The Case for Copyright Reform (15 page)

No lavishly expensive expert panels were held in total consensus about
how necessary icemen were for the entire economy.

Rather, the distribution monopoly became obsolete, was ignored, and the
economy as a whole benefited by the resulting decentralization.

We’re now seeing a repeat of this scenario, but where the distribution
industry — the copyright industry — has the audacity to stand up
and demand special laws and say that the economy will collapse without their
unnecessary services. But we learn from history, every time, that it is good
when an industry becomes obsolete. That means we have learned something
important — to do things in a more efficient way. New skills and trades
always appear in its wake.

The copyright industry tells us, again and again and again, that if they
can’t have their obsolete distribution monopoly enshrined into law with
ever-increasing penalties for ignoring it, that no culture will be produced at
all. As we have seen, equally time and again, this is hogwash.

What might be true is that the copyright industry can’t produce music to
the tune of
one million
US dollars per track
. But you can’t motivate monopoly legislation
based on your costs, when others are doing the same thing for much less —
practically zero. There has never been as much music available as now, just
because all of us love to create. It’s not something we do because of money,
it’s because of who we are. We have always created.

What about movies, then? Hundred-million productions? There are examples
of garage-produced movies (and one even has beat Casablanca to become the
most-seen movie of all time in its native country:
the film
Star Wreck
in Finland
).
But it may be true that the argument is somewhat stronger with the
blockbuster-type cinema productions.

So far, the film industry has been setting new box office records every
year for the last decade. For all their doomsday scenarios, they have never
done better financially than right now. But, fair enough, perhaps there will
come a time when people will become less interested in paying for
hundred-million dollar films.

But even if it would be true that movies can’t be made the same way with
the Internet and our civil liberties both in existence, then maybe it’s just
the natural progression of culture.

After all, we have previously had operettas, ballets, and classical
concerts as the high points of culture in the past. They all still exist, but
they are not at the center of mainstream public attention in the way they once
were. Nobody is particularly concerned that those expressions have had their
peak and that society has moved on to new expressions of culture. There is no
inherent value in writing today’s forms of culture into law and preventing the
changes we’ve always had.

Everywhere we look, we see that the copyright monopolies need to be cut
down to allow society to move on from today’s stranglehold on culture and
knowledge. Teenagers today typically don’t even see the problem — they
take sharing in the connected world so totally for granted, that they discard
any signals to the contrary as “old-world nonsense”.

And they certainly don’t want to pay a refrigerator fee.

Cultural Flat-Rate: A Non-Solution To A
Non-Problem

Cultural flat-rate, or global license, or a broadband tax to give money
to copyright holders, is an idea that has been around for at least a decade,
but has never become reality. There is a reason for this. The idea sounds
deceptively simple and possibly attractive when you first hear it, but when you
start looking at the details to formulate a concrete proposal, you become aware
of the problems.

Collecting the money is one thing. You can discuss
if it is fair
to force people who do not actually download anything
to pay anyway,
or
why
businesses should be compensated for technological progress
, or
details like how to handle the multiple (mobile) Internet connections that a
family normally has. But we leave that aside.

It is when you come to how the money should be distributed that the real
fun begins.

• TV and radio play: Giving to the rich

If you base the payouts to artists on what is being played on TV and
radio, most of the money will go to the established artists that are already
doing very well. This is how the current system with levies on blank discs and
various electronic devices works.

One of the most attractive features of the Internet is that smaller and
not yet established acts can reach an audience, even if they are not played on
TV and radio. This is the ”long tail” effect, and all the small acts together
constitute a fair amount of what is being downloaded from the net.

This is the group of artists that most people would want to support,
both for the cultural diversity they provide, and simply because they very
often need the money. With a cultural flat-rate based on TV and radio play,
they will get very little of the money collected. At the same time, their fans
will have less disposable income to spend on these artists, since the fans have
had to pay the flat-rate out of their household culture and entertainment budget.

The net effect could very well be a system that reduces income for poor
artists, and gives the money to the already rich.

The alternative that most flat-rate proponents favor is to instead
measure what is actually shared on the net, and base payouts on those numbers.
But that leads to other problems.

• Billions to porn

35% of the
material
downloaded from the net is porn. Pornography has exactly
the same copyright protection as other audiovisual works. If the payments from
a cultural flat-rate system are to be seen as ”compensation” for the
downloading of copyrighted works, then 35% of the money should rightly go to
the porn industry. Do you think that the politicians should create a system?

The point here is not to criticize porn as such. It is a popular form of
entertainment, and there is nothing inherently wrong with it. But this does not
mean that it requires billions in government mandated subsidies. Throughout
history, this is an industry that has amply demonstrated its ability to stand
on its own, if that is an appropriate expression in this context.

But if you want to exclude porn from a cultural flat-rate system, you
will not only have to create a ”European Board of Morality and Good Taste”, or
some similar mechanism to draw the line between pornography and art. More
importantly, you can no longer use the argument that the cultural flat-rate is
a ”compensation”, or has any connection to copyright.

Instead, it becomes random cultural subsidies at best, or an
undisciplined money-grab at worst.

• Filling up the networks

It is technically possible to measure what is being shared on the net
with a reasonably high precision. Some people have voiced privacy concerns, but
in this particular case, that would not be a problem. The measuring only has to
be ”good enough”, so it is not necessary to track every individual download
that everybody does. You can fairly easily design a system to collect good
enough statistics without invading anybody’s privacy.

But the minute you start paying out money based on the download
statistics, people will change their behavior. Today, if you like an artist who
has released a new album, you will download that album once so that you can listen
to it. But if you know that your favorite artist will get money in proportion
to how many times the album is downloaded, you realize that you can help that
artist by downloading the same album over and over again.

Since it doesn’t cost you any of your own money even if you download the
album a thousand times, or a million times, we can expect fans to do exactly
that. We know that fans really love their idols, and want them to prosper
economically. If all you have to do to make that happen is to start a
three-line script on you computer when you are not using it for anything else,
a lot of fans will.

The only real limit on the total number of
”I-want-to-help-my-favourite-artist downloads” will be the capacity of the
Internet infrastructure. In other words: With a cultural flat-rate, the net
will turn into a permanent gridlock of completely unnecessary traffic, and no
matter how much money backbone providers spend on increasing the capacity, it
will fill up immediately.

• A revenue stream for virus writers

Computer viruses are a major problem today, despite the fact that it is
actually quite hard for virus writers to make any money from their criminal
activities. The purpose of a computer virus is usually to install a back door
in your computer, to make it part of a so called ”botnet” of thousands of
computers that the virus writer can take control of at will.

A botnet owner can sell his services to criminals who want to send spam
or commit various forms of advanced fraud, but unless the virus writer has
connections to organized crime, it is not trivial for him to convert his virus
writing skills into hard cash. With a cultural flat-rate system, that changes.

In principle, all the owner of an illegal botnet needs is a friend who
has recorded a song that is covered by copyright. He can then order the
thousands of computers in the botnet to download the song again and again.
Thanks to the flat-rate system, these downloads will automatically result in
real money being paid out to the friend who has the copyright on the song.

In its most primitive form the police would perhaps be able to detect
this criminal activity and put an end to it, but it is easy to imagine how more
sophisticated criminals can elaborate the scheme. The cultural flat-rate
system, which would pump out billions of euros per year on the basis of
automatic download statistics, would become a very rewarding target for
criminals. Writing harmful computer viruses would become a much more profitable
activity than it is today.

• There is no problem in the first place

There are several other arguments against cultural flat-rate as well,
but we’ll skip those and go directly to the final, and very positive one:

There is no problem to be solved.

The Internet is a revolutionary technology that changes many of the
preconditions for the cultural industries. The task for policy makers and
politicians is not to protect old business models or to invent new ones.
However, policy makers do have a responsibility for making sure that we have a
society where culture can flourish, and where creative people have a chance to
make money from what they do.

Ten years ago, when file sharing on the Internet on a massive scale was
a new phenomenon, it was perhaps reasonable to wonder if this new technology
would impact the market conditions for artists and creators so that they would
find it impossible to make money from culture, and worry that cultural
production would drastically decrease in society.

Today, we know better. We know that more culture is being created than
ever before, and the people who were predicting ”the end of music” or similar
doomsday scenarios were simply wrong. There is a growing body of academic
research showing that artists are making more money in the file sharing age
than before it. The record companies lose, but artists gain from file sharing.

It is not easy to make a living as an artist, and it never has been, but
the Internet has opened up new opportunities for creative people who want to
find an audience without having to sell their soul to the big companies who
used to control all the distribution channels. This is a very positive change
for the artists and creators, both from a cultural and an economic perspective.

There is no need to compensate anybody for the fact that technological progress
is making the world a better place.