Category Archives: Apple

My Awesome Announcement

I hate tooting my own horn but this is one of the proudest moments in my still short social media law career.  Please forgive the somewhat staged presentation but those who know me know that if I’m going to tell a story I need to make it interesting.

I was at the University of Texas Co-op’s law school location last week browsing the Nutshell books.  (Go with me, people.)  For those of you not in the legal profession, congrats on that by the way, know that the Nutshell series is put out by West Academic (one of the biggest names, if not the biggest name, in the legal publishing world) and is a fantastic resource for an overview of legal issues in a particular topic.  They aren’t casebooks–larger books with often edited cases to look at judicial rulings on certain areas.  Nutshells get right to the point and provide essential information on the overall legal topic.  I used more than one when I was in law school and as a practicing attorney.

But I noticed something was missing from the Nutshell section.  Can you spot it?

Can you spot what's missing?

Can you spot what’s missing?

That’s right, there’s no Social Media Law in a Nutshell.

Let’s fix that, shall we?

I’m proud to announce that I will be writing Social Media Law in a Nutshell for West Academic.  My co-author, Thaddeus Hoffmeister, is a professor of law at the University of Dayton School of Law and has previously published a book on social media in the courtroom.  His knowledge of social media litigation, evidence uses, and applicability in criminal cases will combine with my information on the marketing, content, employment and other social media uses to make this a comprehensive review of social media across all legal channels.

Doing this as a Nutshell book feels perfect right now.  There isn’t a wealth of case law on social media issues, but there are certainly cases out there.  In some areas the most fascinating legal issues are taking place outside of a courtroom so a Nutshell allows us to cover those topics in ways a casebook couldn’t.  Plus, when the movie rights get picked up we all agree that Hugh Jackman can play me.  He’s just a more talented and better looking version of me who can also sing and dance and has a better accent.  The resemblance is uncanny.

I’m not sure when the book will be released but it certainly won’t be until 2015 at the earliest.  Rest assured I’ll let you all know as the process unfolds.

Yesterday I published the 100th blog post here on SoMeLaw Thoughts.  When I look back at how much has changed in social media since I started writing about it, not just my own professional involvement, it’s staggering.  I feel incredibly lucky to take this journey and contribute to the field as well as participate in a line of books that I personally value.  To join the ranks of the Nutshell books blows my mind.

Thanks to all of my readers and friends on social media who have pushed/pulled/heckled me along the way.  An even bigger thanks to my family for putting up with my little side projects.

Now, if you’ll excuse me, I’ve got some writing to do.

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13 Quick Thoughts About The iPhone 6 Plus

You wouldn't like the iPhone 6 Plus when it gets angry.

You wouldn’t like the iPhone 6 Plus when it gets angry.

Because social media and mobile technology are so well connected and because I didn’t want to post a long thing on Facebook, here are some quick thoughts from my own use of my new iPhone 6 Plus.  Most of these are answers to questions I’ve been asked.  If you have some questions, fire away.

  1. Yes, it’s big.  When you put it next to an older model iPhone it seems gigantic. Shockingly, once you start using it away from your old phone it does seem a bit bigger but not much.  I believe a similar technique will be used to shrink Paul Rudd in the Ant-Man movie.
  2. Yes, it fits in my pocket.  Both my jeans pocket (but I don’t wear skinny jeans because a-I’m not skinny and b-ew) and my shirt pocket.  When it sits in my shirt pocket the top bit including the camera does stick out so it might concern people that I’m filming them as I walk by.  Which I’m not.  Probably.
  3. I have no idea if it fits in a suit jacket pocket.  What’s a suit jacket?  I live in Austin and I’m in-house counsel.  That means I’m forbidden by two sets of laws to wear a suit.  Same with this sports coat people mention.
  4. Yes, I can use it one handed.  And that’s without doing the double tap to bring the top stuff down to the bottom, although that helps too.  I don’t know if it’s because I have large hands (I never thought I did) or if it’s because I grew up playing arcade games in the 80s (which required you to dislocate three fingers to play Defender for more than 3 levels–and don’t get me started on my finger speed thanks to Track & Field).  Either way, I can use it just fine with one hand.  A bit slower than the iPhone 5 but that could be the size or just getting used to it.
  5. Set up was super easy.  Maybe it’s because I’m used to switching Apple phones, but the old back-up with encryption (to keep your passwords) and restore from backup worked flawlessly.  I did have a slight hiccup getting the phone to active (you have to call an 866 number for AT&T) and then there was a weird iMessage bug (solved by turning iMessage off and back on, IT Crowd for the win!).
  6. It’s actually faster to use with two hands.  I didn’t think about this but maybe it does show my hands are that big.  I was never able to use my previous iPhones with two hands.  My hands just got in the way–at least to make it any faster than using it one handed.  But now there is plenty of room to navigate so I can move faster with two hands typing.  That’s pretty neat.
  7. The predictive keyboard is very cool.  Having a few options available is nice and it seems to make that damn autocorrect less intrusive.  I hope this doesn’t mean Damn You Autocorrect is going away because those are the best.  My favorite feature–if someone sends you a message with two options (e.g., “This or that?”) then without typing a character the predictive keyboard will give you the choice of “This” or “That.”  Nice touch.
  8. Jitterbug mode sucks, will hopefully improve over time.  You know Jitterbug, the smart phone for “aging Americans?”   Using an iPhone app that hasn’t been redesigned for the 6 Plus’ screen feels a bit like using an app on Jitterbug.  Suddenly everything is blown up to silly levels as iOS scales the apps to fill the space rather than give a big black border like the first iPads did.  My Good For Enterprise app still shows 3.5 emails on the Inbox view only now each one is massive.  Compare that to the native Mail app that shows 6.5 in highly legible type.  I know it’s just a matter of time before the main apps I use update (Good, Facebook, Twitter, etc.) but that can’t come fast enough.
  9. The battery rocks.  This may be a combination of leaving autobrightness on (which works much better than it did with my 5–I constantly had it on brightest mode for most of the day) but I noticed it yesterday when I cranked the brightness as well (before realizing I didn’t need to).  Right now my battery is sitting at 75%.  I’ve had typical usage of it today, perhaps a bit less than others.  But on most days my iPhone 5 would be at 20%-30% by the end of lunch.  75% is amazing.
  10. I still haven’t played with the camera.  I look forward to having fun with slow motion and burst photos and all that, but I’m not a good photographer and I take pictures when needed.  Like if there’s a funny sign.
  11. Native HD screen rocks!  The biggest draw for the Plus over the basic 6 was, for me, the native HD screen.  This screen has all the pixels of a 1080p video stream.  Every other phone has to squeeze it down a bit.  Every other iPad with more pixels is just stretching the image out.  This is fantastic for someone like me who only uses my iPad to watch movies and read comics.  Now I don’t need that for movies (and I’m hoping Comixology gives us full page view on the 6 Plus soon).  I watched some Netflix on it last night and that was awesome.  Holding a 5.5″ screen a foot away from my eyes seems larger than my living room TV which is 57″ but ten feet away.
  12. I’m hopeful this is my iPad replacement.  I don’t like travelling with two devices or having some games/apps on my iPad while my essential stuff is on my iPhone.  My goal is for this device to replace my old phone (check) and my iPad (let’s see, but so far so good).
  13. There is no item 13.  But congrats on making it to the end.

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Filed under Apple, Email, Facebook, Technology, Twitter

Butt That Can’t Be Right!

This is an epic tale of how social media discovered, confirmed, won, then lost, then won again in a creative battle.  This is a story about rap history, creative rewrites, copyright law, and legal corporate theft.  This is a story about butts.

Let’s meet our players.

I Like Big Characters And I Cannot Lie

Sir Mix-A-Lot

Sir Mix-A-Lot

His real name is Anthony Ray but you know him as Sir Mix-A-Lot.  In 1992 he brought us one of the greatest songs of the 90s, if not ever: Baby Got Back.  If you don’t know the song I’m tempted to tell you to never read this blog ever again.  But in the spirit of bringing people together, the same spirit that inspired Sir M to record this song, I will simply embed the video below so you can either hear it the first time or listen to it again.

This well-known song won Mr. A-Lot the 1993 Grammy award against an amazing set of nominees that included Marky Mark (now Mark Wahlberg, two-time Oscar nominee), Queen Latifah (one-time Oscar nominee), LL Cool J (just hosted the Grammys), and MC Hammer (watches the Grammys almost every year).

The video shown above was so controversial in its day that MTV would only play it at night.  Yes, MTV used to show music videos.  Fun trivia about the song: the line “Me so horny” at about 0:53 in the video above was sampled from the movie Full Metal Jacket (it was also sampled in 2 Live Crew’s Me So Horny).

Jonathan Coulton

Jonathan Coulton

Singer-songwriter Jonathan Coulton conducted an experiment in 2005 to determine whether a musician could make a living on the Internet releasing music under the Creative Commons license.  The project, Thing A Week, released a new song every week for free with the hopes that people would donate to support his career.  The song for Week 5 was Baby Got Back but unlike any version ever recorded.  Just so you can compare go back and listen to the original Sir Mix-A-Lot version.  Even if you just listened to it.  Can you ever really listen to it enough?

Now that you’ve made your computer speakers happy happy happy, take a listen to Mr Coulton’s version.

I think we can all agree that’s quite an interpretation.  And it’s awesome.  As he wrote on the blog post releasing the song,

I’ve wanted to cover this song for a long time, because it is excellent – there’s a wonderful message in there for those of you who have big butts. In the proud tradition of many white Americans who came before me I hereby steal and white-ify this thick and juicy piece of black culture.

As the Thing A Week project progressed the songs were gathered together and released as albums.  Most of the songs are complete originals but since this song is based on Sir Mix-A-Lot’s original Coulton acquired a compulsory license to the song in order to release his own version commercially.

Glee

Glee

Glee is a TV show on Fox featuring high school and college students that break out into song a lot.  Kids these days.  It began as a show about a high school choir but quickly turned into a musical drama that just happens to include a choir as a way to get them to sing songs.  Other devices used to get them to sing songs: walking down the hallway, applying make-up in the bathroom, or changing a car’s oil.

On January 24, 2013, Glee aired the “Sadie Hawkins” episode.  The plot doesn’t matter (to this post, anyway) but part of it involved a group trying to recruit a new member by showing how they like to put their own spin on classic songs.  So they invited him to a theater and sang the following version of Baby Got Back.

Sound familiar?  Yes, our three players have now collided in a copyright battle played out on a social media stage.

His Homeboys Tried To Warn Him That Glee Song Sounded So Fam(iliar)

As Coulton explained on his blog, someone pointed him to information on the Internet a few days before the Glee episode aired that included some audio of their Baby Got Back version.  Glee had never spoken to him about the song so he was a bit confused.  The episode aired a few days later and the official Glee track was released.  It didn’t just sound similar, it sounded identical.

A fan of Coulton’s actually put the two tracks together and posted it on Soundcloud, a social media site for sharing audio files.  The results are below and staggering.  The right audio track is the Coulton version, the left audio is from Glee.  Take a listen.

If you have headphones you can alternate ears to confirm that they are two different songs being played, but if you listen to them both at once you’ll notice that not a single note is out of sync.  This is not a case of Glee hearing Coulton’s version and deciding to make their own–they simply took his music and put new vocals over it.  You can hear the difference in singing, but the music is exactly the same.

Coulton’s fans were furious while Coulton was stunned.  How can a sophisticated show such as Glee run by a giant company such as Fox think they can get away with stealing his music without so much as a credit or a thank you?

The problem for Coulton?  What Glee did was absolutely legal, at least from a copyright perspective.

My Copyrighter Don’t Want None Unless He’s Got Rights, Son

When Coulton decided to start selling his version of Baby Got Back along with his original songs he knew that he needed the proper rights to distribute a song based on a protected work like Sir Mix-A-Lot’s version.  At this point he had two potential licensing choices: he could get the automatic compulsory license that is available to everyone or he could try to negotiate an individual deal with Sir Mix-A-Lot (or the song’s rightsholder) to create a derivative work (a new, creative work that is based on another creative work belonging to someone else).  Individual deals like the latter can be difficult and the original rights holder can say no.  Maybe that was why Coulton decided to go with the compulsory license.  Or maybe just because it was easier.

The good news about compulsory licenses is that it is, as the name tells you, compulsory.  There is no negotiating and no issue with the rights holder saying no as US copyright law requires these licenses to be granted for any song recorded.  The bad news is that while they are easy to obtain they are limited in what they protect.  17 USC § 115 covers compulsory licenses and subsection (b) discusses the scope of that license:

A compulsory license includes the privilege of making a musical arrangement of the work to the extent necessary to conform it to the style or manner of interpretation of the performance involved, but the arrangement shall not change the basic melody or fundamental character of the work, and shall not be subject to protection as a derivative work under this title, except with the express consent of the copyright owner.

(Emphasis added)

So the license here is a double edged sword.  For Coulton’s compulsory license to be valid he must say that his song does not change the basic melody or fundamental character of the work–if that is true then all his prior music sales are protected but it also means he has no rights he can assert under copyright.  If he were to instead argue that his song does change the basic melody of the song then he may very well have a derivative work that he could sue Glee for copying–but at the same time he would expose himself to copyright infringement for creating an unlicensed derivative work.  And even taking the calculated risk where he sues Fox with the hopes that Sir Mix-A-Lot doesn’t sue him, a judge may very well believe that Coulton doesn’t have clean hands (the idea that you shouldn’t have done something bad before you come in and sue someone for doing something bad).  Either Coulton has no basis for a lawsuit or he opens himself to defending a massive lawsuit.

I’m Tired Of Searching On Bing, Saying Copyright’s My Only Thing

Here’s the great thing about a songwriter who made a living out of releasing music on the Internet and built an incredibly loyal fan base–Coulton knew that there are other ways to fight this kind of legal theft.  As he documented on his blog, Coulton re-released his song with the brilliant title of Baby Got Back (In the Style of Glee).  Brilliant because anyone who, for example, searches for “Glee Baby Got Back” on Amazon’s MP3 store will see the following results.

Ironically, Glee's version costs 30 pieces of silver...I mean cents...more.

Appropriately, Glee’s version costs 30 pieces of silver…I mean cents…more.

Not only can he try and get some of the credit for his creative efforts in terms of sales, but his fans have also taken the cause to the song reviews as well.  As of the time I’m writing this post, his track on Amazon has 22 ratings for a 5 star average.  The Glee version has 13 reviews for an average of 1 star.  On iTunes the numbers are even more striking.  Coulton’s version has 3,322 ratings for an average of 5 stars.  Glee’s version has 2,614 ratings for an average of 1.5 star.  And you can guess what all the reviews say.  (Or you can search yourself because I can’t direct link to iTunes reviews)

So They Toss The Lawsuit And Leave It, But Coulton Pulls Up Quick To Retrieve It

There may also be alternative legal theories that Coulton could pursue against Glee and Fox, but at the core it may be difficult to succeed in an end-run around copyright laws (which it would be).  But even though Coulton didn’t get the credit or acknowledgement from Glee he may still emerge the victor if enough people hear the story.

Personally, I first saw the Glee version (yes, I watch–is that really surprising given that I did a blog post about what social media could learn from Les Miserables?) before learning the full story.  After learning the facts I can see that Glee may be in the right, legally speaking, but that doesn’t make them right.  So I bought the Coulton album and even though I’m a temporary Nielsen household I’m not watching Glee until my Nielsen gig is up.

Coulton made his career on individuals supporting his creative efforts thanks to social media.  It’s only fitting that social media rallied to his defense and I’m happy to be one more person to tell Coulton “I’ve got your back.”

No, not that back.  Sheesh, people.

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Filed under Amazon, Apple, Celebrities, Copyright, Social Content, Social Platforms

How I Cut An Apple Terms of Service 62% While Keeping All The Legal Stuff

We’ve talked about the problem with terms and conditions a few times already.  And I’ve even discussed some recent efforts to summarize those terms such as TOS;DR.  I still don’t think the current attempts at a solution (providing short summaries or visual cues) are very good.

I think the solution is fairly simple: lawyers need to write better terms and conditions.

From a lawyer’s perspective there are two important goals for a site’s terms and conditions: how well they defend the company against a lawsuit and how enforceable those terms and conditions will be.  I think, however, there should be a third factor that lawyers should factor into the terms and conditions they draft: do the terms help foster a community?  An incredibly detailed terms and conditions may defend a company against lawsuits that exist today or can be imagined in the future and several levels of user acknowledgement (must read, multiple acceptance checkboxes, a text area to type I TOTALLY AGREE WITH EVERY TERM IN THIS BINDING CONTRACT, etc.) may ensure the terms will be upheld by any court in the land.  But will people read it?  Will users like the hoops you’ve forced them to jump through?  Will they even sign up?

There’s an easier solution: cut to the chase.  Be open and honest about what you’re going to do and state it simply.  You may still lose some people who just want to click through, but you will have a far better argument that you were presenting your terms in clear language that the user could understand.  And for those that do read your document you’ve started building a relationship that may help your platform.

Let’s use an example to illustrate.  Apple has released the latest version of iOS but even if you didn’t upgrade your iDevice’s operating system you may have encountered some new terms and conditions this past week.  One of them is Game Center.  If you play any games on iOS that use Game Center you’ll know that this is Apple’s service that keeps track of high scores or individual achievements within a game.  You can then compare that with your friends that you have connected with on Game Center.  Several games also allow multiplayer games via Game Center.

Game Center updated its terms the same day as iOS 6 so the first time you used a game that had a Game Center connection you were prompted to review and accept the terms.  I’m guessing most people blindly did so.  I read them, but that’s what I do.  It’s a document that has 3,289 words.  Bear in mind these are not the terms and conditions for the operating system or iTunes or even the App Store.  This is not the Apple privacy policy.  These are just the terms for the service that some of your applications use to share high scores and track achievements.

I read this document and instantly thought this is a perfect example for how to do terms better.  So I set about rewriting it.  I cut it from the original 3,289 words down to 1,253 words.  That’s a 62% reduction while keeping all the legal topics intact.  Here’s how I did it.

First, just so we have a basis for comparison, here’s the word cloud of the original terms.

Can you find the words “Game Center?” After all, that’s what these terms cover.  No?  Center is about the S in Service.  Game is over the far right.  Their size shows how rarely they are used.

I think these terms are understandable, but tedious.  And these are terms for a gaming service!

Let’s change that.

Here’s how the original starts:

Game Center
TERMS OF SERVICE

GAME CENTER
THE LEGAL AGREEMENT (“AGREEMENT”) SET OUT BELOW GOVERNS YOUR USE OF THE GAME CENTER SERVICE. IT IS IMPORTANT THAT YOU READ AND UNDERSTAND THE FOLLOWING TERMS. BY CLICKING “AGREE,” YOU ARE AGREEING THAT THESE TERMS WILL APPLY IF YOU CHOOSE TO ACCESS OR USE THE SERVICE. IF YOU ARE UNDER THE AGE OF MAJORITY, YOU SHOULD REVIEW THIS AGREEMENT WITH YOUR PARENT OR GUARDIAN TO MAKE SURE THAT YOU AND YOUR PARENT OR GUARDIAN UNDERSTAND IT.

Apple Inc. is the provider of the Game Center service (the “Service”), which permits you to engage in game related activities, including, but not limited to, participation in leader boards, multi-player games, and tracking achievements. The Service may not be available in all areas. Use of the Service requires compatible devices, Internet access, and certain software (fees may apply); may require periodic updates; and may be affected by the performance of these factors.

To use the Service, you cannot be a person barred from receiving the Service under the laws of the United States or other applicable jurisdictions, including the country in which you reside or from where you use the Service. By accepting this Agreement, you represent that you understand and agree to the foregoing.

Fairly standard opening for a long legal agreement like this.  But basically they’re trying to cover the following points: this is an agreement that you must agree to for you to use the service; if you’re a minor you need to have an adult sign it; what Game Center does; what you need for Game Center; and that you are not barred from the service (for whatever reason, a sort of legal catch-all).  So how about we use the following instead:

Game Center
TERMS OF SERVICE

GAME CENTER
HEY YOU!  BEFORE YOU USE GAME CENTER YOU NEED TO REVIEW THESE TERMS AND CONDITIONS.  WE’LL KEEP IT BRIEF, BUT THIS IS IMPORTANT BECAUSE IT’S A LEGAL AGREEMENT.  IF YOU ARE UNDER 18 THEN YOUR PARENTS OR GUARDIANS NEED TO ACCEPT IT.  WE’RE GOING TO STOP YELLING NOW, OKAY?

Game Center provides leader boards, multi-player game functionality, and achievement tracking for applications on supported devices.  We think it’s awesome.  It requires Internet access (which probably costs money), software that uses the service (which also may cost money), and may need to be updated from time to time.  Game Center performance can be impacted by all of these things.

To use Game Center you need to agree to this document and there cannot be a legal reason preventing you from using the service (such as a law or court order saying you can’t use something as awesome as Game Center).

Yes, I kept the all caps in the new version because courts like it when you make text stand out, but I used it to start setting the tone.  I’ve cut that section from 204 words to 151.  Don’t worry, we’ll make more headway in later sections.  Next for the original terms:

YOUR ACCOUNT

As a registered user of the Service, you may establish an account (“Account”) in accordance with the Usage Rules, below. Don’t reveal your Account information to anyone else. You are solely responsible for maintaining the confidentiality and security of your Account and for all activities that occur on or through your Account, and you agree to immediately notify Apple of any security breach of your Account. Apple shall not be responsible for any losses arising out of the unauthorized use of your Account.

You agree to provide accurate and complete information when you register with, and as you use, the Service, and you agree to update your registration data to keep it accurate and complete. You agree that Apple may store and use your registration data to maintain your Account. You may not create an account for anyone other than yourself without that person’s permission.

This part isn’t too long but it can be made a bit friendlier.  It also includes the bizarre statement to not reveal Account information to others–that’s bizarre because that would include your username which you have to tell other people if you’re going to connect with them.  I’ve replaced this with the following:

YOUR ACCOUNT

Once you make an account with Game Center, keep it secure.  If someone gets access to your account, let us know.  We’ll try and help you but we aren’t responsible for someone else using your account.  On that note, you can’t make an account for someone else unless they let you.  That’s true in other places besides Game Center too.

We will store and use your registration data to maintain the account, so be sure to keep it up to date.  And don’t lie in your account information.  Because lying is cheating and cheaters never win in the long run.

Next up is the very long Usage Rules.  I’ve pasted the entire section here but skip to the end for my summary.

USAGE RULES

You agree to use the Service in compliance with these usage rules. Apple reserves the right to modify the usage rules at any time.

You are authorized to use the Service only for personal, noncommercial use.

You agree not to, or attempt or assist another person to, violate, circumvent, reverse-engineer, decompile, disassemble, or otherwise tamper with the Service.

You agree that you will NOT use the Service to:

a. upload, download, post, email, transmit, store or otherwise make available any content that is unlawful, harassing, threatening, harmful, tortious, defamatory, libelous, abusive, violent, obscene, vulgar, invasive of another’s privacy, hateful, racially or ethnically offensive, or otherwise objectionable;

b. stalk, harass, threaten or harm another;

c. if you are an adult, request personal or other information from a minor (any person under the age of 18 or such other age as local law defines as a minor) who is not personally known to you, including but not limited to any of the following: full name or last name, home address, zip/postal code, telephone number, picture, email address, or the names of the minor’s school, church, athletic team or friends;

d. pretend to be anyone, or any entity, you are not — you may not impersonate or misrepresent yourself as another person (including celebrities), entity, another Service participant, an Apple employee, or a civic or government leader, or otherwise misrepresent your affiliation with a person or entity, (Apple reserves the right to reject or block any nickname which could be deemed to be an impersonation or misrepresentation of your identity, or a misappropriation of another person’s name or identity);

e. engage in any copyright infringement or other intellectual property infringement, or disclose any trade secret or confidential information in violation of a confidentiality, employment, or nondisclosure agreement;

f. post, send, transmit or otherwise make available any unsolicited or unauthorized email messages, advertising, promotional materials, junk mail, spam, or chain letters, including, without limitation, bulk commercial advertising and informational announcements;

g. forge any TCP-IP packet header or any part of the header information in an email or a news group posting, or otherwise put information in a header designed to mislead recipients as to the origin of any content transmitted through the Service (“spoofing”);

h. upload, post, email, transmit, store or otherwise make available any material that contains viruses or any other computer code, files or programs designed to harm, interfere with or limit the normal operation of the Service (or any part thereof), or any other computer software or hardware;

i. interfere with or disrupt the Service (including accessing the Service through any automated means, like scripts or web crawlers), or any servers or networks connected to the Service, or any policies, requirements or regulations of networks connected to the Service (including any unauthorized access to, use or monitoring of data or traffic thereon);

j. plan or engage in any illegal activity; and/or gather and store personal information on any other users of the Service to be used in connection with any of the foregoing prohibited activities;

k. cheat or otherwise modify the Service or the game experience to effect an advantage for one player over another.

This is a nice list of things you cannot do on Game Center, but there’s two sections that matter.  I’ve made them bold so you can see them (they aren’t bold in the original).  So after you’ve read this really long list you’re left with two big items: Apple can change these rules at any time and you can’t do anything objectionable.  Objectionable is just another way of saying things Apple doesn’t like.  So even if you avoid doing the things on this list they may find it violates the usage rules.  In that case, let’s be honest about it.

USAGE RULES

You can use Game Center for your personal, non-commercial use.  And there’s a lot you can do on Game Center.  But you cannot do any of the following:

  • Anything illegal (that includes breaking intellectual property laws)
  • Pretend to be someone else
  • Stalk or harass another player or try to get personal information from a minor you don’t know
  • Anything that could interfere with Game Center (including cheating and any attempts to reverse-engineer Game Center functions)
  • Any other activities not contributing to the Game Center community

This new version keeps the same broad swaths of prohibits activity and the spirit of the original usage rules but cuts a lot of text as well.  The original Usage Rules section was 525 words.  My version is 87 words.  Let’s move on to Privacy.

PRIVACY

The Service is subject to Apple’s Privacy Policy at http://www.apple.com/privacy. As set out in the Privacy Policy, when you use the Service, such as inviting other users to join the Service, participating in leader boards, enabling invitations or multiplayer functionality, or displaying status messages, the personal information you share is visible to other users and can be read, collected, or used by them. You are responsible for the personal information you choose to submit in these instances. When playing a game that supports multiplayer functionality, other users accessing the Service from within the same game on the same Wi-Fi network, local area network or within range of Bluetooth will be able to see that you are nearby, and see your nickname and photo, or full profile if you have a friend relationship with such user. If you do not want to be visible to other users nearby, you must adjust the settings on your device by launching the Game Center app, tapping Account, tapping View Account, and sliding the Game Invites switch “off”; or on your Mac, by launching the Game Center application, tapping Account, and unchecking “Allow friends to invite you to play games”. If you list your name or other personal information in a status message, that information is public. If you choose to have your public profile set to “on”, other users of the Service can see your full profile, including your full name, your activity (such as the games you have played and when you played them), your scores, and your achievements, and you can be recommended as a friend to other users. If you choose to have your public profile set to “off”, only users with whom you have established a friend relationship can see your full profile, and you will not be recommended to others; only your nickname and photo will be visible to users who are not friends. The full name associated with your Apple ID will also be shared with those users to whom you send, or from whom you accept, a friend request, such as in the Friends list, the Friends leaderboards, and the pending friends requests lists; and we may recommend games that you have played to your friends. If you prefer not to share your full name or profile with friends, you should remove that friend by tapping the “Unfriend” button at the bottom of that friend’s screen in Game Center.

If you wish to stop sharing information with other users and the Service, see http://www.apple.com/support/.

Some aspects of the Service are not available to children under 13, such as features that allow users to disclose personally identifiable information. Please enable parental controls to restrict access to content as appropriate.

Apple has a separate privacy policy which is linked here and then the rest of this section is actually a good description of what is being shared and how to disable it.  But it seems odd to have a how-to section in the middle of terms and conditions–this is even stranger coming from Apple, a company who prides itself on usability design.  I can’t imagine any usability guidelines that say a good place for teaching people how to change privacy settings is in the middle of terms and conditions.  So let’s cut this down to the necessary elements:

PRIVACY

Apple has a Privacy Policy at http://www.apple.com/privacy that applies here.  If you are under 13 then you can’t access some features of Game Center and we encourage all parents to use parental controls to set appropriate limits for their children.

When you use Game Center you send out information about yourself which may include your username, photo, or other items.  If you want to modify what you share or stop sharing information altogether, check the Account section of the Game Center application.  If you need additional help then please visit us at http://www.apple.com/support/.

This new section puts the focus back on the application–since if that’s hard to control what information you share I’m not sure how the original section helps.  If the application helps people, great.  If not, point them to a more robust source of information.  But terms and conditions are not a good place for an instruction manual.  And we cut the original 452 words down to 94.

After the original Privacy section comes four sections that I think can be combined into one.  Here are the original terms, but feel free to skip to the end for a summary and a new version.

SUBMISSIONS TO THE SERVICE

The Service may offer interactive features that allow you to submit materials (including links to third-party content) on areas of the Service accessible and viewable by the public. You agree that any use by you of such features, including any materials submitted by you, shall be your sole responsibility, shall not infringe or violate the rights of any other party or violate any laws, contribute to or encourage infringing or otherwise unlawful conduct, or otherwise be obscene, objectionable or in poor taste. You also agree that you have obtained all necessary rights and licenses to make such submissions. You agree to provide accurate and complete information in connection with your submission of any materials on the Service. You hereby grant Apple a worldwide, royalty-free, non-exclusive license to use such materials as part of the Service or in providing or marketing the Service, without any compensation or obligation to you. Apple reserves the right to not post or publish any materials and to remove or edit any material, at any time in its sole discretion without notice or liability.

Apple has the right, but not the obligation, to monitor any materials submitted by you or otherwise available on the Service, to investigate any reported or apparent violation of this Agreement, and to take any action that Apple in its sole discretion deems appropriate, including, without limitation, termination hereunder or under our Copyright Policy (http://www.apple.com/legal/copyright.html).

THIRD-PARTY MATERIALS

Certain content, and services available via the Service may include materials from third parties. Apple may provide links to third-party web sites as a convenience to you. You agree that Apple is not responsible for examining or evaluating the content or accuracy and Apple does not warrant and will not have any liability or responsibility for any third-party materials or web sites, or for any other materials, products, or services of third parties. You agree that you will not use any third-party materials in a manner that would infringe or violate the rights of any other party and that Apple is not in any way responsible for any such use by you.

OBJECTIONABLE MATERIAL

You understand that by using the Service, you may encounter material that you may deem to be offensive, indecent, or objectionable, which content may or may not be identified as having explicit material. Nevertheless, you agree to use the Service at your sole risk and Apple shall have no liability to you for material that may be found to be offensive, indecent, or objectionable. Ratings and descriptions are provided for convenience, and you agree that Apple does not guarantee their accuracy.

INTELLECTUAL PROPERTY

You agree that the Service, including but not limited to graphics, user interface, audio clips, video clips, editorial content, and the scripts and software used to implement the Service, contains proprietary information and material that is owned by Apple and/or its licensors, and is protected by applicable intellectual property and other laws, including but not limited to copyright. You agree that you will not use such proprietary information or materials in any way whatsoever except for use of the Service in compliance with this Agreement. No portion of the Service may be reproduced in any form or by any means, except as expressly permitted in these terms. You agree not to modify, rent, lease, loan, sell, distribute, or create derivative works based on the Service, in any manner, and you shall not exploit the Service in any unauthorized way whatsoever, including, but not limited to, by trespass or burdening network capacity.

Notwithstanding any other provision of this Agreement, Apple and its licensors reserve the right to change, suspend, remove, or disable access to any products, content, or other materials comprising a part of the Service at any time without notice. In no event will Apple be liable for making these changes. Apple may also impose limits on the use of or access to certain features or portions of the Service, in any case and without notice or liability.

All copyrights in and to the Service (including the compilation of content, postings, links to other Internet resources, and descriptions of those resources) and related software are owned by Apple and/or its licensors, who reserve all their rights in law and equity. THE USE OF THE SOFTWARE OR ANY PART OF THE SERVICE, EXCEPT FOR USE OF THE SERVICE AS PERMITTED IN THIS AGREEMENT, IS STRICTLY PROHIBITED AND INFRINGES ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS AND MAY SUBJECT YOU TO CIVIL AND CRIMINAL PENALTIES, INCLUDING POSSIBLE MONETARY DAMAGES, FOR COPYRIGHT INFRINGEMENT.

Apple, the Apple logo, and other Apple trademarks, service marks, graphics, and logos used in connection with the Service are trademarks or registered trademarks of Apple Inc. in the U.S. and/or other countries. Other trademarks, service marks, graphics, and logos used in connection with the Service may be the trademarks of their respective owners. You are granted no right or license with respect to any of the aforesaid trademarks and any use of such trademarks.

Did your eyes glaze over?  Yeah, that was painful for me too.  The first three sections deal with content on Game Center–it’s a bit different from the Usage Rules since that’s about activity and this is about what is actually posted.  The fourth section covers Intellectual Property generally but has some overlap with those first three sections.  So here’s where I propose a major change and combining these four sections into one:

CONTENT

There’s a lot of content available from Game Center including reviews and product information and achievements and bacon (kidding, but that would be awesome).  You must only post content to Game Center that you have the right to use and where you give us a free, worldwide, perpetual license to use that content in any way we choose in providing Game Center functionality or marketing Game Center.

When you see content on Game Center you should know that it may have been provided by someone other than Apple.  We may review this content but we might not, so we can’t say if the content is accurate and you cannot hold us responsible for anything related to that content.  You cannot use content that someone else posted on Game Center as your own without their permission (and that includes all of Apple’s intellectual property such as our graphics, audio clips, video clips, and other protected elements).  And if you see someone else doing that with your content then contact us according to the terms of our Copyright Policy at http://www.apple.com/legal/copyright.html.

Game Center is a big place so you may come across some content you find objectionable.  Your best option is to just move along but if you want to contact us about it we may take a look as well.  If we see something that we decide is objectionable or not in the best interests of the Game Center community, we have sole discretion to take it down.

OH BOY HERE COMES THE ALL CAPS AGAIN.  SORRY, BUT WE WANT YOU TO TAKE THIS SERIOUSLY BECAUSE WE TAKE INTELLECTUAL PROPERTY SERIOUSLY.  YOU CAN ONLY USE GAME CENTER SOFTWARE AND SERVICES AS PERMITTED IN THIS AGREEMENT.  IF YOU DO ANYTHING ELSE WITH IT WE MAY SUE YOU FOR VIOLATING OUR INTELLECTUAL PROPERTY RIGHTS.  SERIOUSLY, WE’VE DONE IT BEFORE AND WE GOT A BILLION DOLLARS.

Here I’ve cut out a lot of specific examples with broader statements in the interest of keeping the terms short and understandable.  Here we’ve gone from four sections and 831 words into one section with 313 words.

Next up, comes a few more sections that I think can be combined.  The original:

TERMINATION

If you fail, or Apple suspects that you have failed, to comply with any of the provisions of this Agreement, Apple, at its sole discretion, without notice to you may: (i) terminate this Agreement and/or your Account; and/or (ii) terminate the license to the Service; and/or (iii) preclude access to the Service (or any part thereof).

Apple reserves the right to modify, suspend, or discontinue the Service (or any part or content thereof) at any time with or without notice to you, and Apple will not be liable to you or to any third party should it exercise such rights.

DISCLAIMER OF WARRANTIES; LIABILITY LIMITATION

APPLE DOES NOT GUARANTEE, REPRESENT, OR WARRANT THAT YOUR USE OF THE SERVICE WILL BE UNINTERRUPTED OR ERROR-FREE, AND YOU AGREE THAT FROM TIME TO TIME APPLE MAY REMOVE THE SERVICE FOR INDEFINITE PERIODS OF TIME, OR CANCEL THE SERVICE AT ANY TIME, WITHOUT NOTICE TO YOU.

YOU EXPRESSLY AGREE THAT YOUR USE OF, OR INABILITY TO USE, THE SERVICE IS AT YOUR SOLE RISK. THE SERVICE AND ALL PRODUCTS AND SERVICES DELIVERED TO YOU THROUGH THE SERVICE ARE (EXCEPT AS EXPRESSLY STATED BY APPLE HEREIN) PROVIDED “AS IS” AND “AS AVAILABLE” FOR YOUR USE, WITHOUT WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND NONINFRINGEMENT. BECAUSE SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, THE ABOVE EXCLUSION OF IMPLIED WARRANTIES MAY NOT APPLY TO YOU.

IN NO CASE SHALL APPLE, ITS DIRECTORS, OFFICERS, EMPLOYEES, AFFILIATES, AGENTS, CONTRACTORS, OR LICENSORS BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, PUNITIVE, SPECIAL, OR CONSEQUENTIAL DAMAGES ARISING FROM YOUR USE OR INABILITY TO USE THE SERVICE OR FOR ANY OTHER CLAIM RELATED IN ANY WAY TO YOUR USE OF THE SERVICE, INCLUDING, BUT NOT LIMITED TO, ANY ERRORS OR OMISSIONS IN ANY CONTENT, OR ANY LOSS OR DAMAGE OF ANY KIND INCURRED AS A RESULT OF THE USE OF ANY CONTENT (OR PRODUCT) POSTED, TRANSMITTED, OR OTHERWISE MADE AVAILABLE VIA THE SERVICE, EVEN IF ADVISED OF THEIR POSSIBILITY. BECAUSE SOME STATES OR JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR THE LIMITATION OF LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES, IN SUCH STATES OR JURISDICTIONS, APPLE’S LIABILITY SHALL BE LIMITED TO THE EXTENT PERMITTED BY LAW.

APPLE SHALL USE REASONABLE EFFORTS TO PROTECT MATERIALS OR INFORMATION SUBMITTED BY YOU IN CONNECTION WITH THE SERVICE, BUT YOU AGREE THAT YOUR SUBMISSION OF SUCH INFORMATION IS AT YOUR SOLE RISK, AND APPLE HEREBY DISCLAIMS ANY AND ALL LIABILITY TO YOU FOR ANY LOSS OR LIABILITY RELATING TO SUCH INFORMATION IN ANY WAY.

APPLE DOES NOT REPRESENT OR GUARANTEE THAT THE SERVICE WILL BE FREE FROM LOSS, CORRUPTION, ATTACK, VIRUSES, INTERFERENCE, HACKING, OR OTHER SECURITY INTRUSION, AND APPLE DISCLAIMS ANY LIABILITY RELATING THERETO.

WAIVER AND INDEMNITY

BY USING THE SERVICE, YOU AGREE TO INDEMNIFY AND HOLD APPLE, ITS DIRECTORS, OFFICERS, EMPLOYEES, AFFILIATES, AGENTS, CONTRACTORS, AND LICENSORS HARMLESS WITH RESPECT TO ANY CLAIMS ARISING OUT OF YOUR BREACH OF THIS AGREEMENT, YOUR USE OF THE SERVICE, OR ANY ACTION TAKEN BY APPLE AS PART OF ITS INVESTIGATION OF A SUSPECTED VIOLATION OF THIS AGREEMENT OR AS A RESULT OF ITS FINDING OR DECISION THAT A VIOLATION OF THIS AGREEMENT HAS OCCURRED. THIS MEANS THAT YOU CANNOT SUE OR RECOVER ANY DAMAGES FROM APPLE, ITS DIRECTORS, OFFICERS, EMPLOYEES, AFFILIATES, AGENTS, CONTRACTORS, AND LICENSORS AS A RESULT OF ITS DECISION TO REMOVE OR REFUSE TO PROCESS ANY INFORMATION OR CONTENT, TO WARN YOU, TO SUSPEND OR TERMINATE YOUR ACCESS TO THE SERVICE, OR TO TAKE ANY OTHER ACTION DURING THE INVESTIGATION OF A SUSPECTED VIOLATION OR AS A RESULT OF APPLE’S CONCLUSION THAT A VIOLATION OF THIS AGREEMENT HAS OCCURRED. THIS WAIVER AND INDEMNITY PROVISION APPLIES TO ALL VIOLATIONS DESCRIBED IN, RESULTING FROM, OR CONTEMPLATED BY THIS AGREEMENT.

These sections cover some broad topics WITH A LOT OF CAPS (again, because some courts require that).  But all these topics deal with some specific lawsuits so I think they can be addressed in one section.  My new version:

THINGS FOR WHICH YOU CANNOT SUE US

If you violate this agreement we’re totally cutting you off from Game Center.  Serves you right and you can’t sue us for that.  We may also change or end Game Center at some time; if we do we won’t provide notice and you cannot sue us about that either.

CAPS LOCK LOOKED LONELY SO WE’RE GOING ALL CAPS AGAIN.  WE DO NOT WARRANT, GUARANTEE, OR PROMISE THAT GAME CENTER WILL BE ERROR-FREE, UNINTERRUPTED, OR HACK-PROOF.  GAME CENTER IS PROVIDED TO YOU “AS IS” AND “AS AVAILABLE” AND WE MAKE NO IMPLIED OR EXPRESS WARRANTIES OF ANY KIND REGARDING YOUR USE OF GAME CENTER OR THE INFORMATION YOU PROVIDE TO GAME CENTER.  WE’LL MAKE REASONABLE EFFORTS TO PROTECT YOUR DATA AND KEEP GAME CENTER RUNNING, BUT WE CAN’T PROMISE ANYTHING BEYOND THAT.  SO YOU CAN’T SUE US FOR ANY GAME CENTER WARRANTIES EITHER.

APPLE’S (AND WE MEAN ANYONE CONNECTED WITH OR TO APPLE) LIABILITY WILL BE LIMITED TO THE FULLEST EXTENT OF THE LAW.  IN SOME JURISDICTIONS THIS MEANS YOU CANNOT SUE US FOR ANY DAMAGES (DIRECT, INDIRECT, CONSEQUENTIAL, PUNITIVE, AND ANYTHING ELSE YOU CAN THINK OF).  IN OTHER JURISDICTIONS THE MAXIMUM LIMITATIONS SHALL BE APPLIED IN APPLE’S FAVOR. SO EVEN IF YOU SUE US YOU MAY GET NOTHING.

YOU ALSO AGREE THAT YOU CANNOT SUE US IF YOU VIOLATE THIS AGREEMENT AND YOU CANNOT SUE US FOR THE ACTIONS WE TAKE TO INVESTIGATE IF YOU HAVE VIOLATED THIS AGREEMENT.  AND IF WE GET SUED OVER SOMETHING YOU DID, YOU MUST INDEMNIFY US AND HOLD APPLE HARMLESS FOR ALL RELATED CLAIMS.

Yes, that’s a lot of screaming, but those are some big waivers by the user so it’s worth pointing them out.  Still, I’ve managed to cut the original 636 words down to 267.

Home stretch now.  Here’s the end of the original:

CHANGES

Apple reserves the right at any time to modify this Agreement and to impose new or additional terms or conditions on your use of the Service. Such modifications and additional terms and conditions will be effective immediately and incorporated into this Agreement. Your continued use of the Service will be deemed acceptance thereof.

MISCELLANEOUS

This Agreement constitutes the entire agreement between you and Apple and governs your use of the Service, superseding any prior agreements between you and Apple regarding the Service. You also may be subject to additional terms and conditions that may apply when you use affiliate services, third-party content, or third-party software. If any part of this Agreement is held invalid or unenforceable, that portion shall be construed in a manner consistent with applicable law to reflect, as nearly as possible, the original intentions of the parties, and the remaining portions shall remain in full force and effect. Apple’s failure to enforce any right or provisions in this Agreement will not constitute a waiver of such or any other provision. Apple will not be responsible for failures to fulfill any obligations due to causes beyond its control.

The Service is operated by Apple from its offices in the United States. You agree to comply with all local, state, federal, and national laws, statutes, ordinances, and regulations that apply to your use of the Service. All transactions on the Service are governed by California law, without giving effect to its conflict of law provisions. Your use of the Service may also be subject to other laws. You expressly agree that exclusive jurisdiction for any claim or dispute with Apple or relating in any way to your use of the Service resides in the courts of the State of California. Risk of loss and title for all electronically delivered transactions pass to the purchaser in California upon electronic transmission to the recipient. No Apple employee or agent has the authority to vary this Agreement.

Apple may send you notice with respect to the Service by sending an email message to your Account email address or a letter via postal mail to your Account mailing address, or by a posting on the Service. Notices shall become effective immediately.

Apple reserves the right to take steps Apple believes are reasonably necessary or appropriate to enforce and/or verify compliance with any part of this Agreement. You agree that Apple has the right, without liability to you, to disclose any Registration Data and/or Account information to law enforcement authorities, government officials, and/or a third party, as Apple believes is reasonably necessary or appropriate to enforce and/or verify compliance with any part of this Agreement (including but not limited to Apple’s right to cooperate with any legal process relating to your use of the Service and/or products, and/or a third-party claim that your use of the Service and/or products is unlawful and/or infringes such third party’s rights).

Last updated: September 19, 2012

And here’s my take:

ALL THE REST

We may change this Agreement in the future.  We’ll let you know if we do and you can keep using the service to show you agree to the new terms.  This is the entire agreement between us for Game Center but there may be some other terms and conditions that apply when you use Game Center.

If any part of this Agreement is held invalid or unenforced by a court, the rest of the Agreement shall be construed in a way to uphold the intentions of the original Agreement.  If we decided not to pursue our rights under part of this Agreement we are not waiving any other rights.

We are not responsible for failing to fulfill any obligations for reasons outside our control.

Any lawsuits over this Agreement shall be filed in our home jurisdiction and shall be construed under California law.

If we need to send you a notice we’ll email your account or post something on Game Center.  It will be effective the moment we post it.

Finally, and thanks for sticking with us, if necessary Apple will take steps to verify your compliance with this Agreement.  That could include providing information to law enforcement or our investigators (which may include someone outside of Apple).  You agree to let us take any steps we deem reasonable and necessary.

Now go play some games.

Last updated: September 21, 2012

Not a huge cut here.  The original was 489 words and the new version is 234 words.  But it’s easier to read, I think.

So, all in we’ve cut a 3,289 word agreement down to 1,253.  That’s a 62% reduction.  It could be cut even more but doing so would require more strategic changes because substantive areas would be eliminated.  My exercise here was to keep all of the substance in the agreement but change how it was presented.  Here’s the word cloud for my version:

Can you find “Game Center” in my word cloud?

Although I inserted some content to make this more conversational, there’s more that could be done, but that would also add length and that wasn’t the goal here.

There’s certainly an argument that my language provides less coverage and even at 1,200+ words it may not be read.  But I hope this shows you a way that terms and conditions can be made in a friendlier way than they are today.

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Filed under Apple, Consumer Protection, Copyright, Privacy, Social Platforms, Terms and Conditions

US v. Apple: Why It Matters To Social Media

The Internet was abuzz last week over the news that the Department of Justice filed suit against Apple and six book publishers for conspiring to raise ebook prices.  It’s amazing to think that just over a decade ago you couldn’t find an article that spoke about Apple without using the word “beleaguered” and Microsoft was the subject of lawsuits over anti-competitive actions.  Now Apple is one of the most valuable companies in the world and it’s their time to face the Department of Justice.

As with any Apple story, there is a ton of blog and media coverage.  In this case there are articles saying that Apple will win and others saying they’ll lose.  I’m not going to link them here, they’re easy to find.  What I will say is that so far we only have half the story, the DoJ’s side.  And as with any lawsuit, the initial complaint should be a compelling story.  In this case it’s a doozy.  Reading the DoJ’s complaint is a legal page turner, which isn’t a very high standard.  But I wanted to present the overall story so you can understand the lawsuit and why it matters to social media practitioners.  Sorry for the length here, but hopefully you’ll find this case as fascinating as I do.  The original complaint is 36 pages, so I’m saving you a little bit of time.

I. The Law and Markets

Even though Apple and the publishers have been sued under US laws that prohibit anticompetitive actions, this is not a lawsuit about a monopoly.  The two tend to be confused by the media (and some “legal experts” who have blogged that Apple can’t lost this lawsuit because Amazon still controls the majority of ebook sales…completely missing the point).  Here, the US has sued Apple under section 1 of the Sherman Act which states, in part:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.

The DoJ alleges that Apple and the six publishers entered into a conspiracy that restrained trade.  That phrase “restraint of trade” is Legalese for harmed competition–a cornerstone of laws that protect competition.  The analysis will not be on whether a competitor (e.g., Amazon) was harmed, but whether the entire market where competition takes place was harmed.  Has the DoJ laid out a case that shows competition was harmed?  Let’s see.

To understand the DoJ’s case we must first learn a little about how books are sold in our current market.  To do so, I’m linking to some great illustrations done on the Macstories blog post Understanding The Agency Model And The DOJ’s Allegations Against Apple And Those Publishers.  That blog post focuses more on a timeline of certain events and explaining these models while I’m trying to tell more of the story, so it may be worth checking it out after.  But here is the traditional wholesale book selling model.

Wholesale

In this model, the publisher sells to the bookstore and the bookstore sells to the customer.  You can see the example numbers in the slide but the important thing to know here is that the Retailer (bookstore) is free to sell the book for any price they want.  If they buy a book from a publisher for $11 they can turn around and sell it to Joe Consumer for $25 or $50 or $1 or $1,000.  Whether that book will sell at that price is up to the retailer to determine, but they are technically free to make those changes.  That’s why you have large book stores who sell books at 30% or 40% off cover price–they are still making a slight profit off these books which scales with their large volume.

When Amazon brought the ebook market to the mainstream they used the wholesale model.  They bought ebooks from the publisher and then sold them to the customer at a price set by Amazon.  Because ebooks cost less to manufacture and distribute, their wholesale cost from the publisher was lower than a print book.  But since publishers still wanted to make healthy profits, they didn’t price the ebooks at $1 or $2 for new books by popular authors.  Instead, they typically charged $9 to $10 for the ebooks.

Amazon wanted to make a splash in the ebook market so they priced all bestsellers at $9.99.  That splash worked.  In only a few years, ebook sales accounted for 10% of all fiction book sales in the US.

This scared the book publishers.  No, not scared; it terrified them.  First, publishers were faced with declining revenue.  When they sell a brand new book by a popular author it could be anywhere from $11 to $14 or more for the physical version.  The electronic version was $2 to $6 less.  So for every ebook that was sold instead of a physical copy, the publisher earned less revenue.  Arguably, they should have made higher profits given the decreased production costs, but any large business like the big six publishers will be equally concerned about showing revenue and profit to their shareholders and the market.  So selling more ebooks at $9 or $10 scared publishers.

Publishers were also scared that consumers might grow accustomed to this $9.99 price point.  As more customers expected new books to be at this price, there could be further market pressure for publishers to decrease their wholesale pricing on print books or ebooks.  This would lead to even less revenue.  And it could also lead to an even higher rate of ereader adoption–to have 10% of the market shift in a few years was one thing but to have it go to 25% or 50% could dramatically impact the publisher’s bottom line.

II. The Alleged Conspiracy

In late 2008, some of these publishers started talking to each other about the Amazon threat.  They were scared of the $9.99 price point.  And they were also scared that at some point Amazon could just replace the book publishing companies altogether.  But they didn’t know how they could address this ebook threat.

Then Apple entered the picture.  In 2009, Apple was putting plans in motion to announce the iPad in a year.  One of those efforts was looking at how the iPad could compete with Amazon’s Kindle for ebook sales.  Initially, Apple thought they could compete by using the same model as Amazon.  But when they looked into that model they saw how small the margins were with wholesale books (while Amazon typically sold bestselling ebooks at their list price, they made money on other books to be profitable).  Apple was not interested in small margins.  So they started talking to publishers and saw an opportunity.

Apple realized that they could work with book publishers to completely change the ebook market.  The first thing they would do is have the publishers sign up to sell their ebooks through iTunes via an agency model rather than a wholesale model.  Here’s what that agency model looks like:

Agency

The biggest difference is that the publisher is the one who sets the price.  Apple earns 30% of that price, no matter what it is, but Apple has absolutely no control over the price of the ebook.  From Apple’s perspective, this is ideal as they will consistently make 30% profit on any ebook sale.  Unlike the wholesale model, there is no management of pricing required–you don’t need to charge more for new books and then start offering discounts before you ultimately move a book to a clearance shelf just so you can make some money and clear the space for the next batch.  And from the publisher’s perspective, this is the perfect solution to the $9.99 Amazon problem since now the publishers can push up the prices on new books and break the ereading masses from expecting to pay less for ebooks.

But there’s a problem with the agency relationship and changing the business model for the publishers.  It will only work if they all do it at the same time.  If one publisher goes to the agency model but the others don’t then that agency publisher is in trouble.  The other publishers’ books will continue to be sold for $9.99 and the agency publisher will be forced to continue pricing their book at $9.99 in the iTunes store.  But since they are under an agency relationship, that $9.99 sale will only get the publisher $7 since Apple will take $3.  Now all the other publishers will continue to sell their ebooks under the wholesale model for $10 while the agency publisher will only get $7.  Sure, the agency publisher could increase the price of their book to $14 so they make close to the original $10 after deducting 30%, but if you have a bunch of bestsellers in a store for $10 and a few for $14, I think you know what will happen to those $14 books.

The publishers knew that the only way for this model to succeed was for everyone to do it.  So they started talking to each other secretly.  The CEOs of these large publishing companies met in secret.  Sometimes at exclusive dining rooms in elite restaurants.  They had secretive phone calls which they refused to discuss with their co-workers over email.  When they did compose emails about their plans they asked people to “double delete” the message.  (Lawyer’s note: ouch.)  They also shared confidential business plans with each other in order to cement the joint relationship.  And here’s something that’s going to be difficult to explain away if true–while Apple was negotiating the six different contracts with the six publishers, they were telling all the publishers about the other contract negotiations.  These are not the kinds of behavior you would expect to see in a competitive marketplace.

But true to any Apple presentation, there’s one more thing.  Apple and the six publishers jointly agreeing to a new agency model for the iBookstore wasn’t enough to change the entire market.  All that would do is ensure that the six publishers could raise prices for books sold through iTunes.  To truly change the entire business, the publishers would need to change their relationships with other ebook sellers (Amazon).  In earlier versions of the Apple Agency Agreement there was a clause that explicitly called for just such an action–all publishers would adopt an agency relationship with other ebook sellers.  Perhaps because of timing or some legal concern, the final version of the Agreement changed this clause to a strange form of a Most Favored Nations clause.

Most Favored Nations, or MFN, clauses in a contract will provide the best possible pricing to a party.  If I have a contract with a Seller that has a MFN clause and the Seller lowers the price to someone else, I get the lower price.

Apple’s strange MFN clause was for an agency model, so they couldn’t just talk about the price of an ebook sold to Apple (the publisher sets the price for the sale, after all).  Instead, the MFN clause made publishers promise that they would sell their ebooks on the iBookstore for the lowest price that ebook was sold on any other site.  Meaning if they continued to sell the ebooks wholesale, giving pricing control to the other ebook sellers (Amazon), then the publisher would have to match those prices and take the revenue hit (they will only get 70% of the price set by someone else).  The effect was the same as the earlier language–publishers would need to switch their ebook sales to the agency model across the board and immediately.

The publishers all signed their contracts with Apple on January 24-26, 2010.  On January 27, Apple announced the iPad.  Part of that announcement was the iBookstore and in Jobs’ presentation he showed current bestsellers sold for $15.  One Wall Street Journal reporter asked Jobs why consumers would buy a book on the iBookstore for $15 when they could buy it from Amazon for $9.99.  Jobs’ replied “that won’t be the case…the prices will be the same.”

Macmillan, one of the six publishers, decided to press Amazon on the new model immediately.  They told Amazon that they would need to adopt an agency model or Macmillan would pull their ebooks from the Kindle store.  Amazon refused and dropped Macmillan’s ebooks.  The other publishers started telling Amazon they would be doing the same.  Amazon, seeing this was a losing battle, caved to the publishers and adopted an agency model with a nasty note on Amazon.com about what the publishers were doing.  This all happened within 4 days of the iPad announcement.

Almost immediately, ebook prices went up.  The DoJ only presented some average numbers, but even those are compelling.  Within one year of the switch, bestseller prices went up 10%.  Trade publications (think mass market paperbacks but in ebook format) averaged 30% to 50% higher.  And this is in a market where the cost to produce such ebooks did not increase and the number of people purchasing ebooks dramatically increased.  In other words, exactly the kind of market you would expect to see prices fall or stay steady, not go up.

III. The Proposed Settlement

Fast forward a couple of years and a lot of DoJ work and you end up with the current lawsuit.  When the DoJ filed the lawsuit they also announced that three of the publishers were agreeing to the DoJ’s proposed settlement, the rest would need to be forced by the lawsuit.  The terms of the settlement were as follows:

  • Publishers must terminate the Apple Agency Agreement
    • They must also terminate any other agreements that restrict the ability of a seller to set an ebook price or if the contract has an MFN clause
    • Any new ebook selling contract must avoid collusion as detailed in the complaint
    • For 2 years, publishers cannot prohibit discounting by ebook sellers
    • Sellers like Amazon may stagger the termination date of ebook deals with publishers so that publishers are renegotiating their contracts at different times
  • Publishers must notify the DoJ before entering into joint publishing ventures (which could be a form of collusion)
  • Publishers must give copies of their ebook selling contracts to the DoJ if signed after January 1, 2012
  • Collusive and retaliatory actions by publishers are prohibited
  • Publishers may negotiate marketing programs and limited agency programs where total discount is limited but seller still retains pricing control
  • Each publisher must have an Antitrust Compliance Officer and must provide 4 hours of antitrust training to executives

IV. Why it Matters

Now, why should you care about all this?  First, I hope you found it an interesting story and you can see the case laid out by the DoJ.  If all of this is true then Apple and the publishers not only harmed Amazon but they harmed the entire competitive marketplace.  A new model was forced upon us all that resulted in ebook readers paying more for the latest Dresden Files novel, among others.

Social media has changed our world not only because of platforms making it easier to connect with each other but also because we can more easily share content.  A large part of that has been because physical content has moved to digital.  And when large bodies of content make that transition we tend to see the industry around that content rebel against that change.

In the music world, the industry switched to digital content when they embraced CDs–it took a few decades for networked computers to make it easy to share (usually illegally) those files but the genie was already out of the bottle.  Even then, the RIAA tried to regain control by suing music pirates; a strategy that has failed to stop music piracy.  Legitimate channels and affordable pricing has done more to curtail piracy than questionable tactics like lawsuits.

In the ebook world, the printed page is going digital and here was a chance for the old guard to try and regain control.  In this case they decided to force higher prices rather than embrace new technology.  And they may have done so illegally.  We can understand their fears at the same time we can condemn it–publishers may be very afraid of being replaced by direct publishing altogether.

Indeed, one of the final straws that forced the publishers to go in with Apple was when Amazon announced they would sell books directly by authors and pay the authors 70% of the selling rate–in essence trying to flip the agency model against the publisher.  The math on this is intriguing.  A typical author earns 10%-15% of the cover price on a hardcover book.  If that book is sold for retail at $30 then the author will make $3 to $4.50 per book.

That same author could sell their book directly for $7 through Amazon and earn $4.90.  The market may still be too small and too full of unproven authors to be viable right now, but the time is coming.

Social media professionals know that the true power of our new world is that the distance between people is decreasing.  That’s also true for the distance between companies and customers as well as the distance between creative professionals and their potential audience.  But what we must be careful of is the temptation for old technology and leaders to take one more lap around the profit pool at the expense of everyone else.

Change can be scary.  But actions taken to harm competition can be even scarier.

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Filed under Amazon, Apple, Consumer Protection, Ebooks, Social Content