Show Me the Innovation

Now that the very early stages of copyright reform are underway with preliminary hearings on Capitol Hill, I think it’s worth revisiting the question as to why the conversation is happening in the first place.  There are, of course, specific adjustments to the system that ought to be looked at with regard to media & information distribution in the digital age, but these details are often hard to identify amid the clamor of broad, public messaging that has been pumped out of the Silicon Valley PR leviathan for more than a decade.  Instead of specifics, much of the testimony, editorials, and even academic theory can be boiled down to two generalized assertions:  1) the copyright system no longer serves the public interest overall; and 2) the copyright system stifles innovation, which is technically a premise for the first statement.  Since I began paying attention to these issues, I have encountered variations on these declaratives more times than I can count; and each time I do, I look for the innovation being stifled by copyright but can’t seem to find it.  In fact, if we assemble a few fragmentary glimpses of Google and Silicon Valley, a mosaic begins to take shape and forms a picture that is not exclusively innovative at all.

Innovation is one of those catch-all terms that demands context in order for it to have any discernible value. Eli Whitney didn’t necessarily intend to foster a demand for African slaves in the American South, but both slavery and the war it spawned were consequences of his Cotton Gin.  (As a side note, Whitney’s patent was overwhelmingly ignored because he wanted too much money for the simple machine, so IP theft also had a hand in expanding the slave trade and the Civil War.)  But, if the copyright system, which has already yielded more than two centuries of tremendous social and economic benefit, is now in fact stifling innovation (as Big Tech insists that it is), we should demand specifics as to exactly what is being stifled, how it’s being stifled, and who would be the beneficiaries of any proposed un-stifling to be undertaken by congress. The last part is easy to answer; Silicon Valley corporations benefit in a system with weak intellectual property laws — or at least they do now that they’ve already built multi-billion-dollar businesses from patented technologies — but the overall benefit to the public of scaling back these laws in the name of vaguely described future “innovation” is questionable.

Assuming we must rationally define innovation as something that fosters prosperity, then a view of Silicon Valley in general, and Google in particular, makes clear that we cannot unequivocally say that their brand of innovation is always a boon to American or universal well being. Yes, there are many businesses made possible by the internet, but this does not mean Google & Co. get all the credit for this entrepreneurism; and neither should we take at face value their claims that IP laws are somehow a threat to  such enterprises. Moreover, the leading web companies reveal a culture that belies the kind of universal humanism they tend to preach when they want to rally the public to support their political agendas.  This article in the Daily Beast paints a pretty clear portrait of Big Tech as a new American oligarchy that consumes much, controls unprecedented, consolidated wealth, and does not contribute a great deal either to the US or to foreign economies.  As a companion piece, this article from The Guardian (shared by a regular reader) reveals a rather disturbing anthropological manifestation in which the minority population of Silicon Valley employees live a detached existence from their Northern California neighbors, with Facebook employees shuttling in private, luxury busses between the city and their corporate cloisters where they enjoy subsidized haut cuisine, barber shops, and massages as part of the working environment.  Viewed together, these two shards in the mosaic already begin to project a picture antithetical to the grand, social equalization these wizards claim will be the inevitable byproduct of their monastic labors on our behalf.

Looking at some other pieces in the mosaic, we want to be very careful not to let the word innovation become some new PC term for criminal, unsavory, immoral, or meaningless endeavors just because they’re based in web technology.  For instance, Wired offers this detailed account describing Google’s role in “innovating” the sale of millions of dollars worth of illegal and counterfeit drugs.  The story describes exactly how federal agents, working with a con-man-turned-cooperator,  conducted a sting operation that led to Google settling the case against them for a half-billion dollars.  That’s a fine that exceeds the annual revenue of nearly all the largest businesses that depend on copyright and patent protections; whereas for Google, I imagine it’s the snack budget for the programmer pool.  In this story at Music Tech Policy, we see that only under pressure from people like Rep. Carolyn Maloney (D-NY) did Google back off the inclusion of the app Utoopi on its Android phones.  Utoopi Combines geo-location with escort services in order to “innovate” prostitution, which is known to be a primary driver for “innovating” contemporary human trafficking.  And, of course, we had the Google Streets bugaboo, in which the company was charged with “innovating” unauthorized access to private data from people’s computers through open WiFi while driving around in their “innovation” buggies taking photographs.

Yet, for all these shenanigans, Google employs fewer than 40,000 people worldwide, if we exclude the Motorola division.  At the same time, Facebook employs fewer than 5,000; Twitter employs just about 1,000; Pandora employs fewer than 500; and Reddit employs about 20.  Naturally, these numbers alone do not reflect the gross economic value of the internet, which has fostered many start-ups in many lines of business; but the premise being asserted by this elite group of dominant companies is that IP laws like patents and copyrights are a barrier to even more untapped, economic value. The message being sent is that congress must revise these laws so that we the people can benefit.  Start to sound familiar?  “Lift these environmental regulations and drill, baby, drill!”  But at least in that case, there really is oil in them thar hills, and we can debate the pros and cons of drilling for it. When the internet industry and its paid advocates say copyrights and patents stand in the way of economic opportunity, it’s a double-lie.  First, they’re simply serving their own interests; and second, there is no solid evidence that these long-standing rights of creators and inventors inhibit anything that can be called real innovation.

If we are going to allow the internet industry to speak as loudly as it does on the subject of legislative reform this important, their track record on social responsibility should be factored into their testimony. In short, when the web gets ugly and reveals its capacity to enable bullying, defamation, illegal and counterfeit transactions, human trafficking, incitement to terrorism, organized misogyny, and mass copyright exploitation, the owners of these sites and designers of these systems consistently claim the amoral high ground of neutrality. “We are just the highway,” they say, “and we cannot be responsible for how people drive.”  And that’s fair enough to an extent, but not when these companies profit, however inadvertently, from exploitation or from some other form of human suffering, and especially not when these same companies presume to take credit for all the social good derived from the internet.  It seems to me they want their cake, your cake, my cake, and would like to eat it all.

So, operating under the premise “if it ain’t broke, don’t fix it,” congress should begin with what already works, and has worked for a very long time, in the copyright system.  In fact, this week’s WSJ reports, “In the past two decades, intellectual property has emerged as the principal driver of economic growth in the U.S. and other developed countries. IP is now, in many respects, the new global currency.”  So, if we are to revise this system at the urging of this small but vocally powerful industry, legislators should get its Cuba Gooding Jr. on and insist, “Show me the innovation.”

© 2013, David Newhoff. All rights reserved.

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17 comments

  • Innovation is some weird vague term that is trumpeted around. I’m not going to go too much into how to define it. For awhile I’ve tried to craft what I find most wrong about the copyright system in a single sentence and in a concrete manner. I feel like I’m pretty successful with this one: “Copyright is the biggest obstacle to providing the sum of human knowledge and culture to all of humanity.”

    My problem I see in the pro-copyright crowd is in this disregard to the positive effects of technology. Rather all I see a deep rooted cynicism to the very idea of intellectual wealth and a intimate desire to do business like we always did.

    There has to be a better way.

    • David Newhoff

      I don’t know anyone serious who is pro copyright and pro artists’ rights in general, but is fundamentally anti-technology. Many of us are first-adopters of these technologies. Business fundamentals haven’t changed that much. Stay tuned for a video interview with the founder of a digital-only, entertainment media company.

  • I want to see though David, all the stuff you say in this blog post is quite accurate and itself a problem. Especially how the technology industry is harming the middle class.

    • David Newhoff

      The technology industry isn’t harming the middle class, but the relatively small number of companies backing the reform of copyright are a) not directly big middle-class job creators and b) are threatening existing jobs in other sectors by pursuing this particular policy agenda. It’s too broad to say “the technology industry harms the middle class;” the tech industry is a big thing that’s more than Google & Co.

      • Generally, if people are talking about the “technology industry” or “big tech” I find it safe to assume that what they’re talking about is the content aggregators. From the context, it’s pretty clear that Electronic Arts aren’t actually one of the companies under discussion despite the fact that they’re both big and a technology company.

      • “The technology industry isn’t harming the middle class”

        It sure is. In fact, the progression of technology as developed by the technology industry goes much further than hurting creative types. It hurts manufacturing jobs, service jobs, office jobs – you name it.

        There is a ton of arguments written on this issue, I would say that the idea that technological progress devalues human labor is not even particularly controversial at this point.

      • David Newhoff

        We’ve strayed from the original subject, which is fine, but I don’t think we can generalize about all technology, can we? Doesn’t it depend on what we mean by “technology” and how it’s deployed? The U.S. presently has fairly old infrastructure in transportation, building construction, energy systems, etc. If we invest in the use of new technologies to replace our antiquated infrastructure with modern systems, this will be a job creator; it still takes labor to build a better train. By contrast, web businesses like Google, Pandora, Facebook, etc. are fundamentally companies that can operate with relatively few employees while generating massive wealth for their owners, wealth that is often based on nothing more than theory. Plus, their economic value is predicated almost entirely on advertising, which itself only has value if there is a healthy market full of goods and services to sell.

        From an investment standpoint, a company like Pandora is reminiscent of the Dot Com bubble dysfunction of the 1990s; we have 3-4 guys who’ve already made a fortune from a company that “hasn’t turned a profit yet,” and their millions are predicated on the theory that Internet radio is the next big thing. Meanwhile, their business model depends entirely on using the products of much tougher investments that have already been made by other entities. Done wrong, this is a cannibalistic enterprise that not only doesn’t enhance existing value but can dilute it. And, if Pandora fails, it’s principals fail with ungodly amounts of money in their pockets while some stockholders take a bath and their 400 or so employees go look for new jobs. And for the $100+ million in Westergren’s bank account, he will have created nothing (except of course more vitriol unfairly slung at musicians).

        I don’t think we can compare the economic dynamics of web companies like these to the influence or potential of technology overall; and I think how we use technology is a choice. I believe, for instance, that if we allow autonomous weapons to be developed, then we are literally too stupid to live. Underlying these choices, of course, is an addiction this country still has to the short-term, get-rich-in-your-sleep aberration of capitalism that seems to dominate our culture. On my optimistic side, I have a measure of faith in the next generation actually building something with the technologies they’re inheriting, and that’s mostly because I think they won’t have any choice.

  • Great insight, David, on the difference between wealth creation and job creation. Artists need to get involved on this one, because tech is determined to minimize compensation for Artists’ work.

    The seriousness of this situation cannot be overstated. Creative work is very different from all other work. Why? Because it represents the fabric of our culture. It inspires, illuminates and transforms the way we see the world. This isn’t Walmart grinding their vendors for pricing.

    The light of creativity and joy that must not be dimmed by technology.

  • The issue is actually quite fundamental to a much broader discussion of where we are heading as an economy. If you think things don’t look rosy now, believe me: they could get much worse.

    In a nutshell: we’re not really seeing a replacement for the kind of jobs that technology has either rendered obsolete (not as many as you might think) or – more typically – outsourced to China. At the same time, the current technological incumbents are doing their best to stifle the emergence of a proper online market, so their own positions remain unassailable. Andrew Orlowski has a good article about it over at The Register.

    What’s even funnier is when such companies go out of their way not to make money – see Pandora, as reported by Digital Music News. Here, the plan seems to be to keep user numbers high at the expense of revenue, ‘coz big user numbers give Wall Street a hard-on (God only knows why) and that allows the insiders to cash out at a premium. It doesn’t help that these companies (I know this to be true for Google and Pandora, but it seems to be a new trend) are fundamentally disinclined to pay out dividends, so the shareholders (and markets) aren’t that keen on profitability – and hence: higher revenues.

    Mix all the above with the low employment in such companies and we see that their primary role is to pump out huge amounts of money from the economy that either go into the pockets of a small circle of insiders or just lie around. Seriously, Google now has approx. $15G in cash and cash equivalents – the corporate equivalent of 15 billion dollars in a sock under the matterace. This is money that isn’t fuelling the economy – it’s just lying around. Given that this is a number increasing year-on-year, Google is rapidly becoming another vampire squid (h/t to Matt Taibbi) latched onto the global economy. This, of course, ignores the cashouts by their executives, who already have more money than they could realistically spend in their lifetimes.

    This is something we should worry about even if the whole situation doesn’t give us ethical nausea. It’s simply untenable in the long run. If Lenin were around today, he’d have a good hard laugh about how true his statement about capitalists making the rope they’ll be hanged on has become. Things actually have a good chance of becoming really, really bad – unless we seriously reconsider what constitutes and acceptable way of doing business and what doesn’t. The funniest thing is that we really wouldn’t lose much if Google was staked and dragged out into the sunlight – for all the huffing and puffing, they could disappear tomorrow and we’d be functioning just as well as presently within a month, year tops.

  • I can think of some cases where you could argue that copyright has stifled creativity, but those are largely disputes within the artistic community and mostly resolve round the extent of fair use/fair dealing. And it isn’t the same thing as stifling innovation.

    The difference is that I can actually point to specific case studies which can be agreed with or disputed. That doesn’t seem to be the case with the “copyright stifles innovation” proponents. At best, we get an attempt to draw vague historical parallels, as if the situation today is anything like the 18th and 19th centuries.

    Google have an unfair advantage here though. It’s impossible to disprove an entirely hypothetical scenario. I can’t categorically state that abolishing copyright wouldn’t lead to an explosion of innovation. I also can’t categorically state that reducing regulation of genetic engineering wouldn’t lead to immortality. But the balance of probabilities suggests it’s unlikely in both cases.

    The other big rhetorical trick used by the abolitionists is to conflate very different issues. The issue of developing countries not being able to afford patented AIDS drugs is quite obviously entirely separate and far more serious then the ‘right’ of middle class kids to download their music for free. Yet some abolitionists will mention them as if the two are part of the same argument.

    Still, if Google want to prove that loosening of copyright will lead to innovation, they are in a position to test that. They can make all their data open source. If they do that and it causes a notable increase in innovation I’ll be happy to revise my opinion on the issue.

    There is one specific case where I think there’s an argument that current copyright law does stifle innovation is the issue of a “use it or lose it” clause. Yes, if master recordings or book manuscripts are being sat on by the creative industry, with no attempt to distribute them to the public, that stifles innovation. There’s been movement on this by the EU, but not enough; the current term is 50 years before it reverts to the creator. I’d like to see 5 year terms on this. But this is absolutely not an issue Google et al care about. And, quite honestly, I think it’s a no-brainer. Anyone opposed to this is almost certainly an industry shill.

    • I’m with you all the way up until that very last point, Sam.
      That last one has to do with a contract between two interested parties. And i’d agree that it would be a sh*tty situation for the band involved, but:
      Contract dispute ≠ to a Copyright dispute.

    • David Newhoff

      It’s true, Sam, that there have been, and will continue to be, cases where some rights holder will sequester a work in a way that seems unreasonable. I don’t think there’s a legal system we can name that can account for every individual circumstance. But even these situations cannot be said, in my opinion, to stifle creativity while they may appear to stifle an individual’s immediate desires or goals. For one thing, these instances are too few to suggest that creative works are unborn on any kind of large scale; but more importantly, every creator knows that obstacles are often the best catalysts to new ideas. I doubt there are many creators who don’t have at least one story in which they could not do the first thing they wanted, either because of legal rights or money or logistics, and the solution they found wound up being something brilliant that never would have happened otherwise. Even with the short film I made in 2011, I wanted the rights to use a song for which I couldn’t pay and was not surprisingly turned down. So, I collaborated with the musician on revising an old song in the public domain, and it wound up being better and uniquely crafted for the film.

      It’s not that I necessarily agree with keeping works locked down so much as I am skeptical of which interests are fighting which fight. As you say, I don’t think Google & Co. give a damn about cultural diffusion. They give a damn about having a very weak regime of author’s rights.

      • @ James

        I’d see it as a copyright issue specifically because any new regulation on the issue is going to be one of copyright reform. In the EU at least, this particular argument is very much taking place as part of a larger discussion about copyright reform.

        @ David

        Surely the whole point of copyright, or any other law, is to provide guidelines for rulings on individual cases?

        In terms of how much of an issue it is, I don’t have the exact figures. However, the fact that so much arguing and lobbying is still taking place round it over here suggests to me that it’s more significant then you suggest. Especially in the UK. Note that one major difference we have here then the US is that there’s no limit on terms for the transfer of copyright. So, unlike you guys, it’s entirely feasible that a creator will never regain copyright in their lifetime.

        The obstacles are an interesting point, but I think they can stop as much as they push. Authors are probably one of the obvious examples here- someone like Alan Moore has done some of his best work with other people’s creations. And, artistically, the only difference between being inspired by more modern works and that which is now in the public domain is one of legality. There’s been some amazing work based on Lovecraft’s universe; I’d go as far as to say that there are a good number of books who write Lovecraft far better than Lovecraft ever did.

        Besides, where do we draw the line on the argument? Some great works have used poverty as a catalyst to inspiration. But we wouldn’t suggest that we should deliberately try and keep artists in poverty to achieve that.

        In terms of who’s pushing the argument on “use it or lose it”, it’s not Google et al. In fact, they’ve shown no interest in the issue at all. In the UK, the two main groups who push for this are the Featured Artists Coalition and the Music Managers Forum. One of the main journalists who’s written about this is Helienne Lindvall. So I suspect that it would pass your ‘sniff test’ pretty well on this.

      • David Newhoff

        Thanks, Sam. I am familiar with Helienne and her work, and forgive me if I misunderstand you or the specifics of copyright in Europe. I am admittedly a generalist, and unlike some bloggers, I try to admit that and make clear that there are actual legal experts worth reading for specifics on copyright. From my POV, I don’t see any problem with considering certain targeted reforms, including term limits or even the concept of “use it or lose it,” especially if artists themselves can make the case. As promised in the title of this blog, I distrust the grand, utopian proclamations of the internet giants in general and their assault on IP rights in particular. I’d be thrilled if there were a rational, specific conversation about what does doesn’t work with copyright, but I’m not holding my breath in this climate. As such, I’m hyper-skeptical of any proposed reform because I want to know the vested interest behind the proposal and what “problem” it solves. Patents are under the same attack by the same tiny group of entities, and I recently interviewed a retired federal judge, who said he feels the patent system is like a machine that needs some oil and a few parts replaced but is by no means wholly broken. I’d say the same thing about copyright.

        To your first question, I simply meant that a legislative body probably can’t write any law that cannot be either abused or over-used by someone at some time; at best, I think we strive to maintain an average of fairness and balance, no? Your point was about individual cases of stifled creativity, presumably when an entity locks up some work(s) for an unreasonable amount of time, and while this may be true in some cases, I’d wonder about the frequency and volume of this problem as well as the more subjective question of value and quality. Your Lovecraft example is a good one, but there are also a lot of would-be authors out there who’ve bought into the internet dream that they can be financially rewarded for their work if only there were fewer restrictions on their ability to create derivatives, remix, etc. I think it stands to reason, however, that for every 500 eager fanfic authors dying to reinvent Spider Man (or whatever), maybe one of them has any talent. Regardless, it’s a mathematical certainty that if 200 of them are gifted, not all 200 can make a living with this work because the market can’t support the volume of creators this implies. Meanwhile, Google makes money on the traffic no matter who does what. So, I think we have to be very careful when we attempt to define on a large scale the ways in which copyright might stifle what many will call creativity. Again, this goes back to internet industry messaging at both the citizen and the legislative levels; and I think it’s very risky to both culture and economics in the long run if we take too seriously this “we’re all authors now” premise for copyright reform. My instinct is that the fundamentals of copyright are very sound — the US has after all produced a considerable volume of works and IP industry jobs in 200 years — and that these specifics belong in the realm of the courts to rule on a case-by-case basis.

      • Again, and i don’t dispute the possible need for some wording reform in that area of copyright…

        … but what you described is a problem with the specific contract that the artist signed, NOT with copyright..

        The fact that several musicians were so giddy to get offered a ‘deal’ that they signed the first draft that someone put before them (probably without even reading it!) without a lawyer present– indicates poor judgement or naivete or both.
        That’s not a failing of copyright. That is a personal responsibility issue. I would be more apt to call that ‘swindling’ a trusting client than anything ‘wrong’ with copyright.
        I don’t agree with the practice, but it exists throughout the business world, it has nothing to do with copyright. They signed the dotted line. No one forced them to do so.

  • innovative….. yet late. very late
    http://choosecreativecommerce.wordpress.com/2010/11/21/choose-creative-commerce-c3/

    but keep up the pressure… one day they’;ll see the silicon boardwalk empire for what it is, gatsby:)

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