Tag: MPAA

Maybe the Internet IS Just a Dumb Pipe

“Content is king” was the catch-phrase of the 1990s and the heady (headless really) days of the Dot Com bubble.  And although that stopped being a slogan with the resurgence of Web 2.0, it was still true.  Content was still king except the would-be tech giants figured out that they didn’t need to create content but instead just make someone else’s content available.  Whether these companies had any right to exploit said content did not matter since the telecom giants who preceded them had conveniently negotiated a liability shield (DMCA §512) for copyright infringement before anyone quite realized how a YouTube could become a massive infringement machine that prints money for its owners.

When rights holders complained that these platforms were infringers (or at least beneficiaries of infringement), the answer was always some variation on the themes …  It’s not us.  Its the users.  We don’t control what gets uploaded. We’re just a neutral platform.  And so on.  Thanks to that liability shield negotiated by Verizon, AT&T, et al in 1998, Google and the other major platforms got away with the circular logic that “the internet” is simultaneously “just a dumb pipe” and also a network of such inestimable value that no cyber-policy may be altered—other than, of course, by Google and the other major platforms.  They are at liberty to alter the internet all they want because they do so many nice things for us—and all for free!

In 2012, concurrent with the not-so-grassroots defeat of SOPA/PIPA, Google’s lobbying expenditures went from negligible to competing among the top five in the nation; and the major platforms also formed the Internet Association to advocate policy in its interests.  That’s business as usual, and industries have every right to form such organizations, but this new coalition of tech giants was also contemporaneous with the anti-SOPA narrative in which the Motion Picture Association of America a) had allegedly tried to force legislation that would “break the internet”; and b) represented “old thinking” about content, copyright, and digital-age piracy. 

Let us now leap over the past seven years to the present—a time when the major internet platforms—most demonstrably Facebook—have revealed many of the darker consequences of their hands-off, disrupt-culture approach to platform moderation.  Amid this still-developing narrative, came the big news last month—though it should not have been the least bit surprising—that Netflix would leave the Internet Association and join the MPAA.  Because content is still king.

As described in my post of October 2015, Netflix is not an internet company; it’s a motion picture studio that happens to distribute via the internet.  New opportunities to measure viewer data notwithstanding, the simple reality is that the more “tech” companies invest in original programming, the more they will naturally find common ground with the policy interests of the MPAA et al. In that regard, a January article in Variety speculates that Amazon—with its slate of multi-award-winning shows—could be next to join the big studios.  Either way, the swing of this pendulum does suggest a new premise:  that perhaps the internet industry does not have (to use the technical term) jack-shit to teach content creators about copyright or piracy—and let’s not even talk about whatever the hell the “economics of abundance” means.

In fact, if one looks at YouTube’s Copyright Match response to the realization that their own creators do not like having their videos infringed by other YouTubers, maybe the “new” industry actually has something to learn from the “old” one about protecting creative works.  Meanwhile, as the traditional media/entertainment companies continue to migrate toward streaming and other contemporary models of distribution, they will surely learn much from a pioneer like Netflix.  But this will not change the raw investments of time, talent, labor, and money required to produce new works, and so it will not diminish any producers’ interest in protecting and enforcing copyrights.  

In this context, I am reminded of a story from January of last year in which songwriter/performer Blake Morgan found himself having to explain to Spotify executives that music was in fact the product they were selling.  One might think this is not a very high mental hurdle to clear, but Morgan describes that some in the meeting became rather heated in their defense that, no, Spotify was the product.  Because, of course, we launch that app just to look at the interface?

Time will tell if there will be any significant future defections from the Internet Association, though its members are not without vested interest in a range of policy areas.  But to the extent that union was formed in response to proposals like SOPA and to advocate against copyright enforcement, the departure of members who are now major rights holders serves as a long-overdue reminder about the difference between creative works and the technological means to access or distribute those works.  As the platform owners love to repeat in their own defense against liability, the internet doesn’t produce anything; it’s just a dumb pipe.

EFF Manufacturing Scandal in the Service of Google

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On October 25, four days after the unprecedented removal of the Register of Copyrights from her office, the Electronic Frontier Foundation released a post on its Deeplinks Blog asserting rather stridently that the Copyright Office never would have reviewed the FCC “set-top-box” proposal if not for the urging of the MPAA.  I think we can now say that there is officially no line EFF will not cross, no lie it will not tell, in the service of Google’s interests over the public interest, which the organization claims to serve.  The thesis of the blog post boils down to the following syllogism:

1. We have argued that the FCC “set-top-box” proposal does not implicate copyright law.

2.  Because we are obviously correct in this view, the Copyright Office should have agreed with us.

3. Therefore, the only explanation for the Copyright Office disagreeing with us is that they must have been pressured by the MPAA.

And so, the EFF went looking for proof of the motion picture industry’s clandestine influence on the Copyright Office via a FOIA request, and they released supporting documents with their blog post that they know most people won’t bother to read.  If anyone does read the super secret emails betwixt FCC, MPAA, the Copyright Office, and the USPTO, they will discover (hold your breath) requests for meetings to discuss issues of concern with regard to the FCC proposal!  Ah ha! Meetings!

I know this may be a shocker, but there is nothing illegal or improper about any stakeholder, operating above board, requesting meetings to discuss concerns they may have with a proposal by any federal agency.  And emails to arrange meetings—I mean literally communications as banal as, “Hey, does next Tuesday work for you?”—are not subject to any rules regarding disclosure because they’re not substantive.  Nowhere in the “exposed” communications presented by the EFF is there any evidence of motion picture representatives drawing conclusions for Register Pallante that she would not have come to on her own with regard to the FCC “set-top-box” proposal.  The FCC proposal, like any other federal agency proposal, allows for comments from multiple stakeholders that become part of the public record and which members of any other agency may read and consider.  It is also neither illegal nor improper for a stakeholder to send an email to a member of an agency to say, “This is our statement for your consideration.”

The broader point is that one does not need to be an expert at the level of Maria Pallante or MPAA’s attorneys to consider that any proposal which fundamentally alters a licensing paradigm between producers and distributors—as the FCC proposal clearly does—is going to have at least some copyright implications.  Had the EFF made a more nuanced argument, that would be one thing, but to assert that the Copyright Office simply never would have entertained a copyright angle without pressure from the MPAA is just an outright lie.  What the EFF doesn’t like is that their position on the FCC proposal is wrong, and so they’ve tried to manufacture a scandal on the heels of Pallante’s unprecedented and bizarrely orchestrated removal from office.  Why?  Presumably, because they know that at least a segment of the public will find the Hollywood-intrigue narrative easier to follow and far more dramatic than the more complex, but less interesting, truth.

On the other hand …

If a hint of scandal is what the reader wants, consider the October 25th notice from the Campaign for Accountability, which asked FCC Counsel to investigate emails between the FCC Chairman Tom Wheeler and Google VP Vint Cerf.  What’s the problem? Unlike innocuous emails requesting meetings, the FCC’s rules require disclosure of ex parte communications that amount to substantive comments on policy.  In its letter to counsel, the CFA cites an April 8th email from Mr. Cerf to Chairman Wheeler expressing his substantive views with regard to the commission’s April 1 notice on protecting consumer privacy within the ambit of the “set-top-box” proposal. In case you’re not following the bouncing ball, Google likes to harvest user data and doesn’t have great track record on the privacy thing.

See what happened there is that a Google executive expressed a relevant, policy-focused comment via email pertaining to the FCC proposal, and the FCC was supposed to disclose the comment and didn’t.  At least that’s CFA’s view.  Whether or not there are more communications of this nature remains to be seen, but against the backdrop of Google’s now well-documented influence throughout the current administration, it’s hard to imagine that anyone is still believing the narrative that “Hollywood” is pulling the strings with regard to the FCC proposal.

Perhaps more significantly is that while the EFF pitches a non-scandal in an effort to erase the copyright implications of the FCC proposal, they seem remarkably unconcerned about those privacy implications, which one would think should to take precedence for an organization claiming to defend consumers in the digital market.  Why?  Assume for the moment that the producers are wrong about the proposal undermining the investment model that creates television shows. That would still leave the privacy concerns with regard to what kind of data Google would be allowed to harvest from the magic TV box it wants to put in your home.  The EFF’s overplayed hand on the copyright issues combined with their silence on the privacy issues related to the FCC proposal suggest that this organization largely cares about one thing:  whatever Google wants.

Box Office Revenues Say Little About Piracy

Once again the MPAA has announced a profitable year for American motion pictures, and once again some of the usual suspects have seized upon this announcement to declare the studios hypocrites for ever saying that piracy causes real harm to the industry. Certainly, it’s easy enough to keep writing this same, careless article all the time. Cory Doctorow cobbled together a 100-word jab for BoingBoing; TorrentFreak reported essentially the same premise with a little less snark; and Ruth Reader managed to tap out this little sneer on Mic.com, complete with obligatory reference to SOPA, under the unforgiveably misleading headline The Movie Industry Just Admitted Piracy Isn’t Curbing Its Massive Profits.  

I know this may be hard to imagine, but the question of piracy’s harm to the filmed-entertainment industry overall is considerably more complex than a measurement of how the top-grossing motion pictures are doing at the box office.  But before expanding on this subject (again), let me repeat the following theme as a matter of principle:  Whether piracy siphons $100 or $100 million out of the legitimate market, it’s money that belongs to the people who do the work. Sadly, this is not a sufficient rationale for many, so we have this silly conversation instead, speculating about how innocuous piracy is or isn’t.

The annual report released by the Motion Picture Association reveals worldwide box-office sales of $38.3 billion, up 5% from 2014.  And that’s good news.  But the only thing we can actually  conclude from the information in this report is that audiences around the world—and especially in Asia-Pacific—are going to theaters in numbers large enough to make the big movies profitable regardless of piracy. This isn’t all that revelatory, of course—unless you actually thought nobody would go to the theater to see the new Star Wars—but to the the above-named pundits and their ilk, these revenues appear to make the studios out to be Chicken Littles.  How can they be so aggressive about piracy when they’re clearly doing just fine?  But if anyone took the time to look at the report and to learn something about the whole industry, they could not justifiably jump to the conclusion that piracy is fundamentally harmless.

Ruth Reader notes that MPAA CEO Chris Dodd, in an address to CinemaCon this week, stated that the industry projects a $1.5bn estimated annual loss at the box office due to piracy.  This number may seem negligible next to $38 billion, but it’s worth noting that this estimate applies only to US box office, which makes the number considerably more significant relative to the $11.1 billion in sales for the US and Canada.

But assuming the $1.5 billion is accurate and still seems trifling to some readers, let’s look at it from a slightly different perspective that considers all of the 708 films included in the report.  Of these, 561 films were non-MPAA member, independent features.  And let’s imagine that 10% of that $1.5 billion could have been divided among the best 100 of those indies. That would be $1.5 million per movie, which any independent filmmaker will tell you can be life-and-death money.  In fact, Adam Leipzig of CreativeFuture used exactly that expression in this article when he noted the conservatively estimated $1.83 million the film Boyhood lost to piracy last year.  Of course, we cannot definitively say where money not spent might have gone, but by the same logic, it doesn’t make sense to blithely assume that because Jurassic World and Inside Out did great, piracy isn’t an issue across the broader market.

The fact is we can’t know exactly how much is lost due to piracy, but we can conservatively project that a relevant portion of the illegal market would be recaptured if piracy did not exist. Out of a universe of hundreds of millions of pirate site visits every month, if just 20 million consumers worldwide were to switch from illegal home-viewing channels to legal ones and spend just $13/month on filmed entertainment, that would add up to about $8 billion per year. And to put that in perspective, the top 25 grossing films of 2015 earned about $6 billion at the box office.  Or spread $8 billion across 500 idependent titles, and it would be $16m in sales per title.  I’m not suggesting revenue spreads evenly like that; of course it does not. But that’s the point. The top-grossing products may consistently earn enough to overwhelm the effects of piracy, but the smaller products—indie features, TV programs, documentaries—which operate on smaller margins are naturally going to be affected more acutely by any loss.  In fact, producer Martha De Laurentiis recently made a pretty good case for saying that piracy may have played a role in cancelling the popular series Hannibal.

Still, I realize that the pundits’ main premise, however unexamined it may be, is that the studios are the big whiners who want to fight piracy, and the studios are the ones who seem to be doing well.  But even if that logic were sound, readers should not be fooled into thinking it’s exclusively the studio execs who have a problem with piracy.  They’re just the ones who make the headlines, the ones who have the resources to try to address piracy, and the ones who are the most frequently vilified in this context. The indie filmmaker who loses money to piracy feels quite strongly about the issue, too; she just doesn’t have the muscle to do much about it.  As such, the indie filmmaker’s best hope for mitigating large-scale piracy is the costly effort being made by the studios. This is one of many reasons why “fans” cannot presume to separate the individual filmmakers from the major companies; they are co-dependent in a variety of ways.

Finally, while the temptation to bash the studios on the piracy issue will remain SOP for the lazy reporter, at least the peanut gallery might consider its own hypocrisy when criticizing these companies for producing exactly the films that consistently top the Most Pirated lists year after year.  Of the few words Cory Doctorow could be bothered to share with us on this subject, he spent some of these accusing the studios of clinging to “high-risk tentpole economics”.  In other words, the studios’ making money with tentpole films is grounds for calling them hypocrites about piracy, but then the studios should also be lambasted for making tentpole films, which is partly a response to piracy.  I know I’ve raised this issue before, but a threat of any loss in value to any commodity will drive investors to safety.  So, if you promote piracy and at the same time blame investors for producing the kind of big-spectacle fare that can earn revenue in spite of piracy, you kinda sound like you don’t know what you’re talking about.