Digital Media

The revised Google Books settlement agreement may quiet international opponents, but it still gives Google a monopoly on commercializing out-of-print books where the copyrights are unclaimed and fails to protect consumer privacy, opponents said on Monday.

Google is scanning and digitizing books in libraries and publishers' catalogs so people can view and search them online and buy electronic versions. The company is striking deals with publishers for copyright-protected books and offering to pay rights holders to digitize out-of-print works, and will share revenue from sales with authors.

The agreement would settle a 2005 copyright infringement lawsuit filed by the Authors Guild over Google's book scanning plans.

Key concerns focus on licensing rights to so-called "orphan works" where the copyright holder is unknown, as well as books where the rights holder has not stepped forward--together estimated to represent more than half of the available works.

The modified settlement, filed in federal court in New York late on Friday, attempts to address U.S. Department of Justice concerns that the settlement would give Google unfair competitive advantages and violated copyright law.

Copyrights holders now have more control than they previously had. Authors and publishers were given seats on a Books Rights Registry board, a nonprofit that would be responsible for making payments and holding revenue from unclaimed works for up to 10 years. The registry is now required to search for copyright holders who have not yet come forward and revenue from unclaimed works will be used to locate copyright holders instead of for operations or distribution it to known copyright holders.

The revised settlement also could remove some of the heat Google was getting from governments in other countries over copyright concerns. Author and publisher groups in Germany, France, China, and elsewhere have voiced opposition to the Google Books plan. In response, Google, the Authors Guild, and other parties in the settlement excluded any out-of-print works not registered in the U.S. or published in the U.K., Australia, or Canada.

"Just because they are taken out of the agreement doesn't mean Google will stop scanning their books," Pam Samuelson, director of the Berkeley Center for Law & Technology, said of the works from the other countries. "Google has already scanned many of their books."

Also troubling to critics is the fact that the revised settlement circumvents traditional copyright provisions by allowing Google to digitize orphan works without first getting rights holder permission, while any Google competitors are blocked from doing so barring legislation granting them licensing rights.

"For the millions of volumes of orphan books that Google has already scanned in, they can offer those without risk of anyone coming forward and suing them for infringement," said John Simpson, a consumer advocate at Consumer Watchdog.

Danny Sullivan, editor-in-chief of Search Engine Land, wrote on his blog: "Given that everyone is so positive that you CAN find rights holders for most of these unclaimed works, why not go out and find them first, then ask if they want to be included. Surely the settlement can generate enough money from books with known authors to fund that without having to include these books at the outset?"

The Justice Department's main concerns were not addressed, others added. (A DOJ spokeswoman did not return a call seeking comment.)

"The Department of Justice was trying to get them to also create a mechanism for licensing to third parties and the amended settlement agreement doesn't go that far," Samuelson said. "It creates a fiduciary for unclaimed books to potentially license unclaimed books at some point in the future, but only if Congress passes orphan works legislation."

Samuelson and other critics are worried that as a result of Google having the only comprehensive collection of out-of-print books, there will not be competitive pressure on the company to keep prices fair. "The risk of price gouging over time is very high and universities in particular have experienced excessive increases in prices of scholarly journals over the last few years," she said.

"The settlement is a total failure to address most of the problems the Justice Department raised and virtually all the problems raised by U.S. objectors and amicus [friends of the court] briefs," said Gary Reback, an antitrust lawyer and leader in the Open Book Alliance, whose members include nonprofit author groups, library institutions, and Google rivals Amazon, Microsoft and Yahoo.

"If we are going to allow Congress to [pass a law granting others licensing rights for orphaned works] why do we need a settlement?" said Reback. "The right way to do this would be to have Congress deal with it; not for Google to give itself a preference."

Of the settlement's handling of orphan works, James Grimmelman, a professor at New York Law School, writes on his blog that "It's a very clever hack. I have my doubts whether it's legal." Google remains "the only game in town" for unclaimed works, he said. (For more on the copyright implications of the settlement read Larry Downes' guest column on CNET News.)

The amended settlement also does not provide privacy protections for consumers that privacy advocates and authors including Michael Chabon, Bruce Schneier, and Jonathan Lethem had requested.

"One of our core privacy concerns with the settlement has been that reading records are not properly protected from disclosure to the government and third parties," the American Civil Liberties Union of Northern California wrote in a blog post. "Readers should be able to use Google Book Search without worrying that the government or a third party is reading over their shoulder."

Editors' note: This is a guest column. See Larry Downes' bio below.

A month and a half after Google and the leading trade associations for publishers and authors withdrew their proposed settlement over Google Books, the parties on Friday filed a new version of the agreement.

The hope is that this new draft (now weighing in at 165 pages) will respond to the many objections to the original version, particularly those from the U.S. Department of Justice.

Significantly, the revised settlement excludes books published outside the United States, United Kingdom, Canada, and Australia. And the registry that will collect royalties on sales of out-of-print works whose copyright owners are unknown will now act independently of Google. Some privacy concerns were also clarified. But I doubt that those who screamed the loudest will be satisfied with the changed document.

What the objectors--including most of Google's competitors, regulators, and a gaggle of overwrought law professors--seemed to dislike most was Google's audacity, specifically in using technology to solve a problem created by lawmakers in the first place. New objections, more attenuated and jargon-laded, will no doubt follow, until federal judge Denny Chin grabs the reigns of this increasingly unwieldy class action and steers it to resolution.

Let's back up. In 2004, Google began to scan all of the books languishing in some of the world's leading research libraries. Today, Google Books lets anyone search the contents of these libraries for free. For books whose copyright has expired, Google makes the entire text available and downloadable.

Citing possible copyright infringement, however, Google was sued in 2005 by the leading trade associations for authors and publishers. After three years of intensive negotiations, the two sides worked out a detailed settlement. The original agreement seemed to create a cheap and elegant solution to a problem that has plagued scholars, librarians, and ordinary readers for decades: how to provide low-cost access to books no longer in print but whose copyrights have yet to expire.

But then the objections began pouring into Judge Chin's chambers. The problem, according to most of these complaints, is that the agreement gives too much market power to Google over out-of-print books. How's that again? Out-of-print books, by definition, are those for which there is no market today, nor likely to be one any time in the future.

Thanks to advances in information technology, it may now be cost-effective to offer these works to their limited, if passionate, audiences. Google Books, in any case, is investing heavily to develop these markets. The revised settlement makes it even easier for potential competitors to do the same without having to rescan the old books. But let's not kid ourselves. It will be some time before we know if there's any revenue here worth fighting about, let alone an antitrust problem.

The real problem, which no one has the guts to face directly, is the sad state of copyright law. Copyright grants authors and their publishers the exclusive right to make copies of their work in order to encourage the growth of intellectual life, from novels to research papers to songs to cookbooks.

Lawmakers are supposed to balance that powerful control--in this case, a legal monopoly--against the value to consumers of letting information flow as freely as possible. That's a goal that has become fantastically easier and cheaper with the creation of the World Wide Web, high-resolution cell phone displays and other portable reading devices, and the digitization of just about all the world's information, much of it thanks to companies like Google.

Yet even as information distribution gets cheaper, entertainment industry lobbyists have pressured lawmakers to extend the copyright monopoly to absurd levels. The "fair use" exceptions have been all but eliminated through strategic litigating. Civil and criminal penalties for infringement are regularly enhanced, as recently as last year. In the only case of thousands brought by the recording industry that actually went to trial, a file-sharing user was found liable for nearly $2 million dollars in damages for sharing 24 songs. Yet the Obama Justice Department filed a brief supporting that penalty as "rational."

Worst of all, consumers must wait longer and longer for works to enter the public domain, where they can be freely copied, adapted, and sampled. As recently as 1909, a copyright lasted only 28 years in the United States. Since then, Congress has repeatedly extended it and applied the extensions retroactively. Today, copyright runs from the moment of creation until the death of the author, plus another 70 years.

Acknowledging that the U.S. Constitution requires copyright to be for "limited times," the late Congressman Sonny Bono once proposed changing the term to forever minus a day. No copyright on work produced by Disney has ever expired. That's not a coincidence.

Since most published works never make a profit, however, millions of books still under copyright are now out of print, existing only in the ghost towns of a few dingy library stacks. The authors of a growing number of these works are long dead, having made no provision for the inheritance of their rights. Since these books cannot be copied without permission, and no one knows who can give that permission, they inhabit a kind of intellectual limbo. Copyright scholars refer to them as "orphan works."

So far, Google has scanned 10 million books. Two million are old enough to be free of copyright, and another 2 million are still in print (Google has made separate agreements with the publishers of those books). The other 6 million are in copyright but out of print, many of them orphans. Thanks to the madness of recent copyright extensions, that category is certain to get bigger all the time. Congress has tried and failed for years to pass legislation dealing with orphan works.

In large part, the revised Google Books settlement would bring these books back to the world of the living. How? Copyright owners who don't want to participate in the deal must opt out of it, impossible by definition for orphan works. (The opt-out, to dispel a common myth, can occur at any time, not just before the settlement is approved.) So Google would have the right to make these books available in digital form, with any revenue going to a new nonprofit registry that will attempt to locate and compensate the owners.

Tellingly, the objectors say little to nothing about the impact of the settlement on consumers, who already benefit from Google's efforts and would benefit even more, if the agreement is approved.

The interests of information users ought to be the top priority of U.S. copyright officials, but Marybeth Peters, U.S. Register of Copyrights, condemned the original agreement. She spoke on behalf of the theoretical owners of orphan works--authors and publishers, in other words, who were given a powerful monopoly and then abandoned it. Peters accused Google and the organizations who sued the company of conspiring to execute an "end-run around copyright law as we know it."

There's the real problem. Copyright "as we know it" is a disaster and an embarrassment. Rather than complain about the ingenuity, leadership, and careful diplomacy of Google in trying to clean it up, why doesn't Peters focus on the job she was hired to do: urging Congress to bring copyright law in line with the realities of the 21st century?

Congress and its enthrallment to entertainment lobbyists created this mess. Reset the balance of copyright to something fair for authors and consumers, and all the objections to the Google Books settlement evaporate.

Woo wee, did Hulu's fortunes flip-flop fast.

Jason Kilar, Hulu CEO

(Credit: Greg Sandoval/CNET Networks)

The Web's deepest stockpile of full-length TV shows and feature films is seeing some very public infighting over its future. The disagreements are over how Hulu should generate revenue and even how to sell ads, according to a report in Mediaweek.

Things were going so well. Since Hulu's October 2007 launch, the Web video site founded by NBC Universal and News Corp., has grown its audience, generated big ad revenue, and been bathed in positive press.

Hulu has mounted the only serious challenge to YouTube. The site also enables its TV network backers to offer viewers an alternative to pirate sites. But the indications are Hollywood is dismayed over Hulu's earnings. On the issue of Web revenue, the studios seem to be saying: "Is that all there is?"

The first signs that Hulu may not be the cash cow that everyone involved had hoped for came earlier this year. Instead of ballyhooing the selling out of ad inventory like it had done a year earlier, Hulu's managers hushed up.

Then, NBC Universal CEO Jeff Zucker and News Corp. Chairman Rupert Murdoch said publicly that Hulu may charge for some content. In an interview with Dow Jones last week, News Corp. COO Chase Carey said it's important that Hulu have "a real subscription aspect," but added some content will always be free.

Want to bet that the content you'll have to buy will be the latest and most popular TV shows and films?

Hulu's management is wrestling with these issues at a time when the public increasingly develops an appetite for high-quality Web video.

The number of U.S. households with broadband access that watched full-length movies and TV shows online doubled in the past year, according to research firm, Parks Associates. According to the firm, 45 million households regularly watch either TV shows or films via the Internet.

Jayant Dasari, a research analyst at Parks, said people like the control that sites like Hulu give them. If they miss a favorite TV show, they can get caught up on Hulu.

"If they're on the road or don't have access to a (Digital Video Recorder) they are more than willing to consider the option of broadband video," Dasari said. "This is a trend that can no longer be ignored."

(Credit: Greg Sandoval/CNET Networks )

Dasari said Web video's growth is being stifled by the lack of content available at Hulu and other sites. For example, there are only a handful of feature films available at Hulu. Crackle.com, Sony Pictures' Web service, only posts a fraction of its vast library of films on the Internet, but there's not another studio even offering that.

So what? What does it mean if the studios hobble Hulu? Consumers have watched TV for over half a century. They can still go back there. Right?

Big Champagne CEO Eric Garland, whose company tracks traffic on peer-to-peer sites--where most illegal file sharing occurs--told me recently that consumers are heading online for video entertainment and he doesn't expect them to return to their traditional viewing habits ever again. Garland's data shows that Hulu is the first legal Web service to snatch market share away from the pirate sites.

He also said that the lords of video, with their rejection of Internet businesses, are behaving much the same way the music industry did when confronted by the digital age. If network and film studio executives are dissatisfied with the returns they see from Hulu and similar sites, they should consider the possibility that this is all the new media landscape will yield, Garland said.

Perhaps in a sign of how the plague of social media has numbed us all to the value of legitimate human connections, the New Oxford American Dictionary has picked the verb "unfriend," or "to remove someone as a 'friend' on a social networking site such as Facebook," as its 2009 Word of the Year.

At the very least, it's a testament to the ubiquity of Facebook, which now has well over 300 million members around the world.

Facebook itself takes the process of "friending" and "unfriending" very seriously. It once blocked a third-party game called PackRat because it encouraged players to amass huge friends lists (good heavens! they're polluting the social graph!), banned a Burger King ad campaign that let members "sacrifice" their friends to get a free cheeseburger ("Friendship is strong, but the Whopper is stronger"), and still puts a cap of 5,000 on personal profiles' friends lists.

Last year's Oxford word of the year was the decidedly less mainstream "hypermiling."

Cisco Systems has bumped up its buyout offer to $3.41 billion for video conferencing company Tandberg.

The network giant's initial bid received a thumbs down from most of Tandberg's shareholders, who felt the initial $3 billion offer undervalued the company.

So far, more than 40 percent of Tandberg's stockholders, which includes investment firm OppenheimerFunds and Norwegian government pension fund Folketrygdfondet, have pre-accepted the new offer.

Cisco announced on October 1 that it was pursuing a $3 billion cash takeover of Tandberg, a major global supplier of video conferencing equipment with dual headquarters in Oslo, Norway, and New York City.

Increasingly important to companies looking to cut travel costs, teleconferencing is considered a growth industry. Cisco wants a bigger piece of that pie, and analysts didn't expect it to give up on Tandberg too easily.

The new bid expires December 1. Cisco said that if the bid isn't accepted by that deadline, it will withdraw the bid and look at other ways to expand its reach in the video conferencing market.

Cisco has been on a tear lately buying smaller niche companies, taking over a few firms earlier in the year and recently announcing plans to gobble up security software firm ScanSafe and wireless equipment maker Starent Networks.

The app features every member of Congress, including Speaker of the House Nancy Pelosi.

(Credit: Screenshot by Natalie Weinstein)

Apple's App Store has given a nod to an application that features bobble-headed caricatures of congressional politicians and provides contact information.

"Apple came to its senses yesterday and approved the app," Mad Magazine artist Tom Richmond wrote in his blog Saturday. "You have to wonder how much of the decision was based on the press [coverage] and image hit Apple had taken, and how much of it was simply that some overworked approval person rubber stamped it as a reject."

The Bobble Rep-111th Congress Edition app caught the public's attention this week after Richmond wrote a blog about the rejection and quoted from Apple's letter. The letter stated that the app violated the developer license agreement because it "contains content that ridicules public figures," according to Richmond's earlier post.

Apparently, someone at Apple didn't think it was particularly funny to see Richmond's 540 caricatured heads, which bobble around when an iPhone is shaken.

Richmond had called Apple's decision "truly ridiculous" and had written that the "caricatures aren't mean or very exaggerated."

The app costs 99 cents, which comes out to about one-fifth of a cent per politician.

(By the way, the 540 politicians includes the 100 senators, 435 representatives, and five nonvoting delegates.)

A revised settlement filed late Friday over Google's right to scan digital books places additional limits on the company.

The settlement allows out-of-print books from only English-speaking countries to be scanned, restricts the ways that Google can make money from scanning and digitizing out-of-print books, and requires a registry to seek out copyright holders who do not come forward.

The amended settlement comes after Judge Denny Chin of the U.S. District Court for the Southern District of New York granted on Monday a deadline extension to the parties to try to resolve issues that the U.S. Department of Justice had with the original October 2008 settlement.

The settlement now applies only to out-of-print books registered with the U.S. Copyright office or published in the U.K., Australia, or Canada--countries that have a common legal heritage and similar book industry practices--according to the FAQ on the revised settlement.

Each of those countries will have an author and a publisher seat on a Book Rights Registry board, a nonprofit that will be responsible for paying authors and publishers.

The Book Rights Registry will be required to search for copyright holders who have not yet come forward and to hold revenue on their behalf, under the revised settlement. An independent fiduciary approved by the court will make decisions regarding unclaimed works.

Readers will be able to preview and purchase books, institutions can buy subscriptions, and libraries will have free access at designated terminals. The revised settlement limits Google's future business models from the works to individual subscriptions, print-on-demand, and digital downloads. The company will need to get approval from the registry's board and provide notice to all claiming copyright holders before implementing any of the business models.

Copyright holders can now choose to make their books available for free or allow reuse under Creative Commons, as well have the option to modify or remove restrictions placed on Google's display of their books, such as limits on the number of pages that users can print.

The settlement still allows any bookstore to sell online access to out-of-print books covered by the settlement, including unclaimed books. Copyright holders will still receive 63 percent of such revenue, while retailers will keep the majority of the remaining 37 percent.

A portion of the revenue generated from unclaimed works may be used to locate copyright holders after five years and will not be used for the registry's general operations or redistributed to other copyright holders as previously planned. After 10 years, the registry may ask the court to distribute these funds to nonprofits.

The Book Rights Registry will now hold unclaimed funds for 10 years, instead of five. After that time, the funds will go to nonprofits in the English speaking countries.

The Registry also is prohibited from sharing pricing information with anyone but the book's copyright holder, according to settlement. Authors and publishers will have until March 31, 2011, to make claims for the $60 to $300 per-book-digitization payments, and have until March 9, 2012, to remove works from Google's database.

The revised settlement makes it clear that Google will not display any content by default from works that are for sale as new internationally, which are considered commercially available. In addition, it includes language that specifies that Google will not share any private information with the registry without valid legal process.

Authors and publishers from outside of the covered countries can still enter into promotional and revenue-generating programs through Google's Partner Program.

"The changes we've made in our amended agreement address many of the concerns we've heard (particularly in limiting its international scope), while at the same time preserving the core benefits of the original agreement: opening access to millions of books while providing rightsholders with ways to sell and control their work online," Dan Clancy, Google Books engineering director, said in a statement.

"We're disappointed that we won't be able to provide access to as many books from as many countries through the settlement as a result of our modifications, but we look forward to continuing to work with rightsholders from around the world to fulfill our longstanding mission of increasing access to all the world's books," Clancy said.

According to Google's FAQ, the court will create a timeline for the revised settlement, "which will likely include a notice period, an objection period, and a final fairness hearing in early 2010."

Google is seeking rights to scan and display out-of-print books as part of a larger effort to create the modern day equivalent to the Library of Alexandria. Opponents argue that the settlement puts too much power in the hands of one company.

In September, the Justice Department voiced objections to the proposed settlement on antitrust grounds. The agency was bothered by the fact that Google and the Books Rights Registry, a nonprofit that will pay authors, would have sole control over the pricing of institutional subscriptions to the digital library. The DOJ also raised questions about whether the proposed settlement complied with Rule 23 of the Federal Rule of Civil Procedure, as well as copyright law in general.

Google first announced plans in 2003 to make books searchable and has hit snags with its efforts since, being sued by authors and facing opposition internationally.

Medpedia, a collaborative project for medical information launched in February, is getting beyond the medical-data basics as it adds answers, alerts, and analysis.

The nearly year-old Medpedia grows up with the addition of three key features.

(Credit: Medpedia)

Founded on the noble and semipractical system of providing free online medical information generated for and by physicians, journals, schools, patients, and more, Medpedia's three stated goals are to be collaborative, interdisciplinary, and transparent. The idea is to maximize knowledge and minimize the kind of screwing around that continually threatens the efficacy of other wiki-based projects. Of course, the extent to which this is successful hinges on the quality, integrity, and transparency of the editors.

While Medpedia uses the open-source software Mediawiki (also used by Wikipedia), it is less collaborative than the vast encyclopedia site, allowing only physicians and Ph.D.s approved by an editor to contribute to and edit articles. (The less medicine-literate masses are allowed to create accounts and suggest changes, but not actually make them.)

The jury's still out on whether Medpedia will be big enough to be a successful repository of up-to-date information and tame enough to be useful, but three new features, announced this week, might at least help push it out of beta incubation:

Medpedia Answers is a Q&A feature, collecting questions and answers about health, medicine, the body, etc., tagged for search optimization, and pushed to relevant articles and patient communities. Anyone who takes the time to create a profile can contribute to this section, with a top-contributors list cluing in users to which answers are written by the most informed (and involved) users.

Medpedia Alerts aggregates health and medical-news alerts. Anyone with an account can submit here as well, but this section appears intended to work something like Google Reader, with all sorts of feeds plugging into the platform.

And finally, Medpedia News & Analysis lets a wide range of sources accepted by the Medpedia community self-organize by category, and tag and cross-link to articles. This section is not, strictly speaking, licensed by Medpedia, so copyright is held by the authors themselves, which could prove tricky, as Medpedia hosts content that may or may not be allowed to be there.

Since Medpedia went live earlier this year, it has drawn thousands of members, including physicians, researchers, organizations, and experts contributing to its growing knowledge base. Plus, it has the likes of Harvard, Stanford, the National Health Services, and American Heart Association participating. Will Medpedia's less democratic editing system prove more bulletproof than Wikipedia's? So far, so good.

For Madison Avenue, Facebook just got a little less free.

Last week, the massive social network announced that brands, advertisers, and marketers that want to run contests or sweepstakes on its platform have to go through an approval process first.

Getting that approval could be a new revenue stream for Facebook: according to multiple sources in the marketing industry, they're being told that running a promotion in a Facebook application or "fan page" requires buying ad space too.

It's pricey. The minimum ad buy is $10,000 for 30 days, using Facebook's self-service advertising system, according to documents seen by CNET, or $30,000 for 30 days of Facebook home page ads. Priority in the approval process will be scaled, based on how much advertising space has been purchased. It's a move that one marketing industry professional called, in perhaps a bit of hyperbole, "a little Death Star-ish."

A Facebook representative declined to confirm and said the company did not have any comment beyond official documents released on its Facebook Marketing Solutions page.

Let's step back. Cracking down on contests and promotions might seem draconian, but it's actually important for Facebook: the U.S. state and federal laws that govern sweepstakes are extremely complicated, and by allowing only approved contests, Facebook is making sure that its bases are covered.

"Any promotion that any brand, product, or company would run has to have a terms of service against it," said Gunter Pfau, CEO of the Stuzo Group, an agency that has developed numerous Facebook contests and sweepstakes for clients. "Also, depending on the prize value, they need to be filed with various state regulatory agencies."

What, exactly, is new for contests? If a brand is running a contest on its fan page, it has to be handled through an embedded, separately developed application--not, for example, in the page's "wall." Promotions also can't involve Facebook users manipulating their user photos or status messages specifically for the contest.

Legal experts agree that this is necessary. "The (new Facebook) guidelines really cover only a narrow subset of promotions, specifically sweepstakes, contests, and similar competitions," explained Thomas Williams, a partner at the Chicago law firm Howrey, who specializes in trademark law. "That type of contest or promotion is governed by a myriad of state and federal regulations, so what I think Facebook is attempting to do here is merely shield itself from liability that arises out of its users' potential violations of these laws."

Williams continued: "I think it's a prudent and reasonable step on Facebook's part. There are lawyers who specialize in sweepstakes law, and there really are a lot of twists and turns to it."

One thing it'll also do, Stuzo Group's Gunter Pfau explained, is keep dishonest campaigns and promotions off the Facebook platform. "I think it's great news for consumers," he said. "I think what Facebook is doing is really laying these guidelines in place for companies to protect consumers more."

But what about the new ad spend requirements? Facebook has historically pitched its developer platform and fan pages as a free way for advertisers and marketers to tap into the power of "the social graph"--its 300 million-plus active users and their connections to one another. And while it's clear that the company sees these free pages and applications as a stepping stone for ad dollars--Chief Operating Officer Sheryl Sandberg, for example, regularly gives Madison Avenue talks about the company's "engagement ads"--it doesn't have a long track record of requiring advertisers to pay for something that used to be free.

"It makes sense for Facebook, but (it's) a little discouraging to advertisers," commented Alisa Leonard-Hansen, who holds the title of social-media evangelist at digital-marketing firm iCrossing. "Facebook is continually trying to discover new ways to monetize, and they picked up on the trend that advertisers were using their pages to run contests and other promotions. I think Facebook was looking to be able to benefit from this marketing trend."

The ad spend requirements, too, could be considered partial compensation for the new human resources required in Facebook's approval process. Each company running contests on Facebook now has a designated advertising sales representative, and fan pages will continue to have to be policed for potential violations of both advertiser regulations and sweepstakes law.

There might not be a lot of friction as the new regulations go into effect. Companies that don't run contests on their Facebook fan pages or applications won't be affected. Even some that do, especially small-scale fan pages that could easily go unnoticed by Facebook, won't have to change much. "Of course, there are going to be savvy marketers who skirt this and run (contests) under the radar," Alisa Leonard-Hansen said.

It really goes without saying the obvious: this is Facebook's service, and it can do what it wants with it. That doesn't mean marketers will stop grumbling. As one put it in a phone call to CNET, "This is another example of Facebook saying, 'Sorry, eat it, you've got no choice.'"