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March 2018
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China's Tencent Proves You Can Make A Decent Profit From Online Publishing -- If You Have A Platform With A Billion Users

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A constant refrain from the publishing industry is that it's impossible to make a decent profit from online publishing because of all those people downloading and sharing digital stuff for free. An interesting article in Caixin reporting on the Chinese digital giant Tencent offers an interesting perspective on that issue. It provides an update to a story we wrote last year about Tencent moving into online publishing, with evident success:

Net profit for Tencent's online publishing unit China Literature was 15 times greater in 2017 compared to 2016, according to the company's first annual results released after its blockbuster initial public offering (IPO).Revenue grew by 60% to 4.1 billion yuan ($648 million), from 2016's 2.6 billion yuan. Profit attributable to shareholders jumped by a staggering 1,416% from last year's 36.7 million yuan [$5.8 million] to 556.1 million yuan [$88 million] in 2017.
As the article explains, revenues came mostly from payments by readers of the company's online offerings, which cater for a wide range of tastes -- from comics to romance. In total, works are supplied by 6.9 million writers, most of whom are contracted to produce original material for the company. The scale of the operation is similarly large: last year around 11.1 million people paid to use China Literature's services, up from 8.3 million in 2016.Although those are all impressive figures, it's worth noting one of the key factors driving this business. Tencent is the company behind the WeChat messaging app. Last year, there were 963 million users, so it's likely that more a billion people now use WeChat's powerful and wide-ranging platform. That naturally makes selling China Literature's services much easier.Traditional publishers will doubtless claim this means they are unable to compete with this kind of platform power, and that they can never generate significant profits online. Their conclusion seems to be that companies like Google and Facebook should be punished for their success. Indeed, this demand has been crystallized into a slogan -- the so-called "value gap", which supposedly represents the money that publishers would have received had it not been for the online giants.In truth, this "value gap" is more of an "innovation gap": if the publishing companies had embraced the Internet fully in the early days, there is no reason why they could not have turned into Google and Tencent themselves. Instead, publishers have fought the Internet from its first appearance, as they still do. They hanker for the more profitable days of analog publishing, when they were the undisputed gatekeepers. And in their heart of hearts, they secretly hope one day those times might return if only they can persuade politicians to bring in enough retrogressive copyright laws to hobble innovative online companies.Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

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posted at: 12:00am on 30-Mar-2018
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Appeals Court Has No Problem With Cops Using E911 Services To Perform Warrantless, Real-Time Tracking

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The Fifth Circuit Appeals Court says it's fine if the government uses mandated emergency services to perform real-time GPS tracking. It doesn't go so far as to affirm the constitutionality of the actions, but it achieves the same ends by voting down the appellant's request for a rehearing.What we can glean about the issue at stake comes from the eight-page dissent [PDF] written by judges James L. Dennis and James E. Graves, two of the seven judges who voted for a rehearing. In this case, the government used the defendant's cellphone provider to engage in real-time tracking. No warrant was obtained despite the government's shoulder-surfing of incoming GPS location data.

Defendant William Wallace contends that the Government violated the Fourth Amendment by ordering his service provider to activate his phone’s “Enhanced 911” capability and to relay his GPS coordinates in real time, including while he was in his home. The panel opinion concludes that, even if the Government’s real-time tracking of Wallace’s GPS coordinates was an unconstitutional search, Wallace cannot benefit from the exclusionary rule suppression of the fruits of that search because law-enforcement officials could have reasonably relied on open-ended language in 18 U.S.C. § 2703(c), a provision of the Stored Communications Act (SCA), as authorizing their actions.
Those are the facts of the case, but as the dissenting judges point out, the SCA clearly did not anticipate this use of the law, much less explicitly approve this GPS warrant end-around utilized by law enforcement. The government relied on good faith exception arguments made in two cases -- Leon and Krull. The latter holds that officers may rely on clear statutory authorization even if the statute is later proven to be unconstitutional. (In the Krull case, the statute was struck down a day after the disputed search took place.) This seems about right as courts hardly expect officers to know the laws they're supposed to enforce, much less the ones they're supposed to follow.But that doesn't hold here. The dissent makes it explicit: the SCA provides no basis for warrantless commandeering of a phone's GPS system to track suspects. This isn't a passive collection of existing records. This turns a phone into a tracking device at the behest of law enforcement, even when the phone's owner may have taken measures to limit the collection of GPS data. There's nothing in the SCA that says any of this is constitutional.
Unlike in Krull, here there is no legislative judgment or dialogue between the courts and the legislature as to the constitutionality of the realtime GPS surveillance at issue. Congress passed the SCA over thirty years ago. At that time there was no E911 requirement, see 61 FED. REG. 40,374, and GPS was still experimental military technology that would not begin to be in widespread civilian use until over a decade later…
Furthermore, there's a Supreme Court decision to be considered -- one that strongly hinted real-time GPS tracking requires warrants (even if the Justices didn't actually go so far as to draw a bright line).
Moreover, as has been expressed by five members of the current Supreme Court and by members of this court, there is grave doubt as to the constitutionality of the kind of warrantless, real-time GPS tracking at issue in this case. See, e.g., United States v. Jones, 565 U.S. 400, 415–18 (2012) (Sotomayor, J. concurring) [...] Thus, both the nature of the statute and the nature of the alleged constitutional violation strongly suggest that Krull does not apply here.
The dissent then returns to the SCA. The government argues the SCA should be read to include real-time GPS tracking as something covered by the "or other information" phrase in the law. Since it's not communications, the government rationalizes, there should be no warrant requirement. The dissent points out the flaw in the government's reasoning by pointing to nothing more than the name of the law invoked to perform the warrantless tracking.
This holding ignores plain language in the SCA suggesting that real-time collection of GPS tracking information is not authorized by this statute. Section 2703(c) is part of the “Stored Communications Act.” (emphasis added). The pertinent section is entitled “Records concerning electronic communication service or remote computing service.” § 2703(c) (emphasis added). GPS coordinates that have not yet been created and would not be created absent the Government’s intervention cannot be called “records” or “stored” communications under any commonsense understanding of those terms.
This does nothing for the appellant or anyone who resides in the district, unfortunately. Law enforcement can still turn phones into tracking devices without warrants, barring any state legislation that provides more privacy protections than this district's interpretation of the Fourth Amendment. With its refusal to rehear this case, the Fifth Circuit has granted the government the luxury of interpreting "or other records" to include compelled real-time GPS tracking.

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posted at: 12:00am on 30-Mar-2018
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