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Last December, we wrote about a report put out by the Swiss executive branch noting that, based on their research, it appeared that unauthorized file sharing was not a big deal, showing that consumers were still spending just as much on entertainment, and that much of it was going directly to artists, rather than to middlemen. In other words, it was a market shift, not a big law enforcement problem. At the time, we wondered if Switzerland had just bought itself a place on the USTR's "Special 301 list" that the administration uses each year to shame countries that Hollywood doesn't like.

A ruling handed down yesterday by Germany's highest court represents a blow to rightsholders in their quest to clamp down on illicit file-sharing. The court ruled that the parents of a teenager who had made available more than 1,100 songs on file-sharing networks can not be held responsible for their son's infringements, nor be required to monitor or hinder his online activities.

The Court ruled that the parents had met their parental obligations when they informed their child of "basic do's and don'ts" including that file-sharing copyrighted content online is illegal. Furthermore, the Court ruled that the parents were not required to monitor their child's online activities nor install special software to restrict his online behavior. This would only be required should the parents have "reasonable grounds" to presume that their child would engage in infringing activities online.

And, yes, the "but what about my $100 million movie" crowd will scoff and argue that this number is so "small." But, two points there: first, this number is growing very, very, very fast. And if you can't understand how trends explode, then you're going to be in trouble soon. Second -- and this is the more important point -- those funds helped create 8,000 films. For those who have been arguing about culture and how we're going to lose the ability to make movies... this suggests something amazing and important is happening which goes against all those gloom and doom predictions. By way of comparison, the UN, which keeps track of stats on film production, claimed that in 2009, 7,233 films were made. Worldwide.

They ran models of Nelson's subscription-based theater idea, showing that to break even they would need 3,000 people, or 15% of the mountain communities, to sign up. For $19.95 per month, a member would be able to see each movie one time and buy individual tickets for friends. Non-members could buy a $16 day pass.

Industry organizations have abandoned litigation efforts, and many copyright owners now compete directly with infringing products by offering licit content at a price of $0.

This sea change has ushered in an era of “copyright freeconomics.” Drawing on an emerging body of behavioral economics and consumer psychology literature, this Article demonstrates that, when faced with the “magic” of zero prices, the neoclassical economic model underpinning modern U.S. copyright law collapses. As a result, the shift to a freeconomic model raises fundamental questions that lie at the very heart of copyright law and theory. What should we now make of the established distinction between “use” and “ownership”? To what degree does the dichotomy separating “utilitarian” from “moral” rights remain intact? And — perhaps most importantly — has copyright’s ever-widening law/norm divide finally been stretched to its breaking point? Or can copyright law itself undergo a sufficiently radical transformation and avoid the risk of extinction through irrelevance?

The other interesting bit of the report is Newman's suggestion that an interesting proposal for changing copyright laws that might actually make traditional "maximalists" and "minimalists" both happy is to increase more moral rights for copyright -- and allow copyright holders to effectively choose if they want to enforce the "economic" rights to exclude by going after statutory damages, or, alternatively, enforce the "moral" rights to protect their reputation. His argument is that this might fit better with the nature of content creation today:

On Monday, Prime Minister John Key announced that he had requested an inquiry by the Inspector-General of Intelligence and Security after it was revealed that the Government Communications Security Bureau (GSCB) illegally intercepted the communications of individuals in the Megaupload case.

GCSB is an intelligence agency of the New Zealand government responsible for spying on external entities. It is forbidden by law from conducting surveillance on its own citizens or permanent residents in the country. Now it has been revealed that incorrect information supplied by the police’s Organized and Financial Crime Agency (OFCANZ) led the GCSB to spy on Kim Dotcom and Bram van der Kolk.

During an earlier hearing, Detective Inspector Grant Wormald of OFCANZ said that apart from surveillance carried out by the police, no other surveillance had been carried out against Dotcom. But with the revelation that GCSB had indeed been monitoring the Megaupload founder at the behest of OFCANZ, questions are now being raised about this apparent inconsistency, not least since Wormald previously acknowledged that a secret government unit had been involved in a pre-raid planning meeting in January.

Further evidence of overeager and illegal police work emerged Thursday in New Zealand as Inspector General of Security and Intelligence Paul Neazor released a report on the illegal bugging of Kim Dotcom and Megaupload programmer Bram van der Kolk. Two GCSB officers were present at a police station nearby Dotcom’s mansion as the raid took place.

Police weighed several options for the raid named “Operation Debut,” undertaken at the behest of US authorities, and sought to take Dotcom and associates with the “greatest element of surprise” and to minimise any delays the in executing the search and seizure operation should the German file sharing tycoon’s staff be uncooperative or even resist officers on arrival.

The police planners also noted that “Dotcom will use violence against person’s [sic] and that he has several staff members who are willing to use violence at Dotcom’s bidding” after a U.S. cameraman, Jess Bushyhead, reported the Megaupload founder for assaulting him with his stomach after a dispute. Based on Dotcom’s license plates such as MAFIA, POLICE, STONED, GUILTY, and HACKER, police said this indicates the German “likes to think of himself as a gangster” and is “described as arrogant, flamboyant and having disregard for law enforcement.” However, the documents show that Dotcom had only been caught violating the speed limit in New Zealand. The request for assistance from the STG notes that the US investigation against Mega Media Group and Dotcom was started in March 2010 by prosecutors and the FBI. According to the documents, US prosecutors and FBI “discovered that the Mega Media Group had engaged in and facilitated criminal copyright infringement and money laundering on a massive scale around the world.” FBI in turn contacted NZ Police in “early 2011," requesting assistance with the Mega Media Group investigation as Dotcom had moved to New Zealand at the time.

The past was, and the future is going to be, much more about performance. In this new world, recordings often function as more as ads for concerts than as money-makers themselves. (And sometimes are bundled with concert tickets, as Madonna's latest album was.) As a result, copying looks a lot less fearsome. A copied ad is just as effective--and maybe much more so--than the original.

Just ask pop singer Colbie Caillat. Caillet's music career began in 2005 when a friend posted several of her home-recorded songs to MySpace. One song, Bubbly, began to get word of mouth among MySpace users, and within a couple of months went viral. Soon Colbie Caillat was the No. 1 unsigned artist on MySpace. Two years after posting Bubbly, Caillet had more than 200,000 MySpace friends, and her songs had been played more than 22 million times. Caillet had built a global fan base while never leaving her Malibu home. In 2007, Universal Records released her debut album, Coco, which peaked at No. 5 on the Billboard charts and reached platinum status.

The problem of piracy in music is, of course, very different from the problem in comedy. Stand-up comics worry most about a rival, not a fan, copying their jokes. Still, the reduction of consumer copying of music via norms may be possible, and will become more imaginable if the music industry experiences ever-greater fragmentation and communication. There is already an interesting example of norms playing a substantial role in controlling copying in music. In the culture of jambands, we see the fans themselves taking action to deter pirates. What are jambands? In a fascinating 2006 paper, legal scholar Mark Schultz studied the unique culture of a group of bands that belong to a musical genre, pioneered by the Grateful Dead, characterized by long-form improvisation, extensive touring, recreational drug use, and dedicated fans. Although acts like Phish, Blues Traveler, and the Dave Mathews Band vary in their styles, they are all recognizably inspired by the progenitors of jam music, the Dead. But the Dead's influence is not only musical. Most jambands adhere to a particular relationship with their fans that also was forged by the Dead.

That’s more than 10,000 files per minute….

The continuing debate about the NSA’s mass-surveillance is also likely to have helped Mega. Unlike other popular cloud hosting services, Mega encrypts all stored files so they can’t be snooped on. Similarly, the fact that former U.S. Secretary of State Condoleezza Rice joined Dropbox may have also had an impact according to Dotcom.

In the recent Octane Fitness case (PDF), the Supreme Court changed the test for fee-shifting precisely to deter behavior such as Lumen's, Cote found. Lumen didn't do "any reasonable pre-suit investigation," and filed a number of near-identical "boilerplate" complaints in a short time frame. That all suggests "Lumen’s instigation of baseless litigation is not isolated to this instance, but is instead part of a predatory strategy aimed at reaping financial advantage from the inability or unwillingness of defendants to engage in litigation against even frivolous patent lawsuits."

Music service Rdio unveiled a completely redesigned website, as well as iOS and Android apps on Thursday, emphasizing its expanded free streaming offerings.

The revamped Rdio highlights its free content more prominently, including additional customized radio stations