that prohibited the interstate purchase of wine and other
products. These laws were all designed to benefit local producers, at
the expense of local consumers. Most of these laws were wrapped up in
a cloak of "consumer protection against shoddy products" or
"protection of minors" but it was easy to pierce that veil to see the
monopoly interest.
(This is not to say that market segmentation is dead in the US! Many
continue. The federally supported "Milk Compact" deliberately
segments the New England market and costs consumers of milk many
billions of dollars per year. The federal DMCA has nothing to do with
protecting copyrights and everything to do with protecting monopolies,
as the judge agreed in the 2600 case. Many state and local laws
continue to restrict entry into fields such as lawyering, surveying,
haircutting, and even carpentry ("union shop" laws). Producers are
always looking for political opportunities to outlaw their
competition, and there are always corrupt people inside governments,
who are happy to oblige.)
> We should try to avoid overwrought arguments about the
> "morality" of market segmentation and/or arbitrage.
Unfortunately you set the wrong tone by starting as apologist for it.
> In fact it is easy to demonstrate that _some_ market
> segmentation is good for society as a whole.
The kind of segmentation your graphs rely on can easily be created
by *time* segmentation. Producers start off charging high prices for
their goods, and then gradually reduce the prices as they ramp up
volumes, pay off their startup costs, learn the desires of their market
better, etc. This gets the social benefit you desire, without propping
up any artificial forms of segmentation.
Of course, there are always people who will claim that people aren't
free to change their prices up or down over time. (After the
earthquake, according to those folks, bottled water should sell for
the same price as before, even if at that price the entire supply has
sold in two hours, to the people who value the water least.)
> The closest they could come was to make it slightly hard
> to get a _multi-region_ player. The manufacturers of
> player hardware had to do the studios' bidding because of
> the the controversial (to say the least) "anti-circumvention"
> provisions of
Re: DeCSS, crypto, law, and economics
On Tue, 2003-01-07 at 21:09, bear wrote: > On Tue, 7 Jan 2003, alan wrote: > > > > Not to mention the two seasons of Futurama that are only available > > on Region 2 PAL DVDs. (Or the other movies and TV shows not allowed > > by your corporate masters.) "They Live" is another film only > > available from Region 2. Maybe it tells too much about the movie > > industry... > > This makes an interesting point. While the argument that market > segmenting may increase the ability to provide material in all > markets, the fact is that given region coding, the producers of > this stuff *DON'T* provide the material in all markets. > > If their argument, that the increased market size available with > region coding enables economies of scale, were actually the driving > force behind region coding, there should be no such thing as content > available in one region that is unavailable in another. > > Thus their actions betray that they have a different motive. Therefore > the public skepticism regarding the truth of their assertions about > their motivations seems fairly solidly grounded on fact. The reasoning seems to be pure greed. If you look at the zones, they are more economic than anything else. Another theory is it allows them to edit movies for different markets. (Such as what Miramax does to movies out of Hong Kong. Region codes help prevent the average viewer from being able to see the film in the original form and realize just how much they screwed up the film.) Another argument for the regions is the differing formats for TV signals. (NTSC v.s. PAL.) It is a bogus argument as you can find DVD players that will convert the signal with little or no problem. (Apex produced one that was incredibly cheap and works great.) > ( who likes a fair amount of stuff that is only available > coded for region 6 ). You made me have to look up what region 6 was. (Here is a good reference for those of you who don't know or remember: http://www.ilovedvd.co.nz/regioncodes.asp ) Most of the titles i have seen from China are region free. (Hong Kong makes a good deal of money from Americans who want to see Chinese films uncut. I know, because they are making a fortune off of me...) -- Alan <[EMAIL PROTECTED]> - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
on Tue, Jan 07, 2003 at 04:10:27PM -0800, Eric Rescorla ([EMAIL PROTECTED]) wrote: > Pete Chown <[EMAIL PROTECTED]> writes: > The interesting thing about market segmentation (as Mr. Denker pointed > out) is that it's often good for everyone, particularly in cases > where marginal costs of production are low. > > Consider the following simple case: > A a publisher is deciding to publish some book X. The marginal > cost of production is zero but it costs $7 to do the initial > setup (writing, typesetting, etc.) > > There are only two possible customers for this book. One of > these customers is willing to pay 6 for the book and the other > 3. > > There is no uniform price at which this book can be sold that > doesn't result in the publisher losing money. If he charges 6, > he will sell one copy and be out a dollar. If he charges 3 he > sells two copies but is still out a dollar. Under these > conditions, the book will not be produced. > > However, if he can price discriminate, he can sell two copies, > one at 3 and one at 6. This makes it profitable for him to > produce the book. ...and the usual mechanism is to produce various versions of the book: - A premium hardcover. - A "trade paperback". - A pulp paperback. - A premeium, leather-bound, acid-free archival quality, hand-signed, and specially illustrated, collectors edition. ...the price discrimination here plays on a number of factors, including timing (HC and TC are generally released in that sequence, with 6-12 months between, pulp paperback isn't released for 12-18 months following publication). The different products also appeal to taste and vanity by quality (or at least appearance) of the work. What's distinctive about the last several years of RIAA[1] and MPAA actions is that these industries are seekin legal sanction to enforce price discrimination. The basis for this legal sanction isn't production-side differences, but an attempt to manage the demand-side differntials which exist. This is fundamentally different from import duties charged, say, on account of labor, production, or environmental differences between production methods (and costs) on industrial goods. Here I _do_ see a fair basis for making the distinction, if a market is to fairly value environmental externalites. Where I see a fundamental conflict on the two classic cypherpunk issues of free access to data, but protection of privacy, is this: - Much of the fair use / DRM industry activity seeks to limit access to data which is inherently public. - Much of the privacy debate (now wrapped in the mantel of national security, though marketing data still plays a major role) seeks to make public data which is inherently private, anonymous, or both. I see the traditional cypherpunks line in both cases as being more closely aligned with "natural state" -- how things would be without major intervention -- and thus more sympathetic. > Hal Varian has a very readable exposition of this topic > (from which I got this example) at: > http://www.sims.berkeley.edu/~hal/Papers/price-info-goods.pdf If an economist can be a rock star, Varian is one of 'em. His site, and the book _Information Rules_ (see his website or http://www.inforules.com/) are very highly recommended. I suspect most folks here are already familiar with them. Peace. Notes: 1. a transparent mask for Sony (Japan), EMI (England), Warner, BMG (Germany), Universal (France), the so-called American recording industry, to hide behind. -- Karsten M. Self <[EMAIL PROTECTED]>http://kmself.home.netcom.com/ What Part of "Gestalt" don't you understand? Geek for hire: http://kmself.home.netcom.com/resume.html - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
"Steven M. Bellovin" <[EMAIL PROTECTED]> writes: > In message <[EMAIL PROTECTED]>, "Perry E. Metzger" writes: > >I don't know anyone who trades video files -- they're pretty big and > >bulky. A song takes moments to download, but a movie takes many many > >hours even on a high speed link. I have yet to meet someone who > >pirates films -- but I know lots of hardened criminals who watch DVDs > >on Linux and BSD. I'm one of these "criminals". > > I'm 100% certain it's happening, today. Sure it is. I'm merely noting it is less widespread than pirating audio. Also, as I note, if DeCSS weren't around, people would just steal whole DVD images and leave them encrypted, because you don't need to decrypt them to steal and view them. DeCSS is not the problem. -- Perry E. Metzger[EMAIL PROTECTED] - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
Eric Rescorla wrote: No, this isn't true. Say that Americans are willing to pay 50% more for DVDs than Europeans. It would make sense for producers to attempt to segment the market. You are right that producers would want to segment the market, but we have no reason to introduce extra laws to help them. We would only have a reason to do that when segmenting the market results in greater efficiency, not merely greater profits. With DVDs we have a complex situation. Supposedly studios can make more per film, so they can afford to make more marginal films. Also more people are offered films at a price they can afford. Oddly, in practice it doesn't seem to work this way. Films tend to be launched in the US, which is one of the lowest cost markets. Films that do badly could theoretically be released at a higher cost in other markets, to recoup the expenditure through differential pricing. In practice they seem to be dropped. Coupled with this, we have the negative effect on the technology industry that results from DRM. A small efficiency gain for the content industry could become a large efficiency loss for the technology industry. Suppose that open source operating systems were technically able to play DVDs but were prohibited from doing so by law. Suppose also that open source was a much more efficient economic model. You would now have a more classic case of market distortion, which also gives rise to inefficiency. One last point is that governments serve the interests primarily of their own people. So the job of Britain's government is to get me, and other Brits, the best possible deal on films within the UK. This might mean balancing the interests of British consumers against British film producers. It doesn't mean balancing British consumers against foreign film producers. If no films were made in Britain, the government would logically insist on a completely free market that allowed parallel imports and circumvention measures. I don't speak for Mr. Denker, but the point I think is relevant here is that there are a fair number of situations in which removal of some freedom would result in a superior situation for everyone (Pareto-dominant). I'm not convinced that maximising freedom is the best approach in all such cases. I agree; for example copyright itself is a restriction on commercial freedom in a sense. You have to weigh up the pros and cons in each case. For me the collateral damage from DRM and region locking is simply too great, and so I believe it should be prohibited (or that people should be allowed to circumvent it, which would have the same effect). -- Pete - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
-- I wote: > I pirate films routinely Correction. I watch made for TV shows distributed through the internet routinely. Full length films are not shared to any great extent, because their sheer size makes them such a pain. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG gUT7fZ6Trnc/9Kb/H1Fuuj0atdyZ+LqudqxXb84E 4Wfqp3BAtgVYkqbEMsnlaP6ulQPgSL1YCQwZh8LlS - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
On Tue, 7 Jan 2003, alan wrote: > Not to mention the two seasons of Futurama that are only available > on Region 2 PAL DVDs. (Or the other movies and TV shows not allowed > by your corporate masters.) "They Live" is another film only > available from Region 2. Maybe it tells too much about the movie > industry... This makes an interesting point. While the argument that market segmenting may increase the ability to provide material in all markets, the fact is that given region coding, the producers of this stuff *DON'T* provide the material in all markets. If their argument, that the increased market size available with region coding enables economies of scale, were actually the driving force behind region coding, there should be no such thing as content available in one region that is unavailable in another. Thus their actions betray that they have a different motive. Therefore the public skepticism regarding the truth of their assertions about their motivations seems fairly solidly grounded on fact. Bear ( who likes a fair amount of stuff that is only available coded for region 6 ). - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
Pete Chown wrote: John S. Denker wrote: Note that in the absence of market segmentation, the society as a whole is worse off. I see what you mean, but do you think it applies to DVDs? The segmentation needs to be in each market, between rich and poor consumers. What we actually have is segmentation between markets, say Europe and the US. Europe and the US have similar income per head, but various obscure factors cause products like DVDs to be more expensive in Europe. The other interesting thing about market segmentation is that it is often illegal. Britain's competition law is being reformed in summer this year. Running a cartel will become a crime, in addition to the current civil penalty regime. It will also become possible to bring private anti-trust suits. In other words we are moving towards the American model of anti-trust. I intend to make a complaint about DVD region coding, and I will wait until the summer because the prospect of going to prison will add some extra pizazz for the defending team. Don't get too excited, though, it isn't always easy to get these things moving in the UK. Read about the Walls Ice Cream case if you're curious... I've tried to do that in Canada, without a lot of success. See this mailing list post: http://www.digital-copyright.ca/discuss/40 Since I'm now teaching English in China, I am not following up on it. See the rest of that list's archive, or ask on that list, to see if others are. One interesting result I did get was having a Canadian civil servant gleefully point me to information on what the aussies were up to. See this post: http://www.digital-copyright.ca/discuss/17 For UK stuff, see: http://www.theregister.co.uk/content/archive/9348.html http://www.theregister.co.uk/content/archive/9357.html - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
In message <[EMAIL PROTECTED]>, "Perry E. Metzger" writes: > > >I don't know anyone who trades video files -- they're pretty big and >bulky. A song takes moments to download, but a movie takes many many >hours even on a high speed link. I have yet to meet someone who >pirates films -- but I know lots of hardened criminals who watch DVDs >on Linux and BSD. I'm one of these "criminals". I'm 100% certain it's happening, today. And -- dare I suggest that the industry is being farsighted in anticipating higher bandwidth, and wants to close the barn door *before* the horse's image is "stolen"? --Steve Bellovin, http://www.research.att.com/~smb (me) http://www.wilyhacker.com (2nd edition of "Firewalls" book) - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
RE: DeCSS, crypto, law, and economics
-- On 8 Jan 2003 at 0:30, Ian Brown wrote: > the public tends to be skeptical when an industry claims that > expert opinion shows that what is good for the company will > also be good for the nation, and that state aid in enforcing > its desires will produce an economically efficient result Situations often arise where government enforcement in supporting the anti competitive desires of the company would produce a more efficient result. But when this happens, invariably the result is that the company, being a concentrated interest, soon arranges to receive a good deal more government enforcement of its desires than is economically efficient. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG uytnfDL5wk7zyB1EE5/tKYXC0KzS6sXDK6/jxK07 4SvjkuJx2a+3oxJKR0lkoulNU5XL8/gqJuBIxsI48 - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
-- On 7 Jan 2003 at 20:25, Perry E. Metzger wrote: > I don't know anyone who trades video files -- they're pretty > big and bulky. A song takes moments to download, but a movie > takes many many hours even on a high speed link. I have yet > to meet someone who pirates films -- but I know lots of > hardened criminals who watch DVDs on Linux and BSD. I'm one > of these "criminals". I pirate films routinely. These are almost invariably films that I could not obtain in any other way. The amount of time I spend watching films on my computer, and on television, is roughly comparable. Similarly most of the music I listen to on my computer, I could not readily purchase. Stuff I can readily get through commercial channels I do -- the convenience, rather than the cost, is important to me. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG G6dKu0+L5GqnwO9+mBiUuQ4bgcPQWz7zc6hp0Ku0 4lRkw8fWFbF5+wXCL7T1Xi9eLN/Z/LxSrOd5a5W1p - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
On 7 Jan 2003, Perry E. Metzger wrote: > I don't know anyone who trades video files -- they're pretty big and > bulky. A song takes moments to download, but a movie takes many many > hours even on a high speed link. I have yet to meet someone who > pirates films -- but I know lots of hardened criminals who watch DVDs > on Linux and BSD. I'm one of these "criminals". There is some trading of TV shows, but not movies. (Some, but only things that you cannot buy legally.) The few "pre-release" things you find on the file-sharing networks have the same (lack of) quality that the bootleg tapes have. The only large films worth the time are things that you cannot buy. (Although "Song of the South" should be required viewing in schools. It makes racism *boring*.) A XVCD copy of a 22 minute TV show runs about 425 megs. Anything smaller tends to look like crap. Multiply that out to a feature length film and you find out why it is impractical to trade films in this manner. (It is not worth the 2 days it will take for the download. Most people will go out and buy it than waste the time.) > Many nights, I close the blinds and illegally use the computer I > lawfully paid for to view the DVDs I lawfully paid for. To do that, I > make use of DeCSS. My nice Unix based DVD player, ogle, needs it to > read the drive. A little later this evening I'll be watching an > episode of "I, Claudius" I bought and paid for, using this "criminal" > software combination. Hopefully no one will learn of my shamefully > immoral act. Please don't tell anyone. Not to mention the two seasons of Futurama that are only available on Region 2 PAL DVDs. (Or the other movies and TV shows not allowed by your corporate masters.) "They Live" is another film only available from Region 2. Maybe it tells too much about the movie industry... - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
Nomen Nescio <[EMAIL PROTECTED]> writes: > I don't see much evidence for this. As you go on to admit, multi-region > players are easily available overseas. Sure, but they're generally "illegal". I can buy grey market non-regioned players in the U.S. but the manufacturers are violating within the intellectual property agreements that prevent such behavior. > You seem to be claiming that the > industry's main goal was to protect zone locking when that is already > being widely defeated. > > Isn't it about a million times more probable that the industry's main > concern was PEOPLE RIPPING DVDS AND TRADING THE FILES? Without DeCSS, the piracy problem would have in no way been improved. Even if you didn't want to use physical DVDs, it wouldn't have been an issue. Ripping the raw bits encrypted bits from a DVD drive is easy. From there, you just would have had to have built a driver that pretended to be a DVD drive but actually read a chunk of disk, and presto -- Windows DVD player software would be perfectly happy aiding and abetting your piracy. For those that want physical DVDs, the encryption of course prevented nothing at all -- bits are bits. No, what region coding did largely was allow the industry to try to prevent grey market sales. I don't know anyone who trades video files -- they're pretty big and bulky. A song takes moments to download, but a movie takes many many hours even on a high speed link. I have yet to meet someone who pirates films -- but I know lots of hardened criminals who watch DVDs on Linux and BSD. I'm one of these "criminals". Many nights, I close the blinds and illegally use the computer I lawfully paid for to view the DVDs I lawfully paid for. To do that, I make use of DeCSS. My nice Unix based DVD player, ogle, needs it to read the drive. A little later this evening I'll be watching an episode of "I, Claudius" I bought and paid for, using this "criminal" software combination. Hopefully no one will learn of my shamefully immoral act. Please don't tell anyone. -- Perry E. Metzger[EMAIL PROTECTED] - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
On Wed, 8 Jan 2003, Nomen Nescio wrote: > John S. Denker writes: > > The main thing the industry really had at stake in > > this case is the "zone locking" aka "region code" > > system. > > I don't see much evidence for this. As you go on to admit, multi-region > players are easily available overseas. You seem to be claiming that the > industry's main goal was to protect zone locking when that is already > being widely defeated. Try selling a regionless player in this country. It happens, but not in public. Region codes make them tons of money. (They are economic zones, nothing else.) > Isn't it about a million times more probable that the industry's main > concern was PEOPLE RIPPING DVDS AND TRADING THE FILES? Movies are > freely available on the net, just like MP3s, and the DeCSS software was > the initial technology that made ripping DVD's possible. Many people > would rather get something for free than to pay for it, and DVD ripping > allows that for movies. The MPAA obviously is afraid of following the > RIAA into oblivion. The think that does not get press is that there is a bunch of money being made on the players themselves. Having DeCSS allows you to counterfeit players and avoid the licence fees. It also showed that they were generally stupid gits since the CSS algorythm has only 24 effective bits in the key. Brute forcing the key once you know this takes *seconds* on my PC. Snake oil makes the discs play so much smoother... - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
RE: DeCSS, crypto, law, and economics
> It would be nice to have an enlightened discussion of such topics. "Lay people often react to differential pricing for the same good with a sense of unfairness. No matter how many times they are lectured by the economists that it is actually to the benefit of all that producers be able to charge different prices to groups with different ability and willingness to pay, the popular reaction is normally "that's not fair." Economists have tended to view this as a sign of the public's naive failure to understand market mechanisms. If the drug company can charge the poor nation a low price and the rich nation a high price for the same drug, all will be better off. It is better, then, that gray markets, parallel imports, and resale be prohibited. Popular resistance can be branded as a kind of economically illiterate Jacobinism. There is certainly some truth to this depiction; there are indeed benefits to price discrimination under certain circumstances. But I would like to think that the popular skepticism towards price discrimination also reflects something much more rational. Lacking time to educate themselves in every aspect of market and culture, the public tends to be skeptical when an industry claims that expert opinion shows that what is good for the company will also be good for the nation, and that state aid in enforcing its desires will produce an economically efficient result. And you know what? Given the arguments reviewed in this Paper, I would say that the public has a point." http://law.vanderbilt.edu/lawreview/vol536/boyle.pdf - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
Pete Chown <[EMAIL PROTECTED]> writes: > John S. Denker wrote: > > > Note that in the absence of market segmentation, > > the society as a whole is worse off. > > I see what you mean, but do you think it applies to DVDs? The > segmentation needs to be in each market, between rich and poor > consumers. What we actually have is segmentation between markets, say > Europe and the US. No, this isn't true. Say that Americans are willing to pay 50% more for DVDs than Europeans. It would make sense for producers to attempt to segment the market. The interesting thing about market segmentation (as Mr. Denker pointed out) is that it's often good for everyone, particularly in cases where marginal costs of production are low. Consider the following simple case: A a publisher is deciding to publish some book X. The marginal cost of production is zero but it costs $7 to do the initial setup (writing, typesetting, etc.) There are only two possible customers for this book. One of these customers is willing to pay 6 for the book and the other 3. There is no uniform price at which this book can be sold that doesn't result in the publisher losing money. If he charges 6, he will sell one copy and be out a dollar. If he charges 3 he sells two copies but is still out a dollar. Under these conditions, the book will not be produced. However, if he can price discriminate, he can sell two copies, one at 3 and one at 6. This makes it profitable for him to produce the book. Hal Varian has a very readable exposition of this topic (from which I got this example) at: http://www.sims.berkeley.edu/~hal/Papers/price-info-goods.pdf > > There are two not-quite-separate sensible questions: > > -- Find a way to maximize the created wealth. > > -- Decide how to divvy up the created wealth among > > the various stakeholders: inventors, authors, performers, > > publishers, manufacturers, wholesalers, retailers, > > consumers, et cetera. > > Would you rather maximise wealth or maximise competition? It sounds > like a silly question, but suppose the technology and legal framework > required to support your solution prevented the use of open source. > In that case, I would rather maximise competition. In any case, it > might be that this would maximise wealth in the long term, by > increasing technological innovation. I don't speak for Mr. Denker, but the point I think is relevant here is that there are a fair number of situations in which removal of some freedom would result in a superior situation for everyone (Pareto-dominant). I'm not convinced that maximising freedom is the best approach in all such cases. -Ekr -- [Eric Rescorla [EMAIL PROTECTED]] http://www.rtfm.com/ - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
John S. Denker writes: > The main thing the industry really had at stake in > this case is the "zone locking" aka "region code" > system. I don't see much evidence for this. As you go on to admit, multi-region players are easily available overseas. You seem to be claiming that the industry's main goal was to protect zone locking when that is already being widely defeated. Isn't it about a million times more probable that the industry's main concern was PEOPLE RIPPING DVDS AND TRADING THE FILES? Movies are freely available on the net, just like MP3s, and the DeCSS software was the initial technology that made ripping DVD's possible. Many people would rather get something for free than to pay for it, and DVD ripping allows that for movies. The MPAA obviously is afraid of following the RIAA into oblivion. - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
John S. Denker wrote: Note that in the absence of market segmentation, the society as a whole is worse off. I see what you mean, but do you think it applies to DVDs? The segmentation needs to be in each market, between rich and poor consumers. What we actually have is segmentation between markets, say Europe and the US. Europe and the US have similar income per head, but various obscure factors cause products like DVDs to be more expensive in Europe. The other interesting thing about market segmentation is that it is often illegal. Britain's competition law is being reformed in summer this year. Running a cartel will become a crime, in addition to the current civil penalty regime. It will also become possible to bring private anti-trust suits. In other words we are moving towards the American model of anti-trust. I intend to make a complaint about DVD region coding, and I will wait until the summer because the prospect of going to prison will add some extra pizazz for the defending team. Don't get too excited, though, it isn't always easy to get these things moving in the UK. Read about the Walls Ice Cream case if you're curious... One thing I will need, though, is an economic argument, so keep it coming... It would be the height of foolishness and the height of hypocrisy to pretend that whatever favors my selfish interests is "moral" while whatever favors somebody else's selfish interests is "immoral". Much of the debate about intellectual property issues, on both sides, stinks of foolish hypocrisy. I agree up to a point, but I also think properly functioning markets are very beneficial to a society. I think the moral position is normally the one that creates the most competition. For example, consumers should have the right to choose between a region-2 DVD player and a region free one. People should have the right to choose between watching DVDs on a dedicated player, on a PC running Windows and a PC running Linux. There are two not-quite-separate sensible questions: -- Find a way to maximize the created wealth. -- Decide how to divvy up the created wealth among the various stakeholders: inventors, authors, performers, publishers, manufacturers, wholesalers, retailers, consumers, et cetera. Would you rather maximise wealth or maximise competition? It sounds like a silly question, but suppose the technology and legal framework required to support your solution prevented the use of open source. In that case, I would rather maximise competition. In any case, it might be that this would maximise wealth in the long term, by increasing technological innovation. -- Pete - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
From: "John S. Denker" <[EMAIL PROTECTED]> > For "normal" products, market segmentation is neither > forbidden by law nor protected by law. Mushrooms that > cost $4.00 per ounce at the supermarket can be purchased > for $4.00 per pound at the Asian grocery down the street. > The stores are free to charge whatever they like, and I > am free to shop wherever I like. The law is silent on > the issue. Not completely. http://news.bbc.co.uk/hi/english/business/newsid_1261000/1261060.stm http://news.bbc.co.uk/2/hi/business/2380163.stm http://www.fashionwindows.com/visual/2001/levis_victor.asp [copying from Google's cache on that last one] The UK supermarket lost the latest round in its fight with the US company after a ruling by the EU Court of Justice on Tueday. "The court ruled that goods from outside the European economic area cannot be imported without the unequivocable consent of the trademark owner, and we think that is the right decision," said Levi's Europe chief. The decision is the latest in the long running and very costly legal saga between the two companies. Tesco believes it should have the right to sell Levi jeans at knock down prices whereas the jeans manufacturer argues it has turned down the supermarket as an approved stockist. Levi sells its products through 17,000 selected outlets across Europe, chosen for good customer service argues the company, price rigging argue its pro-consumer opponents. A further twist in the story is that Levi's plan a discount brand for Walmart (and perhaps ASDA in UK ?) supermarkets. > The studios arguably hold intellectual property rights > in the CSS decoding keys, and they can collect per-player > royalties from hw mfgrs who incorporate such keys in > their products. AFAIK Mr. Johansen never copied any > such key (or even had one he could have copied), so > this case was never about illegal copying even on a > per-player basis. It's been reported on this list before that among the security failings of the play protection was one key being left unencrypted. I don't know whether Mr. Johansen copied it - but that's not critical to the end result of producing DeCSS. From: Sandy Harris <[EMAIL PROTECTED]> Date: 04Sep2000 Subject: Re: DeCSS and imminent harm ... : Second, they used 40-bit encryption, presumably to comply with US : export laws. This is obscenely weak. Assume you can try a million : keys a second. 10^6 ~= 2^20 so you need 2^20 seconds. 3600 seconds : in an hour, somewhat < 2^12 so total time is somewhat > 256 hours. : A week or a month on a single machine, depending how fast it is. : : Then they muffed the design so there are faster attacks; they don't : even have 40 bits of actual strength. In one brief to the court, : Dave Wagner from Berkeley said breaking this system was about the : right level of difficulty for him to assign it as undergraduate : homework next term. : : Lastly, one of their customers muffed something else and the disks : have one unencrypted key, which makes it easier to attack the others. -- ## # Antonomasia ant notatla.demon.co.uk # # See http://www.notatla.demon.co.uk/# ## - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
Re: DeCSS, crypto, law, and economics
On Tue, 2003-01-07 at 15:00, John S. Denker wrote: > The studios arguably hold intellectual property rights > in the CSS decoding keys, Do you mean copyrights, patents, or trade secret rights? Copyrights: No, keys are too short, functional, and non-expressive to be subject to copyright. Patents: No, you already established that there were no patents on CSS. Trade secrets: Maybe once, but not anymore -- all ~400 keys are now available at dozens of easy-to-find locations on the net. We'll see what the court in Pavlovitch has to say about this. > AFAIK Mr. Johansen never copied any > such key (or even had one he could have copied), He certainly copied a player key from a software DVD player. > The truly amazing thing about this case is that the > "crime" would not have occured if the studios had used > decently-strong crypto. It's ironic that in an age when > for cryptographers enjoy a historically-unprecedented > lopsided advantage over cryptanalysts, the industry > adopted a system that could be cracked by amateurs. > This probably wasn't simply due to stupidity in the > industry; it is more plausibly attributed to stupidity > in the US export regulations which induced the industry > to use 40-bit keys. Recall that the initial player key was obtained by copying it from a software player. As long as humans can read software, this sort of attack will be possible. It doesn't depend on the strength of the key, because the attacker is given the key. That said, it's unlikely that the next major media format will have software players, and it's also unlikely that Palladium will continue to let us read software. -- -Dave Turner Stalk Me: 617 441 0668 "On matters of style, swim with the current, on matters of principle, stand like a rock." -Thomas Jefferson - The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]
DeCSS, crypto, law, and economics
Regarding the acquittal of Jon Johansen, I quoted CNN as saying: The studios argued unauthorised copying was copyright theft and undermined a market for DVDs and videos worth $20 billion a year in North America alone. Some elements of the industry did indeed claim that, but such claims are grossly irrelevant, and to bring them up is foolish or dishonest. This case was never about unauthorized _copying_ of DVDs. You can make a bit-for-bit perfect copy of a DVD without decrypting it. Indeed it's easier to copy if you don't decrypt it! The main thing the industry really had at stake in this case is the "zone locking" aka "region code" system. The studios like to release videos in different parts of the world at different times, and to charge different royalty fees in different places. This is called market segmentation. The idea of an open-source player was abhorrent to them, because it makes it easy to buy a DVD in one region and play it in other regions. This is an example of arbitrage. For "normal" products, market segmentation is neither forbidden by law nor protected by law. Mushrooms that cost $4.00 per ounce at the supermarket can be purchased for $4.00 per pound at the Asian grocery down the street. The stores are free to charge whatever they like, and I am free to shop wherever I like. The law is silent on the issue. People who engage in market segmentation are always looking for ways to prevent arbitrage. For instance, airlines make sure tickets are non-transferable, to prevent some ticket agent from stocking up on tickets at "excursion" prices and reselling them to business travelers. Movie studios never had a really good market segmentation system, because -- I can legally own region-1 or region-4 DVDs or some of both, no matter whether I live in the US or Australia. -- I can legally own a region-1 or region-4 DVD player, or both, no matter whether I live in the US or Australia. To be clear: the industry was never able to erect a legal barrier to arbitrage of disks _or_ arbitrage of players. The closest they could come was to make it slightly hard to get a _multi-region_ player. The manufacturers of player hardware had to do the studios' bidding because of the the controversial (to say the least) "anti-circumvention" provisions of the 1998 "DMCA" law. If we somewhat charitably assume the studios knew what they were doing, their whole market segmentation scheme was predicated on the lack of multi-region players _and_ on the assumption that players would remain sufficiently expensive that users couldn't just buy a stack of players, one per region. Less charitably the scheme was predicated on the foolish assumption that nobody would ever discover the possibility of inter-region arbitrage of player hardware. I repeat, the practical issue in this case was never about cheating the studios out of their per-disk royalties on DVDs. At this point you might be wondering about per-player royalties. First, let's dispose of an irrelevant side-issue. The rights to patents on raw DVD hardware are held by a consortium of hardware companies, not movie studios. These people presumably collected their cut when Mr. Johansen purchased his raw DVD drive hardware. So this case was never about patent infringement. The studios arguably hold intellectual property rights in the CSS decoding keys, and they can collect per-player royalties from hw mfgrs who incorporate such keys in their products. AFAIK Mr. Johansen never copied any such key (or even had one he could have copied), so this case was never about illegal copying even on a per-player basis. The truly amazing thing about this case is that the "crime" would not have occured if the studios had used decently-strong crypto. It's ironic that in an age when for cryptographers enjoy a historically-unprecedented lopsided advantage over cryptanalysts, the industry adopted a system that could be cracked by amateurs. This probably wasn't simply due to stupidity in the industry; it is more plausibly attributed to stupidity in the US export regulations which induced the industry to use 40-bit keys. So what we have here are remarkably intrusive laws: under US regulations the crypto must be easy to break, while under US law it is illegal to break it. The latter is dressed up as a "copyright" law even if no illegal copying is involved. This strikes me as analogous to requiring everyone to use pin/tumbler locks with only a single pin, so that all locks can be picked using a popsicle stick, and then arresting people for burglary whenever they are caught carrying a popsicle stick. US law is not the same as Norwegian law. You should not imagine that this case sets a precedent for US courts. Additional remarks: We should try to avoid overwrought arguments about the "morality" of market segmentation and/or arbitrage. Producers and retailers will always try to benefit themselves by segmenting the market; consumers and arbitrageurs will a
