Techlash keeps snowballing. Only 16 months ago, Facebook CEO Mark Zuckerberg dismissed Facebook’s influence on the US presidential election as a “pretty crazy idea”. He has apologized several times since, but the controversy has kept growing. As The Guardian and New York Times have revealed, Cambridge Analytica harvested data from 50 Million Facebook users and built a system to influence the American voters. Classic investigative journalism, when Channel 4 reporters caught Cambridge Analytica’s CEO Alexander Nix on video boasting about how they influenced the US election. Nix has since been suspended pending investigation.

Facebook now suffers in four different ways: users, government, advertisers and stock. Users have responded by quitting the social media platform (ironically often announcing it on… Facebook) under the #deletefacebook flag. Calls for regulation increase, which has pressed Zuckerberg to accept the idea. UK Parliament has summoned Zuckerberg for questioning. Advertisers threaten to pull out of the platform. But maybe worst, the share value has plummeted – down almost 50 Billion dollars. Do the math: that is $1000 lost stock value for every user profile Cambridge Analytica harvested. It appears top management saw it coming: in the weeks before the leak was revealed, five Facebook bosses (Zuckerberg included) sold $1,251,992,375 worth of shares. Impressive timing!

There used to be a time when many talked about Facebook as the bringer of democracy. Now, it looks more like its undertaker. How far will Facebook fall? Has it reached rock bottom yet? Or is there more to come? One thing is clear, the catch-all phrase against all kinds of criticism “we’re just a tech company” won’t fly anymore.

Netopia’s question is: when Facebook tells us it is free and always will be – is that really so? What happens if or when Facebook starts losing money? And what happens to the data they have on us if Facebook gets desperate? This will get worse before it gets better.

Spotify plans to become a publicly traded company. Its CEO Daniel Ek wrote a letter to investors talking about the plans. It talks about many things, but some have read parts of it as that Spotify wants to provide a way for artists to reach its audiences directly, without intermediaries. This is a re-occurring idea among creators: what if we could do away with the producers, investors and marketers who keep interfering with our art, messing up our launches and take a big chunk of the money. In a perfect world, would not art be judged on its own qualities with no need for packaging or PR stunts? It is also a favourite topic for starry-eyed tech startups high on disruptive innovation: let’s break up the value chain, take out the fat cats, the intermediaries who don’t add value but only seek rent. It can be travel agents, banks, real estate brokers, lawyers… you name it: any market with specialist intermediaries is ripe for disruptive innovation. That’s not about technology, that’s about commercial opportunities in disrupting the way business is done. In the case of Ek’s letter, these two come together. Can Spotify bring the gift of direct contact with the audience to artists? Can it deliver on the ancient promise for art to be judged on its quality only?

Let’s take a look at a similar industry where the same thing happened ten years ago. An industry I know well: video games. Game developers of course dreamed the same dream as other creators. What if we could get rid of these publishers who keep interfering with our creative decisions and limit our resources with launch dates and budget cuts? In 2008 that dream came true. The Iphone Appstore solved all the problems game developers had struggled with in one stroke: an integrated market place and payment system, convenient for the player, delivery straight to the device. The device itself sleek, beautiful, lots of computing power and a big screen. Perfect for players, perfect for developers. And no intermediaries, except of course for the Appstore which took 30 percent of revenue (after sales tax). That was a small price to pay for a dream come true. One developer I know called the Iphone “The Jesus Phone”. (I guess Appstore may have been the cathedral.)

What happened? Turns out a lot of people had the same idea. A lot more games were published. More than 1000 games per month only on the Iphone Appstore. More than anyone could play. Demand grew too, but nowhere near as fast as supply. In basic economic theory, what happens if supply exceeds demand? Prices drop. If the first Iphone hit games, like Angry Birds, were “premium” – sold at a price of around one euro – soon the downward price pressure led to the dawn of the “free-to-play”-model: play the game for free, buy things in the game if you want. A small number of players, maybe 2-5% actually buy something in the game. The other 95-98% are happy to play for free. Don’t get me wrong: the free-to-play-model is great for players “play as much as you like, pay only if you want” – how can an offer be more consumer friendly than that? And the mobile games industry has made a lot of money from the free-to-play-model. The games industry adjusted and prospered. Except there was one side-effect.

In 2006, Chris Anderson wrote a very influential book about the digital economy called The Long Tail: Why the Future of Business Is Selling Less of More. The theory was that when cost for distribution and stock-keeping approaches zero, retailers can keep unlimited inventory. That has generally proven to be true, as the 1000 new games per month on Appstore show. But Anderson also said that there will be at least one customer for every offer. Ergo: with the long tail economics, there would be pluralism like never seen before. Now, that turned out to be wishful thinking. Around 25% of apps are never downloaded. On Spotify, around the same proportion of songs are never played (there is even a feature called “Forgotify” where you can “donate” a listen to an unplayed song!). The last part of the long tail turned out to be below the breaking point for demand. Unlimited supply did not create endless demand. Demand was still finite.

The free-to-play model for games turned out to be a big boys club. In order to cover costs with revenue from a small proportion of the players, the number of players must be significant. Huge. Millions of players. Yes, there were some spectacular outliers (looking at you Flappy Bird!), but the pattern is clear: in order to attract the large numbers of players needed to make money on free-to-play, the game needs a well-known brand and/or a strong marketing budget (called user acquisition in these parts). It was not for some kids to make a great game, put it out and hope it sells, instead it turns out it needs a very specialized business operation with data analysis, monetization strategies, interface design, A/B-user testing and so on. The expected democratization did not come, rather success gave more success in a feedback loop that pushes money toward the head of the long tail. Most of the 125 000 game apps don’t break even. The money lost comes from the developers themselves in most cases. In the old value chain, developers could get production budgets from publishers, but these days they turn to equity investors who often want safe revenue and a clear exit strategy. Yes, the Appstore is still vibrant with creativity and there is plenty of innovation in the business models on it. But the game developers don’t look to the Appstore so much anymore, instead it’s the PC game platform Steam that gets most attention. It has managed to maintain the premium model and new publishers have arrived to support the developers with marketing, production budgets, advice and admin. The value chain has a funny way of reappearing.

The dream of cutting out the intermediary did come true, but it did not bring the expected freedom. Instead, it brought evermore powerful intermediaries. If game developers used to complain about contract terms and publishers who don’t get the soul of the game they’re making, now they have faceless platforms. Uploading a game to the Appstore means ticking a box that you accept the terms. No negotiation. Appstore can pick the winners by promoting some games as recommendations, but the developer has little or no influence over those decisions. The middlemen were pushed out, then came back stronger. This is called re-intermediation.

Dear music industry, when you dream the dream of getting rid of the middlemen, take a page from the games industry. In other words: Be careful what you wish (it may come true)

Our devices control us more than we control them. We have become slaves to technology. Instant gratification triggers our dopamine system keeping us hooked on social media. We touch our phones several thousand times per day. We spend more time with screens than with our children. Silicon Valley insiders send their kids to tech-free schools. Some techies worry they may have created a monster. Raise your hand if any of this sounds familiar!

Recently, technophobia has talked more and more about addiction, the idea that the lure of devices is stronger than our own will. Looking from the outside, that makes some sense: step into any metro car in any city and you will find passengers glued to their screens. But from the perspective of the user, there is something wrong with this. As users, we have purpose and agency. I know when I use my device to find out when the bus is leaving, looking up the weather forecast or just passing time waiting for my turn at the supermarket checkout. And from the point of addiction, it’s almost an insult to use the same word as someone who abandoned their family and sold their body for heroin.

What if we’re looking at this from the wrong end? What if it’s not the devices that enthrall us, but that we have rational reasons to use them? It used to be that the mobile phone was for calling and texting. The smart phone, on the other hand, does banking, restaurant and travel reservations, social media, games, weather, stock prices, maps and navigation, calendar, calculation, shopping lists, cameras and photo albums, show television and movies, news, take notes, e-mail… you name it. What’s not to like? All of these functions used to have their own (analogue) devices, now they have merged into one. Small wonder we spend more time on it! That’s not really addiction, that is more a convenient but conscious choice.

Is there no cause for concern? Yes, but the problem is maybe not addiction, but something worse. All of the functions listed used to have their own economy, their own suppliers and competition within that field. Calendars were sold in book stores, gifted from your book-keepers or, if you wanted a nicer one, you would get a Filofax-binder with a range of content options. The merging of all these economies into one device is a landgrab by the tech companies. It has many benefits: convenience and free services primarily. But the flipside is concentration of money and power. That is the opposite of pluralism and competition. Plus, it creates an imperative that tech companies must continue to grow by always absorbing new markets. Perhaps at some point, tech companies were enablers for other businesses foremost, but these days they rather acquire them or beat them on account of their sheer scale. Can this landgrab go on forever? No, but there are many sectors left for Big Tech to conquer. The monster Silicon Valley created is not one that is eating our attention, but our economy.

It may look like addiction, but it’s rather a monolithic business structure. Let’s fix the right problem, shall we?

What if the problems around digital have been fixed before? If 2017 was the year of the Techlash, 2018 could be the year of the Techfix. The Techlash, when Silicon Valley started to ask if it had created a monster. Sexism was discussed openly. Facebook admitted that foreign powers had influenced the US presidential election. The technorati started thinking about the surveillance economy and if digital growth could really be endless. It was a welcome wake-up call from the previous delusions of grandeur. Mmm, gotta love the smell of fresh coffee!

The scene is set, then, for a conversation around what to do about all of it. What should the Techfix look like? Many things, probably, but here is one: the EU Commission adopted a “Communication on Illegal Online Content” in September last year. The idea is to ask the intermediaries to take voluntary measures to limit bad things like terrorism, child sexual abuse, and illegal hate speech—the darker sides of internet freedom. The other day, a more developed document—a “recommendation”—leaked” . It also talks about consumer protection, but for some reason copyright infringement is deleted in the leaked version.

One of the challenges of internet regulation is jurisdiction. A rule that makes sense in one place may be bad in a different place. Also, it is often difficult for the legislators to hold internet actors accountable if they operate from a different jurisdiction. The answer has been that it is too difficult to fix; it would break the internet (=take a way the good with the bad), and all the bad stuff online exists offline anyway. Except, of course, offline, we try to limit the bad stuff, and we don’t say that any measure to tackle problems will jeopardise the benefits, so therefore we should abstain from it.

This is when the Commission’s recommendation starts to make sense: jurisdiction is limited, problems are real. Who can do something? Who controls the internet? The intermediaries do. The platform companies. The “tech giants.”. Except they’d rather not, it’s more convenient to be “just a technology company” with no responsibility for what users do. Celebrate the principle of safe harbour (except that principle demands action when made aware of a problem!).

Don’t take it from me, but from Mekonista:

What if the problems around digital have been fixed before? What about press ethics? What stops the press from spreading fake news? Sometimes the law, but in most places it is a system of press ethics operated by the press and journalists: transparency about editorial decisions, accountable editors, clear procedure for complaints and appeals, independent scrutiny. Or what about advertising? What stops the advertisers from lying? The law, to some extent, but more importantly the code from the International Chamber of Commerce. Again: transparency, independent scrutiny, accountability. There are many others; look at banks, content ratings, food safety, automotive safety—a combination of law and self-regulation. Self-regulation is not a company checking itself. It’s an independent body with a transparent rule set and clear procedure. The benefits of self-regulation are that it is much more flexible to changes in technology, markets, consumer behaviour, attitudes, etc. compared to legislation. It is also stricter and tries many more cases than the courts can. These last two are important, as they are the reason the legislator should only intervene as an exception. Self-regulation systems are funded by the industry they regulate, and they are put in place when there is a credible threat of legislation. It is not “privatising the task of deciding what is acceptable or not.”. It is striking a balance between the interests of business and the rest of the world.

Take the hint Silicon Valley. The EU Commission is telling you to get your act together, face up and take responsibility for the fallout from your business. They don’t say it, but if you don’t, there is going to be legislation that you don’t want. So, look at the press, the advertisers or some of the others mentioned above. Whatever you put in place must be real and convincing. You have to mean it. That’s the TechFix. You’re welcome, Silicon Valley. The first fix is always free.

Get your TechFix on. Save the internet.

Full transparency: this writer has first-hand experience from self-regulation as a board member of the Swedish Advertising Ombudsman and many years working with the games age rating system PEGI.

It was only a minute ago the internet was supposed to free us from all evils. Now more and more, we talk about the problems of the surveillance economy and power concentration online. Great, this is the conversation Netopia has tried to have for a while!

George Soros made serious additions to the momentum by using most of his air-time at the World Economic Forum to talk about the perils of IT-monopolies and what can be done about it. This writer is not sure mr Soros reads Netopia, but this part reads like something from this blog (except with a different gravitas coming from this man!):

They claim they are merely distributing information. But the fact that they are near- monopoly distributors makes them public utilities and should subject them to more stringent regulations, aimed at preserving competition, innovation, and fair and open universal access.

Hear, hear! World leaders – don’t take it from me. Take it from the founder of the Open Society Foundations.

I tend to think of the EU Commission as a rock of sanity and patience in a crazy world (don’t laugh, we need something to hold on to!). I think that fits well with the COMM’s self-image too. This means that every time The Commission does something random, bad, or ill-advised, my reaction is surprise and disbelief. It shakes my world a little bit. Then I go back into my comfort zone where I think that even if it gets it wrong sometimes, the EU Commission is still the most sane government organisation we have (not that the competition is getting tougher much).

One case where I have to work harder than usual to keep faith in our leaders is the current conversation about intellectual property rights, freedom of contract, territories, and broadcast rules. The fundamentals are clear enough: if you make something, it’s yours. That works great if you are a potter, for example. You decide whom to sell your pots to and at what price. Customers choose to take it or leave it. But we can’t all be potters, and a big (and increasing!) part of our economy is intangible. That’s why there is a system of intellectual property rights. If you make something immaterial, it’s yours, and you decide the terms for how it’s used. This is called licensing. Let’s say you make a documentary. Perhaps somebody wants to buy the worldwide rights. Perhaps they want the rights to show it in one place only. You come to an arrangement.

Because the cultural and media landscape is often national, many such arrangements are limited to a particular territory, like a country. Except this goes against the idea of a single market in Europe, so the Commission has launched a number of proposals to restrict the freedom of contract for creators in various ways. Many of them haven’t gotten very far, simply because there is not a single European demand. Pluralism and diversity are more important in these cases. Some of it has succeeded, for example the portability regulation, which allows you to take your online content subscriptions with you on travel. Now the battle is about broadcast regulation.

The EU Commission wants to extend the Satellite and Cable-directive of 1993 to online services. This would allow broadcasters to air the same content online as on the air. Except satellite and cable broadcasts are limited in reach, but the internet is global. While Sat-Cab is an exception to freedom of contract (and territorial licensing) that does not completely upset the regular market, extending it to all of the internet is something completely different. Buy the rights for one territory (take a small one; that’s usually cheaper!) and get the rest of the EU for free. Small wonder creators and media businesses are upset.

It appears the Commission itself has problems with this proposal as well, because it’s putting out some very strange information. I don’t say “alternative facts” lightly, but have a look at this (alternative) fact-sheet: http://ec.europa.eu/newsroom/dae/document.cfm?doc_id=48842

Looks great on first inspection, but look again.

–          First some data about online TV. Great, thanks, but what does that have to do with anything?

–          Second, a survey result that says people are interested in cross-border access. Yeah, but they have answered the wrong question. The right question would be something like “Would you be interested in cross-border access if it means higher cost and that the content is no longer available in your language?”. I’m guessing here, but the answer would probably be different.

–          20 million people who live in the EU were born in a different member state. Assuming this is to say that many of them may like to have access to their home country’s television, we’re talking about 20 in 512 million, so less than 4%. I’m sure they have strong feelings about this, but what about the 96% still in their home countries who might have equally strong feelings about television in their own language? (The irony, of course, is that without territorial licensing, the ex-pats still probably wouldn’t get TV in their mother tongue!)

–          1 in 5 Europeans is interested in cross-border content, according to the 2011 Special Eurobarometer. Ok, great, but look at bullet #2 above. Plus, according to the 2015 Eurobarometer, 95% of Europeans haven’t tried to access content cross-border in the last 12 months, and a majority have no interest in doing so. What if the people don’t want it? The Commission probably wouldn’t force citizens to watch television from other member states, but Stanley Kubrick’s A Clockwork Orange does come to mind…

–          67% of European films are only shown in one country. Yes. Or watched.

–          Cultural lock-in, next. The alternative fact sheet talks about public broadcasters. That’s probably because the commercial broadcasters hate the idea of extending Sat-Cab.

–          The “own productions of public broadcasters” still rely on plenty of other rights. Music, for example. The composers have the same rights to compensation as any creator. With this loophole, they would get paid for one territory rather than 28.

–          “Commissioned works”—this” is part of a bigger conversation. Should public broadcasters retain international rights? Or should the production companies benefit from international sales? When the UK Communications Act 2003 forced the BBC to let producers keep the export rights, it started a boom in UK television production. Also, the (alternative) fact sheet doesn’t say if these commissioned works also include co-funded projects with broadcasters in other countries.

–          “Free up” content sounds great, but this phrase hides many headaches for creators and producers—and by extension, viewers.

–          The last boxes in the (alternative) fact sheet talk about how the choice to make content available remains with the broadcaster and that the increased audience should be taken into account when negotiating rights, hoping that this would give more payment. Except that the decision should be with the rights owner, and they need their rights to be respected, not endorsed by wishful recommendations from the EU legislator. Also, last time I looked, the public broadcasters had limited budgets, so they have every incentive to get the most from their money.

Perhaps if this is so important, the Commission could make a policy to give public broadcasters more resources. That way they could buy the rights for other territories if they wanted. I’m sure everybody would be a lot happier with that: ex-pat viewers, all other viewers, producers, creators, broadcasters… maybe even European policymakers? A move like that would certainly bring back my blind trust in our leaders.

This week, the European Commission made me read the Bible. Turns out perhaps they should have a look themselves. This is what I found:

Around the time of Jesus Christ, Jews and Samaritans generally did not like each other. But the Good Samaritan selflessly helped an injured Jew he found, beaten and robbed by the side of the road. Where others had kept walking, the Good Samaritan stopped and gave the stranger his aid.

This parable is often used as metaphor. In many countries, Good Samaritan-laws protect those who help strangers from prosecution (for example from being sued if the victim dies in spite of the help given).

A new spin on the Good Samaritan has turned up in European Commission digital policy, suggesting that social media companies should not be held liable for illegal content posted on their websites or platforms if they actively hunt it down. This is supposed to encourage proactivity on their part.

Really? More exemptions from liability is what the internet needs? Of all the problems that became apparent in the 2017 techlash – sexism, hate speech, election manipulation, extremist propaganda, disruption, abuse of dominant position, surveillance economy and then some – the common denominator was lack of responsibility on the part of the intermediaries, safe harbour gone too far. The lesson learnt should be not more exemptions from liability, but more active responsibility. Under the biblical wrapping, isn’t this only safe harbour in a new guise?

I am glad that Commission Vice President Andrus Ansip thinks online platforms must be more proactive in removing illegal content. In fact, I couldn’t agree more! But: I don’t think Good Samaritan means what VP Ansip thinks it means in this case. Internet platform companies are not innocent by-standers who happen to come across infringing content uploaded by users as they merrily stroll along the road to Jericho, whistling to themselves (probably day-dreaming about stock options). They actively provide the tools and service that makes the infringement (or highway robbery, if you prefer) possible. For profit. It’s more as if the original Good Samaritan was the road keeper, charging the robbers for use of not only the road but providing the stick to beat the victim with. I know, it sounds harsh but this is what you get with the biblical metaphors.

Moreover, the Good Samaritan-laws that give immunity for example from mistakes made when giving help, protect from lawsuits from the victim or its family or similar. In the internet platform version, this would mean immunity from the user who may disagree with a platform removing infringing content. Not immunity from the owner of said content!

If VP Ansip really wants to encourage online platforms to be more proactive, here’s a radical idea: Hold them responsible for illegal content on their systems. And I’m pretty sure that would encourage them way more than immunity. And I’m pretty sure the Good Samaritan would agree

Frequent Netopia-readers may have noticed a sudden peak in guest opinions recently. 21 MEPs published a joint statement. A group of film producers wrote an open letter to the Estonian presidency. I interviewed one of the signatories of this letter.

Let me try to explain why this comes now (to myself as much as you, dear reader!): it all is to do with the copyright reform policies that have made their way through the complex system of law-making in Europe and now arrive to votes and negotiations. In this particular case, it was the so-called Satellite and Cable-directive which allows exceptions from territorial license contracts for satellite and cable television broadcasters (whose signals may not always follow country borders exactly, so it’s a compromise of legal contracts and the limits of this particular technology). The principle of copyright is that it belongs to the creator, who can grant licenses to others to use the copyright content on agreed terms (for example, one country but not another). Now, the European Commission sees territorial licensing as an obstacle for the Digital Single Market and has proposed various restrictions to territorial licensing, sometimes successfully as with the Portability Regulation which allows subscribers to bring their content services when they travel to other member states. However, the creative industries see many of the proposed restrictions as violations of their freedom of contract and the exclusivity of the creator.

The 21 MEPs made two points: firstly, while territories are often discussed as a business interest of the creative industry, there is also a strong demand from consumers for localized content and adjustment to local purchasing power (and currency) for example. Ergo the consumers and businesses have the same interest in this case. Secondly, that the Commission should not attempt to influence the decision-making process of the other institutions, as several sources say is the case in this issue. The film producers made a different point: because territorial licensing is available in all other parts of the world, banning it in Europe would give European films a disadvantage in the global perspective.

Now dear reader, maybe you think “Interesting points, but why would expanding this cable TV-regulation jeopardize territorial licensing?” Good question! That is because the internet is a different technology than satellite and cable, and not in nature restricted to a certain area (those who can pick up the satellite signal or are connected to the cable network). Quite the opposite, the internet is characterized by its de-centralised, open-ended structure. Thus making a broadcast available on the internet, means making it available to the whole internet (unless its restricted, which is precisely what the Commission wants to ban).

Now, maybe you think “okay, but if all these smart people think it’s is such a bad idea, why is the EU Commission pushing for it?”. Good question! That is because it sees the so-called Digital Single Market as the logical next step for the European Union. The Single Market is great, so why not make a digital version? Of course, no one can argue with that. It is a great idea! Except what is a digital single market, really? Would you agree that the United States is a digital single market? I think so, and it’s often mentioned as a benchmark for the European digital single market. Except, in the US there are all kinds of territorial licenses for television, only not around the borders of states or counties, but any kind of territory. It’s possible to license content for television broadcast in one city for example by a local TV-station. I’m told the competition authorities in the US think this licensing flexibility is a good thing. That it increases competition!

What if Europe’s question is not about borders, but audiences? What if the digital single market can be achieved, not by banning certain types of licensing contracts, but by allowing all kinds of licensing contracts: global, pan-European, national, regional, local and everything in between? I know, I know: it’s preposterous of me to think that I can come up with a better solution than all the smart people who work on this all the time. But the great news is that this very flexible licensing model is possible without any intervention at all. No need for votes or trialogue negotiations. It works in the current system! There’s no need to fix it, because it’s not broken. Instead, the policy around the digital single market can focus on other things: digital skills, payment systems, access to risk capital, anti-trust, cyber-security. Of course, a lot of smart people already work on these issues. That’s great, because a lot of those need a lot of fixing!

What happens now, you ask? Good question! There was a vote in European Parliament earlier this week that protects territorial licensing, with the exception of “news and current affairs” broadcasts. The Council of Member States will decide their final position maybe already this week. I’m told they’re leaning the same way as the Parliament. After that, the so-called trialogue negotiations will begin, where the three institutions try to come to an agreement. Stay tuned as this unfolds.

Dear reader, I hope this post helps explain this issue. Thanks for reading all the way through. If you’re still confused, at least I hope you’re confused on a higher level.