Now, if you aren't familiar with that song, you might not find this interesting in the least. Sorry. Thousands of people have viewed this clip online thus far. But today I read,
A video of two Bank of America employees singing a version of U2’s “One” to commemorate their company’s acquisition of MBNA recently made the rounds of the blogs, prompting amusement and some ridicule from online viewers.
But the intended comic effect of their performance and the retooled lyrics (“One spirit, we get to share it/Leading us all to higher standards”) seemed lost on lawyers on the lookout for copyright violations.
On Tuesday, a lawyer for the Universal Music Publishing Group, a catalog owner and administrator, posted the text of a cease-and-desist letter in the comments section of Stereogum.com, a Web site carrying the video. It contended that Bank of America had violated Universal’s copyright of the U2 song.
Universal said on Stereogum that it had sent the letter by fax and registered mail to Bank of America last Monday. On Friday, a bank spokeswoman, Betsy Weinberger, said the legal department had not yet received it.
The letter was signed by Raul R. Gonzalez, a lawyer for Universal Music. Reached at his office, Mr. Gonzalez said, “No comment” and hung up.
Online commentators accustomed to viral marketing said they suspected that the video was the latest corporate attempt to co-opt Internet video for promotional purposes. But Ms. Weinberger said it was “absolutely not” leaked by Bank of America as a marketing ploy.
These copyright lawyers are complete idiots. That type of parody is nothing that can't be found on every radio station in the country. I think on this issue, Universal got a little overzealous. Nonetheless, these intellectual property types simply don't get it.
Take for instance this video below which I posted on YouTube and linked to before.
I had some loser from Z100, an executive producer or something, email me threatening to sick his lawyers on me for posting "copyrighted material". Below is my response,
Let me get this straight. You want me to take down free, viral, international advertising for your show?
But I gain nothing from this clip, so I'd lose nothing by its removal.
I got the clip in an email originally. It's all over the net and will be FOREVER. You'll never be able to take it down everywhere. Sure you guys can put it up on YouTube and Revver and strike some sort or revenue sharing agreement but it will amount to pennies.
You guys should put your next phonetap up immediately and preempt the favor I did for you
Do you really want it down?
This was the response I got back,
What we don’t need is you trying to teach us about viral videos, promotion and the Internet. If we thought you were doing us a favor, we wouldn’t have written you the email. If we wanted it posted, we would have done so with proper detailed descriptions. There are legal issues here involving the people on our calls. It is no different that a recording artist not wanting their videos or their songs posted all over the web. Posting a Phone Tap does not promote our show as you think. We are in the business of having people listen to our show to hear our Phone Taps. Listening on You Tube does not help that and is for us to decide. Please enjoy the mp3 on your computer but respect our wishes and please take it down.
Thank you,
Z100
Note the guy didn't appreciate my patronizing attempt at Luddite edification.
Never one to concede the last word to anyone, I quickly wrote a response that I decided not to send.
"Legal issues"?
Once they air the original show, they have legal liability. It never goes away and the mere 6,000 views of my YouTube clip don't in any way increase their liability. So Z100, please shut up.
I have noticed that this "legal liability" excuse is a chronic Moron tactic. Often times, when a Moron does or says something stupid, they lurch for this lame ruse. For example, banning tag and dodgeball at government schools had to be done for "legal reasons". Give me a break.
Consider for a second the irony of a radio program getting mad at someone else for using their clips. All day long they steal audio clips and soundbites from other media sources. Everything they do is theoretically protected by the parody law.
But God forbid someone reproduces a clip from their show....
As I said in my email, Z100 will never be able to take that clip down from everywhere. I have already found a few more clips of it on YouTube. All were posted after mine so those posters may have just stolen my clip and rebranded it. There is an easy way to capture files straight from YouTube.
In the mother of all copyright ironies, YouTube is actually trying to silence a few websites that instruct on how exactly to do this.
If one googles any permutation of "youtube", "copyright infringement", "intellectual property", and "sued" you'll be absoluteley astounded at how many news stories and blog posts come up. Everyone is getting sued or at least being threatened with it: Google Video, MySpace, YouTube, etc.
In ten years young Captious bloggers will look back at present day and wonder how so many idiotic content producers thought that in the age of the internet, they could control their broadcasted and publicized products.
In an oblique way, this issue reminds me of the multiple listing wars of option exchanges.
Up until the late 1990s, stock options for public companies would only trade on one of the erstwhile four exchanges. The Amex floor had Intel. The Philly exchange had Dell. The P-Coast had Microsoft and Chicago had its proprietary listings. Slowly the monopoly broke. New issues like WorldCom and Netscape would debut on all four exchanges. Eventually all the exchanges declared war on each other and equity options for almost every stock could be found on all of the exchanges.
It was a grand time to be an options broker. They'd come in the pit and bid or offer mid-market, threatening to send the order "away". Specialists and traders were making tight, deep markets, "1000 up" in Moronically vain attempts to protect their business. All they did was piss away lots of money. Without edge, not only is there no reason to trade, it's quite hazardous to your wallet.
It was impossible to protect subsequent orders from ever seeking a better fill on another exchange. The gig was up.
Like the option pit traders of yore, today's copyright warriors are fighting a battle that's long since been over.
Defending "intellectual property" rights is as feckless as launching up fireworks in your backyard and trying to prevent your neighbors from enjoying them.
All you need to know about the intellectual bankruptcy of intellectual property is that Greg Mankiw supports it.
If someone wants to cut and paste my entire blog into a book and sell it, so be it and more power to them. I have been fully aware of that reality since the get-go.
But if I find knock-off C-Nut Bobbleheads for sale in Chinatown, color me a hypocrite, but I may have to call my lawyer.
9 comments:
Without edge, not only is there no reason to trade, it's quite hazardous to your wallet.
How can you tell whether an investor/trader has an edge or not?
I could give a very long answer here will instead endeavor for succinctness.
With stock options, theoretical edge is quite easy to measure. As a reactive pit trader, one who takes the other side of public order flow, I simply want to be buying options a little bit cheaper than the average level they are trading at. Of course I want to be selling options at premiums slightly higher than the average trading level.
The bid/ask spread describes this. If a call option's market is "3 to 3.30", just think of 3.15 as representing fair theoretical value.
If I buy ten calls from a customer for 3 ($300 each), I'll figure to have made .15 ten times in theoretical profit - $150.
In practice, will I have really made 150 bones on that trade?
Well, first of all, when the market closes, that option will be marketed at the midpoint of the bid/ask. So assuming the market closes at those levels, my account will be $150 higher.
In the longer run, I could lose or make considerably more than $150 from that trade, depending on how I hedge it and where the stock moves through expiration.
So then is it really meaningful at all to think in terms of theoretical value?
Yes.
Because ideally traders fill so many orders that they invoke the law of averages. In the days of less pervasive computers, I could trade up a storm intraday, have all sorts of flying positions, missed hedges, errors, and whatnot and still come very close to predicting my profit or loss on just about any day. And I could do this because I watched the theoretical edge of each trade - roughly half of the bid/ask spread times the number of contracts I traded.
Traders are no dummies either. We may have an option theoretically worth 5.15 but may skew the market to create more edge. Betting that buyers will come for it, we may price it 5.00 to 5.50. So if I am fortunate enough to sell 100 of these at 5.50, my theoretical edge would be $3,500 instead of say the $2,500 from an unskewed market around 5.15.
Note that I could trade 5000 calls at 5.15 in that example and my account wouldn't budge and yet my risk profile would explode.
With just plain stocks, a specialist is the only one who could talk about trading with edge. Similarly, for him edge would just be about buying shares for prices slightly lower than they are currently trading and selling them slightly above that level.
As for upstairs traders like me these days, we have to use our experience to create our own more unquantifiable edge.
Upstairs traders lose the bid/ask edge but gain much lower overhead.
Trading options in a pit encompassed anywhere from $5,000 to $30,000 a month in overhead from 1995 to 2001.
If I buy some Apple January 90 calls on the bid, obviously the best way to lock in that theoretical edge is buy selling them later on.
Since that opportunity doesn't always present itself, understand that there are many other ways to lay off that trade and lock in theoretical profits.
I could sell January 90 puts, February or March 90 strike calls or puts. I could also sell 85 strike calls or puts in January or other months.
Generally a trader lays off the risk of buying one option by selling a similar one. The strike prices have to be in the same ballpark at least.
Most of the time, option order flow is one way. Pit traders are forced to buy lots of premium or sell lots of premium - and hold that position for months. Here it's much harder to lay off your risk, but now we are getting to a much more advanced discussion.
OK, I agree that market makers have an edge because they can buy the bid and sell the ask. But what about traders who are not market makers that have to buy the ask and sell the bid? Does the edge stop there for traders?
Let me back up for a second, marketmakers only theoretically have a theoretical edge. In practice, the bid/ask spread doesn't guarantee profitability. Many crowds, like Philly's Home Depot crowd were fiercely competitive. Forty guys fought there and everything traded mid-market. Obviously, no one would stand there if they weren't making money.
Those traders obviously created their own edge.
The SPY pit was very profitable on the Amex at one time, but a seat lease there pushed 30k per month.
When a trader goes upstairs, he loses the bid/ask advantage but gains a whole lot more. As I already mentioned, your overhead craters. Also, it sucks to be standing in the Time Warner pit doing nothing while Dell, FNM, VVUS, or some other stock is going bananas.
An upstairs trader can scan the entire universe of tickers and seek out the action. Personally, I had the misfortune of trading a bear market in gold mining stocks while fortunes were made in internet stocks.
An upstairs trader can generate theoretical edge other ways as well. He can have a connection at a trading desk who instant messenges him "good information". He can sit next to or know a very skilled trader and mooch ideas from them. Or he can simply have gained sharp insight into the markets by dint of experience.
A lot of trading is pure luck as well - good, bad, and horrible.
Edge is really just an academic attempt at analysis, wholly inadequate for telling the entire story. People would be very surprised at some of the neanderthal traders making millions, most of whom couldn't articulate their strategies or even spell "theoretical edge".
Sorry about trading the gold mining bear market while missing the internet bubble. Could you have shorted as a market maker of gold mining stocks?
An upstairs trader can generate theoretical edge other ways as well. He can have a connection at a trading desk who instant messenges him "good information". He can sit next to or know a very skilled trader and mooch ideas from them. Or he can simply have gained sharp insight into the markets by dint of experience.
A trader can have all of the above, but still the question is how can one tell if he has an edge or just pure luck?
In my view, a trader has to last at least 10 years in the business to prove their mettle.
One bull market does not make a trader (or a real estate investor).
I was short gold stocks a plenty. What makes a market bad is a dearth of volatility.
10 years is a life time in the market. I am not sure that any edge would last that long. My guess is that if a trader found a real edge, it probably only lasts a few years at most before everyone knows about it.
Do you think it's necessary for long term investors to have an edge? If so, then since you are a long term investor in Google, does it mean you have an edge with respect to Google? If so, then how do you know that you have an edge in Google?
I think using the words "edge" and "long term investing" in the same sentence pushes even the limits of theory.
I like google's business model and I bought it originally because I foresaw how huge its business could be. There's no edge there, the stock could still go to zero. I just made a small bet on a fast horse.
I am not a long term investor but for sure there's plenty of advice I could give on the subject. Briefly, diversify away from large caps, use ETFs, own commodities, and look to buy small companies, hold them until they are large, then get out. DON'T EVER BUY A MUTUAL FUND (though I realize 401k's may compel you to).
As you correctly stated, edge doesn't last long in the trading business. That's why a ten year career inherently proves the mettle of a trader.
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