It seems bizarre at first, but the draft is laid out like a spreadsheet: one article per row and with three columns, one each for the US/Japan version, the EU version, and comments. Inside each sentence square brackets mark the attributed proposed alternatives for language. From this we can tell some very interesting things about the New Zealand position:

• NZ negotiators are keen on the wording “copyright and related rights and trademarks” rather than the US’s catch-all “intellectual property”. Richard Stallman has a well-written article on why “intellectual property” is a dangerous illusion. (Namely, it covers some very different pieces of law with different intents, terms, scope, and applicability)
• NZ negotiators are keen to keep the Copyright Tribunal option open. After Section 92a collapsed last year, the government consulted and has proposed a nuanced and good proposal that balances ease of complaint against risk of false accusation, giving the Copyright Tribunal the ability to hear complaints and award fines of up to $15,000. A 6-month suspension of Internet access and larger fines remain the domain of the courts. The US proposed language is all about “judicial authorities”, so New Zealand has proposed “competent authorities”. This is good–it shows that the government is serious about the Copyright Tribunal part of the new Copyright Bill and is not simply mooting it knowing that it will be overruled by ACTA.
• NZ negotiators are aware of the US desire to turn litigation into a revenue stream. They’ve opposed the US language “in the case of patent infringement, damages adequate to compensate for the infringement shall not be less than a reasonable royalty”, although interestingly NZ only supports this being stricken from the US proposal not from the EU proposal. The EU negotiators’ comments are fascinating: “The EU sticks on the concept that damage compensates all the prejudice but only the prejudice. Neither ‘punitive damages’ nor ‘future prejudice’ is acceptable”.
• NZ negotiators are keen to prevent the situation where someone joins a filesharing network, grabs an album, and is hit with a $100,000 penalty. Their wording supports flexibility when copyright damages are set: the authorities may consider lost profits (as opposed to the US wording shall) and NZ suggested the authorities consider retail price as well. The US wants each country to set up a system of pre-established damages and guidelines for calculating the penalties (oh, say, number of copies times profit we say we would havemade), and give the rightsholder the choice of using that formula instead of letting a judge award penalties. NZ wants this to be optional, not mandatory.
• Pirated or counterfeit items will be removed from sale or distribution, and NZ would also like them to be surrendered to the rightsholder (so Mattel get the knock-off Barbie dolls). The machinery used to manufacture the pirated or counterfeit goods is also forfeited, which NZ raises no objection to. It’s unclear to me whether this applies to computers used in copyright infringements.
• NZ supports deleting the article which says that when you’re found guilty of infringement, your identity and the identity of others involved in the infringement and distribution are turned over to the rightsholder.
• NZ is questioning the scope of the term “online service provider”. As we’ve seen with S92A, the term “provider” might cover cafes, hospitals, employers, apartment building body corporates, families, even sites like Google and TradeMe. Clarity is essential.
• ISP and website liability is a hot topic. Some countries already hold service providers liable for what happens on that service (e.g., Italy’s prosecution of Google executives) while others give safe harbour to such providers. Section 4 says “what we said for the physical world also applies for the online, but countries can place limits on the liability of service providers under certain conditions”. Switzerland wants this optional, NZ wants to know why search engines deserve safe harbour. I hope they got their answer–Google’s programs index billions of web pages and there aren’t enough humans on the Internet to read and pre-qualify pages before they go online.
• There’s an interesting clause that would prevent service provider safe harbours from being made conditional on proactive monitoring. That is to say, a country wouldn’t be able to say “oh sure, you can have safe harbour, but you have to be reading everything your users do and you lose it if you’re not searching all their traffic.” There’s a NZ objection here, but it’s unclear to me whether it’s to the whole provision or just the language.
• NZ is the white knight when it comes to anti-circumvention legislation. The ACTA draft contains proposed text saying that if you make or use a tool that breaks “technical protection measures” (DRM) then you’re breaking the law. The NZ negotiators point out that DRM is out of scope for ACTA, but even if it were in-scope there’s still public domain material locked behind DRMs and breaking such DRM shouldn’t be against the law. The paragraphs are beautiful. I quote them here:
  

  NZ: The paragraphs refer to “adequate legal protection” as well as remedies, which is inconsistent [with] the objective of ACTA to establish standards for the enforcement of intellectual property rights and the ACTA discussion paper. In particular, we note that the discussion paper refers only to parties providing “remedies against circumvention of technological protection measures used by copyright owners and the trafficking of circumvention devices.”

  New Zealand does not support protection being mandated against circumvention of TPMs where the underlying work is not protected by copyright. In particular, we do not support protection against circumvention of access control TPMs because access control is not an exclusive right given to copyright owners.

• There’s an odd section about preserving electronic rights management information. I assume it’s meant to preserve owner and license information, but I’m not really clear on the situations that motivated this section. NZ opposes extending protection of RMIs to cover information about performances or the producer of a phonogram.

On the balance this bit isn’t too bad–New Zealand is a good voice for sanity in the negotiations. I have to qualify my assessment in two ways, though:

1. I’m not a lawyer. I may have misread the complex document. I’m not intimately familiar with the current legislation, so I may have overlooked a situation where the negotiated text will throw out a freedom that we currently have (e.g., format shifting).
2. I haven’t spent a lot of time thinking about how specific technology might interact with the proposed treaty. For example, do I run foul of the Rights Management Information protections if I rip a CD and don’t add in title, composer, etc. information?

This treaty is going to need a lot of close examination from people who can read the legal language and yet who are intimately familiar with the possibilities and opportunities of technology. This is why negotiation in secret is a bad idea–our country won’t benefit from the knowledge of experts until the text is set in stone. We’ll get something that likely has flaws, but we’ll have to approve or reject it “warts and all”.

1. First, I have to applaud the industry getting together to try and figure out how it can help the rest of NZ grow. The most exciting conversation at the short-lived Digital Development Council was when agriculture and manufacturing and other industries had an honest conversation with representatives of the ICT industry without being sidetracked into the failures or benefits of particular products or vendors.
2. Second, I applaud the idea that ICT can contribute to the lift in national economic performance that the government wants. Lately I’ve been thinking that there are three critical parts to NZ’s industries doing better: (1) make better use of ICT, (2) develop a global focus so our businesses don’t plateau once they get comfortable in the domestic market, (3) lift the skills of the people in leadership and management so that they can deliver on (1) and (2) without shitting on their feet as has happened all too often in the past. The report addresses (1) but I’d say that all three must be tackled together.
3. I don’t like the high-level generalities of the NZICT report. It’s their first report and in many ways is a stake in the ground to say “we’re here, we’re doing good things, we’re on the right side”. That would explain the vague parroting of political objectives (“step-change” is the new “sustainability”). The report is cannily aligned with political objectives (broadband, more efficient public sector, education, R&D) but many of the recommendations are little more than “we will work with you on what you’re already doing in these areas”. Government needs to be shown specific opportunities (e.g., “look to open source database alternatives in these situations”), and there are precious few specifics here.
4. And where there are specifics, they’re not great. For example:
   

   There  has  been  a  move  to  a  more  centralised  approach  to  Government  ICT strategy  managed  by  the Government Technology Services  group  within  the Department  of  Internal  Affairs. NZICT supports this centralised planning approach. It should clarify the strategic objectives of Government ICT spend, and enable consequent research and development opportunities for the industry to take. 

   NZICT proposes that the Government make an “Annual Statement of ICT Priorities”. This will enable transparency, certainty and direction of public sector ICT spending for all stakeholders involved. It will also encourage private sector investment, including research and development. This will stimulate ICT based innovation within the economy.

   Some problems with this: (1) annual is not a timeframe for strategic thought, it’s tactical; (2) annual is not a R&D timeframe, it’s a sales cycle; (3) it’s unclear that an annually-changing long-term strategy would provide any more certainty to investment than exists now; (4) the problem that this would solve isn’t clearly defined. This last failing is near-universal. Very few of the paper’s many recommendations come with a problem statement, and solutions to unknown or poorly-specified problems often turn out to be timebombs, turkeys, or turds.

5. I’m also aware that NZICT is an industry lobby group and as such its offers and advice should be taken with a grain of salt. New Zealand has precious few independent economic voices (New Zealand Institute has served admirably in the past), and NZICT is not one of them. “NZICT  will  establish  a  working  group  with  the Government Technology Services group of the Department of Internal Affairs to develop a programme for improving public sector ICT efficiency, including operational and process cost reduction to an agreed plan and targets” could be read by a cynic as “NZICT members will have privileged access to centralised government IT planners and buyers, bypassing or rendering moot a procurement process that attempts to provide a level playing field”.

So, like most things, it’s a mixed bag. I’d give them 6/10 for speaking with a single voice in such tight harmony with the government’s stated policies. There’s still work to be done in producing something that’s useful, rather than a positioning paper, but this is a promising first step from a new industry lobby group.

1. Nine to Noon
2. InternetNZ New Councilor indoctrination^Wintroduction
3. Silverstripe catchup (I’m on their advisory board)
4. Evensong at St Pauls (loves me the choral music)
5. Meet Clare Curran
6. LIAC meeting all day Friday

Links: FriendFeed acquired by Facebook (BusinessWeek), SpringSource acquired by VMWare (InfoWorld), Poison for Venture Capital (NY Times), the Scratch visual programming language.

FriendFeed and Facebook

Facebook’s the biggest social network: more than 250m active users, with >120M logging on every day. They get a billion photos each month. It’s huge. But a person might belong to plenty of other social networks: Twitter, MySpace, they might have their own blog or two, they put photos on Flickr, …. It’s very easy to have a decentralised identity these days: my Internet presence isn’t just what I post on nathan.torkington.com, there’s much more.

Friendfeed was an aggregator–it gave you one page to track all the things your friends do on many different sites. It looked a bit like the Facebook event stream, and so one of the rumours that went around after the acquisition was “Facebook bought it because they do a better job of presenting information to the user”. To get to the bottom of that, you should know why companies buy other companies.

There are four reasons: technology, HR, customers, and optics. A technology acquisition is where the company being bought has something new and hot, and the acquiring company wants it. Google often buys companies for their technology–they just bought one that does better video encoding over the web, which can save them millions in bandwidth bills because of all the traffic that YouTube does. An HR acquisition is where the company being bought has good people but no good technology. Buying for customers means you want to sell your technology into a new market and the company you’re buying has connections in that market. Optics is a fancy way of saying “we sold it so nobody feels bad about the company closing”.

Friendfeed was an HR acquisition. We know this because (a) they said so, and (b) the team is being split up. If the technology were good, they’d keep the team together working on the technology. So don’t expect Facebook to start looking like Friendfeed any time soon.

This acquisition is notable because FriendFeed was started by a big-name crew of former Google employees. They made Google maps hackable, they built GMail, they …. Google didn’t want to see them leave, but they were determined to set out on their own. Now they’ve been bought by Facebook, the company that Google worries more about than they worry about Microsoft. It shows that brilliance isn’t enough to create great products and make lots of money.

SpringSource and VMWare

Imagine you’re a website developer. You need to test your website on three or four versions of Internet Explorer and Firefox, several versions of Windows and Mac. Do you have one computer for each possible combination? No, you make your computer pretend to be a computer running Windows 95, or Mac OS 10.1, and the most popular software to do this is VMWare. It lets you run one or more “virtual” computers in your one real computer.

This is hugely popular with “cloud computing”, where a company runs a big data center full of real computers. They rent you just enough computer to get your job done, and they handle all the hard bits of backup, keeping the site airconditioned, swapping out broken hardware, etc. They use VMWare and software like it so give you a virtual computer that’s “just enough” of the physical computer for your needs. That way they can rent the same physical computer to several customers, each getting just enough compute for their needs.

VMWare just bought SpringSource, who made tools that make it easier to write big programs in Java. Lots of people used SpringSource. This was definitely a technology acquisition, because VMWare wants to own as much of the software bits of cloud computing as possible. So they bought the leading Java tools company, they’ll make sure it works VERY well on their cloud virtualisation software, and now there’s ANOTHER reason to use VMWare when you shop for or set up a cloud … you get more pieces of the puzzle, and they all work well together.

MONEY MONEY MONEY

So you might think that this means it’s all good and there’s lots of money floating around in Silicon Valley and the VCs are all happy as Larry. You’d be wrong. The piece in the New York Times that I’ve put in the links refutes this nicely.

If you’re a VC, you put money in when a company is small so that it can become big and you make lots of money when it sells. Venture-funded companies often go through several “rounds” named after letters: you get the A round from the first set of investors, then a few years later you com e back and say “we’ve grown nicely, please pony up to get us to the next stage” and those same investors and maybe new ones will kick in more money in your B round, and so it goes until you’re bought by another company or you IPO.

At each round there’s a “valuation” — the rather arbitrary amount of money that the company is worth. It’s arbitrary because often they don’t have any sales. You’re forced to come up with a number so you can decide how many shares the new investors get. There’s an art to it, some rough guides (number of users, even if they’re not paying; size of the market), but there’s one thing you don’t want to see happening … and it’s been happening.

Valuations have been going down.

A “down round” is where a company comes back for a B round and the market says “yeah, actually, last round you were smoking crack and thought it was a $10M company. Now we look at it and we think it’s only a $5M company”. The investor that kicked in $1M in the last round got 10% of the shares (1M invested, 10M company worth), The same investor coming into THIS round gets 20% of the shares (1M invested, company only worth 5M). AND if the company sells for its valuation, the early round investor has LOST money.

This is, as the article says, poison — VCs take risks, but nobody wants to put money in if the investments are losing money.

As if that’s not bad enough, nobody’s cashing out — there aren’t IPOs, there are few and far between big sales. This is the VC version of the liquidity problem hitting the global markets: you need to be able to sell the company you’ve invested in, so you can get money back to return profits to your own investors and then to start the next round of investments. If nobody buys your company, and you can’t IPO, you’re stuck with your money locked into a company where, to be honest, it’s doing you no good.

In short, still grim times in Silicon Valley.

Kids Programming

For the last two years I’ve been using a system called Scratch to teach 7 and 8 year old kids to program. It’s ridiculously easy and fun. It’s free, developed out of MIT and it really is programming, it’s not a sham.

Scratch is visual: you don’t type in programs, you assemble them from little blocks. You can’t write something the computer can’t run: if two blocks aren’t meant to go together, their shape is such that they can’t be forced to go together. Compare this to typing programs in, which kids are slow at and hate, where a single typo can make your program unusable and the error messages are rarely useful.

You see a stage on which there’s a cat. The cat’s a “sprite”, a character, and characters can have costumes. You assemble scripts that make the characters do things: move, talk, change colour, lay down tracks, react to the mouse or keyboard. You can record and play your own sounds, draw your own characters, set up lots of characters interacting, and even write games.

Kids love it. Boys on the whole want to write games, and there are a lot of sample games that come with Scratch so they can see how to do it. Girls on the whole more interested in getting a lot of characters interacting and telling stories.

I teach classes in the same way: show them two or three simple scripts that make the cat walk back and forth across the screen, or change direction to chase the mouse, and then make it say “got it” when it catches the mouse. Then they’ve seen decisions, how to repeat things, how to get positions and other values, and that’s the basis of many of the programs.

Try it. If you’ve got kids and have wondered “what’s the best way to get them doing something more with the computer than just looking at YouTube”, show them Scratch.