Digital Myth: Copyright Stands in the Way of the Digital Revolution

The Internet was built on copyright content; it’s the foundation of the digital economy.

There are enough myths about copyright and internet to fill a book on its own, but let me bring up a few of them. The basic myth is that copyright does in some way or other limit the progress of technology. I’ve seen and heard many variations of this idea, but let me tell you the one that took the prize. The critics of copyright can be accused of many sins, but never of a lack of imagination. At a conference in Geneva, organised by none other than the World Intellectual Property Organisation – an arm of the United Nations – one panelist suggested that copyright might stand in the way of the colonization of Mars. Not even meant as a joke! He explained that if we make it to Mars and somebody were to spray synthetic DNA liquid on the ground to claim a piece of the planet as their own, that could create problems for further exploration. How this has anything to do with copyright escapes me. If you, dear reader, find it hard to believe, rest assured that the video from the panel can be found on the WIPO website.

Technology can of course be developed in different ways and there is nothing to say that internet technology could not support copyright just as well

No, copyright does not stand in the way of progress; instead it makes possible much of the content that users desire, creating a demand for things like broadband subscriptions, hardware and streaming services. To the extent that content stands in the way of ‘innovation’, it is because the innovators would prefer not to pay for it, but perhaps it should be part of the package with incubators providing office space and hardware and staff working for stock options rather than salaries. Except in that case, the content owners should get a stake in the business too! Technology can of course be developed in different ways and there is nothing to say that internet technology could not support copyright just as well, only there’s no incentive on the part of those who run the internet platforms and broadband cables. Why should they? They get all the benefits of consumer demand without having to share any revenue. Some say that music or film or other content is now a commodity that has no real value. But the truth is that the value is still there in the form of consumer demand, only the revenue ends up in the pockets of those who did not pay for the content to begin with. This creates an odd catch-22, where the revenue from the old analogue distribution methods (say, cinema or print books) subsidize the digital services that fail to create enough revenue to make the pivot to true digital possible for most types of content. That’s right, it is the failure of the digital markets that stands in the way of the digital leap, not copyright.

Another claim is that the creators don’t really benefit from copyright, only the intermediaries. That is at best a smokescreen; creators are better off with as many options as possible and that of course includes copyright. If a creator does not want to use the copyright system, they are perfectly entitled to give away their work for free or to monetize it, whatever they like. Perhaps in the old days when analogue distribution was in the hands of mighty gatekeepers there was more grounds for such a view, but today anyone can access a potentially global audience for a dime (getting their attention is a different job, though). In the digital age, the film studios, book publishers and music labels are more like investors and marketing partners to the creators. The gatekeepers are still there though, but more often in the shape of internet platforms, app stores and social media algorithms. Of course an author can still suffer from an unfair publishing contract, but in most cases the real tug of war is between those who invest in content, sharing risk, and those who distribute it and, at best, share some of their actual revenue with the creators and investors. In a way, it’s the same old conflict between the creators and the distributors as in the analogue age, but with a different cast in the role of the distributors this time around. In newspeak: disintermediation is really re-inter-mediation. When Apple launched the App Store, game developers, fed up with game publishers as they were, rejoiced; a friend of mine called the iPhone ‘the Jesus phone’, only to find a few years later that the disintermediation of the publishers brought a new and stronger gatekeeper into the App Store: as more developers jumped on the opportunity, the platform became crowded with almost 100,000 new games per year, making attention, not content, the new scarcity so the owner of the platform could pick who got heard in the noise, like a bouncer at a hot nightclub spotting the cool kids in the crowd. Re-intermediation was a fact.

Another sub-myth is that the entertainment industry is ‘conservative’ and does not really want to change. That may have been true in the 1990s but today it’s underestimating the basic powers of the market economy. If the entertainment industry could make more money with different business models, it would change. It’s not a matter of emotion. This accusation of conservatism is often used as a segway to proposals on copyright reform, which is code for having to pay less for content. But it may be rather the infrastructure of copyright which needs an update: license databases, micro-licensing, automated licensing, new contract models and other innovations can facilitate licensing, generate revenue and make content more accessible to various services. Except if free content is what you really want, that doesn’t help.

Sometimes rich superstars are raised as a case in point against copyright, but it’s difficult to see how that is a problem. It’s not like anyone else makes less because most successful artists make a lot, and certainly those who make the least would not make more if the right to the financial yield of their creative output was taken away or somehow diminished. In fact, in some cases, successful artists subsidize the work of less successful ones. Take Bruce Springsteen, who has released his albums on Columbia Records since the 1970s. He could easily change label or set up his own, so we can safely assume he’s happy with Columbia. I haven’t seen Springsteen’s royalty statements, but it’s easy to guess that he gets a better cut than the average artist. But even if he gets 50%, the other half of the money stays with Columbia, which will use it to cover various costs, staff, overheads, interest, dividends to shareholders and so on, but not an insignificant part of that money also pays for the studio time and marketing of new artists. Labels are often painted as greedy capitalists and successful artists as a problematic effect of copyright. But you can also think of it as a form of Robin Hood principle: take from the rich, give to the poor.

A long time ago, I was a partner at a game developer studio. We had a contract with a publisher to make a game (Rock Manager, PAN Vision, 2001). It took lots of long hours over three years and much frustration over how the publisher would interfere with our design decisions. We wanted to include drug abuse, but our publisher was afraid to alienate the family audience so our pixel rock stars were limited to alcohol as they were burning out not fading away. In the darkest moments, we bought lottery tickets hoping to win big so we could pay back the advance and walk away. In the end, the game was released in 14 languages. However frustrating the experience of having to deal with the games publisher might have been, the magic word here is advance. They paid us enough money up front to pay the bills for three years. We did not receive the money as the publisher made it, but years before! If the game didn’t sell the publisher would take the hit, not us. So we creators may have invested our best ideas and our blood, sweat and tears, but copyright made the financial investment possible. Keep that in mind when someone ventures, for example, that digital intermediaries sometimes share the ad revenue. Sure, but do they take financial risk? Do they invest?

Some will say the copyright period is too long, but the longer the term and the better the protection (and larger the territory in most cases), the bigger the value of that particular property. That means bigger investment is possible and more money goes to the creators. The biggest problem in the world is not really that those who create art make too much money. In fact, the opposite is true: anyone bold or ill-advised enough to try and make a living from their art will face great challenges. Most will drop out. Others sacrifice their financial security, sometimes family or friends, even their health to create music, literature, television, games or something else. Only a few make it big. We should be grateful that enough people think it’s worth the price or the world would be poorer for it. We can’t all work in insurance or shipping or government, some have to give us art. We should make their lives easier and copyright is part of the answer.

Some will raise developing countries as a case against copyright (or intellectual property on the whole). Because their economies are smaller, copyright stands in the way of the development sometimes, even portrayed as a tool for neocolonialism. But copyright can be licensed by territory and the same content can have very different price points in different places depending on the local demand and purchase power. With intellectual property, developing economies can also grow and attract investment that would have been unavailable otherwise.

Finally, let me say something about pirates. By no means is piracy the only threat to creative content online, but if it were ever a grass-roots movement, it is now clearly a field for organised crime. When police raided Sweden’s no. 1 illegal streaming service Swefilmer, it uncovered close to €1.5 million generated from ad revenue and donations. In a way, this has always been for profit. In 2009, The Pirate Bay was sold for more than €5 million, except the deal fell through when the buyer couldn’t raise the money. Today, VPN subscriptions are a popular way to monetize piracy. Sure, there are legitimate uses for VPN, but if your service is called Ipredator you can be pretty sure subscribers pay so they don’t have to pay for content. There is no reason to see pirates as some kind of internet rebels; it’s a for-profit, illegal business that pays better than a lot of other crime, poses only a small risk of getting caught and doesn’t attract long prison sentences either.

Pirate apologists love to say that pirate distribution can be a great way to attract attention to your work, and that is certainly true in some cases, but that decision is for the creator to make, not the consumer. If it weren’t for copyright, that movie, song, game or book you want to download wouldn’t have existed in the first place.

It’s probably true that it’s impossible to stop piracy altogether. But that’s no reason not to try and reduce it.

Copyright does not stand in the way of any technology, but technology could do a better job supporting copyright.