Tag Archives: online piracy

SOPA: Rebuttal of RIAA Opinion Pt. 2

This is part 2 of The Official Merchant Services Blog‘s rebuttal of this New York Times Op-Ed piece titled “What Wikipedia Won’t Tell You” written by Cary H. Sherman, chief executive of the Recording Industry Association of America, which represents music labels.

The Real Slim Shady

Mr. Sherman in his article goes on to accuse Wikipedia of spreading misinformation. He tries to find a smoking gun by suggesting the tech giants have an agenda of their own. He accuses them of bias in terms of the story they present, saying they are bending the truth and not being neutral. He even attacks media outlets that supported SOPA for not “taking advantage of their broadcast credibility to press their case.”

This is amazing. In a piece crafted specifically to present the RIAA’s very biased agenda that is featured in one of those media outlets thus stretching the New York Times’ already damaged credibility — lest we forget Zachary Kouwe, Maureen Dowd or Jayson Blair — Sherman accuses his opposition of doing the exact same thing he is doing. Keep in mind, his own executives were gloating about how well the music industry is doing in 2011. But here he is saying the industry is still being harmed by piracy and that Wikipedia is not telling you the whole story. Sherman simply seems to not be as familiar with how the internet works as his employee Duckworth is. To borrow the ever-popular phrase, he’s doing it wrong. He says, “Misinformation may be a dirty trick, but it works.” Not on the internet. People find you lying to them, or manipulating them, and they either make a mockery of you or turn you off. Sorry Mr. Sherman but in this instance, Citation Needed!

Host Merchant Services image about the Stop Online Piracy Act and the players involved.

First World Problems

Mr. Sherman makes another fatal mistake with his article when he types: “The conventional wisdom is that the defeat of these bills shows the power of the digital commons. Sure, anybody could click on a link or tweet in outrage — but how many knew what they were supporting or opposing? Would they have cast their clicks if they knew they were supporting foreign criminals selling counterfeit pharmaceuticals to Americans? Was it SOPA they were opposed to, or censorship?”

Sherman is playing off of a stereotype about the twitter-age, or Net 2.0 –that everything is simplified and broken down into tiny bits of information. That the online citizen isn’t getting the full story is in fact that’s his main idea. But Sherman has forgotten net 1.0, and the strength of what Google, Wikipedia and all of that data really is. Somewhere between twitter campaigns with STOP SOPA avatars and Sherman’s own e-mail inbox is this huge collective database of information, which includes the exact language of the legislation as written. Every single piece Host Merchant Services has written on SOPA has included this link:

Stop Online Piracy Act PDF

Merchant Services Document Download Graphic

Merchant Services Download Button

Many other articles that covered this topic throughout the past year have given links to all of the relevant data and text. It’s the internet Mr. Sherman. The information is just a click away. Many people not only had access to the bill, they also read it. And so their protest was based on the bill itself. Not on the oversimplification you suggest.

Young, Wild but Not Free

Mr. Sherman then takes a wild swing at all of the people who protested SOPA, suggesting some of them are criminals: “But others may simply believe that online music, books and movies should be free. And how many of those e-mails were from the same people who attacked the Web sites of the Department of Justice, the Motion Picture Association of America, my organization and others as retribution for the seizure of Megaupload, an international digital piracy operation? Indeed, it’s hackers like the group Anonymous that engage in real censorship when they stifle the speech of those with whom they disagree.”

So just because people don’t agree with your agenda, they’re hackers who support Megaupload and want free music? That’s the kind of rookie debate tactic that gets you ridiculed throughout the internet. It’s also misinformation and a huge distraction from the topic. The Megaupload arrest is separate from the SOPA debate. This is obvious. The arrest was made under the current law. The FBI was able to crack down on piracy using what is currently in place. That the federal government was able to successfully attack piracy under the laws currently in place would seem to weaken Sherman’s position. In fact data collected on the topic has shown that once the government moved past the Napster issue that Mr. Sherman was so quick to cry about in the opening portion of his article, piracy started to take a huge hit. In fact, that PDF from the IFPI has some compelling statistics about how much piracy dipped after Limewire was shut down. Apparently the current laws have a lot of teeth if law enforcement goes after the pirates and doesn’t waste time going after citizens or forcing search engines and payment network providers to police the internet.

U Jelly?

The last straw with Mr. Sherman’s terrible presentation of his organization’s biased agenda comes from his short and shallow rejection of the Online Protection and Enforcement of Digital Trade Act (OPEN). This bill was drafted as an alternative to SOPA and PIPA. This bill was, excuse the irony, carefully devised by tech industry experts in the government — with an eye toward attacking online piracy but closing the wide open holes that the previous bills contained. The Official Merchant Services Blog helped break this story back in early December, with this blog, where we stated: “A bipartisan group of lawmakers have come out in support of a new law that has been proposed as an alternative to SOPA. Under this proposed legislation, the U.S. International Trade Commission (ITC) would be given the power to investigate claims of copyright infringement on foreign websites. The proposal would also allow the ITC to issue cease-and-desist orders to foreign websites that willfully engage in copyright infringement. The lawmakers demonstrate some clever ingenuity here with this proposal by tapping the ITC for the job of piracy oversight. The ITC already investigates patent infringement complaints and can bar infringing products from being imported into the U.S.”

In short, OPEN is an alternative that was everything Sherman asked for in online piracy legislation that we never received with SOPA or PIPA. It was well researched. It deals with the issues. It has input from tech industry savvy and knowledgeable politicians that know what they’re doing. But Sherman’s misinformation sums up OPEN like this: “The diversionary bill that they drafted, the OPEN Act, would do little to stop the illegal behavior and would not establish a workable framework, standards or remedies. It has become clear that, at this point, neither SOPA, PIPA nor OPEN is a viable answer.”

Host Merchant Services image of online piracy

Forget You

Again Sherman glossed over some important aspects of his own organization’s rhetoric. This article found at The Verge cites the RIAA’s opposition to OPEN and its support of SOPA.  The article quotes RIAA Senior Executive VP Mitch Glazier as saying that the ITC “clearly does not operate on the short time frame necessary to be effective.” Glazer cites the delays in the RIM vs. Kodak case — filed in January 2010 but now expected to be ruled on in September 2012 — as a prime example. Glazier sees these delays as hugely damaging, saying that each day a piracy-facilitating website stays online can cost millions of dollars to “American companies, employees and economy,” and be “an ongoing threat to the security and safety of our citizens.”

So again, it’s a case of what Sherman isn’t telling you, while simultaneously suggesting it’s Wikipedia or Google that are obfuscating the issue. The biggest problem with SOPA and what helped get it killed in Congress was that it left things extremely wide open to interpretation. The biggest boon to OPEN is that it requires investigation. Yes, that absolutely does take time. Time needs to be taken. The RIAA doesn’t seem to care about the affects that can happen when a law goes into place allowing swift shut down of websites based on willy nilly complaints or the hidden agendas of competitors. In fact, this is what is wrong with the RIAA’s stance on piracy. They want what caused the protest in the first place. They want to be able to quickly shut down sites with little to no oversight on how the plug gets pulled. So when an alternative is proposed that works more at the a proper speed with investigation, careful consideration of the circumstances and oversight, the RIAA has to denounce that suggestion.

The RIAA keeps pushing for legislation that mirrors SOPA. In fact, this will be the third consecutive year that Senator Ron Wyden [D-OR] will defend our country against the immense loopholes and abusive traits that the RIAA crusades for — Wyden took a stand and singlehandedly curbed the Combat Online Infringement and Counterfeits Act of 2010 (S. 3804) in 2010, and then was at the forefront of halting PIPA this year in the senate. What Sherman is telling us isn’t anything revealing about Wikipedia. No. What Sherman is telling us is that no matter how many times the government tells him that these laws are poorly written and open for abuse, Sherman will keep pushing for this to go through.

Courage Wolf

Host Merchant Services and all other payment network providers have a vested interest in this legislation because they keep getting named in it. These laws keep coming up that require payment processors to be involved in the policing of online content. The issue is just as important to merchant services as the Durbin Amendment. And so The Official Merchant Services Blog is once again here to keep people informed about these developments. The RIAA is singing the same old song about Napster and Piracy trying to push some sympathetic buttons with the people, but at the same time attacking the overwhelming opposition to their agenda, calling them misinformed — and criminal. Suggesting that internet users don’t go beyond twitter messages in the depth of their awareness of issues that pertain directly to the future of their internet usage. And the entire time the RIAA is engaging in this shell-game of misinformation, they’re also gloating about how profitable they’ve been able to make digital music transactions. They claim they know the internet. But Mr. Sherman acts like he still thinks it’s a series of tubes. He might know it’s not a truck, but he’s still doing it wrong.

We’ll leave you with the same message we had days ago when Sherman’s employees were tweeting “DECLARE THAT!”

The bottom line is if Lady Gaga and Pitbull online sales are robust and  legit, it’s probably time to back off the Online Piracy rhetoric.

Rebuttal of RIAA Opinion

SOPA: Rebuttal of RIAA Opinion Pt. 1

The RIAA just won’t quit. They’re taken up the crusade to push for anti-piracy legislation once again, as seen in this New York Times Op-Ed piece titled “What Wikipedia Won’t Tell You” written by Cary H. Sherman,chief executive of the Recording Industry Association of America, which represents music labels. The content of the piece is incendiary, and that’s being kind. The RIAA is adamant about their stance on piracy and are pressing the issue in every outlet they can. To quote Digital Underground from their Sons of the P album — which currently is not available for legal purchase online due to holes in the DU library in various legit digital music resources — “Like Ice Cube says, Once Again it’s On.”

Everyday They’re Shufflin’

The Stop Online Piracy Act and the Protect Intellectual Property Act were both killed in Congress — shelved because they were too wide open to abuse. The protest against these bills reached a collective crescendo when internet giants Wikipedia and Google and WordPress teamed up with a host of others for an internet blackout. When the largest source of internet information — and grade school kids’ favorite spot for help with their homework — goes dark and the search engine juggernaut that fuels the internet shines its spotlight on your bill, things have finally gotten serious. The U.S. citizens took notice of this blackout, and joined the internet in protest. And Congress heard the people and backed off this poorly written legislation.

But that hasn’t stopped the entertainment lobby. They went back to the drawing board and then returned mere weeks later with a new idea on how to combat online piracy. Unfortunately that new idea was the exact same idea as before. This was seen in the wishlist the International Federation of the Phonographic Industry (IFPI) released. The highlights of this list are essentially that the music industry wants pretty much the exact same things that were in SOPA, the same things that prompted the protest in the first place. A list of seven demands, which include the exact same far reaching calls for search engines and payment processors to police websites individually and be responsible to law enforcement for content they are indirectly connected to.

We’ll get back to this, but for now the point is the music industry felt the need to push for the same stuff that killed SOPA and PIPA. And that came right back to the forefront with Mr. Sherman’s opinion article in the New York Times. Essentially the RIAA wants a do-over and Mr. Sherman is here to tell us why that needs to happen.

Come At Me Bro

So today The Official Merchant Services Blog is going to try to put this issue in its place much like Blake Griffin did to Kendrick Perkins recently. Yes, we are going to Posterize the RIAA. Because the op-ed article indicates the RIAA has soft interior defense and can’t play man to man very well at all. First up we’ll start with the relative hypocrisy of Sherman’s ill-timed article found in this contextual relationship: Suggesting Wikipedia isn’t telling people everything, and then making this comment, “They knew that music sales in the United States are less than half of what they were in 1999, when the file-sharing site Napster emerged, and that direct employment in the industry had fallen by more than half since then, to less than 10,000.”

This is hypocritical because Mr. Sherman is leaving out some very pertinent information — which his employees were just recently bragging about on twitter. As we reported on January 31, the RIAA was excited about the IFPI wishlist because it had a series of statistics that showed the music industry is doing well with digital sales. The music industry claims Wikipedia is being deceptive and then suggests that they are still reeling from Napster, which was effectively scuttled back in 2002. They’re making a play for sympathy from an issue that happened almost a full decade ago, and yet they just got finished gloating about how successful they were this year!

Jonathan Lamy, senior VP of Communications for the RIAA, tweeted that paid subscription services rose 65 percent to 13.4 million in 2011. This tweet was in response to figures released by the IFPI which Lamy was excited to read. Lamy also tweeted that paid digital music services are active in 58 countries, generating $5.2 billion in revenues.

And then Cara Duckworth. The VP of Communications for the RIAA also cited the IFPI figures and then said: “W/more than half of all music sales coming from digital services, we know how Internet works. “Music=Innovation. Declare THAT. #CES #SOPA.”

What the RIAA isn’t telling you is far worse than what Wikipedia isn’t telling you. But Mr. Sherman isn’t about to concede facts when the agenda needs to continue to be pushed. The music industry is finally getting the hang of the digital market. Their own people brag that they know how the internet works. Declare that! But Sherman’s still waving the Napster suit in your face trying to claim that Wikipedia is obfuscating the issue.

It gets worse.

Born This Way

Sherman writes, “While no legislation is perfect, the Protect Intellectual Property Act (or PIPA) was carefully devised, with nearly unanimous bipartisan support in the Senate, and its House counterpart, the Stop Online Piracy Act (or SOPA), was based on existing statutes and Supreme Court precedents.”

The only thing in that statement that is rooted in the reality of what happened with SOPA and PIPA is that there was a lot of bipartisan work. Unfortunately, the work was bipartisan unity on finding problems with the so-called carefully devised legislation. Tech industry experts on both sides of party lines found the problems and holes in the legislation. As we reported on December 27, 2011, SOPA sparked unity in the federal government. And as we’ve written in our in-depth analysis, the bill was not very carefully devised at all. In that analysis we lean heavily on discussion from Congresswoman Zoe Lofgren [D-CA], an expert in the tech industry. We’ll highlight just a bit of Lofgren’s criticism of this bill, with questions raised: “Section 103 also allows a “portion of” a website to be deemed “dedicated to the theft of U.S. property,” regardless of the culpability of the website as a whole. Like many important terms throughout H.R. 3261, the precise meaning of these words is ambiguous, and will require years of expensive litigation to clarify. However, the plain meaning of the words seems to indicate that any large website could face a risk of termination by payment and advertising providers based solely upon infringing material contained in a single web page. 

This is not carefully devised legislation. And as we eventually reported, the bill’s own sponsor admitted he did not fully understand the technical aspect of the bill and he backed off of it. Bill sponsor Lamar Smith is quoted in various media sources as saying:  “I have heard from the critics and I take seriously their concerns regarding proposed legislation to address the problem of online piracy. It is clear that we need to revisit the approach on how best to address the problem of foreign thieves that steal and sell American inventions and products.

To Be Continued

SOPA: The RIAA isn’t doing so bad [2023 Update]

Today The Official Merchant Services Blog dives right back into the fire with the Stop Online Piracy Act (SOPA). We were kind of surprised to find out what this PC World Article had to say. Apparently the  music industry is doing pretty good despite the issue of online piracy upon which SOPA hinges.

SOPA was shelved by Congress more than ten days ago, as we reported in our January 20 blog, but the lobby that fueled the bill is still pushing for federal government involvement in online piracy. In fact, much of the content of SOPA that caused the controversy has popped back up on a wishlist from the International Federation of the Phonographic Industry (IFPI) regarding what they think needs to be done to fight online piracy. The IFPI is a global group similar to the U.S.-based Record Industry Association of America (RIAA).

SOPA and PIPA Review

To recap what SOPA was about you can review our initial post about it from our November 20, 2011 blog. The Official Merchant Services Blog was out in front of this story and eventually the rest of the medial caught up with the impact that this House of Representatives bill and its twin in the Senate — the Protect Intellectual Property Act (PIPA) — were going to have on a variety of tech industry sectors, including Payment Network Providers. Host Merchant Services provides an in-depth analysis of SOPA here.

Host Merchant Services image about the Stop Online Piracy Act and the players involved.

The Kids are All Right

According to the RIAA the music industry is outperforming other entertainment sectors in terms of digital sales. Jonathan Lamy, senior VP of Communications for the RIAA, tweeted that paid subscription services rose 65 percent to 13.4 million in 2011. This tweet was in response to figures released by the IFPI which Lamy was excited to read. Lamy also tweeted that paid digital music services are active in 58 countries, generating $5.2 billion in revenues.

Jumping into the tweets was another RIAA executive, Cara Duckworth. The VP of Communications for the RIAA also cited the IFPI figures and then said: “W/more than half of all music sales coming from digital services, we know how Internet works. “Music=Innovation. Declare THAT. #CES #SOPA.”

Throwing down the gauntlet, the RIAA is now essentially claiming that they have a viable working digital sales model that can exist on the internet. And yet still they pursue a lobby to crack down on piracy, and collateral damage that includes the internet and e-commerce.

Here’s a graphic detailing the top sales from 2011 according to the IFPI:

The Wishlist

The IFPI put out this PDF which details a very hardline stance on how to deal with Online Piracy. Perhaps the most entertaining aspect of this wishlist is that it essentially repeats the details of SOPA. According to the PCWorld article IFPI chief executive Frances Moore said record companies are building a business in digital music “in spite of the environment in which they operate, not because of it.”

Moore went on to say record companies are working with ISPs, search engines, governments, and law-enforcement agencies to reduce the number of illegal downloads and ensure that an ever-higher percentage of the music that is downloaded is bought legally. “Our digital revenues, at one-third of industry income (and now more than 50 per cent in the US), substantially surpass those of other creative industries, such as films, books and newspapers.”

So the IFPI establishes with facts and figures that the music industry is doing well on the internet. Digital Music services are getting traction, profits are rising and piracy is being challenged. The RIAA finds all of this so amazing and awesome that they go and re-tweet it to the world.

With all of this good stuff being said about digital music sales, why does the IFPI have a wishlist of demands to fight piracy that seem pretty much like the exact same thing SOPA wrote?

The Seven Demands

This arstechnica.com article goes into detail about the demands the IFPI has. The demands can be broken down to seven key elements:

  1. Graduated response laws in which rightsholders can pass along notices about file-sharing to the accused party and possibly disconnect them from the internet.
  2. Site blocking. The industry wants the ability to wall off infringing sites, however defined (yes, you read that right, they don’t currently define the criteria for being able to wall off the site), at country borders.
  3. Search Engines need to help the industry. Search Engines need to remove links to infringing content that the industry identifies as well as prioritize links according to industry standards, not the engine’s own standards. Search Engines need to rank search results factoring legality or illegality into the ranking.
  4. Payment Processors. Just like SOPA and PIPA, the wishlist also includes payment processors. Which is why The Official Merchant Services Blog is continuing its ongoing coverage of this topic. Payment Network Providers, Payment Processors, merchant services providers, whatever the entertainment industry wants to call us, are being targeted to police copyright infringement. It’s very strange. The IFPI wishlist demands processors cut off pirates voluntarily, much like SOPA tried to do. As the ars technica article states: “This was a theme of the recent Stop Online Piracy Act in the US, which originally featured a section encouraging companies like MasterCard to take unilateral actions against websites, and provided legal immunity for doing so. IFPI touts a deal with the City of London Police and credit card companies in which IFPI supplies the City of London Police with evidence that illegal downloads are being made available from an infringing site. The police review the evidence, verify its integrity and notify payment providers that their services should not be provided to such sites.”
  5. Ad networks are being called on to cut off funds to suspected pirates as well. Even though some online advertising sites are themselves going through litigation for spams, scams and clickjacking.
  6. Mobile operators need to get involved according to the IFPI wishlist. Because hey, why not? The IFPI’s paranoia suggests that outside the comfy confines of the U.S. where illegal downloaders just lazily go about swiping songs from their PCs, “piratical behavior increasingly takes place through phones and other mobile devices.”
  7. And finally, the IFPI calls for increased litigation. Keep suing the big sites. The PDF report cites how much piracy dropped after Limewire was shutdown as the impetus to keep going after the big dogs in the world of online piracy. Compared to some of the other demands on this list, the final wish seems to be far more reasonable, logical and effective. Going after ad networks, especially those already mired in a legal quagmire of clicks and spam issues, might not do a whole lot in the war on piracy. Going after the big, popular piracy sites, though, might have an impact.

Where to go From Here?

Host Merchant Services image of a pirate button keyboardIt just seems tiresome that after all that went down with SOPA, PIPA, the internet blackout, and the controversy, the music industry just reloads and reuses the same exact talking points that got the laws killed in the first place. SOPA died because the things being asked for weren’t going to work. Banking on payment processors to police the internet was a bad idea. It still is a bad idea. This whole wishlist smacks of some old sitcom gag where a child asks one parent for a cookie, is told no, then goes and asks the other parent. The answer’s still no.

Payment Network Providers do not support online piracy. But the demands being given to them have loopholes where the Processor is being asked to shut down customers that are legitimate and not pirates, just on the whim of the entertainment industry.

And the real kick in the pants with all of this? At the exact same time the music industry makes this zealous push to continue to ask for wide open and ineffective legislation, they spend time gloating about how well they’re doing on the internet with legal, and apparently very profitable, digital transactions. All of course run through e-commerce sites supported by the same payment processors they are asking to shut down other customers at their fancy.

The bottom line is if Lady Gaga and Pitbull online sales are robust and  legit, it’s probably time to back off the Online Piracy rhetoric.

Stop Online Piracy Act Sparks Unity?

The Official Merchant Services Blog is back from its brief holiday. Thank you for keeping up with us. We have a couple of treats to share with our readers today, though the posting is going to be brief. Host Merchant Services is gearing up its site and its services for the coming of 2012, including The Official Merchant Services Blog. Expect a return to the fast break pace and full industry coverage next week.

Stop Online Piracy Act

Up first for us is coverage of the Stop Online Piracy Act. You’ll hopefully recall that Host Merchant Services gave an in-depth analysis of the Stop Online Piracy Act a few weeks ago, getting out in front of the coverage of this controversial piece of legislation. What prompted this coverage was that the bill included payment processors in its extremely broad scope of oversight, letting the Department of Justice take action against merchant service providers — or Payment Network Providers as they are described in the bill’s wording — for the reported piracy of that processor’s merchants. This struck a chord with Host Merchant Services and other providers and brought the whole topic of online piracy into the arena of merchant services news.

GoDaddy Reverses Position

Outside of the entertainment industry support for the bill has been minimal. The bill has been soundly thrashed by most tech industry companies, ranging from Adobe to Google — you can read Google Executive Chairman Eric Schmidt’s comments on the bill here. Apple and Microsoft initially were part of a group that supported the bill, then changed their position quickly when the details of the bill were hashed out in a congressional hearing.

The latest company to do a full 180 on SOPA support is GoDaddy. Unfortunately, it may have been a bit too late. GoDaddy initially came out in favor of the bill, stating that the company opposed Online Piracy and supported the effort to stop this crime through the legislation. That prompted a harsh critical reaction from its customers, many gathering online to organize a boycott of GoDaddy.

GoDaddy relented and changed its position. As this politico.com article reports: “Go Daddy CEO Warren Adelman said in a statement that lawmakers can ‘clearly do better,’ even though the company stands by its original position that ‘fighting online piracy is of the utmost importance. It’s very important that all Internet stakeholders work together on this. Getting it right is worth the wait. Go Daddy will support it when and if the Internet community supports it,’ he continued.”

But the damage has already been done. Much like Bank of America taking a huge PR hit for its reaction to the Durbin Amendment, GoDaddy is now in the spotlight over the Stop Online Piracy Act. The article explains that GoDaddy was in a precarious position on this issue, as they had a vested interest in fighting piracy being a domain registrar: “The fight over Internet piracy has recently put Go Daddy in a precarious position: As a domain registrar with a vested interest in fighting illegal content, it sat opposite of other Internet companies that felt SOPA and the Protect IP Act threatened the Internet’s backbone.”

‘Unlikely Allies’

In one of the stranger developments linked to SOPA, it appears that the bill is acting as a unifying force for liberals and conservatives. According to this ology.com article Republicans and Democrats are banding together in their criticism of SOPA and becoming “unlikely allies.”

The bill, which was authored by Republican Lamar Smith does have some strong proponents besides just the Hollywood and the Recording Industry. The Better Business Bureau and various Chambers of Commerce back the bill on the very simple premise that online piracy is a serious issue and the crime is hurting businesses in the U.S. But as the article points out, the issue is deeper than that and has created allies among Republicans and Democrats: “The ‘netroots’ conservatives opposed to SOPA have some unlikely allies in liberal and libertarian bloggers. In the end, the battle over SOPA is as clear a case of big industry versus the little guy as there has been in recent years. As politics makes a turn toward the populist ahead of the “great recession” it is highly unlikely that the big studios will achieve a legislative victory here.”

Stay Up To Date on SOPA

The bill itself is currently tabled by Congress and likely won’t be dealt with until 2012. But you can keep up with the latest developments by continuing to follow the coverage Host Merchant Services. Also this google+ feed can be quite informative too: #SOPA

E-Commerce: News Briefs [2023 Update]

The Official Merchant Services Blog continues to follow some of the top trending stories in the e-commerce industry. E-commerce is an essential growth element in most retail businesses. This has been building for years, as online shopping becomes more and more a convenient and commonplace fact of life for the everyday consumer.

E-Commerce Sets Record Highs

It became clear that e-commerce is a titanic force in the marketplace when Cyber Monday sales results came trickling in. But the robust clicks business continued. Now reports are indicating that e-commerce had a record setting week. This internet retailer article said that consumer spending reached at least $1 billion on three separate days last week according to the web measurement firm comScore Inc. This means that three of the four recorded billion dollar spending days for e-commerce occurred last week –– the fourth was Cyber Monday 2010.

The statistical breakdown shows that shoppers spent $1.25 billion on Cyber Monday 2011, the single highest spending day recorded for e-commerce by comScore. This was followed up by $1.12 billion on Tuesday and $1.03 billion on Wednesday. In the time period between Nov. 1 and Dec. 1, 2011, consumers so far this holiday shopping season have spent more than $18.69 billion with online retailers ––up 15% from approximately $16.25 billion at the same point last year.

Will The Trend Continue?

The article quotes comScore chairman Gian Fulgoni as saying “As the deals from this week expire, it will be important to see the degree to which consumers return to the same retailers to continue their holiday shopping, thereby helping improve retailers’ profit margins, or if we experience a pullback in consumer spending—which has occurred in previous years—before promotional offers and spending intensity pick back up in earnest around mid-December.”

Free Shipping appears to entice online shoppers in a major way. According to the article 63.2% of all online transactions last week included free shipping. This makes a lot of sense, since free shipping evens the playing field in the bricks vs. clicks battle. With shipping costs taken out of the equation, it comes down to convenience and price. It’s much easier for shoppers to visit a website instead of fight crowds and stand in line. And the Cyber Monday deals –– many of which got extended past Monday prompting the nickname Cyber Week to emerge –– keep the pricing war ultra competitive.

SOPA Update

With e-commerce business booming so much in the holiday shopping season, the Stop Online Piracy Act (SOPA) and its latest developments become more and more important. According to this PC World article, a bipartisan group of lawmakers have come out in support of a new law that has been proposed as an alternative to SOPA.

Under this proposed legislation, the U.S. International Trade Commission (ITC) would be given the power to investigate claims of copyright infringement on foreign websites. The proposal would also allow the ITC to issue cease-and-desist orders to foreign websites that willfully engage in copyright infringement. The lawmakers demonstrate some clever ingenuity here with this proposal by tapping the ITC for the job of piracy oversight. The ITC already investigates patent infringement complaints and can bar infringing products from being imported into the U.S.

Host Merchant Services offered up an extensive analysis of SOPA, including the history and development of previous laws that affect online piracy and intellectual property rights.

What is notable about this new law being proposed?

new law being proposed

Two of the legislators supporting the use of the ITC as copyright infringement oversight are Ron Wyden [D-OR] and Zoe Lofgren [D-CA]. Wyden is notable because he was the one that effectively killed the Combat Online Infringement and Counterfeits Act of 2010 in the Senate. Lofgren is notable because she is one of Congress’ leading experts on the internet and has spoken out against SOPA on her own website. Having these two support a proposed law that seeks to combat online piracy is a pronounced development.

The new proposal seeks to clean up the problem of SOPA by giving it a more streamlined and functional process for copyright infringement claims. Under the new proposal the ITC could also investigate complaints of copyright infringement by foreign websites. Owners of the websites would be invited to present their side to the ITC, and the public would be notified of investigations, as the ITC does in patent investigations. ITC rulings against websites could be appealed to a U.S. appeals court. All of these aspects are different from the broad powers that SOPA grants to the Department of Justice.

As the article explains: “SOPA would allow the DOJ to seek court orders to stop online ad networks and payment processors from doing business with foreign websites accused of enabling or facilitating copyright infringement. The DOJ-requested court orders could also bar search engines from linking to the allegedly infringing sites and order domain name registrars to take down the websites and Internet service providers to block subscriber access to the sites accused of infringing.

SOPA would also allow copyright holders to seek court orders requiring online advertising networks and payment processors to stop supporting the alleged infringers if those businesses do not comply with requests from copyright holders. The court orders requested by copyright holders could target U.S. websites and services that enable or facilitate copyright, in addition to foreign websites.”

The proposal states its case as being a better alternative to SOPA here: “We found that using trade laws to address the flow of infringing digital goods into the United States makes it possible to avoid many of the pitfalls that would arise from other legislative proposals currently being advanced to combat online infringement. Namely by putting the regulatory power in the hands of the International Trade Commission – versus a diversity of magistrate judges not versed in Internet and trade policy – will ensure a transparent process in which import policy is fairly and consistently applied and all interests are taken into account. When infringement is addressed only from a narrow judicial perspective, important issues pertaining to cybersecurity and the promotion of online innovation, commerce and speech get neglected. By approaching digital good infringement as a matter of regulating international commerce, we are able to take all of these factors into account.”

In short, this proposal focuses on the copyright infringement that is at the root of the online piracy, instead of on the payment processors and e-commerce sites that could get caught up in the broad crackdown that SOPA could initiate.

What’s Your Major? E-Commerce

We noted this on our Facebook Page yesterday, but feel the need the mention it in our blog as well. E-commerce is now becoming a path of study in college. This Practical E-Commerce article links to 15 different e-commerce focused course programs being offered by various institutions, including Carnegie Mellon, University of Maryland, and Temple.

Stop Online Piracy Act Controversy [2023 Update]

The Official Merchant Services Blog is going to be quick today. The Holiday Shopping Season is still going great and merchants are still reaping the rewards of the boost in business. But we wanted to take a moment to step out of the holiday shopping mindset and look toward the future. We’d like to point you to a new law before Congress that could have a huge impact on e-commerce and your company’s website: The Stop Online Piracy Act.

The Basics

Let’s get the basics out of the way first. What is the Stop Online Piracy Act (SOPA)? The Stop Online Piracy Act (SOPA) is also known as H.R. 3261. It was introduced in the House of Representatives on October 26, 2011 by Lamar Smith [R-TX] and a bipartisan group of 12 initial co-sponsors. This bill, intended to help stem online piracy and backed by companies like Disney, Viacom, and Time Warner, has set off the alarms of many sites and companies on the internet because it essentially allows the government and private corporations to censor entire sites that they fear are illegally distributing copyrighted material.

Host Merchant Services has provided an extensive review and analysis of the bill here. We look at the entirety of the law and its controversy, as well as a very focused review of what the law has to say about merchant service providers so that our merchants can get an idea of what is in store for them if this bill passes.

What it Means for Merchants

SOPA is being fueled by the entertainment industry, and as such it contains language that allows for a very broad sweeping attack on copyright infringement –– throughout the internet. A Gamespot Article found here calls it “the law that will break your internet.” What it means for businesses and their websites, as well as payment processors, is the law allows copyright and trademark holders to contact advertisers and others who do business with sites that encourage or even allow infringement to ask them to stop. There is no requirement that those copyright holders contact the offending businesses first.

While on the surface this may seem like a great idea because it does give the Department of Justice the teeth it needs to attack online piracy, opponents of the bill argue that the legislation could have ramifications for innocent companies that provide a storefront for a wide variety of small businesses. With a large site like Amazon or eBay, having to take proactive measures to police piracy among their many sub-merchants is a herculean task that could all be unraveled by just one person with an axe to grind. And that gets right to the heart of the problem with the law: the way it is currently written there would be no way to determine that the person reporting the piracy was being truthful.

In short, your business could be interrupted by your website getting shut down. Your website could get shut down due to a report through one of many different channels. Since payment processors are included in this law, it could be something as simple as someone making a claim of piracy about your site, but doing so against your processor, and so your processor has to suspend your site’s ability to take payments.

Moving Forward

The Official Merchant Services Blog will keep you updated on this law as it develops. Currently the most interesting tidbits are:

  • Maria Pallante, Registrar of U.S. Copyrights, has endorsed the legislation.
  • Lamar Smith, sponsor of the bill, has backed off his initial aggressive support of the stance, and can be quoted as saying “I’m not a technical expert on this. I’m trying to ferret this out.”
  • Microsoft, Apple and other members of the Business Software Alliance have backed away from supporting the bill 5 days after the initial hearing before the House Judiciary Committee.

Any questions about SOPA? What are your feelings about this law? Do you think it could interrupt your business? Do you think it has the potential to be abused by web surfers with an axe to grind? Do you think it can effectively police online piracy?