Day: 5 April 2010

The Digital Economy Bill: Thinking further about copyright

Image courtesy of Drew Douglas duly attributed here

The photograph above was taken at a rugby league game in Port Moresby, Papua New Guinea, in September 2008. In it you can see young children and older youths watching the game from rooftops adjacent to the stadium.

Tho photograph below, nearly a hundred years earlier, shows fans watching a 1914 World Series game in Shibe Park. My thanks to explorePAhistory for sharing the photo.

Two photographs.  Nearly a century apart. Of people watching a sports game without paying.

The question is, were they stealing? Would you call it stealing? I wouldn’t. But I know some people who would.

People involved in the distribution of published material have tried their best to call such actions “stealing” since the beginnings of copyright. If you really want to understand what copyright is about, what its origins were, then please go and read this excellent piece. It tells you why copyright had everything to do with distributors, distribution and central control and very little to do with authors, musicians and artists. Why it had everything to do with censorship and exclusivity and very little to do with creativity and free expression. In fact, if you get the chance, spend time at questioncopyright.org; there’s some very useful material there, including this video, Copying is Not Theft.

After 9/11, there were people who tried very hard to conflate “Muslims” with “terrorists”. I have many Muslim friends, and none of them is a terrorist.

During Katrina, there were people who tried very hard to conflate “citizen” with “refugee”. Citizens have rights; refugees rely on the generosity of others. The rights of New Orleans citizens were sought to be weakened by the conflation, a technique that  George Lakoff wrote about quite eloquently.

So it is with copying in a digital world. People are trying to make you believe it is stealing. To understand what’s happening, let’s look at the ticketless folk watching the rugby and the baseball from the rooftops.

What are they stealing?

In the same photograph, you can see folks who paid for the tickets watching the game. They’ve paid for the right, and they’re watching the game. The people who sold the tickets make their money, related to the seating capacity of the stadium and the number of tickets sold.

Economists call such “goods” nonrival, to the extent that one person enjoying the good does not detract from the ability of others to enjoy the same good. The people who promoted the games did not incur any costs related to the people on the rooftops. If you can make a copy of something without in any way affecting the ability of others to enjoy that something, economists call such goods extreme nonrival goods. Sunsets and panoramas and views are examples of extreme nonrival goods, as are openair concerts and street theatre.

All these openair events share something in common. They’re in the open. Repeat that. They’re in the open.

People who promote sports events and street entertainment and openair concerts understand this. They know that as a direct result of their actions, others will be able to enjoy what’s happening. For free.

They can stop this. Very easily. By not using open spaces to do this. If they moved openair concerts to closed venues, the possibility of others freeloading diminishes. This open-to-closed spectrum is a continuum rather than a set of discrete outcomes. So, for example, you can build walls around openair venues, as happens with Kenwood. I have paid for, and enjoyed, many concerts at Kenwood, in the wet and in the dry. This summer my children will be going to concerts in Reading, and they will have paid for the tickets. Passers-by will be able to hear the music, but nowhere near as well as people sitting in the roped-off areas.

Shibe Park, in Philadelphia, decided to do something about the onlookers. So they built a bloody great wall around the stadium. Shame, but that is how some people think.

This summer, there are a few concerts taking place around Hyde Park, with tickets and with reserved areas. Can you imagine how it would be if the promoters managed to convince the Crown that a 16ft wall should be erected all around the park, just so passers-by won’t be able to catch glimpses of the concerts?

In a way, that’s what music and film distributors want to do with the internet. Like Hyde Park, the internet is a commons, something that has been designed with openness and sharing in mind, something that can be enjoyed by people without detracting from the enjoyment of others.

But only if we stop people from erecting hideous walls around the commons.

The Digital Economy Bill seeks to do this. And it’s worse than that. Because it seeks to protect and enhance distributor rights while actually damaging the rights of consumers and creators in many walks of life. Photographers, for example, are heavily affected. Just read Kevin Marks here and Simon Phipps here, or go to Open Rights Group to find out more about what you’re about to lose.

Think about this. If internet copying was really stealing, then there would be an active disincentive to produce digital works. Yet, in the apparent heyday of internet copying, every form of digital publishing is on the rise. There are more books being written and published, more films made, more albums released. Why would this be? Looking for that answer, I spent some time with Paulo Coelho some years ago:

I wanted to talk to Paulo for one simple reason: I’d heard rumours that the biggest pirate site for Paulo Coelho books, Pirate Coelho, was actually paid for by Paulo Coelho. In fact that has since changed: Paulo now hosts them in a subdirectory of his own blog, here. An author who pays others to rip him off? I needed to talk to him.

His answer is best understood in this statement from Wikipedia: In total, Coelho has sold more than 100 million books in over 150 countries worldwide, and his works have been translated into 67 languages. As an author, he wanted to reach as many people as possible, particularly in different cultures and geographies. His publishers had their way of doing this. His fans had a better way.

The internet, with its extremely low cost of copying and distributing things digital, transforms the access and distribution landscape for many industries. Its effect is felt most painfully in the publishing industries: music, film, journalism, books. The pain is at its most intense for those whose function with the industry was centralised control of distribution.

I work for a telco. Before that, I worked for an investment bank. Some time before that, I worked for hardware manufacturers with proprietary operating systems. All my life I’ve been working in industries where the core monopoly rights of the industry have been taken away by technological advance, often aided and abetted by regulation.

Regulation is first and foremost meant to protect customers, to protect the consumer. It does this in many ways, at least one of which is in preventing monopolies and reducing any significant market power.

When it comes to music, film, books and journalism, things become very complex. It’s like having a fire in the fire alarm system. The very people charged with telling you the truth about what’s happening are themselves affected by what’s happening. Which means that with a few exceptions, mainstream media have not woken up to the wholesale damage being planned by the Digital Economy Bill.

Let me end with this. Copying per se is not stealing. After Michael Jackson did his moonwalk, children the world over copied him. They were not stealing. Digital forms of music, film, book and newspapers are cheap to copy and to distribute, because of the internet. The internet is a commons, specifically designed for doing this. For copying and distributing. Throwing that away just to protect the “rightsholders” is questionable in the extreme. Digital assets are nonrival goods, shareable without affecting the rights of anyone else to enjoy the same thing.

  • Distributors of digital content are feeling the pressure, and some are using questionable techniques to lobby Government into acting.
  • The data on illegal downloaders is suspect, as is the claimed revenue losses. Price elasticity of demand is not adequately allowed for. It’s like saying kids on the rooftop would otherwise have paid for tickets to watch the rugby. Just not true.
  • The people involved in the process are suspect, largely unelected, and with clear bias supporting the very industries under threat. [This is a bit like placing an investment banker at the head of Treasury and asking him to solve the woes of financial markets. Oops.].
  • The democratic process itself is being subverted, lobbyists are seeking to ensure that the Bill is not properly debated in Parliament before being passed. To me this is more criminal than anything the Bill seeks to prevent.
  • The punishments suggested are technically complex, expensive, time-consuming and guaranteed to fail. They will waste a lot of time and expense, your time, your expense. Our time, our expense.

We have very little time to act. So please please get going, write to your MP, call her up, meet him, do something. Start off with reading this, make sure your voice is heard.

The Digital Economy Bill: Be Careful What You Wish For

Do you find it easy to be moderate about things? It’s taken me a long time to learn about moderation, about knowing how to leaven and temper my passion with patience. For most of my life I’ve been an extremist, either full-on about something or not at all engaged. As a result, particularly of late, I’ve had to take time to learn one thing: If you feel really passionate about something, take the time to step back and look at things from the opposite perspective.

Now the Digital Economy Bill is something I feel passionate about, which is why, as we approach Tuesday 6th April 2010,  I’ve been writing a post a day on the subject for the past few days. The Bill covers a litany of subjects; the particular bit that bothers me is to do with the treatment of downloaders, the what, the why, the who, the how, the whole shooting match. As far as I’m concerned, I feel that the premise is wrong (illegal downloading does not take place at the levels claimed); the people are wrong (the Bill is being pushed through by unelected people who have clear bias in favour of “rightsholders”); the process is wrong (such an important Bill should not be finagled through parliament without proper debate) and the punishment is wrong (as BT CEO Ian Livingston pointed out recently, a fine is more appropriate for the crime, it’s easier to administer and it does not affect others in the household).

Notwithstanding all that, let me try and look at this issue from the perspective of the “rightsholder”. In fact let me go further, let me look at it from the viewpoint of the rightsholder after the Bill, in its current state, has become law. Ostensibly as happy as a creature of the porcine persuasion in an environ of excrement.

What could possibly go wrong? Let me count the ways:

1. People stop downloading all digital music, not just “illegal” music

Retaliation: The music industry, particularly through organisations like BPI and IFPI ,has spent a long time telling its customers what rotten people they are. In the latest report issued by Ofcom, the country had around 17.3 consumer and small business broadband lines; which suggests that a very high proportion of digital music customers acted illegally. Irritated by the change in law and by being treated like criminals, people may just give up and stop downloading music altogether, legal as well as illegal.

Fraud: Given the level of internet fraud going around, people may not want to take the risk of losing their broadband connection by buying music in good faith from a pretend-legal site. When they buy anything else, they tend to get their money back from the credit card company. When buying music, even in good faith, they run the risk of losing their broadband connections. So they stop buying music online altogether.

Streaming: Man’s ability to record and replay music is itself less than 150 years old. Newer than the postage stamp, newer than the locomotive, newer than the Grand National, newer than the FA Cup. By British standards, recorded music is a mere stripling, a callow youth. Man’s ability to own the recorded music and retain it for personal enjoyment is even newer, it hasn’t been there that long. And it may not be in vogue for long either: there is a growing body of evidence that the Millenials prefer streamed music to owned music. My own habits have changed. I still buy vinyl, but in dribs and drabs. I still buy CDs, but also in dribs and drabs. For the most part, I use services like Spotify.

So whether it’s frustration or fear or a change of habit, people may use this opportunity to stop downloading altogether. Since digital music sales are reported to be booming, the industry runs the risk of killing the baby goose before it really has a chance to lay any golden eggs.

2. People stop downloading music illegally, but there is no materially positive impact on revenues

Download levels estimated wrongly: The Mandelson 7 million figure turns out to be hogwash. [And, like Churchill, I shall resist the temptation to say I told you so]. So even though everyone behaves legally when it comes to downloads, the market uplift just isn’t there. [ I am so tempted to ask that, in the event of the law being passed unchanged, the music industry is asked to put down 15% of the loss figures it has claimed into escrow in advance,  to pay ISPs for the cost of implementing the technical solutions].

High price elasticity of demand: The pirated downloads might have been real, but there is greater price elasticity of demand than was anticipated by the industry. Rolex watches sell for thousands of pounds. Rolex ripoffs sell for tens of pounds. No one in Rolex honestly believes that the customer who paid a tenner for a ripoff was a real contender for paying five hundred times that for the real thing.

The end of try-before-you-buy dampens sales: There is evidence that people who download music are also the ones who buy digital music. After all, they must have the connections, the access and the equipment in the first place. By being denied the chance to try the music out, they may not buy at the levels they used to. So any uplift in digital revenues via the change in law is compensated and balanced by a drop in the revenues that used to be there.

It is one thing to lay out a whole series of “facts” in order to browbeat busy politicians to do something; it is another altogether to expect that those “facts” become real in the process. In this respect, the Digital Economy Bill may turn out to be a case of shutting the stable door after the piglet has bolted.

3. People stop buying from established labels and channels and move to new, independent channels that offer them what they want

In a fascinating study entitled The State of Music Online: Ten Years After Napster, the Pew Research Center makes the following, telling,  observation:

While the music industry has been on the front lines of the battle to convert freeloaders into paying customers, their efforts have been watched closely by other digitized industries — newspapers, book publishing and Hollywood among them — who are hoping to staunch their own bleeding before it’s too late. And if the music market is any indication of how consumer expectations will evolve elsewhere, the demands for free content will extend far beyond the mere cost of the product.

In the decade since Napster’s launch, digital music consumers have demonstrated their interest in five kinds of “free” selling points:

  1. Cost (zero or approaching zero).
  2. Portability (to any device).
  3. Mobility (wireless access to music).
  4. Choice (access to any song ever recorded).
  5. Remixability (freedom to remix and mashup music).

All of this makes for a tall order, but if history is any guide, music consumers usually get what they want. And as researchers look back on the first decade of the 21st century, many will no doubt point to the formative impact of file-sharing and peer-to-peer exchange of music on the internet. Napster and other peer-to-peer services “schooled” users in the social practice of downloading, uploading, and sharing digital content, which, in turn, has contributed to increased demand for broadband, greater processing power and mobile media devices. Further, the Napsterization effect extends to non-media areas such as sharing health information, oversight of politicians, access to government data and online dating via free social networking sites.

Remember this is about digital music consumers, not “dirty rotten illegal downloaders and filesharers”.  The people who crafted the current version of the Digital Economy Bill appear to have thrown away all the input and consultation to do with the consumer side of the music business and concentrated on the “rightsholders”. [I suppose this should have been expected, since that is the precise problem with a lot of modern copyright law, too one-sided to be useful or progressive]. Consumers want the five things stated above. If they don’t get it from the established digital music industry, they will go somewhere else to get it. Which gives independent labels and new entrants the chance they’re waiting for, to drive a bus through the barndoor of opportunity that’s opening up for them. Artists have the opportunity to set up their own label and distribution capability, like the Grateful Dead did nearly fifty years ago. There are many who are watching and learning from the Dead, from Radiohead, from Nine Inch Nails, and so on.


4. Content is not king: simplicity and convenience rule

There was a very interesting article published by Andrew Savikas in the middle of last year, talking about content being a service business. In it he quotes from Trent Reznor of Nine Inch Nails:

[W]hat you NEED to do is this – give your music away as high-quality DRM-free MP3s. Collect people’s email info in exchange (which means having the infrastructure to do so) and start building your database of potential customers. Then, offer a variety of premium packages for sale and make them limited editions / scarce goods. Base the price and amount available on what you think you can sell. Make the packages special – make them by hand, sign them, make them unique, make them something YOU would want to have as a fan. Make a premium download available that includes high-resolution versions (for sale at a reasonable price) and include the download as something immediately available with any physical purchase. Sell T-shirts. Sell buttons, posters… whatever. [emphasis added]

Reading through what Reznor had to say in his original post, I found another extract telling in the extreme:

The database you are amassing should not be abused, but used to inform people that are interested in what you do when you have something going on – like a few shows, or a tour, or a new record, or a webcast, etc.
Have your MySpace page, but get a site outside MySpace – it’s dying and reads as cheap / generic. Remove all Flash from your website. Remove all stupid intros and load-times. MAKE IT SIMPLE TO NAVIGATE AND EASY TO FIND AND HEAR MUSIC (but don’t autoplay). Constantly update your site with content – pictures, blogs, whatever. Give people a reason to return to your site all the time. Put up a bulletin board and start a community. Engage your fans (with caution!) Make cheap videos. Film yourself talking. Play shows. Make interesting things. Get a Twitter account. Be interesting. Be real. Submit your music to blogs that may be interested. NEVER CHASE TRENDS. Utilize the multitude of tools available to you for very little cost of any – Flickr / YouTube / Vimeo / SoundCloud / Twitter etc.

The key phrase for me is this one: make it simple to navigate and easy to find and hear music.

When I read the Savikas article, one of the points I understood was this: the success of iTunes lay in the quality of the service they offered, the simplicity and convenience, rather than in premium content. In fact, the pricing of digital goods tends to reflect this: prices for songs, albums, films and books tend to be very similar for a given class of digital good, suggesting that the content behaves like a commodity, that the perceived value is in service simplicity. When you take into account recent developments such as Ofcom’s stance on Sky’s exclusive premium content, there is every possibility that there’s going to be downward pressure on the prices of premium digital content.

So let me summarise. I don’t know much about  how the world is changing as a result of the internet and the web, as a result of digitisation. What I do know is this: these changes are putting real structural pressure on a number of industries, particularly on the “publishing” industries of music, film, journalism and books. Every participant in the supply chains of those industries is feeling that pressure.

During such a time of flux, the customer becomes even more of a scarcity, even more of an asset. Any action you take which alienates customers, you take at your peril.

In this context, the actions of the music industry at this time, particularly in the context of the Digital Economy Bill, seem foolhardy in the extreme. Foolhardy enough for shareholders and activists to look at the consequences very carefully, and to take legal action against the decision makers.

You know something? If I was one of those people who’d lobbied to put all the garbage in the Digital Economy Bill, I would start praying. Now.

And I would write to my MP and ask that the Bill be withdrawn. Even if I worked for the BPI. Particularly if I worked for the BPI.

Sometimes it pays to Be Careful What You Wish For.