Author: David Newhoff

David is an author, communications professional, and copyright advocate. After more than 20 years providing creative services and consulting in corporate communications, he shifted his attention to law and policy, beginning with advocacy of copyright and the value of creative professionals to America’s economy, core principles, and culture.

NFT – The Hottest Trend in Ripping Off Artists

By now, even people who don’t follow copyright and crypto stories may have read somewhere that a crypto group called Spice DAO purchased a rare copy of Frank Herbert’s Dune for €2.66 million and then announced its intent to make the work publicly available, produce an animated series, and promote derivative works. The group also floated the notion of minting each page into an NFT, burning the book while video-capturing themselves doing so, and then minting the book-burning video into an NFT. (Nice to have so much time on one’s hands.)

https://twitter.com/TheSpiceDAO/status/1482404318347153413

Since the initial tweet on January 15, Spice DAO has been smacked around the internet by even legal laymen reminding the group that the purchase of a copy of a work, even a rare and old copy, does not transfer any rights to do anything whatsoever with the underlying material. If these guys really spent that much money on the book expecting an ROI based on any their stated plans, they should quit while they’re behind. The lawsuits they have already implied would cost a more than they’ve spent so far.

Meanwhile, Spice DAO’s stated intent to mint NFTs out of material they do not have the right to reproduce brings me to the reason I am finally saying anything at all about this crypto trend that’s been making noise for almost two years. Although I have often been asked about NFT art and copyright, I have been reluctant to write a post about the topic, mostly because I wanted to avoid writing that obligatory paragraph describing what an NFT is while pretending that any explanation makes sense. Like the rest of you, I have read definitions of NFTs in various places—critical, analytical, and promotional—but find it impossible to believe that the virtual trading floors exchanging NFTs do not represent an irrational market, buying and selling smoke.

It’s a digital record of a transaction that lives on the blockchain …

… when someone buys an NFT, they’re not buying the actual digital artwork; they’re buying a link to it.

It’s a digital certificate for intellectual property and is stored on the blockchain.

And so on.

Seriously? Are we all pretending that any of that means anything? A parable about the Brooklyn Bridge comes to mind, but in that scenario, at least there’s an actual bridge the huckster does not own. But okay. Even if the NFT market is not just another free-for-all invented by tech bros to sell to the Court of the Naked Emperor, it is clearly the coolest new way to rip off artists. As Kevin Collier wrote on January 10 for NBC …

Last week, an unidentified user on OpenSea, the dominant marketplace for the burgeoning NFT art market, started putting tens of thousands of listings of [Aja Trier’s] work, often duplicates, up for sale. Thirty-seven of them sold before she was able to convince the platform to take them down.

Tell me how this was not inevitable. If literally anyone can mint and upload an NFT to a trading platform like OpenSea, of course thieves are going to grab artworks they “find” online and do exactly what Collier’s article describes. After more than twenty years of creative works being used without permission online and enriching the platforms on which they are being used, this black-market trade in NFT art finally sheds all pretension of respect for the artist’s right to control and monetize her own work as she sees fit. Collier adds …

Trier’s story has already become common in the burgeoning world of NFT art sales. RJ Palmer, a San Francisco artist who designs creatures and monsters both as commissioned digital works and for movies and video game companies, said issuing takedown requests to NFT platforms for his work became a daily routine before he eventually gave up.

Whack-a-mole 3.0? If making artists give up on their rights was not the intent of network effects, it sure as hell is a byproduct. Creators find it both daunting and depressing to discover dozens, or hundreds, of unlicensed uses of their works online, but to now find the works explicitly being sold without permission is a whole new level of predation. Collier’s story reports that OpenSea is valued at over $13 billion, which is its own kind of crazy, but it is astounding that these platforms are not responsible for validating the provenance of the NFTs being offered.

I say astounding but, of course, it’s not surprising. In fact, the most obvious absurdity that leaps out at the moment is this:  the NFT enthusiasts have been brosplaining to artists that this is a crypto-currency solution to their woes—a new method of validating ownership in their work, and one that might even replace copyright. But aside from the fact that copyright does a lot more than validate ownership, how can the NFT serve as a means of validating ownership if the market allows any jamoke with a computer to mint and trade NFTs made from art they don’t have rights to use in the first place?

Presumably, the Spice DAO group with the rare Dune copy is exactly as naïve as their public statements imply. If so, that story is mostly a laugh. The Herbert estate can adequately address infringements of the work, if they arise. But for the artists mentioned in the NBC story, and creators even less well-known, having their art appropriated and sold as NFTs without their permission isn’t the least bit funny. In fact, one might even call it a crime.

Photo by: justlight

Would You Fall for the Anti-SOPA Campaign Today?

“The more desperate one is to get attention, rather than to accurately communicate what one believes a problem is, the more one ventures into the realm of sensationalist propaganda.”

That observation was not written about anyone promoting the Stop the Steal narrative that led to the insurrection on January 6, 2020. No, that’s Chris Ruen, in his book Freeloading (2012), describing Fight for the Future co-founder Holmes Wilson trying to come up with a line to rally support among Redditors for American Censorship Day in November 2011 to protest the anti-piracy bills SOPA/PIPA. According to Wilson’s own description, as quoted by Ruen, he eventually grabbed readers’ attention with this lulu: “The MPAA will soon have the power to block American’s [sic] access to any website unless we fight back, hard!”

There was zero truth in that statement. And although FFTF is terribly concerned about the power of social media today, for instance, Facebook’s role in fostering the events of January 6th …

…the organization is not likely to acknowledge that ten years ago, they and their friends in the “digital rights” world exploited the same manipulative tools and the same human flaws in what was arguably the first misinformation campaign to succeed at scale.

Hyperbole like Wilson’s headline naturally went viral and accreted even more outlandish claims as the Stop SOPA crusade gained momentum through the end of 2011 and culminated on January 18, 2012 with “Blackout Day.” The idea, hatched by Wikipedia founder Jimmy Wales, perhaps imagining himself as John Galt, was to get prominent websites to go dark on a single day and show us what a post-SOPA internet would allegedly look like. Wales also went on TV as the erudite and magnanimous representative of “the internet” and wove a crazy quilt of lies about SOPA/PIPA causing harm to free speech online.[1]

Behind the scenes, death and rape threats (a common feature in any digital-age campaign) were directed at female congressional staffers and other women in pro-copyright organizations, along with the predictable spate of DNS attacks against the websites of any organization that dared voice support for—or even just try to explain—the legislation. Relatedly, it is not a minor footnote that the Stop SOPA folks reached out to 4Chan, which Wilson described as “awesome,” to help push the censorship message.

Today, many readers know 4Chan as a site where misogyny, racism, and legit fascism intersect with bored adolescent boys and hackers espousing a broad spectrum of moral relativism. The output of this crucible has often been a prankster/hacktivist hybrid in which the motive for action may be nothing more than a laugh (aka for the lulz). 4Chan begat 8Chan, and 8Chan begat QAnon. And my point is not that the anti-SOPA organizers spawned Q but rather that it is significant that both January 18th and January 6th were, in part, fueled by tapping into this nebulous digital underworld.   

Above ground, Google, Mozilla, the Electronic Frontier Foundation, and other organizations with internet-industry resources, coordinated and directed a deluge of messages that jammed phone lines and clogged email servers on Capitol Hill, leading Congress to abandon the SOPA/PIPA legislation in a bipartisan group shrug, with staffers and Members mystified as to what exactly had just happened. In the days that followed, some Members even reported that upon returning to their districts, they discovered that constituents had not only not protested SOPA, but that they had never even heard of it.

January 18th is also something of a tenth anniversary for this blog, which first launched in August 2012 but really began with an editorial in The Hill in which I called support for in the anti-SOPA campaign Pavlovian and dysfunctional. At the time, I wrote that “I believe we are seeing the most extreme, most egotistical voices — from the Tea Party to Anonymous — aiming not for change, but to dismantle the system itself.”

Notice that says nothing about media piracy. Piracy was secondary. It was the mechanisms of the anti-SOPA campaign that scared the hell out of me. Worse than the specific lies about the legislation was the bigger lie being promoted by the “digital rights” groups, telling the world that Stop SOPA represented a new model for grassroots activism in which the people are finally empowered by real information and social platforms. In truth, these groups simply showed us how easy it is to rally thoughtless action with little more than some provocative bullshit on a web page.

Wilson posted that nonsense about the MPAA and site-blocking in November, and by January, a virtual mob that knew nothing about what it was protesting stopped Congress in its tracks. Fast-forward to the era of Trump, and a different breed of unscrupulous provocateur, including one calling himself Q, post even more outrageous lies online, and by January, a physical and violent mob tries to stop Congress in its tracks. If we believe there is an ethical chasm between Q and Wilson, it’s because we are overlooking the fact that this is the same disease causing different symptoms.

There is little difference between the fearmongering declarations, “Fight like hell, or you won’t have a country anymore,” and “Fight like hell, or you won’t have an internet anymore.” Convince people that someone is trying to rob them of their liberty—End piracy. Not liberty. was Google’s message in 2012—and you just might start a riot. And during this interval between the first anniversary of January 6th and the tenth anniversary of January 18th, I truly doubt that anyone intending to memorialize their role in the latter would ever acknowledge their insidious contribution to the former.

In a healthy democracy, the means are always more important than the ends, and the inversion of this principle—that it’s okay, even admirable, to lie like hell as long as you win—is the underlying pathology driving both decorum and integrity to the margins of our political discourse. The vector bearing the pathogen is social media, a force which was not so widely understood in 2012 as an addictive, dopamine-inducing activity that neutralizes reason while feeding emotion. That was the human frailty exploited by the professional anti-SOPA crowd ten years ago. And considering all the destruction that misinformation has done to the world since, I cannot imagine why anyone would want to celebrate that travesty of a milestone.

[1] For instance, the legal remedies in SOPA/PIPA have been applied in different ways both prior to and since the defeat of the bills without any effect on the speech right.

Amazon Fades from the ebook Legislation Narrative

Before I let the topic of these state ebook lending bills go for a bit, there is one aspect of this story that should not be overlooked. I was thinking about it when I saw a tweet criticizing Governor Hochul’s December 30th veto of the New York version of the bill. Media professional and professor Dan Gillmor, who has over 46,000 followers, summed up the sentiments of many when he wrote…

Mr. Gillmor’s hyperbole is an example of that blinkered view which finds it sensible to vilify publishers while ignoring authors, as if the interests of two were not intertwined. But the comment also reminded me that the force still driving this willful blindness is a belief that internet platforms can and should obviate the need for intermediaries like publishers. What’s especially funny about that idea in context to this story is that it was the monopolistic conduct of one internet platform—Amazon—which served as a major predicate for advocating the ebook bills in the first place. For instance, in Maryland, which passed its bill into law and now faces litigation by the publishers, all the supporting letters in the record contain the following:

For example, Amazon and Audible currently have between them over 20,000 “exclusive” titles. They will license these titles – which include high demand content by J.K. Rowling, Margaret Atwood, Alice Walker, Dean Kootz, Neil Gaiman, and others – to consumers, but not to libraries.

The headline of a Washington Post article from March 2021 (when the eBook bills were still percolating in state legislatures) identified Amazon as the publisher refusing to license titles to libraries. And as the AAP complaint against the State of Maryland notes, “The Maryland act’s legislative history and public statements by state legislators and public officials reveal some very specific concerns about this company.” The complaint adds that legislative sponsors specifically and repeatedly cited Amazon, but then avers, “… there is no contention that publishers more broadly are failing libraries. Nor is there any question that the marketplace for library ebooks and audiobooks is flourishing.”

After passage of the Maryland law, Amazon Publishing signed a deal with Digital Public Libraries of America (DPLA) to make their ebooks available to U.S. libraries, and it is reportedly negotiating terms to make its Audible audiobooks available as well. That’s a good thing, but we should not lose sight of the distinction between Amazon and the major publishers, who were not withholding their ebooks from libraries. Because whatever drove Amazon’s decision at the time (strategy for global domination?), it must be viewed as an outlier unique to that leviathan of a company and not aligned with the rest of the industry whose core business is still book publishing.

The library associations highlighted the conduct of one tech industry publisher as a reason to promote legislation that would divest individual authors of their copyright rights. Thus, despite the claims that these bills are not anti-author, a major prong of the argument for them boiled down to this:  Amazon behaved like a monopoly, so authors should pay the price. And this aspect of the story is transformed from the absurd to the grotesque when we remember that Amazon was among the platforms once touted by copyright critics as an antidote to the “gatekeeping” engaged in by publishers.

As the ebook bills gained momentum in four states—NY, MD, MA, RI—the Amazon predicate faded into the background to the extent that now, according to observers like Gillmour, the story is all about the publishing “cartel” quashing “reasonable” legislation solely directed at the price of ebook licenses for libraries. A couple of problems with this narrative, though.

The first is that, even if the libraries have a sound complaint about the cost of ebook licenses, that’s a subject for negotiation and not grounds for a futile attempt to legislate away the rights of authors. Second, if the libraries want to make a case for calling the current terms of ebook licensing unreasonable, they need to at least do some math. It is not enough to just compare the ebook purchase price to the library ebook license price and declare the difference extortionate on its face.

Because whatever the ideal cost of ebook licenses should be for libraries, the current rate of approximately three times the consumer price for ebook purchases is not as unreasonable as the library associations make it seem. The simple fact is that lending an ebook to multiple readers is a different market from selling an ebook to one reader. Let’s do a quick, back-of-the-envelope review for context.

A two-year license fee of $65 provides free access to an ebook to roughly 52 readers at a cost to the library system of $1.25 per reader. But based on the rhetoric employed by the library associations, they seem to want the same 52 readers to be provided access at a cost of about $ 0.29 per reader, but even then, not really. Because digital materials never wear out, what the libraries actually want (i.e. unlimited licenses at consumer purchase rates) is for the authors and publishers to make titles available until that per reader cost approaches zero. Clearly, there is a threshold when too low a fee would cannibalize the market for ebook sales, which would end the market for ebooks, period.

For further context, keep in mind that one reason the libraries claim a right to buy, rather than license, ebooks is that they are used to buying hardbound copies and loaning them to their communities. But here, the library associations are comparing apples and oranges and not taking an honest account of cost to the library system for providing its services. Because a physical book requires infrastructure and labor to maintain, a $30 clothbound copy, for instance, may cost the library around $1.44 per reader to serve the same 52 patrons.[1] The broader point is that the two-column argument the ALA et al presented to state legislators is not a full picture.

Finally, I would add that libraries will not stay relevant in a world where they put too many eggs in the digital lending basket. At the point at which one’s “library” experience is little more than tapping a button to access a book through an electron reader, the relationship with the individual library evaporates rather quickly. If the library associations were to take a serious read of the landscape, they might consider whether Amazon’s original refusal to license its titles has something to do with that company’s strategy to replace publishers, libraries, and any other distribution channel it doesn’t control. Because that’s the real battle of the digital age, and to that end, the libraries and publishers should be allies.

[1] Based on a staffer making $10/hr and spending three minutes managing a book for a single patron. The actual per read cost is likely higher.