SOPA Shellacked, PIPA Plastered
Widespread online protests have sent SOPA and PIPA into cold storage. Backed largely by big media and content producers, the bills would have granted copyright holders and law enforcement new powers to fight piracy. But critics say they went much too far. Meanwhile, Yahoo bleeds its purplest blood, Apple takes a stab at textbooks, and hackers slice through Zappos' defenses.
01/21/12 5:00 AM PT
The Stop Online Piracy Act, otherwise known as "SOPA," is losing friends fast, and now it looks like there's a good chance it'll lose the support it needs to make it out of Congress alive, much less the White House.
SOPA and its Senate bill cousin PIPA, the Protect IP Act, have been controversial from the beginning, but a recent round of protests have made them almost toxic. High-profile websites like Reddit and Wikipedia went dark last Wednesday to give visitors a taste of what SOPA and PIPA opponents say the whole Internet could look like if they become law. Smaller sites participated as well, and even Google put up a black banner and provided links to information, though it still let visitors do their thing.
The bills are backed mainly by large content providers -- movie studios, record labels and other big-time media producers. They're designed to be a way to keep digital piracy in check. For example, under SOPA, if a rights holder has a copyright bone to pick with a foreign website, the rights holder can take steps to shut that site off from several vital channels -- search engines, ad networks, even Internet service providers. That stuff's like food and water to the survival of most sites, so in other words, under SOPA, a rights holder could basically starve the offending site out of existence.
But SOPA's and PIPA's opponents aren't just a bunch of piracy fanatics who can't bear the thought of having to pay a few bucks to see "Iron Man 2" instead of torrenting. A lot of them are actually against piracy. What worries critics about SOPA is what they see as a lack of oversight. They say it makes it way too easy to simply snuff out a supposedly offending site just by writing a strongly worded letter. There's also concern that SOPA would overburden legitimate sites with a huge new set of legal obligations and leave a door open for Internet blacklists that threaten the freedom of expression.
Those opponents have been getting their message through with info campaigns and lawmaker briefings, but Wednesday was the day of the big online protest, and it seems to have had some real results. U.S. lawmakers' websites were reportedly inundated with messages from constituents, Google delivered a 4-million-name petition against SOPA, and several erstwhile SOPA-loving legislators jumped the fence on the issue. The weekend before, President Obama revealed that he doesn't care for SOPA either.
The protests rankled SOPA and PIPA supporters in the movie and music industries. MPAA Chief Chris Dodd released a statement calling the Web blackout "an abuse of power given the freedoms these companies enjoy in the marketplace today," apparently without a hint of irony. And RIAA spokesperson Jonathan Lamy joked on Twitter about students actually having to do original research with Wikipedia out of commission, though he apparently deleted it soon after.
Just for the record, most serious Wikipedia articles are stuffed with links to cited materials, many of which are well-regarded scientific studies and academic papers. So it can help with research, if you use it right.
Anyway, it's all very democratic and grass-rootsy to see so many websites fly the banner, distribute information, and angle for widespread public opposition to bills most people probably weren't aware were even being considered a few days prior. And if Wednesday's action does prove to be a main factor in SOPA's and PIPA's unraveling, it'll show that a great big protest still can make a difference in the passage of legislation.
But the bills' backers are experienced political wranglers. They know how to get Congress' attention, they know how to lobby, and they know just where to put the money to make sure laws are passed. They won't give up on their goal to stem piracy, and it's a reasonable goal in itself. But in order to ensure that future efforts don't look anything like SOPA or PIPA, perhaps the Web companies that have stood up to the bills will need to start playing Washington from the inside a little harder, just like every other industry with interests to protect.
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Apple delivered on its big show-and-tell promise from earlier in the month with a presentation in New York that ushered in a new way to create, distribute and read educational textbooks.
The next generation of the iBooks app, named "iBooks 2," will manage digital textbooks, and a tool called "iBooks Author" will allow people to produce textbooks for iPads.
Textbooks are normally a familiar pain for most students. Lugging them around campus is a drag, and they can be pretty expensive, either for school districts or individual college students. But Apple's made inroads with three major publishers -- Houghton Mifflin Harcourt, McGraw-Hill and Pearson -- and it says most textbooks for iPad will be available for $15 or less. That's just for high school texts for now, but the deal could eventually grow into college volumes too. Of course, an iPad isn't exactly cheap either, but at least you'll probably want to keep it for longer than a semester.
Meanwhile, the iBooks Author feature could be of great use to professors, who could use it to easily write their own course materials. Although that could get in the way of the age-old tradition of professors padding sales by making their own published books required reading for their classes.
And it would also require everyone in the class to own an iPad. Some schools help their students get a discount for education-related gadget purchases, though it seems only a few small colleges are giving all their students iPads on day 1 of freshman orientation. Not that expanding further into more universities would be an odd place for Apple to go. Apple has deep roots in education -- if you went to a decently funded grade school in the '80s you might remember the computer lab being filled wall to wall with Apple IIs.
E-textbooks could eventually be a real financial relief, especially for college students. In vying for relatively low-cost content, Apple seems to be taking a different approach from Amazon's Kindle Fire strategy. Amazon's content isn't particularly expensive by comparison, but it's estimated that Amazon takes a financial loss every time it sells a Fire, then makes up for it by putting all this content up for sale. For Apple, content is the draw that drives sales of its much more pricey devices. And if its iBooks system can win the textbook market and make iPads the default tablet for students, that's going to be a whole lot of sales.
A Gushing River of Purple
It seems Yahoo's been in a state of constant turmoil for years, with everyone wondering when that one big, key, all-important change will come along to put it on track and bring it back to its glory days as king of the Web. When and if -- big if -- that change comes, it probably won't be fully recognized until long after the fact, but Yahoo did snag itself a new CEO a few weeks ago, Scott Thompson, a choice that may be just unconventional enough to put a new spark into the company.
But the changes don't stop there. In order to undergo real metamorphasis, perhaps Yahoo needs a good bleeding. A little blood was splattered when Carol Bartz was unceremoniously fired from the chief position last year. But it seems the powers that be at Yahoo believe real change can only be brought about by spilling blood of a much deeper and richer shade of Yahoo purple.
So out went Jerry Yang, the company's cofounder. There's no official word on whether he jumped or was pushed from his position on the board, but it may have been something of a combination. His holdings in Yahoo could have given him a lot of resources to fight an ouster, but considering his history at Yahoo, he may have figured another fight just wasn't worth it.
With Yang out, it's unclear what Yahoo will do next, but it may be more free to experiment than when he was in the boardroom. Yang developed a reputation for being Yahoo's chief naysayer, for better or for worse. When he was CEO a few years ago, he fought hard to spurn Microsoft's offer to buy up the company for over $44 billion, only to watch Yahoo's value sink shortly after. He also may have been an obstacle for those who want Yahoo to sell off some of its parts and go after a major reorganization.
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If watching its value plummet hundreds of dollars per share over the course of a few months wasn't bad enough for Netflix, the online movie renter will now have to deal with angry shareholders who say the company gave them the bum steer and ended up costing them big.
Netflix wasn't as transparent as it should have been regarding its prospects and that bump in fees it imposed last summer, according to the plaintiffs in a new class-action shareholders suit. The price reshuffling significantly changed the amount many customers would have to pay for the service, critics said the transition was entirely mishandled, and lots of users either quit Netflix or drew down their memberships. In the middle of last summer, shares of Netflix were Wall Street fois gras; by mid-fall they were pig slop -- or maybe at best expired cans of Spaghetti-Os. They plummeted from $300 to less than $70.
A company throwing up all over itself in a period of three months happens now and then, and by itself it isn't a great basis for a big class-action suit. But in this case, shareholders say Netflix's senior management -- its CEO and its top content, product and marketing execs -- knew that the company's value was headed straight for a cliff and sold off a big chunk of their own holdings without giving other shareholders ample warning.
It claims the execs knew but didn't properly reveal that they'd have to raise prices and scare off customers, and that they weren't clear about the nature of certain content-access contracts. In all, according to the suit, Netflix's leadership knew it wouldn't make its forecasts -- but they kept zipped.
It'll be tricky, but not necessarily impossible, to prove who knew what and when as this case plays out. The Netflix honchos had to have had some kind of inkling that raising prices would make some customers walk; it's just a matter of how accurate their inside estimates were. But it's hard to imagine any company would intentionally put itself through what Netflix did to itself last year if its top brass really did know what the outcome would be.
King of the online shoe scene Zappos took a kick in the pants recently when hackers broke into its systems and stole data on a few of its customers -- 24 million of them.
The thieves apparently got in by way of a server in Kentucky, and once they had access they helped themselves to things like names, addresses, email addresses, phone numbers and partial credit card numbers of millions of customers. Zappos was fairly quick to address the problem, sending out a mass email alerting users and having everyone submit a new password. That's probably the safest way to go when something like this happens, though for some customers the process couldn't be completed for several hours due to the volume of requests.
And the kinds of information that were leaked weren't exactly the keys to the kingdom. Yes, it's an invasion of privacy when data thieves suddenly find out stuff like where you live and what your email address is. That could be used for some pretty sharp phishing maneuvers, if any bad guys are dedicated enough to do it. But Zappos says the hackers did not gain access to peoples' full credit card numbers or payment data. If that's still not enough to make you rest easy, though, it might be a good time to have your credit card company send you one with a new number.
Zappos also says that the passwords the thieves managed to get were encrypted. That means they're scrambled up pretty well, but it's not necessarily impossible to decode them. If the data thieves can manage to unscramble them, they'll have about 24 million sets of user names and matching passwords. None of those passwords will work for Zappos anymore thanks to the forced reset the company did, but the bad guys know that a lot of people use the same name and password combo for every site they sign into. Amazon, other online retailers, banking sites -- who knows what kind of opportunities for fraud they may find?
The safest thing to do, of course, is to use a different password for every single site you visit, though remembering all those passwords will probably require a management application or some kind of memorized formula.