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President Obama recently signed into law a bill that allows people to “jailbreak” or “root” their mobile phones in order to switch wireless carriers. The Unlocking Consumer Choice and Wireless Competition Act was that rarest of rarities these days: a bipartisan bill that passed both houses of Congress by unanimous consent. Copyleft advocates such as Public Knowledge see this as an important step towards weakening the part of the Digital Millennium Copyright Act that outlaws hacks to DRM systems, known as DMCA 1201.
For those of you who might be scratching your heads wondering what jailbreaking your iPhone or rooting your Android device has to do with DRM hacking, here is some background. Last year, the U.S. Copyright Office declined to renew a temporary exception to DMCA 1201 that would make it legal to unlock mobile phones. A petition to the president to reverse the decision garnered over 100,000 signatures, but as he has no power to do this, I predicted that nothing would happen. I was wrong; Congress did take up the issue, with the resulting legislation breezing through Congress last month.
Around the time of the Copyright Office’s ruling last year, Zoe Lofgren, a Democrat who represents a chunk of Silicon Valley in Congress, introduced a bill called the Unlocking Technology Act that would go considerably further in weakening DMCA 1201. This legislation would sidestep the triennial rulemaking process in which the Copyright Office considers temporary exceptions to the law; it would create permanent exceptions to DMCA 1201 for any hack to a DRM scheme, as long as the primary purpose of the hack is not an infringement of copyright. The ostensible aim of this bill is to allow people to break their devices’ DRMs for such purposes as enabling read-aloud features in e-book readers, as well as to unlock their mobile phones.
DMCA 1201 was purposefully crafted so as to disallow any hacks to DRMs even if the resulting uses of content are noninfringing. There were two rationales for this. Most basically, if you could hack a DRM, then you would be able to get unencrypted content, which you could use for any reason, including emailing it to your million best friends (which would have been a consideration in the 1990s when the law was created, as Torrent trackers and cyberlockers weren’t around yet).
But more specifically, if it’s OK to hack DRMs for noninfringing purposes, then potentially sticky questions about whether a resulting use of content qualifies as fair use must be judged the old-fashioned way: through the legal system, not through technology. And if you are trying to enforce copyrights, once you fall through what I have called the trap door into the legal system, you lose: enforcement through the traditional legal system is massively less effective and efficient than enforcement through technology. The media industry doesn’t want judgments about fair use from hacked DRMs to be left up to consumers; it wants to reserve the benefit of the doubt for itself.
The tech industry, on the other hand, wants to allow fair uses of content obtained from hacked DRMs in order to make its products and services more useful to consumers. And there’s no question that the Unlocking Technology Act has aspects that would be beneficial to consumers. But there is a deeper principle at work here that renders the costs and benefits less clear.
The primary motivation for DMCA 1201 in the first place was to erect a legal backstop for DRM technology that wasn’t very effective — such as the CSS scheme for DVDs, which was the subject of several DMCA 1201 litigations in the previous decades. The media industry wanted to avoid an “arms race” against hackers. The telecommunications industry — which was on the opposite side of the negotiating table when these issues were debated in the early 1990s — was fine with this: telcos understood that with a legal backstop against hacks in place, they would have less responsibility to implement more expensive and complex DRM systems that were actually strong; furthermore, the law placed accountability for hacks squarely on hackers, and not on the service providers (such as telcos) that implemented the DRMs in the first place. In all, if there had to be a law against DRM hacking, DMCA 1201 was not a bad deal for today’s service providers and app developers.
The problem with the Unlocking Technology Act is in the interpretation of phrases in it like “primarily designed or produced for the purpose of facilitating noninfringing uses of [copyrighted] works.” Most DRM hacks that I’m familiar with are “marketed” with language like “Exercise your fair use rights to your content” and disclaimers — nudge, nudge, wink, wink — that the hack should not be used for copyright infringement. Hacks that developers sell for money are subject to the law against products and services that “induce” infringement, thanks to the Supreme Court’s 2005 Grokster decision, so commercial hackers have been on notice for years about avoiding promotional language that encourages infringement. (And of course none of these laws apply outside of the United States.)
So, if a law like the Unlocking Technology Act passes, then copyright owners could face challenges in getting courts to find that DRM hacks were not “primarily designed or produced for the purpose of facilitating noninfringing uses[.]” The question of liability would seem to shift from the supplier of the hack to the user. In other words, this law would render DMCA 1201 essentially toothless — which is what copyleft interests have wanted all along.
From a pragmatic perspective, this law could lead non-dominant retailers of digital content to build DRM hacks into their software for “interoperability” purposes, to help them compete with the market leaders. It’s particularly easy to see why Google should want this, as it has zillions of users but has struggled to get traction for its Google Play content retail operations. Under this law, Google could add an “Import from iTunes” option for video and “Import from Kindle/Nook/iBooks” options for e-books. (And once one retailer did this, all of the others would follow.) As long as those “import” options re-encrypted content in the native DRM, there shouldn’t be much of an issue with “fair use.” (There would be plenty of issues about users violating retailers’ license agreements, but that would be a separate matter.)
This in turn could cause retailers that use DRM to help lock consumers into their services to implement stronger, more complex, and more expensive DRM. They would have to use techniques that help thwart hacks over time, such as reverse engineering prevention, code diversity and renewability, and sophisticated key hiding techniques such as whitebox encryption. Some will argue that making lock-in more of a hassle will cause technology companies to stop trying. This argument is misguided: first, lock-in is fundamental to theories of markets in the networked digital economy and isn’t likely to go away over costs of DRM implementation; second, DRM is far from the only way to achieve lock-in.
The other question is whether Hollywood studios and other copyright owners will demand stronger DRM from service providers that have little motivation to implement it. The problem, as usual, is that copyright owners demand the technology (as a condition of licensing their content) but don’t pay for it. If there’s no effective legal backstop to weak DRM, then negotiations between copyright owners and technology companies may get tougher. However, this may not be an issue particularly where Hollywood is concerned, since studios tend to rely more heavily on terms in license agreements (such as robustness rules) than on DMCA 1201 to enforce the strength of DRM implementations.
Regardless, the passage of the mobile phone unlocking legislation has led to increased interest in the Unlocking Technology Act, such as the recent panel that Public Knowledge and other like-minded organizations put on in Washington. Rep. Lofgren has succeeded in getting several more members of Congress to co-sponsor her bill. The trouble is, all but one of them are Democrats (in a Republican-controlled House of Representatives not exactly known for cooperation with the other side of the aisle); and the Democratically-controlled Senate has not introduced parallel legislation. This means that the fate of the Unlocking Technology Act is likely to be similar to that of past attempts to do much the same thing: the Digital Media Consumers’ Rights Act of 2003 and the Freedom and Innovation Revitalizing United States Entrepreneurship (FAIR USE) Act of 2007. That is, it’s likely to go nowhere.
The International Digital Publishing Forum (IDPF), the standards body in charge of the EPUB standard for digital book publishing, puts on a conference-within-a-conference called IDPF Digital Book inside the gigantic Book Expo America in NYC each year. Various panels and hallway buzz at this year’s event, which took place last week, showed how book publishing is developing regarding issues we address here. I’ll cover these in three installments.
First and most remarkable is the emergence of Wattpad as the next step in the disruption of the value chain for authors’ content. The Toronto-based company’s CEO, Allen Lau, spoke on a panel at the conference that I moderated. Wattpad can be thought of as a successor to Scribd as “YouTube for writings.”
There are a few important differences between Scribd and Wattpad. First, whereas Scribd had become a giant, variegated catchall for technical white papers, vendor sales collateral, court decisions, academic papers, resumes, etc., etc., along with more recently acquired content from commercial publishers, Wattpad is focused tightly on text-based “stories.”
Second, Wattpad is optimized for reading and writing on mobile devices, whereas Scribd focuses on uploads of existing documents, many of which are in not-very-mobile-friendly PDF. Third and most importantly, Scribd allows contributors to sell their content, either piecemeal or as part of Scribd’s increasingly popular Netflix-like subscription plan; in contrast, Wattpad has no commerce component whatsoever.
In fact, the most remarkable thing about Wattpad is that it has raised over $60 million in venture funding, almost exactly $1 million for each of the company’s current employees. But like YouTube, Facebook, Tumblr, and various others in their early days, it has no apparent revenue model — other than a recent experiment with crowdfunding a la Kickstarter or Indiegogo. There’s no way to buy or sell content, and no advertising.
Instead, Wattpad attracts writers on the same rationales by which YouTube attracts video creators (and Huffington Post attracts bloggers, etc.): to give them exposure, either for its own sake or so that they can make money some other way. For example, Lau touted the fact that one of its authors recently secured a movie deal for her serialized story.
Apparently Wattpad has become a vibrant home for serialized fiction, fan fiction, and stories featuring celebrities as characters (which may be a legal gray area in Canada). It has also become a haven for unauthorized uploads of copyrighted material, although it has taken some steps to combat this through a filtering scheme developed in cooperation with some of the major trade publishers. Wattpad has 25 million users and growing — fast.
This all makes me wonder: why isn’t everyone in the traditional publishing value chain — authors, publishers, and retailers — scared to death of Wattpad? It strikes me as a conduit for tens of millions of dollars in VC funding to create expectations among its youthful audience that content should be free and that authors need not be paid.
There’s a qualitative difference between Wattpad and other social networking services. Copyright infringement aside, TV networks and movie studios didn’t have much to fear from YouTube in its early days of cat videos. Facebook and Tumblr started out as venues for youthful self-expression, but little of that was threatening to professional content creators.
In contrast, Wattpad seems to have crossed a line. Much of the writing on Wattpad — apart from its length — directly substitutes for the material that trade publishers sell. Wattpad started out as a platform for writers to critique each others’ work — which sounds innocuous (and useful) enough — but it’s clearly moved on to become a place where the readers vastly outnumber the writers. (How else to explain the fact that despite the myriad usage statistics on its website, Wattpad does not disclose a number of active authors?)
In other words, Wattpad has become a sort of Pied Piper leading young writers away from the idea or expectation of doing it professionally. Moreover, there are indications that Wattpad expects to make money from publishers looking to use it as a promotional platform for their own authors’ content, even though — unlike Scribd — it can’t be sold on the site.
By the time Wattpad burns through its massive treasure chest and really needs to convert its large and fast-growing audience into revenue from consumers, it may be too late.
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The BBC has discovered documents that detail a so-called graduated response program for detecting illegal downloads done by customers of major UK ISPs and sending alert messages to them. The program is called the Voluntary Copyright Alert Programme (Vcap). It was negotiated between the UK’s four major ISPs (BT, Sky, Virgin Media, and TalkTalk) and trade associations for the music and film industries, and it is expected to launch sometime next year.
Vcap is a much watered-down version of measures defined in the Digital Economy Act of 2012, in that it calls only for repeated “educational” messages to be sent to ISP subscribers and for no punitive measures such as suspension or termination of their accounts.
In general, graduated response programs work like this: copyright owners engage network monitoring firms to monitor ISPs’ networks for infringing behavior. Monitoring firms use a range of technologies, including fingerprinting to automatically recognize content that users are downloading. If they find evidence of illegal behavior, they report it to a central authority, which passes the information to the relevant ISP, typically including the IP address of the user’s device. The ISP determines the identity of the targeted subscriber and takes some action, which depends on the details of the program.
In some cases (as in France and South Korea), the central authority is empowered to force the ISP to take punitive action; in other cases (as in the United States’ Copyright Alert System (CAS) as well as Vcap), ISPs take action voluntarily.
Assuming that Vcap launches on schedule, we could soon have data points about the effectiveness of various types of programs for monitoring ISP subscribers’ illegal downloading behaviors. The most important question to answer is whether truly punitive measures really make a difference in deterring online copyright infringement, or whether purely “educational” measures are enough to do the job. Currently there are graduated response programs in South Korea, New Zealand, Taiwan, and France that have punitive components, as well as one in Ireland (with Eircom, the country’s largest ISP) that is considered non-punitive.
Is America’s CAS punitive or educational? That’s a good question. CAS has been called a “six strikes” system (as opposed to other countries’ “three strikes”), because it defines six levels of alerts that ISPs must generate, although ISPs are intended to take “mitigation measures” against their subscribers starting at the fifth “strike.” What are these mitigation measures? It’s largely unclear. The CAS’s rules are ambiguous and leave quite a bit of wiggle room for each participating ISP to define its own actions.
Instead, you have to look at the policies of each of the five ISPs to find details about any punitive measures they may take — information that is often ambiguous or nonexistent. For example:
- AT&T: its online documentation contains no specifics at all about mitigation measures.
- Cablevision (Optimum Online): its policy is ambiguous, stating that it “may temporarily suspend your Internet access for a set period of time, or until you contact Optimum.” Other language in Cablevision’s policy suggests that the temporary suspension period is 24 hours.
- Comcast (Xfinity): Comcast’s written policy is also ambiguous, saying only that it will continue to post alert messages until the subscriber “resolve[s] the matter” and that it will never terminate an account.
- Time Warner Cable: also ambiguous but suggesting nothing on the order of suspension or termination, or bandwidth throttling. It states that “The range of actions may include redirection to a landing page for a period or until you contact Time Warner Cable.”
- Verizon: Verizon’s policy is the only one with much specificity. On the fifth alert, Verizon throttles the user’s Internet speed to 256kbps — equivalent to a bottom-of-the-line residential DSL connection in the US — for a period of two days after a 14-day advance warning. At the sixth alert, it throttles bandwidth for three days.
In other words, the so-called mitigation measures are not very punitive at all, not even at their worst — at least not compared to these penalties in other countries:
- France: up to ISP account suspension for up to one year and fines of up to €1500 (US $2000), although the fate of the HADOPI system in France is currently under legal review.
- New Zealand: account suspension of up to six months and fines of up to NZ $15,000 (US $13,000).
- South Korea: account suspension of up to six months.
- Taiwan: suspension or termination of accounts, although the fate of Taiwan’s graduated response program is also in doubt.
[Major hat tip to Thomas Dillon's graduatedresponse.org blog for much of this information.]
In contrast, Vcap will be restricted to sending out four alerts that must be “educational” and “promot[e] an increase in awareness” of copyright issues. Vcap is intended to run for three years, after which it will be re-evaluated — and if judged to be ineffective, possibly replaced with something that more closely resembles the original, stricter provisions in the Digital Economy Act. By 2018, the UK should also have plenty of data to draw on from other countries’ graduated response regimes about any relationship between punitive measures and reduced infringements.
Announcing Copyright and Technology London 2014 April 25, 2014Posted by Bill Rosenblatt in Europe, Events, UK, Uncategorized.
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I’m pleased to announce that our next Copyright and Technology London conference will take place on Wednesday, October 1, at the offices of ReedSmith in the City of London. This is the same beautiful venue as our conference last October, with 360-degree floor-to-ceiling views of the city. Music Ally is producing the event. Now in our fifth year, the mission of the Copyright and Technology conferences is to bring together a diverse group of lawyers, technologists, policymakers, and business people for education and intelligent dialog about the nexus of copyright and technology. The London conference focuses on issues of particular interest in the UK and the rest of Europe but also offers international perspectives from the US, Australia, and beyond.
At this point, I am soliciting ideas for sessions. What are the hot issues for people concerned with copyright in the UK, Europe, and beyond? As in past Copyright and Technology conferences, the agenda will consist of plenary sessions with a keynote speaker in the morning, and afternoon breakouts into Technology and Law & Public Policy tracks. Please feel free to suggest session topics that will appeal to technologists, law and government professionals, or all of the above. Also feel free to put forward names of speakers for sessions.
We plan to have a working agenda in place by June, so please send me your session proposals by May 16.
As in the past, sponsorship opportunities are available. Copyright and Technology London 2014 is a great opportunity to connect with top-tier decision makers from law firms, media companies, technology vendors, service providers, and government. Please inquire if you are interested in learning more.
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We have added another panel session to the Copyright and Technology London 2013 conference, which will take place next Thursday (17 October). The most important recent copyright litigation in the UK at the moment is the case of Ministry of Sound v. Spotify, in which the record label is objecting to Spotify making playlists available that mimic the compilation albums for which the label is best known. The case has broad implications for the limits of copyrightability in the digital age, at least under UK law.
Here is the panel description:
The Limits of Copyright in the Digital Age
The litigation that Ministry of Sound recently started against Spotify will test whether playlists on compilation albums have copyright protection. It will be played out in the context of the debate about to what extent we as a society are prepared to pay for curation. The same issue faces news-disseminating organisations over their headlines and sports reporters over game highlights. Does our society value the editorial/quality control/validation role that they play? This panel will explore the boundaries of what is – and should be – protected by copyright in the digital age and suggest what directions legal decisions in the future may take.
Although the case was only filed a month ago, we have been able to pull together an excellent group of authorities on both the legal and content aspects of the matter, thanks to the tireless efforts of Serena Tierney of Bircham Dyson Bell, the panel chair and herself an authority on copyright in the digital age. Panelists will include:
- Jeff Smith, Head of Music at BBC Radio 2 and 6; former Director of Music Programming at Napster
- Mo McRoberts, Head of the BBC Genome Project at the BBC Archive
- Lindsay Lane, Barrister at 8 New Square Intellectual Property and co-author of the standard copyright treatise Laddie, Prescott and Vitoria on The Modern Law of Copyright and Designs
- Andrew Orlowski, Executive Editor of The Register, who has covered this case.
This means that we will have a packed day of exciting sessions from all around the world of copyright. Places are still left, so register today!
Copyright and Accessibility June 19, 2013Posted by Bill Rosenblatt in Events, Law, Publishing, Standards, Uncategorized.
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Last week I received an education in the world of publishing for print-disabled people, including the blind and dyslexic. I was in Copenhagen to speak at Future Publishing and Accessibility, a conference produced by Nota, an organization within the Danish Ministry of Culture that provides materials for the print-disabled, and the DAISY Consortium, the promoter of global standards for talking books. The conference brought together speakers from the accessibility and mainstream publishing fields.
Before the conference, I had been wondering what the attitude of the accessibility community would be towards copyright. Would they view it as a restrictive construct that limits the spread of accessible information, allowing it to remain in the hands of publishers that put profit first?
As it turns out, the answer is no. The accessibility community, generally speaking, has a balanced view of copyright that reflects the growing importance of the print disabled to publishers as a business matter.
Digital publishing technology might be a convenience for normally sighted people, but for the print disabled, it’s a huge revelation. The same e-publishing standards that promote ease of production, distribution, and interoperability for mainstream consumers make it possible to automate and thus drastically lower the cost and time to produce content in Braille, large print, or spoken-word formats.
Once you understand this, it makes perfect sense that the IDPF (promoter of the EPUB standards for e-books) and DAISY Consortium share several key members. It was also pointed out at the conference that the print disabled constitute an audience that expands the market for publishers by roughly 10%. All this adds up to a market for accessible content that’s just too big to ignore.
As a result, the interests of the publishing industry and the accessibility community are aligning. Accessibility experts respect copyright because it helps preserve incentives for publishers to convert their products into versions for the print disabled. Although more and more accessibility conversion processes can be automated, manual effort is still necessary — particularly for complex works such as textbooks and scientific materials.
Publishers, for their part, view making content accessible to the print disabled as part of the value that they can add to content — value that still can’t exist without financial support and investment.
One example is Elsevier, the world’s largest scientific publisher. Elsevier has undertaken a broad, ambitious program to optimize its ability to produce versions of its titles for the print disabled. One speaker from the accessibility community called the program “the gold standard” for digital publishing. Not bad for a company that some in the academic community refer to as the Evil Empire.
This is not by any means to suggest that publishers and the accessibility community coexist in perfect harmony. There is still a long way to go to reach the state articulated at the conference by George Kerscher, who is both Secretary General of DAISY and President of IDPF: to make all materials available to the print disabled at the same time, and for the same price, as mainstream content.
The Future Publishing and Accessibility conference was timed to take place just before negotiations begin over a proposed WIPO treaty that would facilitate the production of accessible materials and distribution of them across borders. The negotiations are taking place this and next week in Marrakech, Morocco. This proposed treaty is already laden with concerns from the copyright industries that its provisions will create opportunities for abuse, and reciprocal concerns from the open Internet camp that the treaty will be overburdened with restrictions designed to limit such abuse. But as I found out in Denmark last week, there is enough practical common ground to hope that accessibility of content for the print disabled will continue to improve.
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I’m pleased to announce that our next Copyright and Technology conference will take place in London on Thursday, October 17. The one-day event, produced by Music Ally, will take place at the offices of ReedSmith, near Liverpool Street railway station.
Here is the draft conference agenda, which is subject to change. At this point, we are seeking moderators, speakers, and sponsors. Deadline for speaking submissions is Friday, July 12, and as usual, proposals to moderate panels will be given priority. We are also seeking sponsors; a brochure is available on request. Our initial sponsors include MarkMonitor, ReedSmith, and Civolution.
As with our past events, the agenda will feature a morning plenary session with opening remarks by me, a keynote address, the Conference Sponsor session, and a plenary panel designed to appeal to a wide variety of attendees. Then in the afternoon, we will split up into two parallel tracks: Law and Policy, and Technology.
Here are the panels for which we are seeking moderators and speakers.
- The Global Repertoire Database
The Global Repertoire Database (GRD) was initiated in 2008 by EU Commissioner Neelie Kroes as “a single, comprehensive and authoritative representation of the global ownership and control of musical works.” After five years, this landmark initiative is getting set to launch. Our panel will include representatives from the GRD initiative who will discuss its status, implications for long-sought efficiencies and clarity in online licensing of music, and ways in which the entire online music community can benefit through involvement.
Law and Policy Track
- Digital Copyright Exhaustion and Resale
The doctrine of exhaustion states that once you obtain a copyrighted work legally, it’s yours to do with as you please, without any further control from the publisher. This law applies to books, CDs, DVDs, and so on. But does it apply to downloaded bits? As more and more content is consumed as digital files, this question becomes more important. This panel will examine legal precedents, such as the EU Court of Justice’s decision last year on downloaded software. We will also discuss the potential for innovative business models for reselling digital files.
- Graduated Response
As France has learned from its experience with Hadopi, graduated response regimes come with benefits as well as risks. Some countries (such as the United States) are starting their own graduated response systems while others (such as the Netherlands) have rejected the approach. We’ll discuss the pros, cons, and lessons learned so far.
- Brand Advertising on Pirate Sites
Websites that exist primarily to offer illegal content downloads show advertising from well-known consumer brands. Some consumer brand companies are taking steps to prevent their ads from appearing on these sites, while others claim that their ad networks give them no control. This panel will discuss steps the Internet ad industry can take to enable companies to avoid having their ads appear on pirate content sites, whether it’s best practices, automated mechanisms, or legal mandates.
- Automated Content Recognition and Second Screen Applications
Second screen applications are hot. Watch TV, fire up your tablet or smartphone, and an application will figure out which show you’re watching and enhance your viewing experience. Automated content recognition (ACR), also known as content identification, is the secret sauce that makes it happen. What rights do third-party apps have to use content from television programs? As the popularity of second-screen apps grows, so do these legal and technical issues, which we’ll discuss on this panel.
- Cyberlockers and Large-Scale Piracy
The halcyon days of cyberlockers — online services for storing files — are over regarding copyright liability. After the shutdown of Megaupload, Kim Dotcom recently launched Mega, a cyberlocker service that encrypts users’ files. RapidShare implemented a series of technical measures to curtail large-scale infringing activities. What are the merits of these techniques, and how effective are they likely to be in both curbing infringement and avoiding liability for operators? Are we approaching a set of voluntary best practices for curbing infringement, or is further legal action warranted? We’ll get into the meat of these issues in this session.
- Content Protection for Over-the-Top Video Services
Many traditional Pay TV operators are launching “Over-the-Top” (OTT) Internet video services with premium content licensed from Hollywood studios, TV networks, and sports leagues in order to keep up with competition. As the number of delivery modalities increases, so does the complexity of protecting the contentb. Operators must integrate content protection technologies for unmanaged networks and consumer devices with their existing pay-TV infrastructures. On this panel, we will demystify this often bewildering technical area and discuss solutions.
Once again, the deadline for moderating and speaking proposals is Friday July 12. Please email your proposal(s) with the following information:
- Speaker’s name and full contact information
- Panel requested
- Moderator or speaker request?
- Description of speaker’s experience or point of view on the panel subject
- Brief narrative bio of speaker
- Contact info of representative, if different from speaker*
As mentioned above, the agenda is subject to change. If you have another idea for a panel, we’d love to hear about that as well.
Sponsorship opportunities that come with varying degrees of publicity and exposure are available. Please ask and we will send you a brochure describing the sponsorship levels and benefits. Thanks in advance for your interest!
*Please note that personal confirmation from speakers themselves is required before we will put them on the program.
Yes, Piracy Does Cause Economic Harm January 27, 2013Posted by Bill Rosenblatt in Economics, Uncategorized.
Back in 2010, the Government Accountability Office (GAO) published a meta-study of the economic effects of intellectual property infringement (including counterfeit goods as well as copyrighted works). The GAO concluded that IP infringement is a problem for the economy, but it’s not possible to quantify the extent of the damage — and may never be. It looked at many existing studies and found bias or methodological problems in every one.
More recently, Michael Smith and Rahul Telang, two professors at Carnegie-Mellon University, published another meta-study that serves as a sort of rejoinder to the GAO study. This was the subject of Prof. Smith’s talk at the recent Digital Book World (DBW) conference in NYC.
Assessing the Academic Literature Regarding the Impact of Media Piracy on Sales summarizes what has been a growing body of studies on the economic effects of so-called media piracy. Their conclusion is that piracy does have a negative effect on revenue — if for no other reason than the vast majority of studies come to that conclusion.
Smith’s presentation at DBW listed no less than 29 studies on media piracy that take actual data into account (as opposed to merely theoretical papers such as this one). Of those, 25 found economic harm from piracy, while 4 didn’t. When the list is restricted to papers published in peer-reviewed academic journals, the ratio is similar: 12 found harm; 2 didn’t. Interestingly, almost half of the cited studies were published after the GAO’s 2010 report.
(When Smith and Telang’s paper was originally published last year, many discredited it instantly because the MPAA helped fund the research. Yet I take the researchers at their word when they say that the funding source had no effect on the outcomes — an assertion bolstered by the paper’s exclusion of the MPAA’s own study from 2006.)
The paper explains why some studies’ methodologies are better than others and discusses shortcomings in some of the studies, such as the Oberholzer-Gee & Strumpf paper from 2007 that showed no harm to sales of music from piracy by laptops/PCs and therefore has been widely cited among the copyleft.
It’s easy to poke holes in the methodologies of studies that have to rely on real-world data over which the researchers have little or no control. And as someone who wouldn’t know an “endogenous dependent variable” if one bit me in the face, I find it hard to look at criticisms of these studies’ methodologies and determine which ones to believe. Yet it’s obvious that any study on piracy must rely on real-world data in order to have any credibility at all.
Decisions about business and policy have to be made based on the best information we have available. After a certain point, simply poking holes in studies — particularly those whose results you don’t happen to like — isn’t sufficient.
It may indeed, as the GAO suggested, be impossible to measure the economic effects of piracy with a large amount of accuracy. But if dozens of researchers have tried, all using different methodologies, then their conclusions in the aggregate are the best we’re going to do. Put another way, it will henceforth be very difficult to dislodge Smith and Telang’s conclusion that piracy does economic harm to content creators.
The Artists’ Rights Movement July 10, 2012Posted by Bill Rosenblatt in Music, Uncategorized.
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The phenomenon that I called the Loweryquake has survived the press’s news-cycle rhythm and the proverbial 15-minute time limit. It continues to reverberate throughout the mainstream press and techblogosphere. It has led to a lot of what New York magazine last week called “actually pretty thoughtful online discussion.” And it has engendered what can only be called a movement in favor of artists’ rights.
This has nothing to do with the RIAA, MPAA, or any other representative of Big Media. The Artists’ Rights Movement is the product of actual content creators, real people who make the copyrighted works and receive the royalty checks… or not, as the case may be. They are in favor of stronger copyright enforcement, eager to expose technology industry profitability on the backs of recorded content, and deeply skeptical of many of the schemes that have been suggested to make up for lack of compensation from content in the digital age, from T-Shirts to “True Fans.” (They also sometimes espouse extreme positions such as curtailing First Sale.)
David Lowrey’s blog The Trichordist is fast becoming the unofficial house organ of the Artists’ Rights Movement. The Trichordist Random Weekly Reader, a weekly post of links to relevant articles around the web, is becoming as useful in its way as the lamented Rightscom Daily Briefing was before it was discontinued a few years ago. The Trichordist also aggregates other sympathetic blogs such as Copyhype and Fareplay, and more mainstream columnists such as Andrew Orlowski of The Register and Helienne Lindval at The Guardian.
Through The Thrichordist Random Weekly Reader I learned, for example, that the Center for Copyright Information (CCI) — the United States’ private-sector analog to graduated response regimes in countries like France — has appointed an Executive Director and is gearing up to launch later this summer. The surprising tidbit about this news is that they have appointed an advisory board that includes people representing consumers, privacy issues, and so forth — including Public Knowledge CEO Gigi Sohn.
It’s good to see Gigi Sohn doing something constructive like this. My opinion of Public Knowledge had been declining since its excellent white paper on 3D printing over a year ago. Its output has shifted towards shrill fire-up-the-base scare tactics. Its attempt to tie its Internet Blueprint to SOPA and PIPA was a particularly disingenuous piece of opportunism. Sohn has said that she will try to influence the CCI to stay away from copyright enforcement through suspensions of users’ ISP accounts. But more generally, the CCI advisory board will benefit from her point of view and, frankly, her presence will serve to blunt accusations that it’s a cabal between Big Media and ISPs and that consumers’ concerns aren’t being heard.
An article in today’s New York Times suggests that a main theme of this week’s annual exclusive Sun Valley media/tech summit will be constructive engagement on copyright infringement. On the one hand, RIAA CEO Carey Sherman has stated that he’s giving up on legislation as a remedy, now that SOPA and PIPA have failed (ACTA, which was soundly voted down in European Parliament last week, had long ago lost its teeth on copyright enforcement). He is more optimistic about “best practice” solutions arising from the private sector.
On the other hand, a top Google executive said, “we do not want to be building a business based on piracy.” Google also cosponsored an interesting new study of online copyright infringement carried out by BAE Systems Detica in the UK, and while — like all such studies — the methodologies can be questioned, this is another pleasantly surprising development.
These are all hopeful signs that, in the wake of the SOPA/PIPA defeat, the media and tech industries may be ending their hyper-partisanism, and in particular that the tech community may soften its “Party of No” stance regarding using technology to solve problems that were born of technology in the first place. Meanwhile, The Trichordist is clearly growing in influence; it may (to extend an analogy) even become an MSNBC to the likes of TechDirt’s Rush Limbaugh.
P.S. one organization that really needs to get the memo on the Artists’ Rights Movement is the Future of Music Coalition, which purports to represent independent musicians and songwriters. They could start by taking a hard look at their own advisory board.
The Loweryquake June 27, 2012Posted by Bill Rosenblatt in Economics, Law, Music, Uncategorized.
David Lowrey is a semi-legendary musician in one of techdom’s most beloved genres, indie rock. He sits on Groupon’s advisory board. He’s neither a rich rock star nor a spokesman for the RIAA. As a university professor, he is more a beneficiary of what Larry Lessig calls “the academic patronage system” than of copyright. In other words, you’d expect David Lowrey to be one for “sticking it to the man.” Yet last week, he wrote a 3800-word masterpiece about the dire state of musical artists in the digital age and the moral compromises that got us there.
As everyone involved with music knows by now, Lowery’s “Letter to Emily White” was originally occasioned by a blog post by an intern of that name at National Public Radio, who admitted to being a big music fan and possessing 11,000 tracks of digital music but only having paid for less than 2% of them (which puts her well below the generally-accepted figure of 5%). It went viral online and got mentions in the New York Times as well as other major media and blogosphere outlets.
Paul Resnikoff in Digital Music News said it best, in perhaps the most cogent piece of analysis I’ve ever read from him:
Our digital innocence just died … after a decade of drunken digitalia, this is the hangover that finally throbs, is finally faced with Monday morning, finally stares in the mirror and admits there’s a problem. And condenses everything into a detailed ‘moment of clarity’.
Over the years, I have written occasionally about the “race to the bottom,” in which the price of content is tending inexorably towards zero. The massive amount of free and illegal content available now, coupled with legal content services’ needs to “compete with free,” has led to more and more legal content offers for less and less money. Emily White’s frank admission shows that, for a growing number of young people, the race to the bottom in music is over, and musicians and songwriters have lost.
I won’t comment on Lowrey’s piece per se, except to recommend strongly that you read it. And I will say that as I read more of the posts on his blog, The Trichordist (by other authors as well as Lowrey himself), I found some attitudes about intellectual property that I felt were a little extreme and/or ignorant in their own ways.
Instead, I want to focus on the range of comments people have posted about Lowrey’s Letter to Emily, particularly the negative ones. The Trichordist curates comments by hand (and has been “accused” of favoring positive comments heavily as they cope with comment volumes that are orders of magnitude higher than usual), but they have appeared unfiltered on other sites — thousands of them.
Some of the negative comments are sober economic arguments that conclude with “This is just the way it is, and we can’t change it, so we all just have to adapt,” citing principles such as supply and demand, value migration, or cost of goods sold. While I disagree with the “we can’t change it” part, the economics are hard to argue with.
Yet the bulk of the negative comments are remarkable for their defensive attitudes, as expressed through smugness, arrogance, misinformation, rationalizations, and most telling of all, outright hostility towards Lowery. Many of them remind me of the rhetoric of right-wing political extremists when backed into a corner. Apart from the ad hominem attacks against Lowrey, the negative comments fall roughly into the following buckets:
- Economic rationalization (record companies): The record companies rip artists off anyway. Lowrey rips this one apart in his piece.
- Economic rationalizations (artists): Musicians can make money touring instead. Ditto. (Did the people who wrote these comments actually read Lowrey’s piece?)
- Economic rationalization (users): Emily is just a poor young intern and isn’t able to pay for that music anyway. See below on the perceived value of music.
- Legal rationalization: What Emily did was “fair use.” When your prom date gives you a “present” of 15GB worth of digital music, it’s probably not fair use. (Of course, that this is even a question is a problem with fair use itself, but that’s another subject.)
- Terminological distractions: So-called piracy is not “stealing” because the original remains once you have copied it. As even TechDirt’s Mike Masnick points out, what you call it doesn’t matter; it’s copyright infringement, which is against the law.
- Exceptions that prove the rule: So-and-so has figured out how to thrive under the new system, so there must be ways to do it. This one is Masnick’s specialité de la Maison. He seeks out these examples in order to encourage others to follow them. That’s fine, but they continue to be few and far between.
- Market research cherry-picking: I saw a study that says that piracy actually benefits music sales and/or the RIAA/MPAA’s piracy studies are biased. Let’s agree that no study of the economic effects of copyright infringement is both methodologically unassailable and unbiased, and perhaps that the “real” effect may be unmeasurable. But if we’re going to cite studies, we should at least look at all of them instead of putting up strawmen for the purpose of knocking them down. I have looked at all of the studies (and not just those about music) and found that those that claim economic damage from infringement outweigh those that claim economic benefit by a wide margin, even when studies commissioned by the RIAA or MPAA are ignored.
I am also reminded of a conversation that took place at the Copyright and Technology conference last week in London. The eminent copyright litigator Andrew Bridges echoed the common copyleft refrain that “copyright infringement is not a problem” except perhaps that “some companies are losing money.” He also asserted that the sky-high statutory damages under United States law act as an effective deterrent to copyright infringement because they scare people.
I disagreed with both statements. The case of Emily White is the best counter-argument I could have made to both points if I had known about it at the time. For every Joel Tenenbaum or Jammie Thomas-Rasset who makes headlines getting nailed for copyright infringement (and getting Harvard Law professors to defend them), there are millions of Emily Whites who don’t, and millions more who have no idea about copyright infringement, let alone statutory damages.
However, none of these arguments addresses the real problem. The real problem is that the value that people perceive in music has virtually disappeared. As Jaron Lanier pointed out in his book You Are Not a Gadget and subsequent writings, there is a profound cost to society as the perceived value of original content goes to zero. And the cost goes well beyond questions of whether there is “enough creative content” if artists can’t make livings.
Lowrey’s Letter to Emily is more about morals and ethics than about the inherent value of content. The problem is that simply preaching ethics to people in order to get them to change their behavior doesn’t work. At best, as Ben Sisario points out in the New York Times, this gets musicians to the status of charity recipients.
A more recent post on The Trichordist, by Lowrey’s Camper Van Beethoven bandmate Jonathan Segel, focuses exclusively on perceived value — after providing an illuminating history of musicians’ compensation since Beethoven. Killer quote:
What is happening here seems to be a willful ignorance that the inherent value is still there, not being paid for in the distribution of additional copies. These same individuals would certainly make the claim that they are copying the music in order to listen to it … but are refusing to admit the relevance of the social contract that says that that inherent value is what is used in the exchange rate with monetary currency. I see this as a hypocrisy: either music has no value at all, (in which case why copy it to begin with?), or it has value and the copiers are refusing to admit that it does, simply because it is a copy.
Once this behavior becomes normal — i.e. becomes standard practice for the Emily Whites of the world — then the taint of hypocrisy disappears. Once that happens, concern over the value of content evaporates, as then does the value itself.
The time for questioning whether or not this is a problem is over. The proper question is how to solve it.