Motion Picture Unions Opposed to FCC Set-Top Proposals

Photo by ponsulak Pond 5.
Photo by ponsulak Pond 5.

As noted several times on this blog, it takes a lot of highly skilled people to make a film or TV show, and these people generally do not own any copyright interest in the works they help make or any equity in the production companies.  Motion pictures and television production is a project-to-project business. Crew members and performers are not full-time employees of either studios or production companies and may go months between jobs; they’ve been “gig-economy” workers since long before anyone thought that term was a new thing.

Just like most labor in the United States, today’s motion picture craftspeople are the beneficiaries of hard-fought rights—many negotiated decades ago—to share in the financial rewards of successful products they do not own.  Films and TV shows are mostly made by middle-class, freelance workers whose average, annual incomes comprise not only day rates and overtime, but also residuals and health and pension benefits.  These terms are negotiated and managed for most crew and performers by the unions DGA, SAG-AFTRA, and IATSE. These unions are opposed to the FCC “Set-Top Box” proposal because, as it stands, the proposal would break the licensing structure on which their compensation packages are based.

To be a sustainable workforce, performers and crew members generally need to remain on the net-positive side of several averages—average number of days worked, average number of shows worked that succeed, and average number of shows that succeed in the market overall.  By taking the macro view of the ways in which these workers are compensated over time, it’s very much a rising-tide-raises-all-boats paradigm.  The successful show that Props Master A works on feeds the health and pension program of Make-up artist B, who might work a show that doesn’t make it. The spread of investment across multiple shows keeps the pool of skilled labor generally sustained among the various gigs and periods of unemployment between gigs.

Photo by sokolodv Pond 5.
Photo by sokolodv Pond 5.

It should be clear to anyone that if you disrupt the means by which labor is compensated, labor has a habit of not working.  And as stated in previous posts on this subject, the FCC proposal cannot be called a consumer-focused plan to introduce better and cheaper TV options if the plan simultaneously kills the means of production. This is exactly what the proposal can do by enabling companies like Google to create a parallel, commercial video service without licensing any of the programming.

It’s Not About Boxes

FCC Chairman Wheeler emphasizes the amount consumers spend renting set-top boxes from cable companies, and then “digital rights” groups like EFF and Public Knowledge echo the sentiment that this proposal is about innovative technology (just like the VCR) that will give consumers more flexibility in viewing options for programming that we’re already paying for. And it will unleash us, they say, from the rental boxes owned by the cable companies.  But the rental fees thing is a smokescreen for what’s really going on because the box rental part of our cable bill isn’t the biggest line item; there’s nothing in the proposal that would technically lower the cable bill; we’re free right now to go buy boxes and not rent from the cable providers; and the new licensing market is already providing consumers with viewing options way “beyond the box.”

The big talking point that is most likely to confuse consumers is that the new box Google wants to sell us would only make programming available for which “we are already paying” via the Multichannel Video Programming Distributors (e.g. cable companies).  This is the central reasoning why supporters of the proposal claim that it does not implicate a copyright infringement, and it’s the kind of talking point that will sound reasonable to consumers.

But this reference to our subscription fees completely misrepresents how the producers—and therefore all the labor represented by the unions—get paid for the programs they make.  Our subscription fees to MVPDs do not pay to produce multi-million-dollar TV shows; they never could.  The license fees paid by the MVPDs to the producers are what pay for production, and those licenses are predicated on a complex variety of ways the MVPD expects to exploit its limited or exclusive access to the content.

The simplest and most obvious example is advertising. If, under the FCC proposal, the MVPD that has licensed programming is forced to deliver that programming free of charge to Google, which may then re-distribute the content however it wants and then advertise against the programming from its own ad services, the MVPD’s ad revenue will go down almost immediately.  So, when a new slate of shows is produced, the MVPD’s incentive to pay current market-value license fees is diminished while Google, which captured part of the ad market, isn’t paying anything at all.  Secondarily, new-market distribution channels like Hulu would see no incentive to license programming under such a regime, which gives lie to the notion that this entire proposal is about competition to benefit consumers rather than what it is, which is a government giveaway to Google.

I never quite understand why it should be hard to recognize that less is less—that if license fees for programs go down or if new channels for licensing are cut off, there can be no result other than less production or production of lesser quality. And the FCC proposal would appear to create exactly these conditions—possibly more quickly than people think.  The producers and MVPDs aren’t blind.  If the FCC proposal were to pass, they’ll revise their business strategies immediately, and that could include producing a lot less work within just a couple of years.  At a time when we’re clearly seeing a Golden Age of the small screen in quality writing and production—and in flexibility of viewing options—it is unfathomable that the FCC would advocate unraveling the licensing regimes that have made all this bounty possible.

What’s in it for Google?

I know I’ve repeated Google in this post despite the fact that there are other manufacturers hoping to sell boxes under the FCC proposal.  But if the value of getting into this line of business is predicated on advertising and data mining—which it has to be—it’s pretty hard to imagine that Google would not very quickly dominate this space and become the only game in town.  I understand Radio Shack, for instance, plans to make boxes, but as that company doesn’t have an online ad business or a data mining business, their boxes would presumably serve Google’s pipelines for a piece of the revenue.  If that’s how this would shake out, the “competition in boxes” story is pure illusion.

If the producers, the MVPDs, and the unions are all correct that this plan can only undermine the means of production and inevitably reduce production quantity, quality, or both, what does even Google—let alone the rest of us—gain in the long-run?  When variety of quality content is reduced, then advertising value is reduced and so is data mining value.  Google has a long track record of earning revenue by exploiting works it hasn’t licensed; but in this case, its parasitical model can actually limit the means by which the company typically generates revenue.  So, what’s the long-term plan here?  It’s hard to say. But it’s not hard to see in the short term how this proposal is bad for creators in the film industry and bad for consumers who want to see great television continue to thrive.

Activists Promote Revisionist History of DMCA

Rusty boat lying on girders on shore with light cloudy ocean background
Photo by eyevision Pond5

Earlier this month, Rolling Stone published an article by Steve Knopper called Inside YouTube’s War With the Music Industry.  I would characterize the article as more of a glimpse than an inside view; but setting that aside, the article contained a quote about the DMCA that caught my attention.

Knopper focuses on the fact that several major stars like Taylor Swift, Paul McCartney, and Beck recently signed an open letter to Congress demanding revision to Section 512 of the DMCA.  The article is actually too short and broad to really get into the nitty-gritty, but anyone who follows the issue knows that the crux of all artists’ complaints with the DMCA is that it has unintentionally enabled platforms like YouTube to distribute works without a negotiated license and to monetize mass infringement of works without providing rights holders an effective means of control—as the law was meant to do.

Toward the end of the article is a quote from Corynne McSherry, legal director of the Electronic Frontier Foundation.  Keeping in mind that her statement is brief and can be taken out of context, McSherry said, “I don’t think copyright owners appreciate what they got [with the DMCA]. In 1997, if you wanted to get music taken offline, you had to go to court.”

I don’t know if McSherry added any nuance to that statement, but as presented, it connotes a revisionist history that feeds a general misunderstanding of DMCA and how it got here.  Both tech-industry advocates and mainstream reporters are apt to continue the narrative that Section 512 is principally a takedown provision that happens to have a liability shield (safe harbor). In fact, it’s the other way around, and the difference is actually rather important.

Why the DMCA is seen as flawed for rights holders.

Drafting of Title I of the DMCA began in December of 1996 in order to implement the WIPO Copyright Treaty adopted that same month.  The treaty was a special agreement under the Berne Convention to which the US has been a signatory since 1989.  Title I is primarily known for Section 1201, which prohibits circumvention of technical protection measures (TPM) used to protect copyrighted digital goods. In the late 1990s, this would largely have applied to products like DVDs and CDs, but the DMCA was intended to anticipate copyright enforcement on the internet.  (1201 has its own criticisms, as noted in a recent post.)

While Title I was being debated, major ISPs, which at that time were telecoms led by Verizon and AT&T, petitioned Congress for a shield from monetary liability for copyright infringement—the shield we now call the “safe harbor.”  These service providers knew that users would continue to upload infringing content but argued that only the rights holders could know what was infringing and that the rights holders were in the better position to identify infringements than the ISPs were.  These service providers further argued that, if they were constantly vulnerable to litigation for contributory infringement, this would stifle the development of the still-fledgling internet.

It is worth noting that when the ISPs initially argued that the responsibility of “ferreting out” online copyright infringement should fall to the rights holders, Roy Neel of the United States Telephone Association highlighted the availability of “spiders” (now called “bots”) that owners could use to automate search for infringing files.  Today, this same automation, which has grown in scale in an effort to keep up with the scope and frequency of infringement, is regularly characterized by the internet industry and “digital rights” activists as an overreach that cannot help but chill speech online. The history that this automation was a key component of what the ISPs initially lobbied for is rewritten almost daily with statements like the one by McSherry.

In response to the ISPs’ request for the liability shield, major rights holders, including the MPAA and RIAA, negotiated conditions the service providers would have to meet in order maintain the “safe harbor” status—most prominently that the ISPs had to adopt systems for removing infringing material upon request (i.e. takedown). The result of these negotiations are the provisions in Title II of the DMCA, particularly Section 512, which is the part of the law the aforementioned music stars are asking Congress to amend.

So the request for safe harbor came first, and the takedown provisions were one part of the conditional compromise.  Rights holders had not petitioned Congress for a takedown provision in order to avoid the burden of litigation, which is what McSherry’s statement can imply to the casual reader.

Meanwhile, in 1996, we were all still dialing into AOL; Napster was three years away from changing everything; YouTube would not launch until 2005; and users could only rather slowly view a single photograph online, let alone stream HD video. At the time Title II of the DMCA was drafted, neither Congress nor the rights holders—nor perhaps some of the online service providers—quite anticipated the massive growth in online infringement that was to come.  Plus, the parties were—perhaps naively—sanguine about the prospect that new technological protection measures would be adopted through collaboration between the ISPs and the rights holders—which happens to be exactly what Congress had instructed both parties to do. That collaboration never quite happened.

Meanwhile, many rights holders would argue today that subsequent court interpretations of DMCA have undermined the intent of Congress, giving ISPs so much latitude in the manner in which they conformed to its conditions that the law inadvertently creates an incentive to enable user infringement at the volume we see today. As Robert Levine points out in his book Free Ride, the DMCA’s lead architect, former commissioner of the USPTO Bruce Lehman, admitted at a conference in 2007 that the law had been a great disservice to the creative industries.

But are rights holders better off?

Is Corynne McSherry correct to say that copyright owners are fortunate to have the DMCA because its takedown provisions obviate the need for costly litigation?  It’s hard to imagine this is actually the case.  If we’re talking about major rights holders, like big studios or labels, consider the options …

Option 1 – Without DMCA

Several years of expensive litigation against a single provider for multiple infringements in which the rights holder would stand a decent chance of winning the case, where the rights holder may be afforded some injunctive relief, and whereby the case may act as a deterrent to other providers regarding infringement on their platforms.

Option 2 – With DMCA

A round-the-clock, expensive process of requesting individual files be removed one at a time from multiple platforms only to have the same files reappear while some service providers monetize these uses, become too big to sue, and remain free from liability forever.

I’m not in a position to speak for the major rights holders here, but I don’t know if McSherry really wants to ask them if they wouldn’t choose Option 1.  When Viacom sued YouTube in 2007 for a billion dollars’ worth of infringements and the case was finally decided in YouTube’s favor in 2013, it is not unreasonable to imagine a different outcome absent the DMCA safe harbor provision.  (Keep in mind that this particular post isn’t about anyone’s opinion of how things should be, only a consideration of McSherry’s assertion that rights holders are better off under Section 512 of the DMCA.)

For smaller, independent rights holders, they’re kind of hosed either way but maybe a bit better off with Option 1.  Absent the DMCA, they could not afford to sue the likes of Google anyway; but with the DMCA, the takedown provisions are useless as a means of enforcement because of the Whack-a-Mole problem. If, on the other hand, the majors had successfully sued a big provider like YouTube (i.e. had Viacom gone the other way) independents may have benefitted by proxy.

For one thing, if Viacom had won its case, it’s a pretty good bet YouTube would suddenly discover a remarkable capacity for mitigating infringement on its platform.  Secondarily, had Viacom set the opposite precedent, this would have empowered independent rights holders to either litigate or threaten to litigate as a means of enforcing their rights across the web.  So, McSherry’s note that if you wanted to get music offline in 1997, you had to go to court is only partly true and not necessarily the lesser alternative for rights holders, as she implies.

Yes, YouTube itself would have evolved differently—and a few billionaires might only be multi-millionaires today—but do the social benefits of web platforms have to come at the expense of permission and compensation-free exploitation of other people’s work?

Over the weekend, I watched a 1912 film on YouTube called Falling Leaves by Alice Guy Blaché—a file that silent film accompanist and historian Ben Model uploaded along with his own piano composition.  To me, this is a great example of the information-age ideal.  I can research an important work in film history, which has long been in the public domain, and discover a contemporary artist/historian at the same time. Great. Love it.

But was the progress of YouTube—whose growth was substantially subsidized by copyright infringement—the only history that could possibly have resulted in my seeing Guy-Blaché’s film and finding Model’s work in 2016? Not necessarily. So, I don’t know if McSherry really meant to play the alternate histories game here, because it is certainly possible to imagine the benefits of the internet evolving since 1997 without the hundreds of millions of infringements that occur every month. And that was certainly what Congress expected when Title II of the DMCA was being negotiated. So, now that it’s clear the intended consequences did not come to pass, maybe amending the law isn’t such a crazy idea.

To support revision to the DMCA, click the link in the sidebar to sign the Take Down/Stay Down petition.

Ad Hominem

First of all, I hate Twitter.  Not so much as a forum for sharing links to stories or the occasional witticism.  But as a platform for “arguing” a point of view, let’s be honest, it’s total crap.  140 characters to express a thought is nothing but a means to see which idea is the most popular, not which is the most valuable or well-reasoned.  Being a cynic, I’ll go out on a limb and say that it’s rare those two columns are aligned, and even less so since the dawn of social media.

The shorthand of Twitter leads even thoughtful, intelligent people to say really stupid things.  It’s where someone will complain about being the target of an ad hominem attack while committing an ad hominem attack without any hint of self-awareness or even a clear indication that the tweeter knows what an ad hominem attack is in the first place.  So, let’s clear that up.

An ad hominem attack is one that seeks to disqualify the position of a speaker or author based solely on a criticism of his or her character.  This can be as nasty as saying something like “What does she know, she’s gay?” while debating, say, education policy.  But it can also be as benign as criticizing the speaker based on his or her affiliations with work or political party, etc.  This is a major dysfunction in our politics today—the assumption that valid positions never come from sources we’ve decided are bad or that everything the “good guys” say should be accepted without question.

It is not ad hominem to criticize aspects of the way in which a speaker or author presents his or her position while also rebutting the substance of that position.  For instance, if an author writes something with which you disagree and writes it in an arrogant, offensive, or sarcastic tone, it is fair game to criticize both the style and the substance because the style is part of what’s being communicated. I give you Mr. Trump, who is usually saying something false and almost always in a manner specifically designed to offend.  Technically, criticizing Trump’s hair in context to his candidacy is an ad hominem attack, but that may be about it.

Recently, Steven Tepp, CEO of Sentinel Worldwide posted an article on Medium accusing the organization Public Knowledge of exceeding the bounds of discourse by leveling ad hominem and factually selective attacks on the US Copyright Office.  In reference to various topics, Tepp states that PK has characterized the Copyright Office as either unqualified to comment or that it has overstepped its purview.  His observation of PK would be consistent with recent posts I’ve written noting, for instance, how the EFF seeks to dismiss or misrepresent the role of the Copyright Office with regard to the FCC “set-top box” proposals or its mission to have Section 1201 struck down as unconstitutional.  Just as a matter of basic logic, if any party is stating that the Copyright Office has no business weighing in on copyright issues, this ought to trigger at least a mildly skeptical response.  If an organization funded by the pharmaceutical industry stated that the FDA was out of bounds, would you take it on face value?

But how did Public Knowledge and Mike Masnick, and no doubt many of the usual suspects, respond to Tepp’s criticism on Twitter?  By calling him a former Copyright Office employee turned MPAA lobbyist.  In other words, an ad hominem attack.  No rebuttal to the substance of what Tepp said—which is limited to statements of fact about process and the law—just a dismissal out of hand because he’s on “the wrong side.”  It doesn’t really matter what the subject is, by the way, this is how we’re steadily destroying political discourse 140 characters at a time.

In this particular case, with just a couple of tweets, non-experts declare the experts dismissible (see climate change deniers) and also reinforce the bias that Hollywood is running Washington despite the mountain of evidence that the most influential corporation throughout the entire administration is Google.  Compare the number of Google lobbyist visits (128) to the White House to the number of MPAA visits (0) and then decide if Steven Tepp’s criticism of Public Knowledge is invalid because MPAA.  Unfortunately, on social media, this form of debate is sufficient for many people.

Over the last four years, my delving into specific issues related to copyright and the digital age has made me pay closer attention to how generalized many of my own biases have been as a liberal and a Democrat.  Nearly all of the legal experts I have met—and Tepp is one of them—have been extremely thoughtful and balanced in their views, and at least half of them are political conservatives. In fact, this recent post by a new young blogger Rebecca Cusey caught my attention because she’s making what she calls a “conservative” case for copyright, but what’s interesting is that part of her argument invokes labor rights, which is a traditional Democratic party plank.

Not surprisingly, whether the issue is copyright or trade or the economy or the environment or police reform, there are still people in the center, trying to work from a qualified understanding of facts and seeking the best ideas no matter whence they come. Social media rejects this by its very nature.  It feeds on and reinforces careless, associative logic that insists everyone remain in his camp and carry the standard of whatever label has been assigned.  It’s mostly ad hominem.  That’s why I hate Twitter.