Creative Destruction

May 15, 2007

Copyright in Transition

Filed under: Criminal Justice,Current Events,Economics,Popular Culture — Brutus @ 12:09 am

The U.S. Copyright Office and the Recording Industry Associate of America (RIAA) are doing exactly what they exist to do: protect and police the intellectual property of their constituencies. This post by Off Colfax a few days ago about the Copyright Review Board’s decision to raise royalty rates precipitously for streaming copyrighted content over the web (usually by commercial and web radio services), as well as stories like this one, do nothing to enhance the perception of the RIAA as a common thug with the support of the Copyright Office. Indeed, it’s gotten so bad that the RIAA recently won a contest (in public perception only) for being the worst company in America.

Naturally, it’s unpopular to lend support to an institution known for threatening lawsuits against college students, 12-year-olds, and grandmothers, or one that seems hellbent on instituting punitive royalty rates. I goofed in my first comment on this subject, as I didn’t get that new royalty rates for streaming content will likely put an end to web radio. (I still don’t understand the motivation behind it.) But unlike a lot of consumers, I’m no novice at intellectual property issues (see here and here). So the usual tropes consumers offer up to rationalize their illegal, infringing behaviors get no quarter with me.

What interests me now is that the entire notion of copyright, with its hundreds of years of support in legal practice, appears to be simply beyond the power of most folks to adequately comprehend. That change of sea means that widespread infringement and grassroots movements to relax or invalidate copyright protections, ironically undertaken at the same time that the U.S. government is seeking to impose stronger IP protections on other governments, probably doom the recording industry to extinction. If the consuming public determines, justly or unjustly, that a particular body of law is invalid and won’t respect it, then that law usually gets changed (or flatly ignored, like speed limits). The precipitating factor, in my view, is the technological simplicity of copying — the very thing copyright prohibits.

Before the photocopy machine and digital media, copying and piracy were far more costly and time consuming. Now, the ease and ubiquity of infringing behaviors have become a sort of death by a thousand cuts, except that it’s millions and billions of cuts. The business model on which the recording industry has been based for about 100 years is now so entirely destabilized and transitional that its very survival is threatened. In that context, it’s perfectly reasonable (if unpopular) for the RIAA to seek recourse through legal means, which includes infringement lawsuits (real and threatened) and resetting royalty rates. But the public’s insistence that new distribution methods and business models must (must!) be developed because, like the newspapers, the industry is already dead but doesn’t yet realize it, will probably win the day eventually. If and when that happens, and the financial incentive for creative work disappears with it (since creative work won’t be protectible), I wonder whether it will be a classic case of getting what you want but then deserving what you eventually get: crap music and crap media.

25 Comments »

  1. I don’t believe that we will reach the point where one cannot protect one’s own intellectual property and/or creative work. On the other hand, I do believe that, should the current state of affairs continue, the RIAA itself will put itself out of business for, when it comes down to it in the end, if the record industry realizes that they can make more money by dissolving their self-made umbrella corporations (The Recording Industry Association of America and SoundExchange) and handling those minutia of details themselves, they will cut the umbilical.

    The joker in the deck is precisely when the RIAA goes sufficiently into the red to no longer be sustainable.

    wonder whether it will be a classic case of getting what you want but then deserving what you eventually get: crap music and crap media.

    But Brutus, isn’t that what we already have?

    Comment by Off Colfax — May 15, 2007 @ 6:35 am | Reply

  2. Classic economics says that the price of a good will approach its marginal cost of production. This tends to produce a stable and efficient outcome when the cost of production is rising (denoted by an upward-sloping supply curve).

    Intellectual property, in contrast, tends to be characterized by a flat or falling supply curve. The cost of producing the FIRST copy is great, whereas the cost of producing each succeeding copy is less so. The cost of producing the FIRST performance of Beethoven’s symphony involved writing a symphony; the cost of producing the FIRST AZT pill involved researching the pill; the cost of producing the FIRST copy of today’s newspaper involved writing a paper, etc. The cost of producing the second copy mostly involves, well, making a copy. If the price is set at the cost of producing the copy, how can we recover the cost of producing the original? It’s a tough problem, and getting tougher.

    And it’s by no means a new problem. Gilbert & Sullivan learned that they had to open new shows in London and New York almost simultaneously or else musical pirates (no pun intended) would do it for them.

    That said, I’m curious about the idea that problems with intellectual property law will result in “crap music.” Since Brutus knows something about intellectual property and much about music, I want to know his views: When was the “golden age” of music? (Or, if you rather, name your favorite works of music.) And what intellectual property regime existed at that time? How did the producers get compensated?

    Comment by nobody.really — May 15, 2007 @ 10:13 am | Reply

  3. What a silly question, nobody! The “golden age” of music was the state of being shortly after the Big Bang, when no decrepit humans with their stupid cultures and idiot decisions that I wouldn’t make had come into existence. Everything has gone to shit since.

    Comment by Robert — May 15, 2007 @ 11:50 am | Reply

  4. You whippersnappers, so full of yourselves and that newfangled noise you call music.

    “…After the Big Bang….” After?!? Don’t make me laugh. I mean, it’s called the Big Bang, for cryin’ out loud. So THAT, my young friend, was the pinnace of sound. It’s all be derivative nonsense ever since.

    And, oh, ya shoulda been there. My honey and I would be cuttin’ a rug to the sounds of universes unfolding all around us. And I was quite a looker in those days, I don’t mind telling you at great length….

    Comment by nobody.really — May 15, 2007 @ 12:23 pm | Reply

  5. There is more to the statement: “The business model on which the recording industry has been based for about 100 years is now so entirely destabilized and transitional that its very survival is threatened.”, which is basically true, than meets the eye.

    First off, keep in mind that copying has been reasonably affordable for commercial purposes for about 500 years (when the printing press was invented, ending the need to copy manuscripts by hand). It has gotten cheaper since then, and quality has gone up, but the mere availability of copying alone is not the problem.

    The 400 years of the pre-copyright, post-printing press era were not devoid of creative invention. Indeed, this time period was home to the Renaissance and the Industrial Revolution, as well as the classical and romantic periods in the fine arts.

    RIAA itself is a stopgap solution to flaws in the coypright law. Copyright law operates on an individually negotiated use paradigm.

    This paradigm long ago proved impracticable, when radio came into being, so RIAA was created to cut the Gordian knot of transaction costs by centralizing at a national level (and international level) the process of collecting royalties and establishing royalty agreements, in a market place with dozens of publishers of music (i.e. studios), thousands of artists with valueble works, and thousands of radio stations.

    Many countries, Mexico, for example, establish a non-profit artists guild that collects royalties in a manner similar to RIAA from radio stations, taking the publishers out of the equation, and sets rates using a mechanism similar to the Copyright Royalty Tribunal in the United States. Many countries also already undermine the property right concept of intellectual property, by giving would be publishers a right to publish certain unpublished works (especially translations) for a statutory royalty, even if the original copyright holder cannot be found.

    In my view the crisis of the digital age is not the ease of copying, but the deconstruction of the definitions that are inherent in copyright law which are so far removed from their printing press context that they have been robbed of a well defined meaning. What should be simple questions, like the legal meaning of buying a book, reading a book in a library, lending a book to a friend, or reading a book aloud at a children’s party, have become so bedeviled with competiting interpretations, that reasonable serious attorneys and law professors can’t always agree on the law that governs these heartland cases anymore.

    Copyright law contains key terms like “fair use” and “performance” and “derivative work” that once had well defined meanings through community norms, custom and practice, whose meanings are now highly negotiable in a context where there is no one in a good position to definitively and sensibly redefine them.

    I personally believe that the core of the problem is that intellectual property tries to follow the analogy of the law of ordinary property law, and that the analogy has ceased to become useful. At the time American copyright law (and patent law) was developed, a different kind of law, the law of unjust enrichment (also called “restitution”). In a simple unathorized copy of a book transaction that involves works committed to a physical thing, for example, the two bodies of law produce similar results. But, in the examples of the digital age, where defining precisely what is going on and what is protected can become an angels on pinheads kind of question because the focus is on the question “what is the work”, an unjust enrichment analysis which asks “who benefits”, “how much” and “was the benefit of a type that should really accrue to someone else”, the focus shifts away from the increasingly tenuous definition of the work itself, and shifts instead to an analysis of the economic impact of using the work, which is something much easier to quantify and operationalize.

    The other virtue of unjust enrichment is that it replaces the natural leap to criminality that is associated with a misuse of property analogy, with a focus on righting the economic scales, associated with unjust enrichment. For example, filming a movie that is widely distributed with a TV show playing in the background, without thinking to obtain consent for that TV show clip in advance could give rise to punitive damages and even criminal sanctions, because you have “stolen” the TV clip in the current analogy. Instead, the focus should be on how much the TV show producers were enriched by this useage and suitable compensation (if any).

    The other part of the problem is that the TV and radio industry with the record industry’s compliance has created the very moral norms that drive the general population’s disdain for copyright now.

    It is hard to credit the theft claims of someone who routinely makes their goods available for free to end users in the general public, particularly when the role of the end user as a third party beneficiary of the advertisers is often minimized rather than belabored.

    Why should a record company get worked up about giving away the right to listen to a song, when they have been giving away that right to millions of people for free for years and still continue to do so today? Actions speak louder than words. RIAA has injected free content into our daily lives for a couple of generations, we have accepted those injections as part of our communal culture, and now RIAA wants to withdraw the contribution it has made to this cultural commons.

    Until booksellers can create a coherent theory that can explain why a library is different from a download, and until record companies can create a coherent theory that can explain why free radio airplay is different from a download, they are going to be fighting an uphill battle for hearts and minds.

    Comment by ohwilleke — May 15, 2007 @ 1:59 pm | Reply

  6. A cogent explanation, ohwilleke. Thanks.

    Comment by Robert — May 15, 2007 @ 2:54 pm | Reply

  7. I am always careful with percentages, increases of very small numbers always correspond to large % increases. The rates are said to go up over 30%, but these numbers correspond to an increase from 0.8c per 1000 listeners to 1.1c. Right now, if you place a banner on the Internet for a captive audience, the cost is about $10 to reach 1000 surfers.

    XM Radio now has about has 7 million subscribers and Howard Stern had about 150,000 listeners as of June 2006. So last year, if Howard played a song, he owed about $1.2 and now he owes $1.65. The monthly service fee on XM is about $12.99.

    If you start your own webcast and reach 5,000 people (and that is very generous), you shoud get $50 in revenue from that add flashing on the bottom of the screen and will be forced to pay 5c to 6c to the song author. In my book, that is fine.

    Comment by Vilon — May 15, 2007 @ 3:03 pm | Reply

  8. Bad Vilon! Cross-topic posting! So I will respond in the thread I started and leave this to general musings of copyright law in and of itself rather than the specifics of how it applies to streamed content.

    Comment by Off Colfax — May 15, 2007 @ 5:55 pm | Reply

  9. nobody.really writes:

    I’m curious about the idea that problems with intellectual property law will result in “crap music.” Since Brutus knows something about intellectual property and much about music, I want to know his views: When was the “golden age” of music? (Or, if you rather, name your favorite works of music.) And what intellectual property regime existed at that time? How did the producers get compensated?

    Historically, composers were employed by churches, courts (aristocrats), and in some cases, municipalities. It wasn’t until Beethoven’s era (beginning of the 19th cent.) that the professional composer who earned his living from commissions, concertizing, and publishing emerged. A century later, the university employed academic composer appeared. It’s arguable that the 19th cent. had more composers of the first rank than any time in history thus far. There was always lots of wheat and chaff, but a huge proportion of lasting masterworks come from that period, far more than the 20th cent. Once the financial incentive to creative work is reduced or removed, many people who might otherwise have spent their lives in the service of the art move on to something else. (I know because I’m a living, breathing example.) Some few will always persist in the face of penury, but the musical atmosphere in which they develop is by necessity be degraded.

    If the protections provided by copyright disappear, performing musicians and songwriters are forced to expect that their copyrighted work won’t feed them and fund their next project. Perhaps they can develop an alternative income stream (many have suggested giving the music away and making money solely on concertizing), but that’s predicated on a critical mass of concertgoers usually attracted only by established artists. So without financial support, most (but not all) activity will sink to the equivalent level of garage bands and open mic nights at the pub.

    ohwilleke writes:

    keep in mind that copying has been reasonably affordable for commercial purposes for about 500 years (when the printing press was invented, ending the need to copy manuscripts by hand). It has gotten cheaper since then, and quality has gone up, but the mere availability of copying alone is not the problem

    Until after 1950 or so, the means to make copies was not in the hands of the general public. Pirated copies and counterfeits existed, but not on the scale available today. If you wanted to read Poe or Melville, you bought a copy or went to the library. At no point did you even consider creating a new copy for personal use; it wasn’t within your power. With the tape machine, photocopier, and now digital media, dubbed, scanned, burned, and ripped copies are now pushbutton simple to make, so many in the general population do. That’s a technical truth quite independent of the economics of infringing copyrighted material, and it’s not the only way to infringe.

    In my view the crisis of the digital age is not the ease of copying, but the deconstruction of the definitions that are inherent in copyright law which are so far removed from their printing press context that they have been robbed of a well defined meaning.

    That’s a perspective, to be certain, but not one I share. The law is clear: unless you’re the owner of a copyrighted work, you’re prohibited from making copies (lots of nuance in that, but that’s the basic gist of copyright protection). The public doesn’t enter into a debate over the deconstruction of the definitions inherent in the law; they simply see or hear something they want and decide to make themselves a copy with the tools technology has developed. Maybe the individual knows it’s illegal, maybe not. It is indeed complicated by the fact that radio, TV, and cable broadcasting make available to the end user copyrighted content for free or through subscription fees, but only for viewing and listening, not for copying and archiving. Cassette and VHS tapes, TIVO, etc. further complicate the issue, and implementation of DRM, for instance, has failed in part because the technology is too easy to hack and bust (clearly illegal, but given wide support from end users).

    in the examples of the digital age, where defining precisely what is going on and what is protected can become an angels on pinheads kind of question because the focus is on the question “what is the work”, an unjust enrichment analysis which asks “who benefits”, “how much” and “was the benefit of a type that should really accrue to someone else”, the focus shifts away from the increasingly tenuous definition of the work itself, and shifts instead to an analysis of the economic impact of using the work, which is something much easier to quantify and operationalize

    Nonsense. Unjust enrichment is a doctrine aimed at willful piracy, distribution, and resale. And the question of what constitutes a work is not in flux as you suggest. In the instance of the Univ. of Neb. student who copied 100 or so mp3 files, there is little doubt that the activity was for personal use, not for resale and distribution. Most likely, no money changed hands. But it’s still unlawful copying, and an unjust enrichment analysis only begins to “operationalize” if you expand enrichment to include personal enjoyment (difficult to quantify). Otherwise, we would all be able to copy at will anything that found its way into a digital format and was posted somewhere that it would proliferate. Copyright law is understood to protect against this very thing. A $3000 settlement is an expensive way to learn the lesson that someone else’s copyrighted material isn’t yours to copy, but it’s not entirely unreasonable.

    I’m the owner of some 35 copyrights, which are clearly claimed in print (even though they don’t have to be). When I found out about three separate cases of infringement, I sent demand letters for payment of royalties (at the then statutory rate of $0.08 per copy). I could instead have filed copyright infringement lawsuits, which if found to have merit have pretty significant penalties ($10K per instance of copying, I think). The infringers should definitely have known better, which made it appear to be either laziness or willful infringement. (I learned that one infringer paid a service to acquire the rights but the service never contacted me.) So if I wanted, I could have made a lot of money very quickly. Knowing the way things work, I’m absolutely certain that much, much more copying of my protected works goes on than I’m personally aware of. I don’t take the same approach policing my copyright that the RIAA does, but I would be well within my rights to do so.

    Comment by Brutus — May 16, 2007 @ 12:46 am | Reply

  10. Historically, composers were employed by churches, courts (aristocrats), and in some cases, municipalities.

    Great. So nothing about today’s intellectual property rights regime would impede a contemporary Bach. Sure, a contemporary Bach might be impeded by a lack of paying churches, aristocrats and municipalities, but you can’t blame that on a lack of intellectual property rights.

    It wasn’t until Beethoven’s era (beginning of the 19th cent.) that the professional composer who earned his living from commissions, concertizing, and publishing emerged.

    So how would today’s intellectual property rights regime have affected Beethoven? When the Musical Fund Society of Philadelphia performed Beethoven’s Second Symphony in 1821, how did Beethoven get compensated? And when the Germania Musical Society toured the Second Symphony to Chicago, Milwaukee and St. Louis in 1853, did they pay his estate/publisher/copyright holder?

    A century later, the university employed academic composer appeared. It’s arguable that the 19th cent. had more composers of the first rank than any time in history thus far. There was always lots of wheat and chaff, but a huge proportion of lasting masterworks come from that period, far more than the 20th cent.

    Cool. So, if we can emulate the compensation formulas that existed in the 19th century, will we be safe from sinking into a world of “crap music”?

    Hey, I’m about the last person to deny that people respond to incentives, or that less money will lead to less productivity. But less compared to what? Less music than in Bach’s day? Beethoven’s day?

    Comment by nobody.really — May 16, 2007 @ 2:17 pm | Reply

  11. So without financial support, most (but not all) activity will sink to the equivalent level of garage bands and open mic nights at the pub.

    On the bright side, I’ve heard some people bemoaning the fact that Americans had grown too passive about music, and that we should seek to emulate the pre-radio days when people would gather around parlor pianos and porch fiddles and make their own music. Win a few; lose a few.

    Of course, the heyday of the parlor piano was financed through intellectual property rights – specifically, sheet music sales. So maybe we’re not out of the woods yet….

    Comment by nobody.really — May 16, 2007 @ 2:19 pm | Reply

  12. Until after 1950 or so, the means to make copies was not in the hands of the general public. Pirated copies and counterfeits existed, but not on the scale available today. If you wanted to read Poe or Melville, you bought a copy or went to the library. At no point did you even consider creating a new copy for personal use; it wasn’t within your power. With the tape machine, photocopier, and now digital media, dubbed, scanned, burned, and ripped copies are now pushbutton simple to make, so many in the general population do. That’s a technical truth quite independent of the economics of infringing copyrighted material, and it’s not the only way to infringe.

    A couple of points. First, the abilities of the general public aren’t relevant to professional copyright violators. Second, in many ways illegal downloading somwhere between borrowing a book from the library and making a copy for personal use.

    In the print paradigm, you don’t need a license to merely read a copyrighted book, you simply own a physical object called a book which we treat like any other tangible property; you don’t sign a license agreement when you buy one; and you pay a license only upon a first purchase of that book. You can share your books with lots and lots of friends, you can even do it systematically by setting up a library, even though this is calculated to reduce royalty payments to authors. In theory, reading a book aloud may violate a performance right, but long settled customs like story hours at libraries and poetry readings (common not just at modern coffee shops, but a cultural institution in the form of literary societies and Chataqua meetings common in the early 1800s), has established that the performance right is pretty much limited in practice to paid performances or readings.

    In the e-paradigm, the technological accident that any use involves the creation of copy in a process largely invisible to the end user, has blurred the distinction between use of a borrowed work (O.K. in print) and transfer of ownership of a work for someone else to own. Hence my comment that:

    In my view the crisis of the digital age is not the ease of copying, but the deconstruction of the definitions that are inherent in copyright law which are so far removed from their printing press context that they have been robbed of a well defined meaning.

    The biggest deconstruction of all has been an increasing separation of content from the means by which it is objectified (not only in copyright, the U.S. Supreme Court recently took up a case involving the same issues where a software patent was at issue).

    That’s a perspective, to be certain, but not one I share. The law is clear: unless you’re the owner of a copyrighted work, you’re prohibited from making copies (lots of nuance in that, but that’s the basic gist of copyright protection).

    See above. The breakdown of the physical object/use distinction is huge. Now, many of the most copied works, like mp3s, never really get distilled into a single object at all. The content gets completely divorced from an object. Before, content divorced from a physical object was frequently considered a mere use and not a copyright violation. Copying means creating a new object upon which the work was exclusively placed.

    The public doesn’t enter into a debate over the deconstruction of the definitions inherent in the law; they simply see or hear something they want and decide to make themselves a copy with the tools technology has developed.

    Where does it stop? Do you violate copyright law when you simply remember a song, since that creates a biological copy stored in your neurons that could be discerned in theory with the right measuring tool?

    The where does it stop rule is very real. There are, for example, architects who have copyrighted skyscraper designs who try to hit up every commercial photographer who takes a picture of a skyline with their building in it for royalties.

    Maybe the individual knows it’s illegal, maybe not. It is indeed complicated by the fact that radio, TV, and cable broadcasting make available to the end user copyrighted content for free or through subscription fees, but only for viewing and listening, not for copying and archiving. Cassette and VHS tapes, TIVO, etc. further complicate the issue, and implementation of DRM, for instance, has failed in part because the technology is too easy to hack and bust (clearly illegal, but given wide support from end users).

    The rights that flow from free distribution are simply arbitrary legal constructs. There is nothing natural or absolute about them. When widespread public practice by otherwise law abiding citizens systemically and often differs from the law, there is good reason to believe that we ought to change the law, rather than try to enforce it more aggresively. Most of our law developed from a common law process that codified custom and practice in existence, rather than trying to impose it arbitarily.

    Unjust enrichment is a doctrine aimed at willful piracy, distribution, and resale.

    To the contrary, unjust enrichment is a doctrine rooted in innocent mistakes that are taken advantage of (people who try not to pay when someone accidentally paints their house instead of the intended one, or people who spend money accidentally deposited in the wrong acount). The reason unjust enrichment is a better model is that it focused on what the artist is deprived of (economic gain). Copyright violations are not mallum in se, they are not morally wrong, they are wrong because they are illegal, and they are illegal because they deprive artists of profits.

    And the question of what constitutes a work is not in flux as you suggest. In the instance of the Univ. of Neb. student who copied 100 or so mp3 files, there is little doubt that the activity was for personal use, not for resale and distribution. Most likely, no money changed hands. But it’s still unlawful copying, and an unjust enrichment analysis only begins to “operationalize” if you expand enrichment to include personal enjoyment (difficult to quantify).

    Not so hard. In an unjust enrichment analysis the unjust enrichment from the personal use is the cost of purchasing the work legitimately, i.e. maybe a buck or two for a single song. The intermediary who works for free and doesn’t listen to the works himself, may be unjustly enriched not at all.

    Otherwise, we would all be able to copy at will anything that found its way into a digital format and was posted somewhere that it would proliferate.

    People didn’t stop buying books when Carnegie put a library in every town.

    A $3000 settlement is an expensive way to learn the lesson that someone else’s copyrighted material isn’t yours to copy, but it’s not entirely unreasonable.

    It is entirely unreasonable to charge someone $3,000 when the harm they have been unjustly enriched by only a buck or two. It is grossly disproportionate to the harm, and encourages litigation that doesn’t make economic sense because the transaction costs dwarf the actual economic harm in the wrongful use.

    We shouldn’t encourage RIAA to pay a lawyer $3,000 to go after a two buck copyright violator.

    Comment by ohwilleke — May 16, 2007 @ 7:46 pm | Reply

  13. Until booksellers can create a coherent theory that can explain why a library is different from a download, and until record companies can create a coherent theory that can explain why free radio airplay is different from a download, they are going to be fighting an uphill battle for hearts and minds.

    This is easy. A library is different from a download because libraries don’t duplicate things. Only one person can have a given copy of a book at any given time. Libraries generally aren’t adequate to satisfy the desires of people who want to read a book as soon as it comes out (because they don’t buy enough copies to go around) or those who want to keep a copy of a book indefinitely (because they have to be returned). These factors establish a floor for the numbers of copies sold. With downloads, the only thing (aside from the honor system) establishing such a floor is the fact that most people prefer to read paper books, and this factor may begin to disappear as better readers come out.

    With radio, having the ability to listen to a song whenever you want to is, for most people, greatly preferable to having the ability to listen to it whenever the DJ decides to play it. There are also quality issues. Again, this establishes a floor that doesn’t exist with downloads. Actually, radio may well encourage, rather than discourage, music sales.

    Comment by Brandon Berg — May 16, 2007 @ 7:52 pm | Reply

  14. ohwilleke presents curious arguments with respect to U.S. Copyright Law, but it’s clear that he’s not basing his arguments on the law or prevailing interpretations of that law by professionals in the field. His concepts and contentions stray so far afield I don’t even know where to begin. I’m not a copyright attorney, and I don’t want to come across as one, so I won’t cite chapter and verse of the law. That does not mean I concede his arguments. It merely means I don’t care to argue my own points ad naseum. In fairness, it’s a really nasty, complex field of law, and many people get things wrong. So I’ll limit my comments to those found below.

    ohwilleke writes:

    First, the abilities of the general public aren’t relevant to professional copyright violators. Second, in many ways illegal downloading somwhere between borrowing a book from the library and making a copy for personal use.

    A large percentage of the population infringes copyrighted music, which is fully relevant to enforcement efforts. In aggregate, the general public may well represent a majority of the illegal copying going on, considering that pirates still have to get people to pay for their pirated versions whereas copying for personal use is virtually free. And I wholly disagree that illegal downloading (illegal! flashing lights! it’s ILLEGAL!) lies between lawful borrowing from a library and making a copy (illegal! again!) for personal use. Dither all you want about some imaginary scale between library borrowing and illegal copying. The U.S. Copyright Office answers the question succinctly here. Don’t believe me; believe the Copyright Office.

    In the e-paradigm, the technological accident that any use involves the creation of copy in a process largely invisible to the end user, has blurred the distinction between use of a borrowed work (O.K. in print) and transfer of ownership of a work for someone else to own

    Broadcasting is not borrowing. Nor are radio, TV, cable, and Internet broadcasting the same thing as copying a broadcast. Broadcasters pay for the right to use copyrighted material; people copying from broadcasts do not. That said, I’ll agree that devices like VHS, CD-R, DVD-R, and TIVO do indeed blur the distinctions to the layperson. Manufacturers are able to make devices that enable infringement (like gun makers can sell guns that will be used in the commission of crimes) because those devices have other legitimate uses. Some countries tack a penalty or surcharge onto the sale price and distribute the proceeds among providers of copyrighted content. However, none of that makes it legitimate to infringe copyrights. Obviously, it’s an imperfect doctrine, and content creators are forced turn a blind eye to a lot of copying they know is going on.

    The biggest deconstruction of all has been an increasing separation of content from the means by which it is objectified

    This is mere argument and is just plain untrue with respect to the law. In the nominal case we’re considering, a band or a songwriter with a 3-4 min. tune, it doesn’t matter whether the work is fixed in a physical, electronic, or magnetic form. It’s the creative work, the song, that’s protected. With software, it’s the code that’s protected by copyright (not by patent), and the end user purchases a license to install and use the software. That’s the whole point of it being intellectual property rather than real property — it’s not the specific embodiment that matters. The blurb on what’s protected by copyright is here. The law itself, like many bodies of law, defines terms like “work” pretty well. Since the law’s applicability points forward in time, new technological developments may fall into conceptual cracks but are intended to be covered by general catch-all terms.

    It is entirely unreasonable to charge someone $3,000 when the harm they have been unjustly enriched by only a buck or two. It is grossly disproportionate to the harm, and encourages litigation that doesn’t make economic sense because the transaction costs dwarf the actual economic harm in the wrongful use.

    You can believe what you want about how unreasonable it is to threaten a lawsuit and settle for $3K. Damage awards are discretionary and go up to $10K per work infringed, plus attorneys’ fees, which can easily add another $15K-20K if a case goes to trial. For an infringer who copies 100 songs, the potential cost runs over $100K, so $3K has to look like a bargain. So your damage analysis favors the infringer. That’s certainly the current attitude of the public, but it’s not borne out of a clear understanding of the law. If you really knew and understood that illegally downloading 100 songs could potentially put you on the hook for even $3K, why take the risk? Buy the music. It’s a bargain.
    Further discussion of public performance rights, fair use, and unjust enrichment gets too labored for me to pursue further. And they’re extremely complex issues to unpack.

    Comment by Brutus — May 17, 2007 @ 11:28 pm | Reply

  15. To be perfectly clear, I am not talking about what the law is, and I am very well aware of what the law is; what I am talking about is what is wrong with the law as it is now, and providing a theoretical basis for both why it is wrong now, and for what it would look like if it were right.

    Brutus is, of course, entirely correct that it is illegal to download videos and music without permission under current law, that tens of millions of people do it anyway, and that the penalties for doing so under existing law are high and on the order of those Brutus describes.

    [The one nuance to add is that some of the higher penalties touted in the copyright warning from your local blockbuster rental are in actual fact reserved for high volume offenders and can’t actually be imposed on you public who makes one copy of “Star Wars” before he returns it so he can watch it over and over again without paying blockbuster — there is still a high penalty for doing that, but it isn’t 5 years in prison and $250,000.]

    Also, to be clear, I’m not saying that lawyers for defendants facing copyright prosecutions that settle for $3,000 are doing a bad job, only that the law that makes it possible to win those settlements is an ass.

    My goal is to articulate why the law is an ass and further, to propose a reasonable alternative with a different theoretical foundation that eliminates the undesirable and unpopular aspects of copyright law that discourage innovation (by unreasonably shrinking the public domain) and are draconian relative to violations, while continuing to provide reasonable protections for innovators sufficient to allow the vast majority of innovators to secure the vast majority of the economic value of their work.

    Comment by ohwilleke — May 18, 2007 @ 1:07 pm | Reply

  16. What interests me now is that the entire notion of copyright, with its hundreds of years of support in legal practice, appears to be simply beyond the power of most folks to adequately comprehend.

    But copyright, as it currently works, is in many ways not “hundreds of years” old. In particular, the use of effectively perpetual copyright to permanently keep works out of the public domain, thus stifling creativity, cannot accurately be described as “hundreds of years” old.

    Nor is “old” necessarily good. “Work for hire” laws, in which corporations rather than artists become the legal creators of work, have been combined with corporate monopolies over the means of distribution to force creators to give up their rights. That’s been going on for at least a century, but it’s still not right.

    To quote myself from five years ago:

    Copyright laws do not protect creators of million-dollar ideas. They protect copyright owners.

    Copyright certainly didn’t protect Jerry Siegel and Joe Shuster, the creators of Superman.

    In the half-century between the creation of Superman and the creation of Calvin and Hobbes, very little changed for cartoonists. The ownership of Superman was signed away for the same reason the ownership of Calvin was signed away decades later: the cartoonists were young, hungry, unpublished and desperate to do comics. And if unknown cartoonists won’t publish the bosses’ way – which means signing away all rights – they won’t get published.

    Jerry Siegel and Joe Shuster might have been better off had Superman never been copyrighted – at least they would have had the right to continue making Superman comics and selling Superman drawings into old age. (As it is, they ended up penniless, until bad publicity convinced Superman’s owner to give them pensions). The in-practice effect of copyright – and of the overwhelming imbalance of power between a young creator and a huge publisher – is protection of the publisher’s interests, not the creator’s.

    Before the photocopy machine and digital media, copying and piracy were far more costly and time consuming. Now, the ease and ubiquity of infringing behaviors have become a sort of death by a thousand cuts, except that it’s millions and billions of cuts. The business model on which the recording industry has been based for about 100 years is now so entirely destabilized and transitional that its very survival is threatened.

    As Janis Ian wrote, “let me remind you of something: the music industry had exactly the same response to the advent of reel-to-reel home tape recorders, cassettes, DATs, minidiscs, VHS, BETA, music videos (“Why buy the record when you can tape it?”), MTV, and a host of other technological advances designed to make the consumer’s life easier and better. I know, because I was there.” (Her entire essay, which argues that free downloading is good for her as a musician, is worth reading.)

    What’s changed really isn’t the ease of copying; it’s the ease of distribution. The music industry’s business model is predicated on a few big companies having a near-monopoly over the means of distribution. As that becomes less true, it’ll be harder for those companies to earn millions of dollars; but it will also become easier for smaller artists to find their audiences. I’m not convinced that’s a bad thing.

    Comment by Ampersand — May 23, 2007 @ 3:37 am | Reply

  17. And if unknown cartoonists won’t publish the bosses’ way – which means signing away all rights – they won’t get published.

    So take your creative idea, find someone who likes it and who has money, and publish it yourself. Strike a bargain with the entrepreneur, or come up with your own capital (who really needs TWO kidneys anyway, once you get past your drinking years?) and put your work in the marketplace. If it has merit, it will hopefully receive reward.

    (I will readily concede that your argument had powerful force in 190X, and even 1970X. But it’s a digital age. Freedom of the press belongs to the person who owns one, and presses are $39 down at CompUSA.)

    The artist has no right to the capital of the businessman, the businessman has no right to the labor or creativity of the artist. Neither is prohibited from taking on the mantle of the other, or from contracting freely amongst themselves. Each begins from a position of owing one another nothing, save the duty towards mutual decency owed to every human person by virtue of their joint participation in the commonalty of man, plus whatever moral code they may each possess.

    (Mutual decency has limitations and codicils, naturally; someone bound and determined to destroy me may exhaust my obligation toward him or her very quickly.)

    You’re right about the distribution being so much more effective. With the Web, the economics of publishing are frankly ridiculous. It costs $15 to get a perfectly capable hosting account. Unless you’re posting a hundred cartoons a day – and frankly, I don’t think you can write a hundred cartoons in a day on a sustained basis – your bandwidth bill won’t amount to anything. If your bandwidth bill DOES start to amount to something, then you’re successful, your work has found an audience, and you can afford it. At that point you start being able to sell DVDs or books or whatever, and God bless you.

    (Personally I wish you would quit dicking around with blogs and just start putting up a bunch of doodles and some strips. I’ve grown addicted to webcomics, and I wanna see Barry Deutsch Unleashed. (Platonically, I beg of you.))

    Comment by Robert — May 23, 2007 @ 3:56 am | Reply

  18. Yes, the world has changed a lot since Superman, and even since Calvin and Hobbes. I think it’ll change a lot more, but we’re really not there yet.

    What cartoonists really need, along with internet connections continuing to get faster and bandwidth continuing to get cheaper, is an effective form of micropayments — a way that an average, non-cutting-edge consumer can come to a cartoonist’s site and effortlessly pay a quarter to read a comic book, and the cartoonist gets 20 cents of that quarter in her bank account (the other five cents going to the micropayment company). (20 cents is similar to the amount of money that a cartoonist makes when you buy a $3 comic book at a newstand, by the way).

    If and when that happens, the world will be a very different place for cartoonists, and the kind of situation you’re describing will happen on a widespread basis. But we ain’t there yet.

    Right now, for the vast majority of cartoonists, the way you earn a living as a cartoonist is through some form of print, and that means dealing with gatekeepers. And the young, hungry cartoonist who is desperate to stop working at 711 or stop living in her parents’ basement is going to sell rights that they shouldn’t sell. The dynamic that I described in my comic may be coming to an end, thanks to the internet, but it definitely hasn’t ended yet.

    If your bandwidth bill DOES start to amount to something, then you’re successful, your work has found an audience, and you can afford it.

    With all due respect, Robert, you’re clueless about how cartooning works. Net cartoonists talk about this all the time; the ironic zone when you’re popular enough not to be able to afford bandwidth but not popular enough to pay for it. You may be confused because you’re used to a prose model of web content; the bandwidth costs get a lot higher, a lot quicker, if your website consists mainly of images.

    Finally, I’m not saying that artists have a right to corporate money. I’m saying that work for hire laws needlessly advantage corporations in a way that screws artists and audiences over, and discourages creativity and the financing and creation of new works.

    Comment by Ampersand — May 23, 2007 @ 5:05 am | Reply

  19. With all due respect, Robert, you’re clueless about how cartooning works. Net cartoonists talk about this all the time; the ironic zone when you’re popular enough not to be able to afford bandwidth but not popular enough to pay for it.

    That people talk about it doesn’t make it true. Andrew Sullivan claimed that his bandwidth bill was thousands of dollars, before the widespread access to empirical evidence made it clear that he was lying and he stopped. Not that the cartoonists are lying; they’re just wrong.

    Or so I assert. Let’s explore and find out. Maybe I’m wrong. (I know I’m not, for a reason I’ll tell you later.)

    My $14.95 a month hosting plan from GoDaddy is a fairly typical plan, and GoDaddy is a fairly typical host. What kind of bandwidth do I get for that? 2,000 gigabytes per month, which comes out to lets-call-it 70 GB per day. How many people can read my cartoon with that kind of bandwidth availability?

    Looking at an image from a comic selected at random – something called “Hereville”, by some goofball out in Oregon – a page from the strip is about 120K. Another strip, “You Damn Kid”, comes in at 165K for a page. Let’s be generous, and assume that a page, including the ancillary text, is 250K. Four page loads will burn a megabyte of bandwidth. We have 70,000 megabytes of daily BW to play with.

    So 280,000 people can download my 250K cartoon page on a given day. If my daily output is ten times that, I can only distribute my work to 28,000 people on a given day, before I start incurring charges higher than $15 per month. Let’s assume that, in addition to that, GoDaddy is lying to me about the bandwidth that they’ll really give me, by a factor of 10. In that case, I can only distribute my 2.5 megabyte daily output to 2,800 people. My text site gets maybe twice that traffic on a sustained basis, and its advertising revenue runs to a couple hundred dollars a month – swamping the hosting fees for that content.

    The cartoonists are lying, or wrong. (Much more likely the latter, I would think.)

    The reason I knew this in advance of running these numbers is this: last year I did a feasibility study for web video. The figures are too boring to go into, but the bottom line was that it costs a provider about two cents to get a one-hour video file out to one viewer. And if you can get an episode of “24” into a viewer’s system for essentially nothing, you can damn sure do the same thing with graphic content taking up an infinitesimal fraction of the space.

    The marginal distribution cost for producing any form of content on the Internet is so close to zero as to make no difference.

    Comment by Robert — May 23, 2007 @ 12:20 pm | Reply

  20. Hmmn. Okay, point well taken.

    Come to think of it, it has been a few years since I last heard the complaint I’m talking about. Maybe they were mistaken, but is it possible that something in the equation has changed? (Like the cost of bandwidth?)

    Comment by Ampersand — May 23, 2007 @ 6:06 pm | Reply

  21. I do agree, by the way, that good/better micropayment systems would be helpful to small artists (and big ones too, I suppose). I don’t think that’ll be the way most artists make their full living, but that’s OK – every little bit helps.

    I’m not sure how work for hire advantages corporations (other than their usual advantages of size and raw power). Yes, when the barriers to entry are high, they do – there’s no choice but for the artist to submit, if they want commercial distribution. The barriers to entry are no longer high, digitally.

    Print is expensive, I’ll grant you – but I point to the Order of the Stick (which is continuing to be consistently brilliant at an alarming rate) as an example of a web-based guy able to transition into print. Build the audience, then take the orders for the book – having the orders on hand gives you the power with the printer. (The same power the corporation used to have over the artist, in fact. Please use it wisely.)

    Comment by Robert — May 23, 2007 @ 6:19 pm | Reply

  22. Yes, things have gotten cheaper. Though not massively cheaper, as far as I can recollect.

    So let’s see BarrysToons.com!

    Comment by Robert — May 23, 2007 @ 6:22 pm | Reply

  23. Ampersand wrote:

    copyright, as it currently works, is in many ways not “hundreds of years” old. In particular, the use of effectively perpetual copyright to permanently keep works out of the public domain, thus stifling creativity, cannot accurately be described as “hundreds of years” old.

    The most recent major revision to U.S. copyright law was in 1978. That law itself isn’t hundreds of years old, but it’s informed by hundreds of years of practice, which is important because copyright is not a knee-jerk response to an emerging issue. Even in the digital era, that legacy continues to inform meaningfully, though I submit that most folks don’t really get it. That’s the point of this blog post, that copyright is in transition, which we may be losing sight of in discussions of the economics of the recording industry or cartooning.

    As to perpetual copyright, I agree that extensions to copyright terms are out of hand. Protected works need to fall into the public domain sooner than they now do. Before the 1978 revision, it used to be two 26-year terms (IIRC), which was believed to be too little time. I think that many copyright holders (corporations, frequently) simply don’t want to give up the revenue streams from protected works dating as far back as the 1930s and 40s. Their lobbies are apparently powerful enough to get the laws changed, and no one on Capitol Hill wants to tell them no. Cowards.

    What’s changed really isn’t the ease of copying; it’s the ease of distribution. The music industry’s business model is predicated on a few big companies having a near-monopoly over the means of distribution. As that becomes less true, it’ll be harder for those companies to earn millions of dollars; but it will also become easier for smaller artists to find their audiences.

    In the digital era, producing a copy and distributing a copy aren’t really quite the same thing, but they’re frequently conflated. The way Amazon.com (the books side, anyway) and the iTunes Store distribute content might be a good point of comparison. The books Amazon sells are indexed and offered for sale much the same way as with the iTunes Store, but the books are printed matter (purchased directly from publishers and redistributed, I’m willing to bet) and are shipped through the mail. If Amazon sells digital books (PDFs or some other format), it hasn’t really caught on. However, the iTunes Store licenses songs and albums from record companies, which provides either a CD or a digital file, and the iTunes Store in turn copies the CD or digital file as an mp3 each time a song is distributed to its customers. If iTunes were licensing the works and pressing CDs (or other physical media) and packaging them along with the booklets and inserts, then it would be distributing licensed works based on a conventional, predigital era model.

    As Robert points out, the cost of creating and distributing, for instance, a copy of an mp3 or a jpeg of a cartoon strip, is negligible — at least once the intellectual property content is created and refined. That fact may enable widespread distribution on the cheap, but it’s still about the ease of creating those copies, in my view, and only those with rights under the law are allowed to do so. That’s what copyright protects. And there’s still considerable work to be done prior to posting something on the web for download. Copyright also protects that creative content.

    I don’t buy the “few big companies with near monopoly” trope. There are so many indie labels and distributors, as well as individuals creating and distributing their own work, that it just doesn’t fly. You’re one, I’m another. The fact that neither of us gets to quit our day jobs to create and sell our work doesn’t invalidate the current business model. Everyone starts small, and most stay that way.

    As for Robert’s number crunching and Ampersand’s anecdotal evidence about the real economics of cartooning, I’m more inclined to trust the experience of cartoonists than a theoretical business or economic analysis. It’s perhaps true that cartoonists are poor businesspeople and don’t maximize their income using the content they create and the audience they capture. Still, it’s not so easy to just go out and create value that people want, slap up a website, and watch the money pour in. That’s naive.

    Comment by Brutus — May 24, 2007 @ 1:09 am | Reply

  24. I’m not saying it would be easy, Brutus – I’m saying that the cost of distribution is not one of the things that make it hard.

    Comment by Robert — May 24, 2007 @ 1:53 am | Reply

  25. […] Brutus and I have disagreed about the subject of the RIAA many a time on these pages. His points are from the view of a copyright holder, which is very well […]

    Pingback by Zero Income « Creative Destruction — January 2, 2008 @ 4:52 am | Reply


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