Is It Worth Keeping The Pirates At Bay?

David Smith

Last Updated: 23, May 2012

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With the advent of the Internet, major movie and record studios have been demanding extensions to copyright laws in order to preserve outdated business models. But copyright law can do little to protect them and they need to move with the times and embrace the new technologies.

In 1995, John Perry Barlow, a poet and the former lyricist of The Grateful Dead, memorably summed up the changing media landscape by describing big media firms and music publishers as “merely rearranging deck chairs on the Titanic”. In Barlow’s scenario, the Internet – with its 500 million channels – was the “iceberg” that could eventually sink the stranglehold of the media giants and lead to a radical transformation of the media.

“The Titanic analogy is accurate,” says Andrew Murray, Professor of Law at the London School of Economics and author of The Regulation of Cyberspace.

“Barlow said the media and music industries were standing on the deck and shouting to the passengers that they would face harsh criminal penalties if the ship went down.

[quote]“What he describes as their ‘serene, glassy-eyed denial’ reflects the refusal of the music industry to accept that the business has changed forever. The most successful companies today are not based on the old models, like EMI and Sony, but are innovative technology companies, like Apple with iTunes, and Amazon with Kindle Store.” [/quote]

Yet, some major Hollywood studios, as well as the music publishing industry, remain desperate to put the genie of technology back into its bottle. According to studio representatives, intellectual property infringement committed via the Internet, costs the U.S. economy nearly US$250 billion, and 750,000 jobs, every year.

A closer look at these figures though reveals their murky origins. It turns out that the US$250 billion number is a 1990s’ estimate of the size of the global market in counterfeit goods – a different thing altogether. As for the 750,000 jobs figure, this appears to have originated from a 1986 speech by the US Secretary of Commerce, who ‘guesstimated’ that counterfeiting could cost the US “anywhere from 130,000 to 750,000” jobs.

According to Dr Joss Wright, a researcher at the Oxford Internet Faculty, the media industry’s scaremongering tactics were intended to protect a massive money-spinning operation, which was “crumbling under them as the fundamental technologies have changed”.

Dr Wright added that the movie and music studios should accept the fact that we are now living in a “post-scarcity period”.

[quote]“The thing that assigns value is scarcity. That’s why we willingly paid £15 for a CD 20 years ago. But we no longer need these objects and we are seeing an extremely tortuous extension and twisting of copyright as the industry tries to maintain the old business model.[/quote]

“It’s difficult to justify £8 for an album on a legal download from Amazon when all I get is bits and bites on my computer I could have got free elsewhere. The industry is fighting tooth and nail to preserve the idea of scarcity, but the data costs a fraction of a penny.”

“Copyright law is failing to control it because of the transmittable, duplicable nature of the Internet. Copyright laws are being used to patch up holes, but the holes are appearing as quickly as they can be patched.”

Professor Murray also noted that the pace of technology was making it harder for the media industry to regulate copyright on the web.

“Once the technology exists, it’s hard to control through legal means,” he said.

[quote]“Copyright law will always be behind the curve. We saw a few weeks ago when The Pirate Bay (a popular file-sharing website) was blocked that traffic immediately soared by 50 percent. No matter how much the law tells the ISPs to block access, people with technology skills will find ways around it.” [/quote]

As such, Dr Wright believes that the media industry should find new ways to make money, rather than maintaining their “glassy-eyed denial” of the changing landscape.

“New business models have already been successful. One idea is to say ‘here’s our album, it’s free, you can download it, but pay us what you think it’s worth’. This model does surprisingly well as some people pay a fair price, and some pay nothing, whereas others pay a ridiculous price.”

Another model, which was tried by the English rock group Radiohead, is to release the album for free once a fixed sum has been donated. In Radiohead’s case, this was millions of pounds.

“This gets around the idea of scarcity as once the money has been paid, the album is released and that’s an end to copyright restrictions,” said Dr Wright. “Once the data is released, you lose control forever.”

To the objection that Radiohead can make millions with this approach, but a first-time artist might find it hard, Wright responds: “One idea is to upload an album for free once they get a donation of, say, £1,000. They then develop a large fan base whilst working in Tesco’s, but once the album is a success, they ask for £15,000 next time.”

Wright points to the U.S. Kickstarter website, an online domain for people who require investment to fund business ideas, as a reference.

“It’s a phenomenally successful model which relies on financial sponsors. For instance, if someone has a new idea for a board game, an early donor might get their name mentioned for US$100, or their name in the instruction booklet for US$250, or have a character named after them for US$1,000.

“The model (also) works well for films. Let’s say you donate US$1,500 dollars, they name a character after you. Lots of amateur filmmakers are doing this. People might say it’s creatively compromised but it’s much less so than the Hollywood studios which pay over-inflated fees to actors like George Clooney and make safe, formulaic romantic comedies, or action films, every year.”

Dr Wright also challenges the assumption that a successful artist deserves to be mega-rich.

[quote]“We have this profound cultural belief that, by right, an artist should live the rock and roll lifestyle. But the fundamental idea of copyright is to promote creativity. For too long, artists, studios and music publishers have made massive profits for not doing much. The decentralisation and personalisation of copyright will make it easier for people to do quirky little albums that would never get sold by record companies.”[/quote]

The cultural assumption that a recording artist should be paid royalties for a song released decades ago should also be re-examined, says Dr Wright.

“I agree that an artist should be paid for his work. But the argument breaks down when you say that every time a copy of that work is used, he deserves extra payment. I pay my plumber for two hours worth of work, not every time I flush the toilet.”

This ethical debate came into focus last year when English singer Sir Cliff Richard campaigned to extend copyright for his recordings. Brussels agreed to ratify the so-called “Cliff Richard law”, which extended copyright for singers of other people’s songs from 50 to 70 years.

But Dr Wright said: “He recorded Schoolboy Crush in 1958. If I buy a copy today why should I pay for two hours work he did decades ago? He should have to go on working to make more money. The belief that because 1,000 people download an album, the artist deserves more money is now being challenged.”

Professor Murray, an expert on copyright law, agreed that the Cliff Richard Law was retrograde.

[quote]“The reason for copyright is to provide an incentive for creativity and the Cliff Richard Law does not do that. He’s not creating any more 1960s records now.”[/quote]

Click on the next page to continue reading: “Piracy & Censorship: An Ethical Debate?”

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Piracy & Censorship: An Ethical Debate?

Professor Andrew Murray is in favour of developing new business models rather than using the law to stem the tide of technology.

“The law has limited power over the Internet. The last major statute in the UK was the 1988 Copyright Designs and Patents Act, which was created before the web and has had to be amended countless times. Added to that, judges are wrestling with technology they don’t understand.

“We need to consider whether copyright laws need to be so strong for downloaded material. Historically, copyright law protection has been powerful because of the investment to produce the item, which included pressing the disc, packaging, distribution, storage, cuts from the retailers, and so on.

[quote]“But this is no longer the case for downloaded material. The marginal costs of reproduction are a fraction of a penny. Based on this fact, the marketable value of music downloads approaches zero.”[/quote]

A number of people in the creative freedom, creative commons and anti-enclosure movements have argued that instead of making large sums from selling record, artists should make money from concerts like their perambulating 19th century forebears.

“Artists could make most of their money from touring. They could also sell merchandise,” said Professor Murray. “They would earn from downloads, but they should be much cheaper than CDs because there is no need for Sony and EMI to take their cut.”

The success of Apple with iTunes and Amazon’s Kindle Store are also a powerful indicator that the market has changed in the last few years.

“Kindle Store has the potential to transform the publishing industry through self-publishing,” said Professor Murray. “I use Oxford University press for my books and I get a 10 percent royalty. But if I published the same text personally on Amazon’s Kindle Store, I’d get 70 percent of funds. All it needs is one major author – a Stephen King or a John Grisham – and the whole industry could collapse like a house of cards.

[quote]“There’s also enormous freedom in the self-publishing world. It’s very hard to get a novel published, but take EL James, author of Fifty Shades of Grey. She could not get a publisher at first, but then sold millions of e-books and was picked up by a publisher.” [/quote]

The regulation of the Internet however does throw up ethical dilemmas that pit creative freedoms against the desire to clamp down on harmful material, or unlawful reproduction.

Professor Murray said: “Internet filters are neutral so they can’t differentiate between two types of speech. Surveys by US academics have shown, for example, that parental filtering blocks terms such as ‘rape’. Now that’s mainly a good thing, but it also means that victims won’t be able to find details of their local rape crisis centre.”

Dr Wright agrees that the consequences of regulation are unpredictable. He points to BT’s Cleanfeed system, which was launched in 2004 to block access to thousands of websites containing images of child sexual abuse.

“The system was intended to block child pornography, but after two years it was extended to hate speech and last year the British Phonographic Industry brought a law suite against the five major ISPs in the UK. They won and the website Newzbin had to be added to the blocked list. Then, a similar thing happened with The Pirate Bay, but not everything on that site is copyright infringing. It’s an example of Function Creep, where use of technology keeps being extended. It concerns me because filtering the Internet is a very serious thing.”

In these grey areas of ethical debate, Professor Murray has a different take on The Pirate Bay.

[quote]“The Pirate Bay’s legal defence to being banned was that they were merely an optimised search engine like Google and did not host illegal content. Intellectually, there is something to this argument, but the difference is that The Pirate Bay’s intent was to link to copyrighted material and that is not Google’s intent.[/quote]

“Also, Google has a procedure where you can ask to remove links to infringing material and they will do, whereas The Pirate Bay would not. The Pirate Bay is difficult to defend, but there are major problems in policing it through the legal system.”

Whereas Professor Murray is equivocal, Dr Wright is firmly on the side of greater freedom on the web.

[quote]“The dangers of over-regulation are that we’re increasingly seeing people who won’t do something because they fear it might infringe copyright, especially for music performances. This stifles freedom of speech and creativity. It’s termed the Chilling Effect. It’s a negative consequence of Google being so responsive to copyright infringement requests.” [/quote]

Neither can legal measures hold back the spread of technical understanding of how to bypass restrictions.

“If The Pirate Bay is blocked, other sites will appear containing the same material,” said Professor Murray.

“Anyone with the necessary technology doesn’t even need The Pirate Bay to pick up the copyrighted files now. If someone is technically competent and wants to get pirated content, no one can stop them, and that includes child abuse images.”

“Also, attempts to block The Pirate Bay have the unintended consequence of spreading the understanding of the technology needed to get around the blocking technology, and that knowledge spreads,” he said.

[quote]“We are still trying to figure out where the line should be drawn. Where does the risk of under-blocking, become over-blocking?”[/quote]

Speaking as an intellectual property creator and a regular consumer of online media, science fiction author Cory Doctorow though is adamant about the advantages of liberalising copyright laws.

“The studios want to close YouTube down because they say they can’t police the 29 hours which is uploaded per minute and so cannot stop the studio product showing up. But do we want to allow five Hollywood studios to make 40 hours of film a year, or allow 100s of millions of people to make 29 hours of video per minute?

“If we want to promote culture we have to allow YouTube. My guess is that the studios will still find a way to make money, but even if they don’t I will trade Hollywood for nearly 30 hours of new video a minute.

[quote]“I like sitting in a cave with 1,000 other people watching Bruce Willis beat up a jet with his bare hands, but not so much that I would kill every other piece of video on the internet.” [/quote]

About David Smith PRO INVESTOR

An English journalist who, when he's not exploring the social consequences of political actions, likes to write about cricket for some light relief.

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