Steal a Little: Piracy & the Economy

I’ve wanted a sailing yacht for years but have never been able to afford one — until now.  Thanks in part to a report on piracy and counterfeiting by the GAO and this explication by CCIA (Computer & Communications Industry Association)  lobbyist Matt Schruers, I now have a plan that will put me at the helm of the sloop Larceny by the Summer of 2016.  And the best part is the whole family gets to collaborate to make it happen. According to my rough calculations, all we have to do is steal groceries like a Dickensian gang for three full years, and we’ll save enough for a substantial down payment on the boat.  I’m thinking Beneteau 45ft, but if any seasoned mariner out there has a recommendation, let me know.

Now, you might think shoplifting food is a bit radical as an alternative financing option, but that’s where you’re wrong.  See, if the cops nab me or one of my kids while boosting a chicken from the local farm stand (we’d steal organic of course), all I have to do is point to this GAO report, which according to Mr. Schruers, advocates a truly progressive economic principle most of us have never considered.  If you want more things than you can afford, steal some and pay for the rest. Why is that okay? Because in the economy overall, it’ll be a wash. To quote Mr. Schruers:

“So what is The Issue of Which One May Not Speak?  The fact that money not spent on pirated content is, in many cases, still spent.

The U.S. Government Accountability Office pointed this out in a widely discussed report in 2010, observing that “effects of piracy within the United States are mainly redistributions within the economy for other purposes and that they should not be considered as a loss to the overall economy.”  Money does not “just vanish.”  A Swiss Government commission made a similar observation the following year.”

Go back and read that again. Because full-grown adults are saying without a hint of irony that if you don’t spend the money in your pocket, it doesn’t just disappear but will remain there until you spend it on something else! The concept is quite a mind-blower when you come to recognize its elegance. The money you have is the money you have. It’s zen-like.  I am sorry to report, though, that the money spent to reveal this discovery is in fact gone forever.

Of course, in my scheme, when I do get pinched for shoplifting my way toward boating bliss, I have to hope the prosecutor only reads Matt Schruers’s post and not the GAO report because the report itself mostly says piracy and counterfeiting are likely very harmful to the economy in several ways.  In fact, the report devotes a lot of ink detailing the inconclusiveness of many studies that look either positively or negatively at the effects of piracy and counterfeiting, but if we’re just pulling quotes at will, how about this one:

“For example, when pirated movies are sold, it damages not only the motion picture industry, but all other industries linked to those sales.”

 That’s just common sense, and it seems to me the only point worth making if one is going to assess the macroeconomic pros and cons of actually stealing from any industry.  While it’s true that not paying for selected goods and services  will undoubtedly leave you with more disposable income to spend on other things, the industry you’re not paying for will eventually shed jobs.  And if those jobs were held by people in your community, they will no longer be customers for whatever it is you’re selling.  See how that works?  It’s the same economics we learned in high school because it’s pretty damn basic. Perhaps Matt Schruers skipped class that day to hone whatever budding skills would produce this paragraph:

“Normatively bad isn’t the same as an economically bad, however.  Not all normative transgressions necessarily have macroeconomic consequences.  And yet those two items are invariably linked when studies consider infringement.  Infringement is bad, therefore we must assign an economic cost to its badness.  Hence, study after study makes the repeatedly discredited assumption that every infringement is a lost sale, usually calculated at the highest retail price for which the good was offered, and every lost sale represents a commensurate economic loss.”

Strip away words like normative that make the above sound smart and thoughtful, and it’s really just proposing a thesis — that infringement might be a form of theft that doesn’t cause macroeconomic harm — for which Schruers can offer no support.  In fact, were he to refer to the same GAO report, he would find quite a few assumptions of macroeconomic harm from piracy and counterfeiting.  Instead, Schruers segues to the repetitious, obvious, and irrelevant observation that not every individual infringement represents a lost sale.  One doesn’t need a study to draw this narrowly-focused conclusion, and the lost sale analysis is not an indicator of macroeconomic loss. Also, if we’re just going to repeat the words the average 14-year-old will use to justify torrenting music and movies, it’s a safe bet we’re not riding the wave of avant-garde economic theory.

One of my colleagues in the artists’ rights community asked if I were going to sail my new, ill-gotten yacht to Neverland, and the joke resonated more than I think he intended.    Each time I encounter some new attempt to construct a logical or economic argument for the supposed benefits of mass theft of intellectual property, it feels very much like a visit to Mr. Barrie’s  imaginary island — a place where boys refuse to grow up, where they feast on food that isn’t there, and all they really long for is someone who can tell a good story.

See Chris Castle’s “Stealing is Good for You…”

© 2013, David Newhoff. All rights reserved.

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49 Responses to Steal a Little: Piracy & the Economy

  1. Anonymous says:

    David – just one point in the enormously wrongheaded CCIA post is that oft repeated red herring study that assumes every pirate is a lost sale simply isn’t the case. Many studies use a variety of methodologies to strip out the obvious lift to demand that occurs when price goes to zero. But the GAO study said both that it’s hard to draw conclusions and teh problem was inevitably large. It’s kind of like stripping the “information wants to be free” from the rest of the quote: “information wants to be free . .. .but information also wants to be expensive.”

  2. monkey says:

    Great article! I really appreciate the part about related industries. The damage done to retail outlets and the cinema industries is tragic, but it’s ignored because apparently those jobs (or maybe the people who hold the jobs) don’t matter.

    Some book snobs sneered at the decline of Borders because the company represented the big box phenomenon. But Borders employed real people who loved books, and that should be respected. Same with Tower Records, whose closing cannot be replaced by all the torrents in the world. If the cinemas go, it will be a disaster for our culture.

    • David Newhoff says:

      I don’t know why, in an age of increased sensibility about global interconnectedness, people fail to recognize economic interdependence within just one community. How many renewed communities start with a single business like a coffee house or a bookstore that serve as the seed for other businesses to launch? The process works in reverse, too. Thanks, as always for commenting Monkey!

  3. Pingback: Steal a Little: Piracy & the Economy » The Illusion of MoreThe Illusion of More | Steve Mramor

  4. Yeah. When that GAO report came out in 2010, I drew an entirely different conclusion than the CCIA’s spin on it. See http://copyrightandtechnology.com/2010/04/14/gao-report-throws-doubts-on-piracy-studies/. The GAO report concluded that piracy is a major economic problem. They just determined that the studies that have been done have too many methodological problems to be credible.

    The Smith/Telang “meta-study” released last year (sorry, I don’t have a URL for it, email Mike Smith at mds@cmu.edu if interested) gets over that hurdle by finding that the vast majority of studies on piracy — most of which were carried out after the GAO report — find that piracy hurts sales, and therefore that such a conclusion is the best we can determine.

  5. M says:

    I don’t see how this is an incorrect argument. Physical theft is zero sum, it makes the victim poorer and the thief richer, often in equal amounts. That doesn’t make it moral or legal or whatever.

    Copyright infringement is however far more complex. Because when you copy something, the original is not lost. So what is the impact of copyright infringement? The physical equivalent would be to go and clone your neighbor’s car and hot tub. The car and hot tub company may have lost on a potential sale, but it is difficult to quantify.

    We can treat this quite easily as a mass transfer problem, where wealth W is the global value of all the world’s assets, P is the global population, and thus W/P is the average wealth of an individual in the population.

    Given an object which is copied, if that object value v > 0. v > 0 is an object has some kind of inherent quantifiable wealth associated with it.

    If no assets were transferred in the transaction, we can easily say that:

    W + v > W

    or

    (W + v)/P > W/P

    Or that the net global wealth increased, as well as the average wealth of the population.

    Thus any copyright infringement which didn’t result in an actual lost sale has the global effect of increasing average wealth of the population.

    Kind of a counter intuitive result to people who see no wrong in the copyright system, I agree. But perhaps this means maybe we should be encouraging more, not less, copyright infringement in these trying times. 🙂

    To be fair, this is only considering the global impact of copyright infringement. It’s effect on when specifically analyzing the wealth-over-time of heaviest users of copyright protection (incl. filmmakers, artists, etc.) is negative, IMO. But probably not as bad as some of the studies make it out to be.

    Cheers David.

    • Jon says:

      @M

      I guess you imagine using the same calculation for all service industries? Wherever no assets are transferred, you would apply the same calculation of value.

      You seem to be suggesting that the government should force all airlines to fill up all empty first class seats on aircraft for free?

      After all, no lost sale, no foul, and who wouldn’t feel enriched if they got a free first class flight (especially if it was a nice long one).

      It seems obvious that the value would drop rather dramatically. Same for spare rental cars, empty hotel rooms etc etc etc

      This is the same problem faced by the creative industries – not just the distributors (publishers, record labels etc) who have means to protect the products they distribute, but the creators – the musicians, photographers, authors, illustrators, designers, composers etc etc etc, many hundreds of thousands around the world have had the value of what they do sucked away because it is impossible to enforce the value, and who have ever less means to protect.

      Your ideas are extremely short term, and will not contribute to a viable, long term, growing economy.

      • M says:

        I guess you imagine using the same calculation for all service industries? Wherever no assets are transferred, you would apply the same calculation of value.

        Services are inherently scarce – a plumber can only fix so many leaks per week.

        You seem to be suggesting that the government should force all airlines to fill up all empty first class seats on aircraft for free?

        After all, no lost sale, no foul, and who wouldn’t feel enriched if they got a free first class flight (especially if it was a nice long one).

        Is this some kind of “gotcha” attempt? It’s a great idea actually. Those are wasted seats, and making people suffer where there is no rational reason for it seems ethically wrong. So maybe if an airline has open first class seats, they should fill them by lotto or some other method. But yes, they should be filled.

        It seems obvious that the value would drop rather dramatically. Same for spare rental cars, empty hotel rooms etc etc etc

        Their monetary value maybe, but their actual value is exactly the same, because the deal hasn’t changed – it’s still a first class chair. And that’s actually a net improvement.

        All I have to say is just don’t enable the common misunderstanding that building pyramids in quicksand is economic activity.

        Any time a rental car sits in a lot or a hotel unused, or crops go to rot, or useful items with value go to the landfill – it’s not something that a functioning economy requires. In fact, on the contrary, it’s something you want to minimize to have a functioning economy.

  6. M says:

    I feel that some people will be like “copyright infringement can never have good effects”. So I want to make a similar argument without all the nasty “copyright infringement”:

    If an artist makes some really profound/universally enriching artistic content of some sort available at $0.50 and 10,000 people buy it, if he makes the $1.00 and 5000 people buy it?

    How much money does the artist in case #1 and #2?

    Well in both cases, exactly $5000.

    But in which case has more people been enriched by the artist’s work?

    In case 2.

    You have a case where the artist makes exactly the same amount of money, but enriches twice as many people.

    It’s hard to make this same argument with physical objects. If Toyota sells their cars at 50% off, they might get 2x (or probably more sales), but they’re net profit will likely be negative.

    That’s because Toyota cars are sourced from scarce resources, there is only so much minerals in the ground to produce cars with, and these is only so much of it we can extract in a given year and only so many we can produce in any given year with the current factories and labor, etc etc. There is no technology out there that can simply copy a car much as you would copy a song.

    But we do have it for digitized content. In fact, we already have the technology to share ever single piece of content ever published on this planet with every person on this planet with Internet access – at least. And even that, giving everyone Internet seems to me to be a much easier challenge then giving everyone a Toyota.

    • monkey says:

      You’re assuming that creating something digital is no cost, which is ridiculous. True, the cost of duplication is minimal (but not none; someone has to pay for hosting it) but there is still a cost in producing it in the first place. As well, you’re losing the side benefit to the economy via retail sales.

      As well, this ignores the fact that there are still people profiting from the pirated material – just not those who created it.

      • M says:

        You’re assuming that creating something digital is no cost

        You are right, that would be ridiculous. But I’m not actually making that assumption. If you want, you can say it cost the artist $3000 (or rather, any $N) to make the work in the example, and nothing in my argument would change.

      • Patrik says:

        @M

        You’re also assuming that supplying 10,000 people would cost the same per transaction as servicing 5,000 people. This is not the case. Bandwidth isn’t free.

        Ignoring bandwidth, you also seem to be assuming that songs (files, etc.) sell themselves. This is also not the case. Marketing to 10,000 people is significantly more costly than marketing to 5,000. Advertising isn’t free.

        Think of it like a concert, an artist will gross much more money selling out a 30,000 seat stadium than selling out a 300 person club, but the overhead for playing such a massive show scales exponentially from the smaller show. They will not end up netting exactly 100x the profit at the same price for both shows. The larger show will have to charge more just to break even (Hell, just to cover the insurance for the event!).

        You’re also ignoring the time it would take to advertise to a handful of people versus a much larger amount. Would an artist rather have 5,000 sales now, or 10,000 sales over a twenty year span? The former can help fund more work (thus exposing more people to more works (new works, at that); which seems to be your idee fixe), while the latter will be spread much too thin to make any significant contribution to an artist’s bottom line, thus leading to less frequent/lower quality output; a cultural negative.

        Correct me if I’m wrong, but you not only seem to ignore development costs, you also assume that there are no more costs after that production simply because a file can be duplicated by an end user at no cost. For the supplier, it is not free. The internet is not like a grocery store, where simply having your product on shelves guarantees that people who are already actively in the market for products such as yours will be exposed to it.

        In addition, your analogy to cars is suspect. The materials for building cars are not infinite, true, but they are abundant enough as to be virtually infinite in a market sense (I should also point out that ‘digital goods’ are only infinite in this sense, too; the internet is not a perpetual motion machine). In other words, there’s more ore than there is demand for cars. Isn’t it commonly known that the material costs for an average car are well below $5000? That being the case, Toyota could definitely halve the retail price and still clean up nicely while selling more cars. Although, they would have to forgo paying their designers, engineers, builders, computer programmers, etc… you know, the truly scarce resources on the production side, not to mention part of their customer base. Wait, that ‘business model’ is starting to make my musician-y sense tingle. I think I’ve seen it somewhere before…

      • M says:

        Patrik,

        We are talking about canned/abstraction scenario here where the net generated revenue happened to come out equivalent. Which can be hard to grips with if you intend to insert all sorts of variables into the mix. Points in the “ratio to price and sales” where the equilibrium are equal are few, more likely adjusting the price may result in greater or lower and not equivalent revenue. Of course, simply making the cost of a work higher does often result in increased revenue, otherwise we’d see DVDs being sold for infinity dollars. 🙂

        My point is there are things important other than revenue. Not every equilibrium point is equally desirable. If an artist can make the same amount of money with a lower price point, it’s clearly better to society (assuming that artist’s work has tangible value) for the lower price point to win. The equilibrium point with the lower unit price also increases the net wealth in the society, because more people have the thing of tangible value (thing of tangible value multiplied by units sold).

        I used the equivalency scenario because I didn’t want to bring up the seemingly unpopular idea that it’s not always in the best interest of the public to structure laws around the idea that copyright holders inherently deserve to exploit their work for the maximum possible revenue from their works without regard to any other factors. That the ultimate goal is not to maximize the producer’s revenue, but to maximize “things of tangible value multiplied by units sold”, and because of this sometimes the interests of the public to have increased access to a work overrule the interests of an artist to profit from a work.

        That would just get jeers..

      • monkey says:

        “it’s not always in the best interest of the public to structure laws around the idea that copyright holders inherently deserve to exploit their work for the maximum possible revenue from their works without regard to any other factors.”

        It’s not always in the best interest for landowners to exploit the products of their land for the maximum possible revenue without regard to any other factors. Or factory owners. Or lawyers, doctors, etc. And yet laws which limit such enteprises are not popular.

        The ultimate goal of the free information movement is to remove information from the capitalist system, which may seem laudable, but to do so while keeping the rest of the capitalist system intact is immoral.

      • M says:

        You can’t do whatever want with real property either. Hell, in many (perhaps most) jurisdictions simply forgetting to cut your grass could get you hit with a hefty fine from the city government. Even in “capitalist” America, the societal needs often overrules the the ability of an individual to exploit his private property the way he sees fit. Very often.

      • monkey says:

        M- so why doesn’t that apply to the internet?

    • John Warr says:

      The other week a friend was telling me that he’d bought an album from Amazon and how great it was that they gave him the mp3 files via auto-rip. He then went on to say that he didn’t mind paying for the album because it wasn’t from some big label.

      I mentioned that earlier in the discussion he had said he’d gone to Amazon because he couldn’t find the album on bittorrent. IOW his natural instinct was to torrent not to buy, and it was rather strange that he was justifying not stealing content.

      • monkey says:

        Not to mention that buying it through Amazon benefits a corporation larger than any record label.

    • David Newhoff says:

      M, I know your example comes from a well-meaning place, but I agree that it is too narrowly-focused, as are all arguments made in favor of unauthorized free media. You’re using a finite example of a single artist with an already finished work, but investing in the production of these works (either by an individual, a group, or a corporation) is a more complex and long-term prospect than your example addresses. Just to broaden the scope a little (although this is still only one aspect), investments in media made by independents or big conglomerates are done so based on averages over time. A small record label might represent ten artists, none who produce blockbuster hit records, but all who have enough fans to sustain decent incomes that, if nothing else, support the production of more music. In this situation, the artist/label really need every dime available from legitimate fans in order to keep producing; the margins are simply too narrow. And the reality is this same principle scales accordingly even with big artists and labels, even though people choose to pretend bigger labels, etc. are just evil. Beyonce makes more on a tour than Cracker does, but it costs more to produce her tour and deliver the production her fans want and expect. And whether people care to admit it, the profits generated by one Beyonce enable labels to take a risk on, say, five new talents that might hit. This concept is the same for an individual artist. Consider a novelist who produces five books in his lifetime and whose first best-seller supports the production of the other four. By diminishing the security in investment overall, which is what the free media orgy has done, we have created a macroeconomic environment that is actually quite toxic for the majority of creators and might, in the long run, yield less diversity of works for people to enjoy.

      The economics are actually more complex than this, but there is plenty of evidence that piracy has caused macroeconomic harm, which is repeated in that GAO report. Naturally, there are non-economic reasons not to support piracy, and I think John Warr’s friend is a great example of a socially dysfunctional trend, but that’s another matter.

      • James_J says:

        Well said, David.

        side note:
        ‘M’, did you happen to write that GAO report? lol

        The ‘duh’ moment where “if i don’t spend a dollar on this, i can spend it on that” was extra special…

      • M says:

        David,

        Copyright has failed. Flat out. We wouldn’t be having this conversation if copyright was working.

        The past decade and a half has been marked with numerous content industry schemes to try to make copyright and the old business models surrounding it work. They all failed.

        The definition of insanity is to keep trying the same thing over and over and expect different results.

        I propose that if you truly cared about artists and creatives making a living from their craft, it’s hard to support copyright. You’d have to support different systems of compensation that could actually work.

        I feel that the general technology industry understanding of the modern macroeconomics is not really different from mine – after all, that’s where I got my “economics training” from. Right. So maybe the technology industry doesn’t get economics.

        I must say though, they are certainly making a ton of money by not understanding economics.

      • David Newhoff says:

        M,

        I do appreciate that you keep coming back, but when I read a list of one-sentence declaratives that beg long responses as to why they’re fallacious, I have to weigh this against what else I might do with the time. Suffice to say that if “copyright has failed,” this doesn’t square with anything that’s actually happening in real life other than ivory-tower theory. It’s also fallacious to make a general statement about copyright and then segue immediately to economics because copyright covers rights that have nothing to do with money. Have those rights failed, too?

        On new business models, they are all fantasy. There are new technologies and new ways to produce and distribute. But ALL business models are predicated on fundamental math that hasn’t changed. Investment + production + distribution = ROI. There is no business that exists without balancing this equation as part of its core enterprise.

        Finally, you’re better than your last sentence. It’s bullying to say, “we’re rich, so we know best.” There’s a world of difference between creating wealth for a small group and fostering a healthy economy, and you know it. America’s major dysfunction for the last half-century is wealth-consodlidation and the gutting of the middle-class. Our economy has a rotten core. Saying technologists get the economy because they’re rich makes no more sense than saying bankers or schlock securities brokers know about the economy. Those guys did really well for themselves. It’s a very unhealthy view of business in general to argue from wealth backwards to principles. Organized criminals are rich, too.

      • monkey says:

        They’re making tons of money by gaming the system. They’re making tons of money through other people’s labor.

      • M says:

        David,

        Well if the old business models aren’t working, and the new business models cant possibly work, what hope do you have to fix things? Will blogging about the ills of new technological trends on your Web2.0 compliant website help?

        I’m personally not as cynical about new business models. I find it telling that Robert Levine seemed to independently come to the conclusion that pervasive statutory licensing is the way to fix the “culture industry”. He seems to be keeping that on the down low soon after he realized that’s what many technologists have been saying all along. Woops?

      • M says:

        And yes, just to reiterate, statutory licensing of the whole spectrum of content is what I’d replace core copyright with. But it’s the best way to make your dream of a huge middle class of content producing freelancers possible..

    • monkey says:

      Except that it’s not a matter of the creator only getting half the money – it’s more like losing 90% of the sales.

      You also didn’t address that filesharing sites are essentially committing fraud by taking ad revenue for stuff that doesn’t belong to them. The reason creators can’t come up with a “new business plan” is because pirates have coopted theirs.

      • Frank Biederer says:

        yes and until the creators decide to shame the companies who are placing the advertistement, the file sharing companies will keep buying yachts. think the fortune 500 companies advertising on the pirate web sites are immune to public scrutiny? I doubt it. Just need some PUBLIC pressure and some industry icons to call them out. You are never going to shut down the torrent web sites till you shut down or shame the advertisers who pay the freight. Stop focusing on the pirates and start focusing on the treasure…

  7. Frank Biederer says:

    well piracy does not seem to hurt the sales of the major companies who place advertising on those torrenting sites. If you want to solve the problem, you need to shine a bright light on the enablers of the economic model that is theft, piracy. As long as the artist/creative community continues to let the major companies that are spending REAL money on the advertising space these sites offer that are stealing the work of the creators, you are unlikely to solve the problem. A concerted effort need to be made by the artist creative community to point out who it is that is REALLY stealing all that money. Its the corporations who are funding the yachts that the owners of these sites are buying with the product they steal. It’s time to organize and shame and legisilate those companies that are buying the advertising space. It should be illegal for an american corportation to place advertisement on a website engaged in illegal activity. There should be financial and criminal penatlies for this offense, and the money collected in fines should be put in a pool and appropriately divided among the creators who are being robbed.

    • David Newhoff says:

      Thanks, Frank. I direct your attention to http://www.thetrichordist.com, which focuses much attention on brand-supported piracy.

      • Frank Biederer says:

        well I have read that article and you are right about the focus attention, but I am not so sure about the “much” part of your comment. It will take more than that article to bring about change. Not enough people see that article. It will take a high profile, well organized effort by the artist community to shine enough light on that problem to make a difference. Perhaps this is one place record labels, publishers and even streaming sites can find common ground. there is much work to be done, and the heavy lifting needs to be done by the major artists and companies that represent them. Time for Taylor Swift, Zac Brown, Pink Floyd, Rihanna, Justin Bieber to partner with their labels and publsihers to take a LARGE public stand
        and make a difference.

      • David Newhoff says:

        Sorry. I’m referring to the regular content on the blog, which is primarily focused on ad-supported piracy. And more artists are beginning to speak up. In fact, just yesterday, Lou Reed reposted the Trichordist focus on how his work was being exploited.

  8. Frank Biederer says:

    Good for Lou Reed! Hopefully more will step up. Social media is a powerful tool for reaching the masses. Guess all of the “little guys” need to do their part and post a link to that article on their pages, web sites.while we wait for the light bulb to turn on with the major artists… As the parent of a young emerging artist, I thank you for your efforts to shine some light on a major issue that will clearly have an impact on all artists, big and small. You ROCK 🙂

    • David Newhoff says:

      Thank you, Frank. Good luck to your kids!

    • James_J says:

      Frank,
      there was a large, organized, concerted effort to change exactly that. It was called “SOPA” and “PIPA” (acronyms for the actual bills), and it was shot down with malice –thanks to funding and mis-information from the same folks that profit from our misery. In effect, WE inadvertently funded BOTH sides of the argument (though, to be fair, they were using money stolen from us to lobby against us…)

      The problem is that a lot of the major tech companies are directly and in-directly profiting from piracy (along with everyone else in the chain), and they can afford to buy several lobbyists for each and every congressman. They don’t want the status quo to change as they can keep making big bucks by dragging their feet.
      When we’re shaking our couches and chairs for another nickle to buy a slice of bread, they’re entrenching themselves in Washington D.C.
      Though i’m a fan of David in ‘David and Goliath’… Goliath keeps doubling in size and putting on more armor every quarter.

      Next time we can muster another push for a Bill in Congress, do your part and be a voice ‘for’. We can use each and every favorable person to speak out/up.

      • Frank Biederer says:

        Well I think SOPA was shot down by the tech industry too, but I am not talking about attacking the tech industry or even the “legal” industries that make their money by taking advantage of compulsory licensing and government boards to negotiate rates for services that allow them to profit handsomely and creators to starve. It’s not about taking down web sites that operating illegally, its about taking down the advertisers (which are public companies that in most cases are NOT tech companies and are not immune to public pressure and shame) I maintain that the goal should be to work on both ends. undermine the business model that relies on advertising revenue from companies that are susceptible to public pressure on one front, and work to impact the laws on the other. SOPA failed because it overreached, targeted individuals and was susceptible to public scare tactics by the tech industry and everyone else out their who lives in fear of govt conspiracy to control our lives. GO AFTER THE ADVERTISERS WITH A PUBLIC CAMPAIGN. It does not take a law to affect their behavior. (but that would be nice…)

      • James_J says:

        Frank,
        That was at the Core of the bills mentioned. Cutting off funding to pirates. The blocking stuff was secondary.
        Though, there was sooooo much mis-information being pushed about, it’s easy to see why they went down, and that no-one even knew what the bills entailed (except for what they read on a blog or other board)
        I read the bill(s), IIRC it was about taking the ad-revenue and payment processing (from PayPal, and Credit Cards) out of the pirates pockets.

    • monkey says:

      I’ve heard a lot of comments about how another old school rocker – Neil Young – has come out with a fairly blase attitude about piracy. However, Young famously railed against using music for advertising. I’m wondering if he really thought hard about the ad sponsorship of piracy, which effectively makes him “sing for Coke” whether he wants to or not.

      (No, I don’t know if Coke has ever had ads on a pirate site, I just wanted to paraphrase the lyric)

  9. Robert Leivne says:

    >>>I’m personally not as cynical about new business models. I find it telling that Robert Levine seemed to independently come to the conclusion that pervasive statutory licensing is the way to fix the “culture industry”. He seems to be keeping that on the down low soon after he realized that’s what many technologists have been saying all along. Woops?

    Robert Levine here –

    OK, first, I didn’t come to the conclusion – I explored it as an exciting idea. I still think it’s an exciting idea, although one that presents significant challenges. (Among them: The founder of one business that explored this received death threats from people who didn’t want to pay for content.) Second, I’m hardly keeping it on the down low – I published it in a book! (In exactly what world does this qualify as trying to keep something to myself?) Third, I already realized that some “technologists” had been saying that when I wrote the book, and I reference this. Fourth, I’m not sure what you mean by “technologists” – does this refer to anti-creator activists, venture capitalists, or college professors? None of them qualify as technologists in my book. Last, I think the word you’re looking for is “Whoops.” Whoops!

    More seriously, my thoughts on the subject are in my book. They have evolved somewhat since then, partly because I think Pandora’s endless complaining about its statutory license set a poor precedent for more ambitious arrangements. If you want to know how my thoughts have evolved, or discuss this further, you’ll have to be more respectful.

    • M says:

      You stopped talking about statutory licensing after you published your book. I’ve not seen you bring it up in any of your talks or interview or anything like that. The grand conclusion of your book on how to fix the culture industry is noticeably absent in your keynotes and interviews, replaced with lots of whining about tech lobbyists and college professors. I can’t think of any place outside your book where you even mention it, care to enlighten?

      Presumingly your goal was to fix the culture industry. You were going there when you reached the conclusions you did. But I’m just not sure how just picking fights with college professors all day on Twitter is accomplishing that.

      • Robert Leivne says:

        >>>You stopped talking about statutory licensing after you published your book. I’ve not seen you bring it up in any of your talks or interview or anything like that. The grand conclusion of your book on how to fix the culture industry is noticeably absent in your keynotes and interviews, replaced with lots of whining about tech lobbyists and college professors. I can’t think of any place outside your book where you even mention it, care to enlighten?

        You’re wrong. It’s not the conclusion. If you read the book, it’s A chapter with AN idea. It’s NOT the conclusion. That’s why it’s not the last chapter. Second, I discussed it at some length at least twice – once in Nashville in fall 2011 and once in Brussels around the same time.

        As far as interviews and talks, there are a few reasons why I don’t bring it up much. First, as I discuss in the book, while I think that statutory licensing could theoretically work for recorded music, it wouldn’t work for movies and television. Generally, when I talk about my book in interviews or speeches, I’m asked about the culture business in general, not music specifically. Second, if such a plan were enacted in the US, unless it were mandatory on the part of consumers, it would still present enforcement issues. This came up in Nashville. If US music providers paid such a fee, they could still be undercut by foreign sites not subject to US law. So there would essentially be a choice between making consumers pay and making it impractical. I don’t think making consumers pay is all that realistic, which renders the whole plan impractical. Thirdly, to some extent Spotify is already offering a plan that accomplishes much of what a statutory license would: Making music available conveniently, reducing piracy and limiting rightsholder revenue. (Some of this is good, some bad, and Spotify has other issues; my point is that Spotify now has considerably more momentum behind it than any kind of statutory license.) Finally, interviewers rarely ask about it – this particular part of the book seemed to appeal to experts rather than general readers – and it’s very difficult to summarize in a speech to audiences where the level of expertise varies from interested amateurs to media- or tech-business professionals. In Nashville, while I discussed the legal aspects of a statutory license in response to a question from an attorney, I noticed that much of the audience – which consisted largely of college students – appeared to be dozing off. Maybe other aspects of the book are hard to summarize.

        Have I changed my mind as well? A bit, largely thanks to the issues involving international enforcement and Spotify, above. I wouldn’t say it’s a non-started, but I may have underestimated the international issues this presented, and Spotify gained a great deal of momentum that would make this a more difficult sell to the general public.

        In any case, I’m hardly keeping this a secret. When people ask me about it, I speak about it.

        Last, I’m not “whining” about tech lobbyists and college professors. I’m trying to figure out which one is which! Actually, in all seriousness, I cover the technology business aggressively, as I think journalists should, and I think its funding of academics that agree with it is an important topic to cover. When the RIAA and MPAA fund studies, they’re rightly criticized by journalists who cover these issues. Why shouldn’t the reverse apply as well? Pointing out that Sergey Brin’s mother-in-law is the vice-chair of Creative Commons, even though she has no apparent qualifications other than her son-in-law’s donations is not whining; it’s journalism.

      • M says:

        Robert Levine,

        Without statutory licensing, you get stuck with giants like Google, Netflix and Spotify controlling all content.

        Consider that there is a HUGE barrier of entry to negotiate deals with all the multitude of rightholders. Huge multibillion dollar tech companies can handle it, but can tech startups do it? They can not. So it’s a terrible situation for small tech companies.

        It’s not a good situation for artists either, because it when you know the majority of revenue you make comes from a couple of companies – they have all the leverage.

        The only people that benefit from the way copyright is today is the big content companies and the big tech companies. Everyone else suffers.

        The situation right now will not result in a good situation for the middle class and it won’t be until the copyright law changes to make content licensing more accessible.

  10. Frank Biederer says:

    “The ultimate goal of the free information movement is to remove information from the capitalist system, which may seem laudable, but to do so while keeping the rest of the capitalist system intact is immoral.”

    Yes but if the “free information movement” gets to big for its britches there will be plenty of capitalists who will be standing by to take them out. Tyranny in any form ultimately gets its ass kicked in America. It’s how we got this country started and there are still plenty of people who will defend the principles our country was founded upon. There is a right to the fruits of ones labor. It took awhile to give all American’s that right, but we have it now, and there will be people who won’t just sit back and let a “movement” take it away.

  11. Robert Levine says:

    M,

    So, basically, after implying that I’m somehow hiding the conclusion of my book – only I’m not hiding it, and it’s not the conclusion – now you want to have a civil conversation?

    In all seriousness, if I run into you in person, I’d be happy to discuss it further, perhaps over a beer. I mean that sincerely; I’m obviously very interested in the subject. But I don’t care to discuss it online, since it’s just too complicated to have a productive discussion in comments, much less on Twitter.

    To cite just one example of what I mean, you say,
    >>>It’s not a good situation for artists either, because it when you know the majority of revenue you make comes from a couple of companies – they have all the leverage.

    That’s not true in some cases, since collecting societies like ASCAP and BMI allow creators some of the advantages of collective negotiation. (Not all of them, but some of them.) Perhaps unsurprisingly, neither media companies or technology companies are happy with this situation. (I’m not saying that any of the collecting societies are perfect, but it’s a good, if imperfect, system, especially in the US, and it does give creators leverage, which was your specific concern.) But media companies live with it, while technology companies fight it tooth and nail.

    That’s NOT an attempt at answering you – just an illustration of why I can’t do so in a comment. This is complicated stuff. But I’m glad you’re interested in it. I’d encourage you to look at Jim Griffin’s work, which is quite interesting. Best wishes – and if we are at the same event at any point, please do say hi and we can talk further.

    • M says:

      My point is that you don’t talk about your views on how to fix the culture industry very much. I follow your stuff and I know it rarely comes up, you yourself can only point out two instances two years ago where you even mentioned statutory licensing. Most of the time your spiel is to repeat the same mainstream 20+ year old content industry arguments in support of stronger copyright enforcement that got them into this mess in the first place. I suppose this strategy good for getting repeat bookings at content industry conferences?

      If you want to actually change things for the better, you might have to tell people things they don’t want to hear, even if it is too “boring” and “complicated”. You know as well as I do that it is possible to create a working market in the post-scarce conditions of the information age. But it isn’t going to happen with the business models that traditional copyright encourages. So stop encouraging them.

  12. James_J says:

    “M” wrote:
    “Without statutory licensing, you get stuck with giants like Google, Netflix and Spotify controlling all content.

    Consider that there is a HUGE barrier of entry to negotiate deals with all the multitude of rightholders. Huge multibillion dollar tech companies can handle it, but can tech startups do it? They can not. So it’s a terrible situation for small tech companies.”

    Grocery stores have to deal with all the individual companies that stock their shelves. Just about ALL retailers and resellers have to do this. Why is that a problem? It is a cost of doing business.
    “music” isn’t one ‘thing’. Each band is a different brand, and should be treated as such. If brands want to band together for easier licensing, it’s their choice to do so… not some whiny tech start-up saying “it’s too hard” waaah. … maybe the tech start-up should look for some other line of business… there’s already 10’s of outlets to get legal music. We don’t need more.

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