Media, Technology and Society

Technology and Copyright: Of VCRs, p2p and....

A recent commentator noted just how odd court rulings are that place legal liability on manufacturers of copyright technologies among all the manufacturers of technologies that can potentially be used to cause harm. Given the number of references to the Universal v. Sony ruling in the early 80s, here's a comic that is as appropriate now as it was then:

Credit goes to Paul Conrad (1981). Referenced in 'Free Culture' by Lawrence Lessig 2004. p. 159

US Supreme Court Crushes Filesharers

The Supreme Court of the United States (SCOTUS) has just issued a judgement which holds manufacturers of programs that may be used to distribute copyright infringing material legally liable for these actions. In making its decision, the supreme court apparently bought the industry's argument (or suppressed the consideration) that

1. Filesharing actually causes any significant financial loss (empirical evidence suggests the opposite).

2. The use of filesharing to distribute works in the public domain (i.e. not all filesharing has to do with copyrighted works) is a public good of subsidiary importance to the potential damage caused by filesharing.

The ruling appears to be targeting 'the technology' and constitutes a radical disjuncture from previous SCOTUS rulings concerning technology e.g. the 1984 Sony v. Universal case wherein the SCOTUS ruled that technology manufacters were not legally liable for any potential misuse of their technologies.

It still boggles the mind how gun manufacturers are not hauled into court over the use of their product in the committing of serious crimes (the harm is hard to dispute here), while filesharing technologies are uniquely accorded legal responsibility (for unproven harm!?)

It seems the SCOTUS is off on a radical tangent these days, determined to seek a 'balance of the law' firmly in the interests of an already entrenched copyright industry oligarchy.

Having said that, the ruling and the subject matter are complex and multi-faceted. MSN notes that:

"...the court stressed that "peer-to-peer" file-sharing which permits millions of people around the globe to exchange music, films and other forms of digital information can be legal if the intent of the distributor is not to encourage illegality."

But how will intent be determined? And what of the lack of evidence of the 'harm' involved in the first place? How are provisions to ensure this built into the appropriate statutes (positive law), or the Supreme Courts own ruling in this case (common law precedent)?

My first thought is that this ruling demonstrates a similar (lack of) sensitivity to 'balance' which saw the SCOTUS recently decide that the 'private' right of mall-developers to build on any land they choose superseded the 'private' right of individual landowners not to have their land paved over. That said, the ruling will have to be examined in further detail to see whether the provisions recognizing the public benefit of legitimate filesharing are significant.

The RIAA, er...CRIA ("Canadian" Recording Industry Association) Gets A Bill Proposal

Atleast they bother to change the name of their association so as to cosmetically appear to be something other than a Canadian branch plant of the Recording Industry Association of America.

And, to make a rare but vociferous complaint about the CBC: what an absolutely one-sided presentation of the stakes involved in passing a US style copyright enforcement act against the "incredible harm" caused by the Internet and p2p technologies.

Its difficult to believe both the architecture of the Bill as its stands now in its draft from, and the CBC's media coverage - presenting as fact (CRIA?) statistics on the losses the industry has (in truth, only hypothetically) lost at the hands of p2p filesharers. 

But, that's fine. Copyright is complex and the CBC decided (maybe for deadline purposes) that there just wasn't any other side to the copyright debate other than that of the CRIA and the Barenaked ladies (who are unapolagetically proprietarian - understandably - as succesful millionaire artists).

What was unnaceptable was the absurd MPAA style analogy used in the CBC report. In it, a woman tells us in frank and pedantic terms 'that you just wouldn't take a CD in a record store and walk home with it would you?' The assumption being, well, that downloading music is the same thing.

And this reminds me...

For those of you who have the misfortune of ever watching a film in any famous players box office in 2004, you probably know who Manny "you wouldn't take a candy bar from a store, well, downloading movies for free is the same thing" Perry is. Perhaps this frustrated commentary from will refresh your memory.

"Let's start a campaign to put an end to this "Manny Perry Makes Movies" crap. I don't give a f***, I never did, and if I have to sit through his miserable lispy rant one more time I'm going to start a second career hocking bootlegs outside Roscoe's on Pico--filling a void left by the chap who used to do it prior to getting nicked on account of we all-know-who. Kid steals a bar of candy....and that's just like high-tailing it with the copyright of a multi-million dollar investment. It's not right, is it Perry? Not quite ya f*** puppet, yap-yap-yap." (1)

Ok you get the idea. It was just a torture to endure those ads while sitting thinking of all the social injustices in the world that easily take precedence over the MPAAs concerns, not to mention the realization that on a scale of cultural value, virtually anything produced by a movie stunt-man such as Perry can safely assign itself a nice spot on the bottom percentile. And yet, lets defer all of that to hear Manny Perry speak about his important concern....just one more time.

....and back on topic.

So, as I am sure you are all asking, just why are issues of culture and copyright all that different from taking a candy bar from a store?

Well for one, an online music composition is non rival: your using it doesn't prevent another from also using it at the same time. Also, it cannot be depleted. Both cases don't apply to candy bars.

Secondly, a candy bar is easily excludable from anyone else, simply by merely having possession of it. This is not the case with what I'm sure are Manny Perry's Oscar-worthy stunt films.

I've established my main goal here: pointing out that intellectual property and 'real' property have enormous differences, differences which are ignored at the peril of responsible copyright policy.

There are more complicated reasons why copyright provisions to "shut down filesharing" might be argued to be desirable. Here's the theory why they might be desirable, along with a powerful refutation, provided by James Boyle of Duke University:

"The concerns in the informational commons have to do with a different kind of collective action problem: the problem of incentives to create the resource in the first place. The difficulty comes because of the idea that information goods are not only non-rival (uses do not interfere with each other), they are also assumed to be non-excludable (it is impossible, or at least hard, to stop one unit of the good from satisfying an infi-nite number of users at zero marginal cost). Pirates will copy the song, the mousetrap, the drug formula. The rest of the argument is well known.

Lacking an ability to exclude, creators will be unable to charge for their creations; there will be inadequate incentives to create. Thus, the law must step in and create a limited monopoly called an intellectual property right. This is a well known argument, but it has recently acquired an historical dimension, a teleology of intellectual property maximalism. If the reason for intellectual property rights is the non-rival and non-excludable nature of the goods they protect, then surely the lowering of copying and transmission costs implies a corresponding need to increase the strength of intellectual property rights...

Like any attractive but misleading argument, this one has a lot of truth. The Internet does lower the cost of copying and, thus, the cost of illicit copying. Of course, it also lowers the costs of production, distribution, and advertising, and dramatically increases the size of the potential market. Is the net result, then, a loss to rights-holders such that we need to increase protection to maintain a constant level of incentives? A large, leaky market may actually provide more more, the same technologies that allow for cheap copying also allow for swift and encyclopedic search engines—the best devices ever invented for detecting illicit copying. It would be impossible to say, on the basis of the evidence we have, that owners of protected content are better or worse off as a result of the Internet. Thus, the idea that we must inevitably strengthen rights as copying costs decline doesn’t hold water. And given the known static and dynamic costs of monopolies, and the constitutional injunction to encourage the progress of science and the useful arts,42 the burden of proof should be on those requesting new rights to prove their necessity." (2: Law and Contemporary Problems, Vol 63 p. 42)

How the industry proved to legislators that there was sufficient harm to justify the existence of this act in Canada is beyond me. Given Felix Oberholzers (March, 2004) economic and empirical study of the correlation between music downloading and record sales came up with a small positive number (indicating music downloading unsurprisingly increases music sales marginally) and the many relative similarities between Canadian and American music tastes...this just seems an empirically insubstantiated and knee-jerk pandering to American recording interests.

The timeline also mystifies me. Why now? As U. Ottawa professor Michael Geist mentioned briefly on the CBC report (in a statement that may well have had more significant information that didn't make broadcast) the controversy and baldly spurious claims of harm over filesharing have largely subsided. If a government were to pander shamelessly, why pander now?

Intellectual Property Rights: Lawrence Lessig and His Critics

I wrote a forty page paper on Intellectual Property Rights last year, and as I review it, refreshing my grasp of some of the concepts I've written about previously, I thought that the last part of the essay - where I examine critiques of the Stanford law professor, was perhaps the most original part. But, one of the frustrating things about undergrad, is that you get comparitively little feedback on your work. You go through all the trouble of writing something to the best of your ability, and then, only one person reads it (if they don't just skim through it!).

So, here is the last part of that paper, for those interested in normative aspects of intellectual property rights as it pertains to the regulation of culture and creativity.

This paper is important to my current paper, "IPRs, Cultural Localization and the South," because where Lessig examines how IPRs do or do not function well for the West (predominantly, although he does examine the plight of japanese anime animators and other such creative groups), my current study will focus on how IPRs function with respect to indigenous cultural creators around the globe (although especially focussing on Australian aborigines, British Columbian First Nations groups, Ghanian fabric producers and the Mbari Igbo of Nigeria among others).

For those needing or wanting an introduction to the issues and terms of the debate, www.lessig.org is lessig's personal blog url, which contains a free downloadable copy of 'free culture' - an excellent introduction to the contemporary politics of IPRs.

I also wanted to post this, because I seem to be getting farther and farther away from topics pertaining to "media, technology and society," so I think as long as I post on something related to that intermittently, I will remain legitimate somehow :)

COUNTER-ARGUMENTS

STEPHEN MANES – COLUMNIST AT FORBES MAGAZINE

            Stephen Manes has so far produced two articles criticizing the ideas put forward by Lawrence Lessig. The first was a review of Free Culture, entitled “The Trouble with Larry” the second was a rejoinder to the first polemic, entitled “Lets have Less of Lessig”. Both articles read like personal attacks or an online “flame”, and contain excessive amounts of disparaging language and colloquialisms.  Nonetheless, Manes does make a few arguments, even good ones, and its evident from reading them that although Manes might not have read much of Free Culture or the judicial and constitutional histories of copyright in great detail, he nonetheless crafted his articles very carefully to create the impression that Lessig is careless with the facts and that his ideas are on the “lunatic” fringe and not to be taken seriously.

            Manes argues that “contrary to Lessig’s rants, today’s technology has made creators freer than ever to devise and distribute original works” and Lessig’s ideas don’t balance the rights of creators and consumers.  Although he agrees with Lessig that “‘Walt Disney creativity’ – a form of expression and genius that builds on the culture around us and makes it something different’ is well and good, he argues that Lessig spends most of Free Culture defending not “Walt Disney Creativity”, but “free pass” creativity.  So, essentially, Manes argues that ‘Walt Disney creativity’ is fundamentally different than the kind of creation that Lessig views as desirable, and that what Lessig really favours is a kind of creativity that directly reuses existing work (without asking permission, and that its therefore wrong).

            In making his claims about “Walt Disney Creativity,” Lessig asserts correctly that Disney draws extensively on the work of others to create its creativity. It benefits very much from all those works that are in the public domain to begin with, those that are therefore free for all to use and build upon without obtaining permission from anyone. Lessig describes ‘Walt Disney creativity’ as that creativity which is enriched by taking the works of others, whether by obtaining permission for copyrighted works or using ‘free’ public domain works. There is regardless of the source, taking involved. As Lessig writes on his blog,

Sampling is a genre in music. It is much like Walt Disney Creativity. Many great sampling groups begin by simply sampling without paying. If they become successful, they pay for what they sample. But in both cases, the kind of creativity is the same -- a kind of "Walt Disney Creativity."

Both Walt Disney and today’s music samplers benefit from works that are free for them to use in making and developing new innovation. So, a change in laws that makes the kind of creativity Walt Disney exercised more difficult for those who have to pay for what they sample has an averse affect on creativity and innovation.

            As far as Manes accusation that Lessig advocates the direct reuse of works, I don’t see this supported in Free Culture. Lessig advocates that Walt Disney creativity be more widespread, and that the ability for artists to make derivative works based on the “sampling” of others works be made much more easy. Wholesale sampling, as Manes uses the term, seems to imply the taking of another’s work and passing it off as one’s own. This isn’t what Lessig advocates. If Walt Disney creativity amounted to the reproduction and resale of others works, Lessig wouldn’t champion it as a form of valuable creativity. He’s just saying, if we’re going to let a corporation operate creatively by taking the works of others, why deny this same right to everyone else, when it is unnecessary to do so? He suggests that this creative process, which powerful corporations have benefited from in the past, has become increasingly more difficult in today’s permission-based society. We now live in a society where “fair use” is not as easy to exercise, contrary to Manes’ protestations that it is excessively sufficient. 

            Manes appears to view Lessig as being excited over nothing. What does it matter that copyright term extensions have been extended dramatically in the last half-century? We still have “fair use”! What is the big worry over technology changing things? If anything it allows piracy and illegal file sharing activities to happen more easily. As he summarizes in The Trouble with Larry, “the book proposes a slew of sweeping copyright law changes that would consistently screw creators, reward infringers and put the U.S. at odds with international law…lets make it clear: the artists who would benefit most from Lessig’s legal meddling are rip-off artists”.  Lessig proposes not only “copyright law changes”, but a special kind of “copyright law changes” – a change back to what copyright law used to be. Lessig argues for a return to a time when copyright law terms were less than the life of the author plus 70 years, and 95 years for a corporation. As he writes on his blog, “Indeed, the reforms I sketch in the book would still result in a copyright law that is more restrictive than what it was in 1975”.  While it is unfair to compare current copyright law to copyright law in 1975 directly, since the technology of copying has changed considerably, we can still ask whether “creators were screwed” and “infringers rewarded” then. In short, they weren’t. An advance in the technology of ‘copying’ shouldn’t necessitate an increase in legal protections, especially before that technology has matured.  The law isn’t the “perfect solution” to a condition of change and development. Using the law to regulate what is possible with new technologies prematurely can stunt the progress and full development of that technology and reign in uses, that if developed would provide great benefit to society (for example, new and innovative audio compression and distribution channels: in no way do these have to be used to infringe on copyrights).

            Finally, regarding authors, Lessig’s proposals would ostensibly hurt some artists financially, especially those who benefit from being able to collect revenues from their music and creativity for over a century.  However, the original purpose of the copyright act is to provide an incentive for creative production. If the act succeeds in doing that, than it is successful as law. It was not intended (originally) to benefit the authors and (more likely) the owners of music copyrights (music labels) beyond the term necessary to remunerate the artists for their investment and effort. So any justification of longer terms in the name of authors, is unjustified according to the original purpose of copyright. Secondly, as Lessig and many others have argued vociferously, increasing the protections of creativity now increases the cost of creativity created in the future. All culture is to some degree “follow on” innovation. Most music artists are not the top 1% who have lucrative record contracts and can afford to pay the high fees to “obtain permission” to make derivative works based on the work of others. For most artists then, the restrictions and permission requirements that protect more culture than ever before, mean that most artists now and in the far future will have less and less culture to “follow on” easily.

            Manes is correct in arguing that this wouldn’t be much of an issue if “fair use” really did allow fair use. Unfortunately, Manes provides scant evidence that fair use provisions aren’t the “right to hire a lawyer” as Lessig alleges. The evidence he provides in support of the view that fair use is working just fine is the apparent lack of evidence that infringement is punished. For Manes, one can demonstrate that fair use allows artists to borrow from and cite protected works without worry because the number of copyright law suits are as he says, “stunningly low” (around 2,500 a year in the US). The assumption that Manes makes, that if infringement isn’t punished, then “fair use” is working fine supports Lessig’s assertion that Manes never read Free Culture thoroughly. As Lessig writes,

In theory, fair use means you need no permission. The theory therefore supports free culture and insulates against a permission culture. But in practice, fair use functions very differently. The fuzzy lines of the law, tied to the extraordinary liability if lines are crossed, means that the effective fair use for many types of creators is slight... The law was born as a shield to protect publishers’ profits against the unfair competition of a pirate. It has matured into a sword that interferes with any use, transformative or not.

Lessig provides the example of lawyer Alex Albin who spent a year obtaining the permission of every single actor and individual appearing in the (sometimes decades old) film clips he sought to compile for a biographical CD ROM product he was creating. Similarly, he examines the legal difficulties faced by documentary filmmaker Jon Else, who shot a film about stagehands at the San Francisco Opera. One shot in the film contained a television set in the corner of the screen showing The Simpsons. The whimsical nature of the scene in which a few stagehands were watching this popular show inspired Else to keep the shot in the film – until he was informed by Fox Media corporation that the 4.5 second shot of the television screen would cost him $10,000. Every lawyer Else contacted thought it was clearly “fair use”, but in the practical world of filmmakers and the companies that fund them, the enormously high liability of copyright litigation tends to encourage a very narrow view of what really is “fair use”. As we’ve seen, a company like Fox has no incentive to provide any content of theirs for free. Although Lessig obviously couldn’t contact every single film company and producer, or every smalltime documentary filmmaker to discover how many of them treat the fair use provisions in a similar way, this anecdotal indicates that “fair use” often fails in protecting the creative work of those who can’t afford to obtain the clearance, and/or hire a lawyer to defend their fair use rights. At a cost of $200-400 an hour, the law is effectively out of reach of those who can’t afford to defend their fair use rights, meaning that “Any general freedom to build upon the film archive of our culture, a freedom in other contexts presumed for us all, is now a privilege reserved for the …presumably rich.”  Manes error lies in assuming that the threat of a lawsuit, or even the potential threat of lawsuit is insignificant, and that all would be fair-users actually have the resources and willingness to take their cases to trial. Granted, we don’t have solid empirical evidence supporting Lessig’s claim that the vagueness of the fair use provisions results in it essentially being “the right to hire a lawyer”, we can’t assume that the apparent lack of copyright lawsuits accurately accounts for the well-functioning of the fair use doctrine.

            One of the better critiques Manes makes is that before the Berne Convention, copyrights weren’t automatic, requiring what Manes describes as “unwieldy…marking and registration.”  The problem with this system Manes argues is that if a creator forgot to register his work, “it fell into the public domain” and presumably, the author wouldn’t get any remuneration. This certainly is a failure, if it happened with any frequency. However the problem with current copyright law is that everything is protected by default and there is (as yet) no database containing listings of the owners of copyrights (since everything is copyrighted). This condition tends to make it exceptionally difficult for would-be innovators and creators to obtain the rights or permissions for content that doesn’t have an obvious owner. Lessig’s assertion is that if an author really wants to protect a work, she can spend the small registration fee ($1) to have it registered in an online or remote database. If the author forgets to register and the work is subsequently used without permission, the author can assert ownership retroactively. Obviously, the major improvement of this proposal is that it assumes permission by default and prevents the systematic under-use of protected culture. However, Manes is clearly on to something when he asserts that there may be problems when “you steal some kid’s screenplay…make a movie of it, and the kid objects when you take it to Sundance”.  How can authors prove ownership if they didn’t register it in the first place? What legal difficulties might be involved in ownership struggles? These are problems and unknowns, but they appear less damaging than the current permission by default regime, where whole swathes of culture suffer the fate of the ‘anti-commons’. Additionally, the problems with bureaucracy and registration that existed before Berne seem immensely more tractable with an online database as it would enable a person to register a copyright and search for permissions far more easily than previously. Contrary to Manes allegations, it is doubtful that a large corporation would have any more advantage making registrations than a small one-man production since registration could easily be transformed into a simple process and therefore, a “lawyer free zone”.

RICHARD BENNET – ENGINEER AND TECHNOLOGY CRITIC

In a review of The Future of Ideas, Richard Bennet criticizes Lessig’s assertion that it was the end-to-end principle that led to the innovation of the Internet. Bennet argues that Lessig inaccurately ascribes a “constitutional” importance to the architecture of the early Internet and as an apparently more knowledgeable individual, challenges Lessig on whether the early Internet and indeed TCP/IP was “non-discriminatory” in specific, technical ways. From the voluminous posts Bennet has written on Lessig’s blog, one can discern many critiques, of which this one seems particularly telling:

“[Lessig] warns [us] that nefarious forces want to rip the Internet off its utopian moorings and use it to force us to mindlessly support filthy commerce, blind allegiance to the evil Halliburton/Enron/Disney axis, and subjugate us to entertainment addictions to infinitely copyrighted materials that cost us our arms and legs. Lessig says the 1981 architecture is like the federal constitution: precious, perfect, and divinely inspired in its literal meaning…. Even the constitution has had to be amended and re-interpreted to allow slaves to be free, women to vote, an income tax to be levied, and a social security system to be created. Is it not reasonable that an architectural guess that may have made sense in 1981 would have to be revised to accommodate a more diverse set of applications than the Framers envisioned?”

Bennet’s point is well taken, obviously a constitution, or a technology, however good, will have to be modified by a society to make new and valued uses possible. Although its not clear what Bennet proposes as a “better Internet” than one that’s end to end and open-source, his general argument is a good one. Change is good, provided that it is demonstrable that changes are necessary. However, in Code the other Laws of Cyberspace and The Future of Ideas, Lessig was challenging a range of dangerous assumptions (1) that the Internet is inherently unregulable and (2) that left to its devices, it will continue to provide the so called democratic, many-to-many, liberating communications medium that it once provided. Although it is good to be aware of how past technological forms could be inaccurately romanticized, Lessig is careful to assert a politics having to do with online architecture, which is a tremendously valuable contribution. With his work we can ask ourselves, if there isn’t an online constitution, perhaps there should be one? And what should it be like? What should it allow and now allow? If scholars such as Lessig leave the Internet alone because it’s “too technical”, then we lose our ability to understand it and act upon it for normative and publicly beneficial ends. I believe this is what Lessig has attempted with The Future of Ideas, to establish some core principles of what makes democracy and the open flow of information and innovation possible. He has consulted with many technical experts in the writing of Future; it is careless to disregard it as random doomsaying or speculation.  Furthermore, there are several misrepresentations in Bennets own harshly titled review, The Future of Mediocrity that detract from the legitimacy of his own accusations that Future is “shoddily written”.  Lessig does not suggest that the Internet should literally stay the same as it was in 1981, but rather that the fundamental principles that made desirable democratic and innovative behaviours possible in 1981, be recognized and defended to enable those behaviours to continue.

THE RIAA

The Recording Industry Associate of America does an excellent job of advocating for increased copyright protections on behalf of major US record labels. However, the interests of the recording industry are not necessarily those of artists, or of society in general. One  way to consider the claims made by the RIAA on behalf of musicians is to examine one of many seemingly innocuous statements to see if it might conceal a range of assumptions that we may or may not be uncomfortable with. The following statement from Cary Sherman, president of the RIAA will be our example:

"Legal online music services are delivering a high-quality, consumer-friendly experience, and they're attracting new fans…but they shouldn't have to compete with businesses based on illegal downloading. That's why we are sending a clear message that downloading or 'sharing' music from a peer-to-peer network without authorization is illegal, it can have consequences and it undermines the creative future of music itself."

We can begin by recognizing that peer-to-peer networks enable the sharing of many different kinds of files, only some of which are music files. Of these music files the following four kinds of users download music:

(1)        Users who download copyrighted music instead of purchasing that copyrighted music. This is illegal and causes financial loss.

(2)        Users who download copyrighted music that they otherwise wouldn’t purchase. This is nonetheless illegal, but doesn’t cause financial loss.

(3)        Users who download music that isn’t copyrighted and/or is in the public domain

Lessig argues that an additional category exists: “There are some who use sharing networks to sample music before purchasing it… The net effect of this sharing could increase the quantity of music purchased.”  Nevertheless, this category of use in an “unauthorized” p2p network, would be for the purposes of the RIAA, be considered a copyright infringement. So among this list of behaviours, two uses are illegal, only one of which causes economic harm, and the third use is not illegal or economically harmful. To be absolutely plain, all these uses take place on a p2p network such as Napster, Kazaa, Morpheus and others. In similar cases where technically illegal but economically benign behaviour was possible (Mp3.com) , the RIAA nevertheless sued and won the right to shut down a rival music distributor of music. In legal cases such as Napster v. RIAA, the RIAA has succeeded in shutting down a service that by all accounts enabled both illegal and economically harmful file-sharing activities. However, how much of this usage was in category (1) and (2) and how much was in category (3)? I suspect, that the RIAA is correct, and most downloads of music were illegal.

However, even if the RIAA and I are right, and most downloads are illegal, should something necessarily be done to shut down all technologies and all makers of technology that allow such behaviour (via the DMCA)? No. Does this mean that it is ok to download music illegally? No. It is still illegal. However, the law should react as Lessig argues, if harm can be proven. For radical new laws to be drawn up and installed at the behest of a single industry, harm must be shown. If a person is suspected of atrocious criminal acts, but no harm is proven, they must be let free. Similarly, if a technology is suspected of enabling piracy of the worst kind, it must be demonstrated that harm occurs, or otherwise left unregulated. So far, this harm has not been demonstrated with any reliability. For the ‘harm’ we are considering here to occur, a correlation must exist between downloading music and lost sales. Evidence of category (1) behaviour would logically be demonstrable by a correlation of this kind.

Economists Felix Oberholzer (Harvard) and Koleman Strumpf (UNC Chapel Hill) conducted a detailed study to discover whether the alleged category (1) behaviours could be successfully correlated with declines in music sales. Unlike previous surveys of file sharing users, which have suffered from a significant self under-reporting bias, the study by Oberholzer and Strumpf is supported by an extensive comparison of file-sharing and music sales data for four months during the end of 2002. One would expect that the study would produce a strong correlation between spikes in downloading and sales losses, and yet the economists found no such relationship (p-value of 0.4404):

The estimated effect is statistically indistinguishable from zero despite a narrow standard error….even in the most pessimistic specification, five thousand downloads are needed to displace a single album sale. We also find that file sharing has a differential impact across sales categories…high selling albums actually benefit from file sharing.

So, if we are to afford this study more credence than the RIAA’s self selected surveying agency of choice (NDP Group), then not only is there no empirical evidence that downloading causes economic harm – the ostensible reason for intellectual property protections in the first place – but it actually helps in some cases! Realistically, this makes intuitive sense. A truly enormous amount of downloading takes place. More people can afford to download more music than they could ever possibly purchase in their lifetime. If the net affect of all this listening is to increase the size of the music market (more people wanting more music), it seems reasonable to expect that the net effect of this would be an increase in sales (albeit among the Top 40 category, or ‘Current’ as it is described in the Oberholzer study). To return to Cary Sherman, how could a behaviour that has no statistically significant affect on music sales somehow “undermine the creative future of music itself”? And how can p2p software packages be technically described as illegal businesses? They are not in the business of selling records or distributing content directly. Most companies obtain revenue through subscriber ships and advertising.

            Furthermore, allowing for a second, that it did have a statistically significant effect, what right do owners of content have in shutting down a platform (Napster, Mp3.com) that is used only by some people to distribute content illegally? The implication of the court rulings in the RIAA’s favour in those two cases (they both were ordered to shut down), is that the sum total benefit of x number of users sharing legally is of less importance than shutting down the capacity for y number of users to share illegally. No statistical or empirical evidence (to my knowledge) was cited in those cases in support of the view that mostly illegal uses were taking place. The RIAA’s position is cut and dry: if any p2p action is illegal, the enabler or technology facilitating that action must be shut down.

Lessig describes the implications of this ‘cut and dry’ approach thusly, 

When Napster told the district court that it had developed a technology to block the transfer of 99.4 percent of identified infringing material, the district court told counsel for Napster 99.4 percent was not good enough. Napster had to push the infringements “down to zero.” If 99.4 percent is not good enough, then this is a war on file-sharing technologies, not a war on copyright infringement. There is no way to assure that a p2p system is used 100 percent of the time in compliance with the law, any more than there is a way to assure that 100 percent of VCRs or 100 percent of Xerox machines or 100 percent of handguns are used in compliance with the law. Zero tolerance means zero p2p.

In the absence of any professionally assembled evidence that file-sharing has anywhere near the catastrophic 15% decline in sales the music industry alleges file-sharing is responsible for, pursuing legal action to shut them and all individual infringers down, is comparable in sensible judicial action to handing out jail sentences for jaywalking.. As Oberholzer writes, “a key question is the impact of file sharing and weaker property rights for information goods on societal welfare… if we are correct in arguing that downloading has little effect on the production of music, then file sharing probably increases aggregate welfare.”  While “aggregate welfare” might not be a concern for the music industry, it should be a concern for any responsible judiciary.

CONCLUSION - REFRAIN 3: FREE SOCIETIES ENABLE THE FUTURE BY LIMITING THE POWER OF THE PAST

In conclusion, I don’t think any of the critics I have surveyed have significantly challenged the dominant theoretical framework advanced by Lawrence Lessig in his three part anti-control manifesto. This doesn’t mean that he’s correct in all ways, only that his detractors and critics have made established simplistic positions on piracy and copyright which are difficult to sustain in light of the extensive history surrounding its legal and cultural tradition. Some good criticisms have been made, but no thorough refutation of the position that more is controlled now than ever before and that this control is not good for society. While many different sides appeal to ‘striking a balance’, few can realistically consider Lessig an extremist for advocating a return to laws which worked well in a not all that different context in 1975 (substitute file-sharing with VCRs). Then as now, intellectual property was an important industry, but it’s demands were not given carte blanche in the halls of every legislature from the European Union to the United States (and hopefully not to Canada).

Essentially, our challenge as a culture and a society is to achieve balance by looking at our history for guidance. If we fail to do this, we will likely ensure that our lawmakers and judiciary will listen to the interests closest at hand and fail to ‘see the harm’ in enclosing the public domain further vs. protecting against ‘piracy’. Fundamentally, the challenge is to effectively balance technological innovation so that fair competition between service and culture providers (such as the music industry) is ensured without providing these same industries the power to control how technology develops. This is a difficult balancing act to achieve, and in the balance are two major losses if we fail. The first is that new and beneficial technologies and innovations don’t occur because they enable in the case of music distribution technologies some illegal use. If the Internet had failed to develop because the wires were discriminatory and controlled by a single commercial entity (such as AT&T), society as a whole would lose out on this technology. It shouldn’t surprise anyone, that Lessig has made this very example in his article The Internet Under Siege.  We should recall Bill Gates accurate assertion that “established companies have an interest in excluding future competitors.”  We should be aware of the legally mandated “survival” instinct that all corporations are designed to have. They will not sit by idly and let new and competitive business models blossom around them if they can help it. To continue then, a second failure is the kind of society and culture we inherit when too much centralization and institutionalized control is permitted whether through technological, market-based or legal structures. We’ve seen this argument made with respect to the recent FCC decision to relax the limits on media ownership in the US.

            Our goals for the future should be to promote diverse competition in markets and steer away from the tendency towards monopolistic market structures, which Lessig describes as almost feudal in their extremist stance on property rights. Part of the reason why the feudal economy was so drastically inefficient is that a merchant had to pay for many different tolls to obtain “permission” to cross over every single lord’s lands. With so much cost involved in commerce, progress was slow and encumbered. With culture and innovation, we need to clearly demarcate and establish the importance of not just cultural production (though short term property rights), but the cultural production capability (public domain) that makes that production less costly and more accessible to all.

            Finally, our appreciation should be extended to lawyer-scholars such as Lawrence Lessig, Yochai Benkler, David Boyle, Jessica Litman, Siva Vaidyanathan and many others who have taken a stance against what they view as the normative imbalance of copyright law in the global cultural and industrial marketplace.

60 Minutes' documentary "Pirates of the Internet"

I just finished watching CBS's 60 Minutes investigation of online downloading, an investigation, that truth be told requires 60 minutes as opposed to the 2 minutes of the evening news to fully understand! Well that's the theory anyway...

To begin, I was quite impressed with the program, er sort of. I was impressed in that unlike the news, it clearly, almost literally expressed an argument, a moral point of view. It was not propaganda, because it didn't aim to decieve its audience purposely. It was biased, but I look kindly on programs and news that wear their bias on their sleaves. In my view, its far better for an audience to watch a program which they view as advancing an argument, as taking a position; as opposed to one that aims to present "only the facts" - the so-called objective programming which we tend to view less critically (See footnote 1). So as a peice of argumentation, the peice was quite effective at setting out the moral ground for the argument in favour of "artists" (directors such as M. Night Shyamalin all the way down to film set construction workers and stunt coordinators...people like manny perry!!) against the buckaneers and highwaymen of the internet. I was particularly impressed with how corrospondent Leslie Stahl refused to buy the argument advanced by the "facilitator" behind the grokster p2p service. In her words, his argument was a "fig leaf" covering up a specious and morally dubious position. Really people, Wayne Rosso, is morally equivalent to...what was the analogy used...a criminal who owns a house in which criminal activity is engaged, and then professes not to know what's going on. Its a valid point, and it neatly casts doubt on Rosso's defense that he "doesn't know what's being downloaded" on his p2p network. Of course he does, and he should have admitted it. What he should have said instead of attempting to deny that pirating takes place on his network, and that this use is probably a majority use, he should have met the moral argument advanced by Stahl in a more direct manner.

Here's what it boils down in my view:

1. P2p networks enable data to be exchanged (music, movies etc, are some of this data).
2. Some of the data exchanged is pirated, stolen, I'll even be charitable and say that most of it is illegal (without empirical evidence).
3. Some of this sharing is also legal.

So what do we have here. Some sharing, maybe almost all of it is illegal, and some of it is legal. Hmmm...To put it pointedly, Stahl and her interviewee, Peter Chernin (20th Century Fox CEO) ignore the legal uses and conflate all use (indirectly of course) as illegal and attempt to uncover the "fig leaf" that otherwise prevents the audience from seeing the evil Rosso for what he is: a facilitator of the worst kind, a psuedo pirate, if not psuedo-pirate facilitator/evil incarnate! And this is all well and good, there is nothing wrong with making a strong argument, or questioning the morality of p2p networks.

However, what about the legal uses? Nobody ever seems to care that some people download public domain blues songs such as Howlin' Wolf's "Natchez' Burnin" from p2p networks and delight in being able to listen to this song from the mississipi blues legend which otherwise might be difficult to attain through normal consumer channels (See footnote 2).

Admittedly, since I already assumed that illegal uses were the majority use, I haven't persuasively addressed the evil-ness of grokster and p2p in general (including those facilitators!), although I have submitted a qualification which problematizes shutting down the technology in general just because some uses are illegal.

The real counter-argument in my view is that we should accept moral arguments without seeing any evidence. Yes, we do have Mr. Shyamalin offering up the apocalyptic scenario of a world without hollywood, where the livelyhoods of all the Manny Perry's are drastically altered not by globalization (which currently favours Vancouver and New Zealand over Hollywood workers) but rather by an ostensibly vast displacement of revenue from online downloading. As Chernin admits, 60 million Americans using p2p is not "a bunch of college kids or, you know, a bunch of computer geeks. That's America.” Right he is, and 60 minutes wavers between indicting these 60 million americans as reprehensible criminals and pardoning them due to volume considerations. I won't make the argument that a wrong action is justifiable if 60 million american's perform that action, but that so many have used p2p is evidence that it is a market, and a warning against simplistic readings of these individuals as "pirates". Rational economic actors might be more appropriate and not in the sense that it is rational to steal (although in a certain sense it is). As Stanford Law Professor Lawrence Lessig has offered in his book on the issue, 'Free Culture', p2p is an innovation in sharing technology first and a threat to copyright industries second.

60 seconds complements this view by detailing Chernin's assessment of efforts Fox has made to establish an online presence where file-sharing can be accomplished legally (by paying 3-4 dollars to download a film for example). Great. This is where the technology and common sense of the public has been for several years, and it only makes economic and moral sense to accept it.

But I have to laugh at the completely insubstantiated claim that movie downloading is going to threaten the livelyhoods of all those who make movies and the revenues of dvd movie sales. A caveat first: it may in fact do just this, but NO empirical evidence was provided. As Chernin quips, "Fifty percent of the revenues for any movie come out of home video ... so that if piracy occurs and it wipes out your home video profits or ultimately your television profits...” What? Says who? When? Maybe it will wipe out these profits, and perhaps its a good thing to force the film industry to survive on (gasp) box office revenues only? No re-packaging and selling of the complete collectors edition Star Wars series for the umpteenth time? And although I must say I tremendously enjoyed Shyamalin's "The Village", I find it difficult to accept that making movies with less money will "degrade the art form". Arguably it will degrade some forms of film perhaps, but film is quite a resiliant art, and in fact, other countries and individuals outside of hollywood have been known to occasionally make a movie without 50 million also.

In closing, I think CBS/60 Minutes has done an admirable job of presenting the point of view of the film industry on downloading. But like the music industry, I find that they tend to simplify the normative/moral terrain and avoid complicating issues like whether p2p is used legally by some people and to what extent. Furthermore, they tend to either avoid making any evidentiary argument (i.e. a professionally produced study which obtains a reproduceable correlation between movie downloading and lost sales). I suspect that as is the case with music downloading (which takes place on exactly the same p2p networks), "aggregate welfare" is increased with downloading, and that "the estimated effect is indistinguishable from zero, despite a narrow standard error..." (Oberholzer et al, 2004) (Footnote 3)

References:

60 Minutes Online

http://www.cbsnews.com/stories/2003/10/31/60minutes/main581153.shtml

Oberholzer, Felix; Strumpf, Koleman (2004) "The Effect of File Sharing on Record Sales: An Empirical Analysis" Harvard Business School.

Footnotes:

1. Objectivity or facticity has its merits, but as a society I think we make more decisions based on arguments, so entertaining the merits of arguments is more valuable than entertaining the tautological value of whether something "happened" in the world or not....although if we are uncritical about that, then manufactured events can be ignored...ack!

2. Whether it should be free or not is questionable normatively; the artist himself has already died, and is incapacitated from recieving any benefit or not. Whether his family and/or estate should continue to benefit from his work (for over a century), is again, outside of the scope of this argument. But technically speaking, the downloading of this song without paying is likely still illegal, as I believe all Howlin' Wolf's songs are owned by Chess Records and the copyright on them is almost certainly still active.

3. Obviously, my conclusion would benefit from a further study to ascertain the status of the correlation between movie downloading and dvd/box office sales. I can't see why there would be a significant differentiation between the Oberholzer result, but I am still "guessing", so my argument can be critiqued on these grounds. However, even if it is false, and for some reason movie downloading is completely different than music downloading in its effect on sales, should the law intervene because an industry (hollywood) is threatened by a new technology (p2p)? What are the moral implications of propping up a culturally imperalistic industry with domestic legal protections? And what soundness lies in justifying anti-downloading campaigns on the grounds that "artists and film workers suffer"? These same artists and workers are disenfranchised and forgotten about in a heartbeat when the global film workforce offers up a more tempting (and cheaper) locale. And there is a tremendous literature challenging the hegemony and morality of hollywoods' formula-driven conquest of other nations cultural (film) industries. Perhaps p2p is a vitally uncontrolled distribution channel through which non-hollywood films can attain an audience (see Pendakur, R. for some of this literature on Hollywood domination of Canada's cultural industries).

The Relevance of Canada's Supreme Court Ruling on Music

My position on music is strictly speaking, anti-piracy. I am against the commercial exploitation of works for which one has not paid for or obtained the permissions and rights to use. However, in the realm of online downloading, the question becomes more complicated. Yes, there is some downloading which comes at the expense of sales at recording labels. This downloading is wrong and objectionable. However, there are as many and most likely more uses of this same technology for completely legal transmissions of music which have great benefits for citizens (the recovery and downloading of songs that have exceeded their commercial usefullness, but are still valuable for some people. i.e. old recordings of blues songs, classical compositions etc). There is even evidence that illegal transmissions of copyrighted music may in fact expand the market of potential music buyers and that in and of itself might result in a greater net benefit for the music recording industry than had file sharing not been invented (See James Boyle's argument in "The Second Enclosure Movement and the Construction of the Public Domain" terms of "large leaky markets"). The idea that all these positive uses of this technology would be foreclosed upon without demonstrable evidence that illegal file sharing was the dominant use and that this use significantly threatened the recording industries viability, is absurd.

It is in this context that I welcome (belatedly, I admit) the ruling by Canada's supreme court on the issue of revealing the personal identities of file sharers. Although revealing identities is admittedly not the same as shutting down the network wholesale (as Napster and Mp3.com were at one point). Revealing personal identities is again a major step for the law to take, and unless harm can be demonstrated, this action should not be taken, and is moroever, unjustified.

As Justice Konrad von Finckenstien mentioned in his 28 page ruling on the matter, "No evidence was presented that the alleged infringers either distributed or authorized the reproduction of sound recordings. They merely placed personal copies into their shared directories which were accessible by other computer users via a P2P service." (see http://www.cbc.ca/news/background/internet/downloading_music.html)

Contrast this sentiment, with the rulings taken with regard to allowing the RIAA to demand the identities of "potential file sharers" on college and university campuses in the US. Contrast this with the rulings in the RIAA v. mp3.com, or RIAA v. Napster rulings. Its just remarkable. Admittedly, Napster and Mp3.com are the actual parties enabling the purportedly illegal activity, and not owners of the technology, as are ISPs. That said, the RIAA has made little distinction between ISP's, which one might imagine being accused of 'providing the infrastructure for global piracy' and those services which enable "pirating". After all, if you're not with us, you're not on the right side of Jack Valenti's "terrorist war" to fight "piracy". (see http://www.boycott-riaa.com/lessig/free.html)

Not incidentally, it makes me very, very glad I live in Canada.

Progressive Intellectual Property Policy Advocated by Washington Based Think Tank

On May 23rd, 2001, Oxford-based Intellectual Property (IP) scholar David Vaver commented at a Toronto conference on 'Intellectual Property and Innovation in the Knowledge Based Economy' that, currently, the balance between the interests of authors and the interests of the public domain has been lost in favour of the former. Vaver affirmed that innovation, which is widely agreed as instrumental to the future expansion of the digital economy, is in fact threatened by the increase in copyright protectionisms over the past 50 years.

To a considerable degree, patent, copyright and IP license holders have been vocal in ensuring that legislators were aware of the risks to industry, should IP laws fail to enforce the "temporary" monopolies that reward initial acts of innovation.

However, there has been a growing effort to raise awareness of the potential that ever-increasing protections will in fact jeopardize the very innovation that copyright and IP law is intended to protect. Vaver and many others (Lessig, Boyle) have emphasized the importance of not narrowly defining "innovation" as that product of a corporate research and development lab, but rather, the natural product of an open-ended, global, public sphere in which ideas are distributed freely and without discrimination.

For many years, the big-picture view of innovation has escaped serious consideration in influential economic and policy think tanks. Until recently:

The Washington DC based Committee for Economic Development (CED) has adopted the progressive view that "quick legislative or regulatory solutions for the problem of digital copyright protection [poses] risks to innovation and economic growth and [is] likely to have unintended consequences" (66, CED, 2004).

It castigates the regressive tactics of the Recording Industry Association of America (RIAA) for its regressive attempts to preserve an older (non-digital) rights-enforcement model and instead advocates that industry develop new busines models for the distribution of creative content. This is an excellent critique of the short sighted view that laws must automatically favour the protection of older technologies and entrenched business interests.

Rather than fight what consumers already 'expect' to be able to do with IP content (i.e. combine and splice different kinds of content on the go, create re-mixes, mixed tapes etc), the industry should aggressively seek to adapt to change...make lemons into lemonade so to speak...rather than use law as a defensive and reactionary mechanism. As Boyle writes in his paper "The Second Enclosure Movement et. al, (2003)" it should be "easy" to break the law: i.e. as 15 year old Briana Banks would no doubt agree after being sued by the RIAA for her unlawful collection of downloaded Britney Spears tunes.

This isn't to say that unlimited use of IP content is 'ok' in all situations: it isn't. Its just that suing people and pretending that the problem is simply a matter of people breaking the law is the wrong way to go about it. Accordingly, the CED recommends that the soft-sell of education and other methods are more appropriate than the hard sell of a lawsuit, in getting people onside.

In mediating the benefits and drawbacks of Digital Rights Management schemes (where digital content can potentially turn itself off if used illegitimately), the CED recommends that DRM be used as much as possible to "accomodate users [traditional] rights allowed under intellectual property law". This appears to be a reference to the fabled regime of pre-90s copyright law, where the "first-sale" and "fair use" doctrine provided the leeway and flexibility for content to be shared without extensively threatening content distributors and authors. The capacity for DRM schemes to play this role using technological controls is certainly worth pursuing.

The last recommendation advanced by the CED involves the recommendation that incentives be created for the voluntary surrender of privately held IP rights into the public domain after the significant economic incentives have been secured immediately after invention/creation. Again, the public interest is considered here, as well as the potential for future innovation to be stifled by monopolistic rights restriction within a few private parties. Doubt remains however, about how willing companies like Disney and Microsoft would be in signing away the rights to specific copyrights when they continue to contribute revenue long after their initial "innovation". For example, the Mickey Mouse franchise is over 70 years old, and yet I would imagine that it is more profitable now than it was in the 1930s, (comparitively). Similarly, if Microsoft allowed its early Windows 3.11 versions to become available freely to the public domain, it is plausible that its "windows" copyright could become freely available as well, thus necessitating a different brand name. This is the case, despite the obvious irony that Microsoft's much coveted "Windows OS" Graphical User Interface (GUI) is an infringement on the Macintosh GUI. It is not thoroughly discussed by the CED what sort of "market based economic tools" would be necessary to require companies such as these to willingly forgo the long term benefit of their IP holdings.

The CED clearly demands that the IP industry shape up and undergo 're-engineering' before demanding that government protect already outdated business models. Instead of appealing to government for regulation, the CED recommends ambiguous market-based solutions, in order to safeguard the potential for follow-on innovation.

Although the report is laudable for emphasizing that IP regimes ultimately benefit the public interest, nowhere does the report recommend that government increase regulations on industry. This isn't necessarily a bad thing, its just conspicuous. Instead, the CED advocates for a sort of market based self-regulation effort, in which companies willingly adopt new business models and refrain from regressive tactics in order to benefit themselves and society at large (in the long run). Under the 'Chicago School' of economics, government is best recruited to protect property rights, and refrain from excessive public spending or market regulation (See Alan Greenspan for more). The CED's recommendations seem to mark a divergence from this view: Industry should willingly self-regulate itself, and avoid using the state as a source of legal-economic protection. The CED is careful to emphasize that the benefits are not restricted to the public interest either: this strategy is ultimately required to ensure the viability of commercially-applicable innovation in the future.

See Toronto IP Conference on Video at http://www.innovationlaw.org/lawforum/pages/ip_conference.htm (2001)

Read James Boyles 'The Second Enclosure Movement et. al' at http://www.law.duke.edu/journals/lcp/articles/lcp66dWinterSpring2003p33.htm (2003)

And the Committee for Economic Development at http://www.ced.org/docs/report/report_dcc.pdf
(March 2004)

On a related note...

Many software providers have opted into DRM (Digital Rights Management) schemes which
allow popular applications such as RealPlayer to fail to play 'illegitimate copyrighted content'. But is this the best way to deter unfair downloading? Does it have the capacity to hamper legitimate uses of content, and how easy is it for hackers and other programmers to design patches around such quick fix techniques?

And DRM's capability to shut down 'blacklisted' content may just be an indication of its potential uses:

According to www.pocketpcwire.com, "Microsoft is busy readying a secure clock DRM technology dubbed "Janus." Janus enables songs distributed under a subscription model to be transferred to portable devices, with a built in "time bomb" that enables songs to expire in the event that a customer's subscription lapses."

While this use of DRM seems potentially troubling, Bill Rosenblatt ( writing for industry-focussed research group www.drmwatch.com) speculates on the limitations of the software and on how best to 'develop the DRM market'.

So what are some of the potential fair use problems involved in DRM technologies? Rosenblatt writes:

"The two types of participants most closely involved in designing DRM schemes have been platform/device vendors and IP owners. IP owners, as mentioned above, have long thought in terms of "products" instead of "content," leading them to feel that purchasing content in one format should not allow the purchaser to access that content in other formats. And device vendors are not at all motivated to create DRM technology that allows users to access content on other types of devices. "

Interoperability has been a consumer expectation since the first mixed tapes allowed users to record songs off the radio or a cd, play them in their car, in their walkman and in any other setting they wished, with mutliple technologies. DRM runs the risk of upsetting this expectation by mandating (by force) that a content-product can only be played in one context, on one technology for a specific period of time. The product would potentially become unusable if removed from its pre-agreed to conditions of use, i.e. taken to a friend's house and played on their device.

The conception of IP owners that they are selling products, and products only, perhaps leads them to expect that they can assign any sort of license terms they deem necessary. If content usage can be so vigorously regulated and controlled, maximum market benefit can be obtained out of each market transaction, and perhaps fair use would be unnecessary.

One of the reasons for the initial fair use regime in the original copyright act (Canada, 1985) was that it would be impossible for vendors to attempt to prohibit fair use in any case, so why not make a certain amount of discretionary use 'fair'.

The capability to regulate content use down to the level of a specific device (one), playable during a specific time( lets say 1 month) is a radical departure from previous arbitrations of the intellectual property regime.
Perhaps Paul Goldstein's 'celestial jukebox' model will become the norm after all, and every 'sliver' of marketable intellectual property will become propertized, and bought and sold under exact conditions of use.

See a short description of Paul Goldstein's 'COPYRIGHT’S HIGHWAY. FROM GUTENBERG TO THE CELESTIAL JUKEBOX' at http://www.bsos.umd.edu/gvpt/lpbr/subpages/reviews/Goldstein903.htm

European Parliament passes controversial anti-piracy law

The European parliament's recent approval of an act which grants local police the power to raid the homes of "suspected ntellectual-property pirates, search their financial records and even freeze suspects' bank accounts" (Wired Magazine, Mar 16th, 2004)

Wired magazine

The act is designed to create a unified framework of anti-piracy law across all EU members, and in doing so prevent regulatory disparities between the different nations.

"The disparities between the national systems of penalties...[are] hampering the proper functioning of the Internal Market....make itdifficult to combat counterfeiting and piracy effectively..[leading] to a loss in confidence in economic circles in the Internal Market, and hence to a reduction in investment"

The internal market here is revealed later to be "... interested parties [that have] expressed the desire for this question to be tackled energetically and for far-reaching measures to be taken at the level of the European Union."

In other words large brand based or 'copyright' content creation/distrubution companies such as Bertlessman, LVMH, and others are sure to benefit from the act which treats intellectual property 'theft' as a crime against the state, and thus worthy of criminal sanctions.

The ease with which warrants can be attained based on the "suspicion" of commercial intellectual property theft is unkown at this point, but the internet is identified as a primary culprit in enabling piracy.

Presumably, the act will give plaintiffs the right to compel ISP's to hand over the internet records of suspected 'commercial theives' in order to provide local authorities with the means to arrest these individuals.

Contrast this development with a more local struggle between ISP and service providing companies such as Shaw and Telus which are being attacked legally by the Canadian Recording Industry Association (CRIA), otherwise known as the Canadian branch plant office of the RIAA.

"Using sophisticated Internet surveillance technology, the association has tracked computers - identified online through their Internet protocol or 'IP' addresses - that are actively trading copyrighted songs," says the Star. "The next step is to match those IP addresses with subscriber information so the alleged pirates can be identified." (http://p2pnet.net/story/762)

Despite the recommendations coming out of forward looking Economic Institutes such as the Washington based Committee for Economic Development (well, forward for market-based solutions!) the RIAA, like the European Parliament seem unaware of the broader issues at stake in the sphere of intellectual property rights.

Adhering to classical definitions of market distortion, the institute seems guided by the principle of protecting private monopolies and innovation at the expense of future innovation or 'carry-on innovation'. Referring to the internet primarily as a conduit for trafficked products, the parliament disregards the tremendous technological contributions arising from the decentralized, uncontrolled availability of content on the internet.

The act contains clauses emphasizing the necessity of protecting innovation in the creative hubs of commercial r & d labs and universities, but ignores the broad productive capacity of individual innovators, who are more likely to be shut out of the productive loop by any act which increases the cost of access to information.

"In this context, the free movement of information should also be ensured and access to the Internet not made more difficult or costly by, for instance, imposing excessively heavy obligations on Internet intermediaries"

The European parliament refers to the argument that

"A lack of adequate protection would not only severely trammel the development of a major economic sector but would, above all, pose a threat to our heritage and cultural diversity."

While this always seems to be the central tenet of intellectual property right protectionism, it fails to address alternate means of motivating production.

For example, copyright protections amount to a public subsidy of a monopoly for what (used to be) a set limit of time. The public would willingly pay this subsidy fee in order to compensate authors for their work, with the understanding that both the author and future authors were indebted to previous innovators i.e. no creative or industrial product is created in a vacuum, in which all productive work can be assigned to a single private entity.

This act and others like it reinforce this singular method of compensating creators, at the expense of other methods of compensation, as well as the broader public purpose of copyright law.

View a transcript of the European parliament's act at

http://europa.eu.int/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=en&numdoc=52003PC0046&model=guichett

Lessig, Discriminatory Control and the Internet

Protecting the Informational Commons: What is the threat of the DMCA and Discriminatory Control?

By Peter Konefal

In “The Internet Under Siege”, Lawrence Lessig argues that the Internet owes its initial phase of explosive growth to the intellectual common ground of Internet protocols and publishing language such as HTML and TCP/IP . Lessig is not alone in conceiving of the Internet and its very infrastructure as an example of what a public information commons can be. He describes its evolution from “an obscure tool of government backed researchers” to an accessible mass medium as the result of both open architecture and the collaborative innovations of people around the globe. This reference to the innovative and economic potential of the intellectual commons is a particularly relevant because it stands in direct contradiction to conventional economic theory. This point is made in James Boyle’s article “The Second Enclosure movement and the Construction of the Public Domain” in which he argues that it is empirically and analytically unsound to enclose the information commons with acts such as the DMCA before the true economic potential of the public domain can be realized.

Before proceeding, it is helpful to consider just how the Internet can be a “commons”, and why this was necessary for its rapid development. Lessig argues that the Internet expanded exponentially due to three main factors: the “end-to-end” principle of the network , the open-source nature of publishing and information transmission infrastructure, and lastly, the state-regulated neutrality of telephone service companies. The idea that the Internet wouldn’t even have developed due to private control over any of these channels is very disconcerting: the internet may have been confined to a few large corporate intranets and never developed as a mass medium at all. Lessig argues that a crucial balance existed between the control wielded by rights holders, (content layer) service providers (physical layer) and the public’s enfranchisement with the information commons – a balance that has been obstructed by the DMCA and other acts.

What does this balance look like? Boyle and Lessig both take the position that a lack of central private ownership and control of any requisite layer of Internet infrastructure, led to equally and non-discriminatory access to almost all users.

“The balance of control and freedom produced an unprecedented explosion in innovation. The power and hence the right to, to innovate was essentially decentralized…some of the most important innovations came from…outsiders”

If the innovations that made the Internet the popular, decentralized and communal medium it is now, were initiated from outside of the conventional productive hub of entrepreneurial America, then there is a danger in foreclosing on that structure. This amounts to a critique of the notion that technology corporations, especially traditional ones are the engines of innovation. Why would they be engines for growth and innovation when they already enjoy monopoly status and steady revenues?

More broadly, the proprietary model of production is arguably inferior to the large-scale collaborative production model of the scale facilitated by the Internet. A central reason innovation and growth has developed so successfully on the Internet is due to the potentially enormous number of collaborators that can be involved on a particular project. Second, the marginal cost of production and transmission are close to zero, resulting in a product that is both inexpensive and robust. Nonetheless, because production methods of this sort do not resemble traditional ‘profit extraction’ models, private content producers are foreclosing upon these peer-to-peer development possibilities.

Lessig sees these entrenched interests fighting a winning battle, or “counter-revolution” against the diverse global network of users in an effort to win back centralized control and discriminatory power. Where previously, the telephone-services content had fallen under the “neutrality” provision of state regulation, cable-services content is not regulated, allowing ISPs to discriminate against suspicious file sharing content.

“…A British pharmaceutical company invoked the DMCA in order to force an ISP to shut down an animal-rights site that criticized the British company…ISPs have no incentive to resist the claims”

With the DMCA, the mandate for ‘fair use’ that was present with copyright is banned under the new act, which again tips the balance in favour of private control of the content layer.

Lessigs’ overall criticism of the DMCA is accurate. If the goal of intellectual property law is to spur innovation in general and comply with the constitutional injunction to further “promote the progress of science and useful arts”, then what value is a statute that prohibits that very activity? Technological optimists such as Weinberg have suggested that if a technology is proven imperfect by its unintended consequences, a new technology should be devised to rectify the problem. Implicit in this view, is that technology is only sufficient until a more useful technology is developed. There is no condition in this view for a new innovation to be disregarded if it threatens entrenched proprietary interests, nor should there be.