Category: Culture

Copyright Found After Brief Search

Well, artists and authors, I guess you can pack it in. Professor Glynn S. Lunney, Jr. of Texas A&M School of Law has declared copyright dead in a recent 12-page paper that is presumably a digest of his new book Copyright’s Excess: Money and Music in the US Recording Industry. Apparently, Lunney first announced copyright’s demise in a 2001 article tautologically named Death of Copyright, in which he then identified the proximate cause of death as the DMCA. But now, Professor Lunney states, “Copyright is dead. But it was not the DMCA that killed it. It has become increasingly clear to me that copyright, as a law that serves the public interest, was only ever a dream. In the real world, it never existed at all.”

So, copyright didn’t die. It’s been a ghost all along. In his new paper Copyright Lost, Lunney argues that the law’s fundamental promise is “more money equals more works,” and that because his data reveal this to be untrue—in fact, he finds the opposite to be true—copyright has never been the public-serving legal framework we’ve been taught to believe it is. But I think the real phantom Lunney is pointing to is his own scholarship, which begins with a straw man and then proceeds to cite irrelevant (if even true) data to reject a false premise.

Copyright is Not Synonymous with Money

Copyright’s whole purpose does not boil down to “more money equals more works.” The legal framework itself is agnostic with regard to how much money an individual author, or group of authors, actually earns. Yes, the bundle of rights opens up a range of possible revenue streams, but these are uniform (or constant) for the author who earns a lot of money and the author who earns very little.

For instance, the copyrights on a James Patterson thriller are identical to those on Lunney’s new book (I know, right?), even if Lunney’s contract with Cambridge University Press is quite different from Patterson’s contract with Random House. And the copyrights underlying those contracts have no bearing on the market reality that Patterson will outsell Lunney at a ratio of a gazillion to one. Money is a factor in Patterson’s staggering output, but the copyright itself is not predictive of that output.

It is true that one argument for copyright’s value is that the royalties from precedent works can provide authors with the resources to create new works, but this is not the sole purpose of copyright, and it is more than a little mercenary for Lunney to propose otherwise. The author who only produces a single work, even if that work is wildly profitable, does not “owe” society more works because society “granted” the copyright in the one work.

Authors and artists are mortal beings, some gifted with the right combination of skills, timing, luck, and even frailties, that make them especially productive. Others struggle for decades to produce a modest body of work. And, of course, there are external factors like family, health, world events, etc. beyond the author’s control that may affect her output of work. In this regard, Lunney is outright insulting to creators when he invokes a principle of labor economics that may be true among certain classes of workers but is rarely true among artists. He writes …

“Once wages have increased to the inflection point, individuals are earning enough that they want to buy more leisure rather than work. As a result, the income effect begins to outweigh the substitution effect, and the labor supply curve starts to bend backward. Beyond that point, further wage increases will lead the individual to work less, rather than more. In the late 1990s, copyright ensured an effective “wage” for our top artists and authors far in excess of their reservation price, and potentially above the point at which the labor supply curve began to bend backward. Thus, I argued that reducing revenue might actually lead some superstar artists to work more, rather than less.”

Right. Tell that to David Bowie working on Blackstar with his last dying breath. Lunney’s appeal to this principle may accurately describe a wide range of employees who would not necessarily work if they didn’t have to, but it is a minority of creators who actually stop working, no matter how much or little they earn. What academics consistently misunderstand in these analyses is that unlike most people who work to live, most artists live to work.  You simply cannot compare the pecuniary motivations of the average creator with those of some executive at a bank who would “rather be sailing.” Jimmy Buffett sails and has earned a few bucks, but he’s never stopped making music.

Sketchy Data Supporting a Dubious Theory

Nevertheless, having established an incomplete, if not outright false, premise for the purpose of copyright, Lunney sets out in search of evidence to support his theory that higher revenue consistently fails to yield “more and better” works. And unsurprisingly, he finds exactly what he’s looking for in data that not only fails to prove his point, but actually has little to do with copyright. Lunney’s theory can be summarized as follows:

The creation of the sound recording right increased revenue from sales and licensing of recorded music, but contrary to expectations, high-revenue periods were not high-output periods. In fact high output occurred during low-revenue periods.

To arrive at his conclusion, Lunney poses a broad question and a specific question. Broadly, he asks whether “more and better” music was produced at a lower rate after the phenomenon of mass piracy (Napster), and more specifically, he asks whether periods of peak revenue correspond to periods of “more and better” output. He defines “more and better” as “music people want to listen to,” which is a dubious metric because it does not inherently point to quantity and diversity. If there were only 100 songs in the world, they would be very popular indeed.

To observe “what people want to listen to,” Lunney cites Spotify data and finds, not surprisingly, that there is a sharply ascending peak in streams of music produced between 2000 and 2010, and he also shows that peak revenue periods like the 1990s correspond to a substantial dip in current popularity among Spotify listeners. From these data, Lunney concludes that we can “reject the notion that more revenue led to more and better music.”

No, I don’t think we can draw this conclusion, given the wide range of possible conditions that must be considered to responsibly assess the data. These include, among others, the fact that the most popular music at any time is usually the newest music; that more than 34% of Spotify users are under the age of 35; that Spotify streaming data is very narrow relative to Lunney’s broad inquiry; that some of the best niche music to emerge in the 1990s might be accessed by fans via other media; and that the concept “better” is far too subjective to simply sweep into the bucket of contemporary popularity and call it evidence.

For instance, Lunney’s Spotify data reveal a noticeable peak in the mid 1980s. If he asserts that the adjacent dip in the 1990s is literally caused by a corresponding rise in revenue for that decade, is it truly reasonable to assume that a corresponding “dearth” in revenue is the most rational explanation for the popularity of 80s music on Spotify today?

Or does this peak simply reveal that the next largest demographic of Spotify users is my generation, who grew up on 80s music? Or perhaps it’s explained by the fact that a lot of our kids also like 80s music because we’ve exposed them to it? Or might it have something to do with fact that a lot of new musical works are drawing inspiration from 80s sounds right now?  What happens to Lunney’s theory if 90s music becomes more popular in five years because trends are cyclical?

I don’t know these answers, of course, but because Lunney is measuring contemporary music taste (and only on Spotify), his attempt to explain current trends by virtue of previous years’ revenue alone rings a little hollow as an economic analysis, to say nothing of citing his findings as proof of copyright’s worthlessness.

“It is no coincidence,” Lunney writes, “that the most prolific artists in the study, the Beatles and Taylor Swift, had their first 100 hits in the low revenue years of 1964 and 2006, respectively.” It isn’t a coincidence? How does Lunney know this without accounting for, I don’t know, about a thousand other variables? More to the point, how does he sincerely invoke the Beatles—the Beatles!—in a paper which asserts that as income increases, artistic output decreases?  What does the overall industry revenue of 1964 have to do with the fact that two years later, the Beatles heard Pet Sounds and then produced Sgt. Pepper’s in 1967, which went on to sell over 30 million copies?

Maybe Lunney means some other Beatles and not the guys who started out playing cover songs and dance music in clubs then, when they earned real money, produced some of the most revolutionary sound recordings of all time. Those Beatles, Lunney would argue, decreased their output as they attained wealth from album sales. McCartney and Starr are still making music. And does anyone seriously doubt that Harrison, and especially Lennon, would still be writing and recording, if they were alive?

Little To Do With Copyright

Most importantly, even if Lunney can support his theory that lower revenue periods produce “more and better” music, he is fundamentally incorrect to associate those findings with the sound recording copyright passed in the U.S. in 1972. Lunney states, “For the recording industry over the last fifty years, when copyright protection was strong and effective, it forced consumers to pay more for music.”

That is simply a false statement. Because other than comparisons to outright piracy, the sound recording right has never had much to do with retail prices for recorded music. Prices of albums, and then CDs, rose along with the price of other consumer goods, and whatever cultural excesses one might ascribe to the recording industry of the 1990s was also true of business in general in that decade. Greed was evident in every sector.

But the sound recording right itself is largely a B2B protection, implicated when one artist samples a recording made by another artist; when a sound recording is synced to a motion picture or TV show; or when a sound recording is publicly performed via certain digital platforms. The sound recording right has never played much of a role in consumer sales of music for the simple fact that consumers had neither practical alternatives to—nor major complaints about—purchasing physical copies of albums.

Even in the digital market, the sound recording protection underlies a limited set of exclusive rights that remain largely a matter of licensing among business entities and rightholders, and these have even less to do with consumer “prices,” which now range between zero and about $120/year for access to 25-million tracks on Spotify (if we’re sticking to Lunney’s limited data).

Finally, it must be noted that Lunney has focused all of his attention—worthy or not—on the music industry and the sound recording copyright post 1972, and this is a rather slim platform from which to declare “copyright is dead.” Surely, Professor Lunney is aware that copyright encompasses far more than sound recordings and that perhaps his diagnosis of the whole body of law is at least premature, if not outright quackery. I suspect creators will insist upon a second opinion.

New Paper Takes on the Myth of Free

Zeno’s Paradox describes physical change as an illusion. Zeno of Elea, in the 5th Century BCE, postulated that in order to travel any distance, one had to first travel half that distance, and before that half could be traversed, one had to travel half of the first half, and so on. And because space could be infinitely divided, traveling through space would seem mathematically impossible but for the fact that anyone running headlong toward a brick wall will suddenly realize why we call Zeno’s theory a “paradox.” Or as Professor John M. Newman might put it, apropos his recent paper The Myth of Free, the sudden impact with the wall will be an encounter with the “friction of the real.”

Even a casual observer of the real world can reasonably conclude that we are not heading toward a market utopia in which goods and services are both free and abundant. Yet, despite the empirical evidence all around us, Newman’s new paper in the George Washington Law Review asserts that the Myth of Free is not merely pervasive among academic theorists but has been wreaking havoc in applied law and policy for years. He writes …

“Legal institutions have already begun to grant an undeserved protected status to the suppliers of Free products. Such suppliers have received de facto or de jure immunity from certain laws, as well as favorable treatment in close cases. This is so despite the reality that these firms engage in for-profit transactions that are structurally identical to traditional, positive-price transactions. That unjustified protected status undermines the rule of law and distorts natural market competition, harming total welfare.”

Newman’s paper should be required reading by jurists and policy-makers seeking to understand, in economic terms, many of the same principles that artists and creators—the first victims of Free—have been saying anecdotally for quite some time.

Artists and Creators Know This Story Well

Day-to-day arguments about copyright are apt to be about specific points of conflict, like duration of terms, methods of enforcement, application of fair use, court opinions, etc. But the broader social, academic, and political campaign against copyright’s purpose—advocating changes from radical revision to outright erasure—is largely predicated on this economic belief that once the internet became publicly accessible, we crossed some threshold toward a future in which goods and services will inevitably be be both free and abundant. Where scarcity itself would be eradicated.

Newman’s paper is among the first, if not the first, to formally rebut the Myth of Free based on economic analysis. Covering more ground in his 74 pages than I can adequately summarize here, copyright owners and advocates will immediately identify with Newman’s critique of Free’s “major premise,” which asserts that zero (or near-zero) marginal cost drops the natural price of goods and services to zero (or near zero).

“According to the Myth, once information-based products could be reproduced and distributed digitally, the marginal cost of such products began to map onto the ever-halving cost of trendlines of processing, storage, and bandwidth. Eventually costs became so low that prices inevitably dropped to zero. Free was born.”

Authors of creative works will recognize this “marginal cost” premise as the head-banging gibberish they’ve encountered for years from people like Mike Masnick ‘splaining the alleged zero-cost of digital distribution of works while simply ignoring the high cost of development and production of works.

As Newman puts it, “…the Zero-Cost Premise fails to account for both the stubborn persistence of costs and what is referred to herein as ‘the friction of the real.’” To put that in practical terms creators know very well, even if the distribution cost of a movie really were zero, the cost to produce the movie is never going to approach anything like zero. But Newman doesn’t even need to go there, instead demonstrating that even digital distribution is never going to approach zero cost either …

“Digital processing, storage, and bandwidth do not occur in some abstract realm that transcends scarcity. They occur in the real world, which means they come with real costs. Those cost may be quite low, and may decrease lower still, but they cannot reach zero.”

So, even the premise underlying the premise of Free isn’t true, hence Newman’s reference to Zeno’s Paradox in this part of his paper to describe the fact that the cost of bandwidth itself will not continuously halve itself until it becomes “too cheap to meter,” let alone implicate that all goods and services will soon become both free and abundant as a logical extension of this tech-utopian fallacy. “Those who claim the existence of zero marginal costs fall into the same trap as those who chase the elusive dream of perpetual motion,” Newman writes.

Many of the footnotes in The Myth of Free read like a Who’s Who of “Freeconomics” hucksters—Mike Masnick, Chris Anderson, Mark Lemley, Jeremy Rifkin, Amanda Palmer et al, but I was particularly struck by the attention Newman gives to rebutting the premises of Professor Lemley in context to previous posts on this blog. Readers may remember that Lemley is the academic who has accused some of his colleagues—and by extension advocates like me—of endorsing a “faith-based IP” doctrine that he claims ignores empirical evidence. But as Newman makes quite clear in this paper, proponents of Free are engaged in magical thinking that goes beyond anything we might generously describe as faith and can more accurately describe as denial.

“…those who foresee a coming of age of abundance tend to miss—or misunderstand—a crucial element of the dynamic, long-run view: demand is a moving target. With that element in place, such techno-optimism is revealed as misguided. It is, as those who espouse the Myth of Free rightly recognize, a mistake to view technological innovation solely through the lens of short-run employment effects.”

In other words, when people like musical artists say the math of Free doesn’t add up, it’s not because they’re “clinging to old models,” trying to sell buggy-whips in a market of driverless cars.  It’s because the math of Free doesn’t add up.

As mentioned, it’s hard to imagine anyone observing the world today and believing that we are trending toward a post-scarcity utopia. But I suspect this particular idealism happened to emerge during a period when the failure to reign in certain excesses of capitalism demoralized the same generation that was being fed the hip and ebullient economics of Free. Quite simply, because the Napster generation collided with a market that was transparently bloated, corrupt, and offering dwindling opportunities, the conditions were probably ideal for evangelizing a vision of a post-scarcity future.  A vision of “sharing” that would somehow transcend market realities by virtue of “free” technology, which isn’t free at all.

Meanwhile, Newman describes in this TEDx talk that Free also has a specific neurological effect, which rewards gluttony and is consequently having a detrimental effect on both human activity and fundamental economics. “We as a society are dumping billions of dollars into developing ever more creative ways to first addict ourselves, then to extract from ourselves as much of our time and attention and personal privacy as possible, and then auction it off to the highest bidder.”

As if to underscore the point, Newman’s talk about the addictive nature of Free has just over 200 views, while Top 100 Viral Videos of 2107 has over 31 million.

CA Supreme Court in Hassell Reveals Sec. 230 is a Catch-22

First, a refresher. The broad immunity provision known as Section 230 of the Communications Decency Act was adopted in 1996 as an incentive to internet service providers to take affirmative steps to remove material. Congress wanted to encourage sites to take down certain types of offensive or obscene content (e.g. child porn), and the ISPs asserted, quite reasonably, that taking such action should not render them “publishers,” which would then leave their companies vulnerable to endless litigation stemming from unlawful content posted by users.

Since then, however, Section 230 immunity has been interpreted in court cases, and portrayed in the blogosphere, as a blanket protection allowing sites to take no action to mitigate harm by removing unlawful or harmful content. For the past 20 years, Section 230 has provided the statutory basis for ISP claims of universal neutrality—the “just a platform” argument—no matter what occurs on their sites. This premise was soundly rejected by both parties in Congress during hearings conducted in response to evidence that Russian agents had purchased American political ads on major platforms.

Hassell v. Bird

The facts of this case are quite simple. Ava Bird posted three reviews of Dawn Hassell’s law firm on Yelp, and these were held by a California trial court to be defamatory. No party disputes the unlawfulness of the reviews. Hassell successfully sued Bird and purposely did not name Yelp as a defendant in her litigation. The court ordered Bird to remove the reviews and also issued an order to Yelp to remove the content even though it was a non-party to the litigation.

Yelp, along with a host of amici, argued that the court order violated both Section 230 and its right to due process. A California Court of Appeals upheld the injunction, but this week, the State Supreme Court reversed, with the majority holding that the injunction indeed violates Section 230 and, thus, it was unnecessary to rule on the due process claim. Nevertheless, a concurring opinion by Justice Kruger does address the due process issue and holds that Yelp is correct in asserting that it had a right to its “day in court.”

So, as a practical matter, if you were in Hassell’s position, here’s the Catch-22 emphasized in this case: Section 230 forecloses the option of suing a web platform for harm stemming from unlawful conduct by a user. BUT, in this case, because Hassell did not name Yelp as a party, it then claimed that it was denied due process and, therefore, should not have to comply with a court order to remove Bird’s reviews. If that sounds like the platform gets to do whatever it wants, that’s because it is.

The CA Supreme Court described Hassell’s decision not to name Yelp a “litigation strategy” employed to “accomplish indirectly what Congress has clearly forbidden them to achieve directly.” If Congress chooses to address some of the the unintended consequences of Section 230, this seems like a statement worth underlining. Because Hassell’s decision not to sue Yelp—to hold them in no way liable for the harm done by Bird—appears to this reasonable observer as entirely consistent with the intent of 230 to shield platforms from costly and chronic litigation. As Justice Liu states in his dissent …

“No one has burdened Yelp with defending against liability for potentially defamatory posts. Here, the trial court ordered Yelp to remove postings that have been already adjudicated to be defamatory. Hassell sued Bird, not Yelp, and the litigation did not require Yelp to incur expenses to defend its editorial judgments or any of its business practices.”

That is the heart and soul of Section 230 at its origin, and it is consistent with recent declarations by both parties in Congress that the immunity in the CDA was never designed to obviate all platform responsibility. To the contrary, it was designed to encourage that responsibility. So, to the extent the majority opinion in this case rests on a plausible, or even reasonable, reading of the statute, this case may serve as guidance to Congress for considering revision of Section 230.

Is the language of 230 problematic?

Specifically, the majority opinion holds that Section 230(e)(3) bars this injunction against Yelp as a non-party due to the wording, “No cause of action my be brought and liability may be imposed under any State or local law that is inconsistent with this section.” Thus, if it is this court’s understanding that the order for Yelp to remove unlawful content is a prohibited “cause of action,” but that a plaintiff is simultaneously barred by the same statute from actually suing Yelp, then it may be time for Congress to reconcile exactly this discrepancy.

I agree completely that Yelp should not be sued, or otherwise held liable, for any harm that may have been done to Hassell through the unlawful conduct of Bird. But in the realities of the digital market, where serious harm is both easily and cheaply effected, there is no justice in holding that a platform’s immunity from costly liability extends to an immunity from taking responsible, mitigating action which costs nothing.  In this regard, Justice Kruger’s concurring opinion also recognizes the difficult realities of the statute, stating…

“Section 230 has brought to an end to a number of lawsuits seeking remedies for a wide range of civil wrongs accomplished through Internet postings—including, but not limited to, defamation, housing discrimination, negligence, securities fraud, cyberstalking, and material support of terrorism.”

And in fairness, she further states…

“Whether to maintain the status quo is a question only Congress can decide. But at least when it comes to addressing new questions about the scope of section 230 immunity, we should proceed cautiously, lest we inadvertently forbid and even broader swath of legal action than Congress could reasonably have intended.”

Justice Cuéllar concurred with the opinion on the basis that a proper finding of fact was not made regarding Yelp’s conduct that would render it properly a subject to an injunction as a non-party. But at the same time, he had this to say about Section 230 immunity …

“To the extend the Communications Decency Act merits its name, it is because it was not meant to be—and it is not—a reckless declaration of the independence of cyberspace. Nothing in section 230 allows Yelp to ignore a properly issued court order meant to stop the spread of defamatory or otherwise harmful information on the Internet.”

Ouch. That allusion to Barlow is a pretty solid kick right in the EFFin gut. And that’s from a justice ruling in Yelp’s favor—for now. Suffice to say, there is plenty in this decision that stops short of the internet activist view that Section 230 immunity is both absolute and sacrosanct. Even the majority opinion is tempered by editorial comments acknowledging that platform irresponsibility causes tangible social harm.

As a final comment, I’ll pose the following food for thought:

Once a court has vitiated the role of the original author of some unlawful content (i.e. Bird has been found guilty and ordered under pain of contempt to remove her reviews), how is it that the platform which continues to publish the unlawful content is not then held to be the “author” of that content? If I plagiarize a work, I am guilty as the “author” of the plagiarism; and if I further use plagiarized material to defame someone, the original author is not liable for the defamation; I am.

Moreover, if Bird requests that Yelp remove her reviews and they do not, is Yelp not violating her First Amendment rights by means of coerced speech; and are they also not potentially liable for forcing her into a state of contempt of court by means of that coerced speech?