Owned Ideas are Different Ideas

When ideas are property, the ideas we have are different than when they are not. If we look for peer production to produce the same familiar novels, music, and films that arise from proprietary production, we are bound to be disappointed. Worse, we will be blind to the different qualities of works produced in the commons, and to the engagement, the community, and the self-development that take place there.

For ideas to be made into property, they must be transformed. Creative and intellectual works never stand alone: they are always interwoven with other ideas. Yet property must be bounded. We must determine what is part of the property, and what is not. When a novel is owned, we must disentangle it from other novels, stories, and ideas in order to be able to say which words are within the novel, and which are without it.

The enclosures of physical land in England illustrate how the bounding of property changes the thing. “Enclosure” is not just a figure of speech: the enclosure laws of the 18th and early 19th centuries required land owners to physically separate their land by building fences. Some could not afford the expense, and had to sell their property. Land ownership became concentrated; villages changed and disappeared. The land was physically different before and after enclosure. When a similar change took place in the Oklahoma territories, a Pueblo chief found himself lost in a landscape he knew. Enclosed land was not only managed differently, it was a different sort of land.

When ideas are not owned, they are slippery. They overlap and interpenetrate one another. Each contains parts of others. Stories share themes, characters, motifs; sometimes there are multiple conflicting versions of the same story. The interconnection of ideas spans time as well: ideas change as they are passed on; stories are retold, altered, added to.

When ideas are owned, their forms must be frozen. What had been amorphous ideas and culture become individual works. A story must be captured in a novel; a piece of music in a composition or a performance. One version or form is authoritative; others are secondary or simply not permitted.

We can predict that the ideas produced under these conditions will be different. We can predict, without ever seeing Microsoft Windows, that it will not be like Linux. In fact, such predictions are common – like claims that free and open source software1 is inherently more secure and more bug-free because it is open to examination by more people, or that software produced in the commons is merely imitative of that produced elsewhere.

But the differences go deeper than that. Even when we do have Linux on one hand and Windows on the other, how do we compare them? Which version of Linux should be compared? Microsoft takes years to release a new version of Windows; there is a new Linux every day. What is Linux anyway? Is it “Linux”, an operating system kernel, or “GNU/Linux”, an operating system with the software to make it useful?

We can anticipate, without ever reading Encyclopedia Britannica, that it will not be like Wikipedia. Some people praise Wikipedia for its scope and its ability to include up-to-the-minute information about the world; others criticize it for the anonymity, lack of authority or credentials of its authors, the constant change that allows an article to say one thing one minute, and something else the next. They all agree that Wikipedia and Britannica will always be different.

The products of the commons are not like the products of proprietary production. And when we try to find the “work” – the novel, the album, the film – we find it slippery, hard to name, hard to locate. If we try to pin it down, we will change it – and we will miss what else is happening.

Commons activity takes place in a community; the product itself may or may not be the most important thing. Participating, people express themselves, develop themselves, build relationships. The concept of a “work” is problematic, because it is always dynamic. It stops changing only when the community that sustains it drops away. When an open source project ceases to change, we call it abandoned, dead. If no-one edited Wikipedia, it would not be Wikipedia any more; the experience of reading Wikipedia is inseparable from the continuous process of its creation.

And so, if we go looking for novels, for songs or albums, for feature films in the commons, and expect to find the proprietary works we are familiar with, we will not find what we are looking for. If we judge the value of peer production by its ability to reproduce the past, we will find it wanting – we may even block it or ban it for violating the boundaries we place around proprietary works. If, on the other hand, we seek out the commons for what it is, not what it is not, we will find people talking to people, expressing themselves, developing their abilities. Yes, we will find works, though they may not be like the works we are familiar with. But we may find, finally, that what we do in the commons is just as important as what we produce.

Notes

1 The term “open source” refers specifically to the peer production of software, while “free software” encompasses the moral implications of openness and freedom. However, I use the term “open source” here and elsewhere, even though I implicitly argue for the freedom of free software, because it is concise while lacking the ambiguity of “free software”, and because my argument applies to it even when consciousness of the moral dimension is lacking.

2007-03-15

The Future of Creativity

Often people belittle those they disagree with as stupid or irrational. The music and film industries, for example, in their fight to keep music and movies off the Internet, are said to be blind to the wealth the technology offers them. I don’t agree. The entertainment conglomerates are certainly scoundrels. But I think their behavior is perfectly rational.

One classic illustration of the foolishness of their behavior is Jack Valenti’s hyperbolic claim in 1982 that “The VCR is to the American film producer and the American public what the Boston Strangler is to a woman home alone.” The sale of videos went on to become an profitable part of Hollywood’s business, to the point where video sales account for “35-50% of the typical film’s income1.” The Internet seems likely also to enrich and expand opportunities for the entertainment industries. So why are they fighting it?

The answer is that the the industry is not identical with the biggest firms. The tremendous promise of the Internet will be good for entertainment; it may not be good for the dominant players today. When you’re winning the game, changing the rules is not very appealing. So far, the incumbents in these industries have been reasonably successful at hindering change.

A Vision of the Future

Smaller industries with fewer profits, lacking the power to dictate laws or criminalize the behavior of customers, are already changing. I will be drawing evidence from a column by Robin Laws, a roleplaying game (RPG) designer. I recommend reading his piece even if RPGs don’t interest you; it is a fascinating depiction of an industry dying and being reborn in the age of the Internet2. Laws simply asked a number of people throughout the industry, “Is the RPG Industry Screwed?”

For retailers, distributors, and many publishers, the answer seems to be yes. This is a tiny industry – the market is estimated at $25 million, and it has shrunk enormously since its glory days in the 1980s. The market is fragmenting as barriers to entry fall. Potential customers are lured away by trading card games (like Magic: The Gathering and Pokemon) and computer RPGs (like Everquest and World of Warcraft). Retailers are struggling to compete with eBay and Amazon; according to an interviewee in Laws’ article, 40% closed shop in the U.S. in 2005. Many have seen the writing on the wall and are diversifying away from RPGs. Despite all this, no-one is throwing RIAA-style tantrums: there is no war here between an industry and its customers, or even (as far as I know) between the old guard and the innovators.

For players and game designers, however, the answer to Laws’ question is quite different. As traditional publishing becomes uneconomical, game designers are shifting to print-on-demand (e.g. through Lulu) and PDF sales. The RPG industry is a rare field in which PDFs are popular: Laws suggests they are 8-14% of the market and growing3. Designers and publishers are experimenting with ransoming their works. This week, a small RPG company asked players to commit to buy before going ahead and printing a 224-page hardcover book. They achieved their goal of 400-odd patrons in only 48 hours. This diversity and fragmentation causes difficulty for publishers, distributors, and retailers, but it is a boon for designers and players.

What’s Good for General Motors…?

In economic terms, the news looks bad: more people producing smaller print runs of a greater variety of games for less (or no) profit. Bad for GDP, bad for productivity. For existing publishers, distributors, and retailers, this could be the end of their involvement with RPGs. Yet for many people who love the games, this looks suspiciously like the start of a new golden age. Ben Lehman, an independent game designer interviewed by Laws, captures the optimism:

I’m seeing a . . . movement away from the periodical/collector/fandom model of enjoyment, and more towards creative focus and real play. In this respect, and that’s what matters, I think that role-playing is at its healthiest state since the 70s. . . . certain aspects of the role-playing distribution chain are being eclipsed by an economic model that is more effective in both creative and monetary terms, and as a player and designer I just can’t see that as a bad thing.

Laws’ article can be seen as a depiction of a possible future for other creative industries. Spending shrinks as consumption gives way to experience, creativity increases and people have more fun. For the entertainment giants, this is the nightmare scenario. If what is happening to RPGs happens to music and movies, everyone might win. Except them.

Notes

1 Janet Wasko, “Show me the money”, A. Calabrese et al., Toward a Political Economy of Culture, 2004, p. 13.

2 RPGs are hardly unique. I believe the comic and wargame industries (among others) have experienced similar pressures and changes.

3 Consumers have objected to DRM and got their way. Despite concerns about piracy, one of the main PDF vendors shifted away from DRM-protected files; now they simply add the buyer’s name to each page of a download.

2006-06-11

What is a creative work?

What is a creative or intellectual work? The assumption that the exercise of human creativity and thought produces discreet objects – works – lies at the heart of the concept of intellectual property. Indeed, this is what copyright and other IP laws do: they define parcels of ideas1, then assign rights over those ideas to people. The commons, by contrast, treats intellectual and cultural works as shared entities.

Ideas Are Never Discreet

In reality, ideas are never discreet entities. Even creative works that appear to be separate – such as novels, music albums, or films – are developed from the raw stuff of other culture. Lawrence Lessig illustrates this beautifully when he describes how Disney’s success was built upon traditional folk tales like Sleeping Beauty and Snow White2. As I have argued, much of the meaning of these works emerges from another source: the audience’s interpretation of culture creates much or most of their value.

Creative, cultural and intellectual works aren’t only tied to other works, they are also tied to other versions of themselves: they change over time and with context. For example, the meaning of a duck & cover video is very different now than when the Cold War was at its height, even though the images themselves have not changed.

Intertwingularity and the Internet3

None of this is new, but it is particularly relevant in the context of online media produced by numerous authors and always in flux. How does one disentangle the contents of a wiki or an online forum? What is the relationship between that content and the ideas and intellectual work that gave rise to it?

A Wikipedia article, for example, is multiple in both space and time. The text itself is hard or impossible to connect to the work that went into creating it: it has likely been written by many people, whose changes to words, sentences, and paragraphs cannot be isolated from each other. The article as a whole is also linked to the larger encyclopedia or to external sources on which it depends for explanation. The content may be further distributed in space as other sites copy it in whole or in part, perhaps making their own changes.

Furthermore, there are many versions of the same article. For a start, Wikipedia keeps a revision history (and if the article is vandalized, an older version may be preferable to a newer one). The article coexists with other versions of itself in time; copies elsewhere may represent different versions. Accurate references to an article must therefore refer to the specific version referenced. Wikipedia is exceptional in this way: most webpages don’t maintain a revision history. References must include the date the page was accessed; even then the content is often ephemeral and lost to history.

The same applies to software, which is typically also the product of multiple authors and versions. Even the point where one piece of software ends and another begins can be hard to determine – hence the dispute as to whether the popular open source operating system is Linux or GNU/Linux: proponents of GNU/Linux argue the core of the operating system cannot be meaningfully separated from other essential parts of the system. Indeed, this echoes the question of the Microsoft antitrust case: was Internet Explorer part of Windows or not? Well, yes and no.

The Work and the Commons

The difficulty with isolating intellectual and creative works from each other helps explain why a strong implementation of intellectual property threatens the creativity it purports to protect. But the commons can also be affected, for the concept of the “work” is common here also (I use the term myself). Lawrence Lessig, for example, has proposed that U.S. copyright be scaled back by again requiring copyright holders to register their works. But what would they register? If the work is changing, when would they have to register again?

Anthony McCann argues that most understandings of the commons, rather than opposing the enclosure entailed in the concept of intellectual property, reinforces it. Advocates of the commons often draw a contrast with with enclosure as an efficient means of managing resources. But, McCann says, accepting an economic perspective of the management of resources implicitly accepts the ideological basis of enclosure and the commodification it entails.

Although I think McCann goes too far – even an economic commons is valuable – his skepticism of such understandings is useful. Indeed I have proposed that it may be more helpful to look at the commons in terms of practice and experience rather than production and consumption. Yet I begin by arguing that creativity is often individual and can be tied to a particular work. The concept of the work is not only helpful analytically, it corresponds to much of our experience of culture and ideas in the world. Works, however, can be defined many ways (the Wikipedia page or paragraph, the edits of a particular author, the Web as a whole, etc.). The danger McCann raises is of commodification even in the commons. One definition of a work may become seen as natural, and be elevated above all the others. A commons that does this diminishes itself4.

Notes

1 I say copyright protects ideas. It may be objected that it protects the expression of ideas. For example, the copyright of a novel protects the words expressing the story, not the concept of the story itself (although in practice this is more ambiguous). A series of words is an idea too, however. The distinction only makes sense at a certain level, and only when the contrast with expression is introduced. The ambiguity only reinforces my point about the difficulty of separating ideas.

2 See Lessig’s Free Culture.

3 According to Wikipedia, intertwingularity was coined by Ted Nelson, who also thought up “hypertext”. I first saw the term in recent years used by ambitious web entrepreneurs.

4 That said, I am using an attribution version of the creative commons license for this post. There is on ideal solution.

2006-05-17

Paying the Door

The door refused to open. It said, “Five cents, please.”

He searched his pockets. No more coins; nothing. . . . “What I pay you,” he informed it, “is in the nature of a gratuity. I don’t have to pay you.”

“I think otherwise,” the door said. “Look in the purchase contract you signed when you bought this conapt.”

— Philip K. Dick, Ubik

Pricing is sometimes touted as a universal path to efficiency. Big telecoms providers plan to charge for premium access to specific third-party web sites over their networks; this would entail tracking the priority of all data crossing those networks. Yahoo and AOL want to charge a quarter of a cent per email for guaranteed delivery. Hollywood and the recording industry plan a future in which technology can track everything you do with their content and bill you accordingly.

When these companies argue their new pricing will increase efficiency, we should ask for whom. Ubick‘s apartment-dweller who can’t afford to pay to open his own door illustrates the perversity of markets gone mad. It isn’t efficient to price everything. It isn’t efficient to pay the door – unless you’re the door, that is.

2006-04-21

There's too much copyright when it threatens democracy

I attended a discussion entitled When is there too much copyright? at the Vancouver Public Library tonight. The room was quite full – there were probably about 80 people in attendance. The copyfighters were by far the majority: I only recall one person arguing for strong copyright from the floor; much of the discussion was criticism aimed at the lone proponent on the three-person panel.

On the one hand, this is unfortunate: there’s not much to be gained by discussing with the converted. This also suggests the degree to which self-selection in the audience limited attendance by those not already acquainted with the issues. On the other hand, the large attendance shows that this is an issue whose time has come.

Democracy

Cindy pointed out afterwards that I was the only person who drew an explicit connection between copyright and democracy. This is because I have a problem with a debate framed as a negotiation between creators, publishers, and consumers. We are not just consumers; we are co-creators of cultural works. Audiences add value: we both publicize culture (it is the audience that creates the bankable value of a blockbuster) and add meaning to it (e.g. the ritual of the Rocky Horry Picture Show).

But there’s more to it than this: we and our society are the subject of our cultural expression, and that is inherently political. Take the PBS civil rights documentary Eyes on the Prize. The news footage in that series depicts the people – politicians, police, protesters, victims – who made history in the struggle for civil rights in the United states. But their contribution goes unacknowledged. The copyright holders of the footage are treated as owners; they set the price we must pay to see our history1. As a result, PBS can no longer show or distribute the series because its licenses to the news footage have lapsed, and PBS can’t afford the half-million dollars it would take to renew.

Eyes isn’t alone – art has often been a medium for political expression, from Murphy Brown to Rock & Roll, and it is often the audience that adds the politics2. Democracy is participation: in a very real sense, culture is the realm of democracy between elections. I oppose strong copyright not because I want free music and free movies, but because music, movies, books, newspapers – the lot – are the medium of democracy. Strong copyright tries to enforce the fiction that we are observers, not participants, in our own society.

Notes

1 My being Canadian hardly separates me from the joint history of our two countries, or indeed the connections that bind us to the rest of the world. There is no sense in a taxonomy that says the settlement of New France is “our” history but the struggle for racial equality is not.

2 And the value. Although they don’t supply them, meanings like this often pay off for artists or holders of copyright.

2005-10-27

Open Source, Piracy, and Networks

Many people who believe current copyright laws are too strong have suggested that sharing benefits publishers. A number of artists agree, but publishers remain unconvinced. They continue to push for draconian legislation and digital rights management which interfere with our ability to use the content we pay for. Ken Camp argues that this will ultimately fail: content is not king, “content is a commodity . . . we are the value.” His argument is very similar to Steven Weber’s insight in The Success of Open Source1.

What Weber says is this. Most economic theory is based on excludability and scarcity. Most goods are both excludable (you can stop someone else from using them – your car, for example, when you lock it) and rival (there is a limit to them, so the more I have the less someone else can have). Software is different: it is both non-excludable and non-rival. If I have a piece software, I can give it to you without incurring any cost or disadvantage to myself. As a result, all sorts of economic mechanisms, such as supply and demand, break down.

One such mechanism is the problem of free-riders – people who take from a common pool without putting anything in. A good example is fishing: it is in the collective interest that we not overfish the oceans. But it is in the individual interests of fishermen to free-ride. If I take a few extra fish I’ll make more money. Of course, it’s in every other fisherman’s interests to do the same. And so we overfish, stocks collapse, and everybody loses.

For most goods, free-riders would be a serious problem. Open Source seems to suffer from more than it’s share. In fact, we are all free riders – you, me, just about anyone who uses a computer. I use Mozilla, Open Office, my mail is sent through an SMTP server. And yet, Open Source doesn’t even discourage free-riding (in other contexts called piracy). Why not?

The first part of the explanation is obvious: software is non-rival and non-excludable; you can’t “overfish” software. But Weber goes one step further. He says that while free-riding is a problem for most goods, for software it can actually be a benefit. Open Source developers allow free-riders to use their software because it is in their own interest.

The key is positive network externalities. Every additional copy – even if made by a free-rider – increases the value of all the other copies. This is the reason for Windows’ dominance. Windows runs on close to ninety percent of the world’s desktops. Why? Because most software is written for Windows. Why is most software written for Windows? Because Windows runs on most of the world’s desktops.

Ken explains how people using content – like music, films, and books – increase its value:

When we make it our own, we add value with our joke, our quotes, and even with our getting it wrong. We are the value. We’re the value that makes LOTR the blockbuster. We’re the value that makes that hit song #1. . . . The Internet isnt’ a delivery mechanism for content. The Internet is a collaboration mechansim for us in the value chain. We are not consumers. Consumers eat the steak from the market at dinner and the steak is no more. We’re not a market. We’re not a target audience. We’re the top of the value chain. We are the value-add.

Ken is talking about positive network externalities. He’s talking about how even free-riders can increase the value of content. I hope he’s right. I hope Weber’s right. Then everybody wins.

Notes

1 Harvard University Press, 2004.

2004-09-27

Copyright and the Golden Age

Canada considers changing its copyright laws to prevent the free distribution of music on the Internet. Some claim that such copying is an attack on the artist; others are the middle men who fear for their incomes in a golden age of art. We have more to fear from draconian laws than from a society that joyfully immerses itself in its culture. If we enforce our copyrights too sternly, we will not only take the joy from music and film and the entertainments which make humanity unique, we will also attack the thoughts, commentary, and debate which are the lifeblood of a democratic society.

Let us start at the beginning. Copying is not inherently wrong, and it is not even legally theft. Copyright was a concept created by English censors centuries ago, and brought into the modern era by a newborn and uncertain America which wished to encourage its citizens to be makers of culture. The founders of the United States believed that copyright, while it provided a limited 14 to 28 year monopoly and violated the free market, would encourage more than it repressed. And it would repress: they understood the risk, as they understood that copyright could not and should not give eternal control to an artist.

Artists are not motivated by control1 – if they were, they would create their work and keep it locked away where no-one could see. Neither are they all motivated by money. Indeed, few can be because few become wealthy; paintings are famous for being worthless until their painter’s death. Artists – and include in their number writers of all sorts – wish to express something, to share it with their community and to influence their fellow people. I think few artists would trade recognition for wealth and consider their art a success, and for that we all benefit. We hope to right the balance so that the artists can afford to bring their gifts to the world.

Their art is based on past works. Much of the greatest art is great precisely because of what it borrows – think of the Simpsons without its references to American pop culture, or Warhol without Marilyn Monroe. All art, from electronic music with samples of old songs or the plays of Shakespeare whole stories were proudly taken from past works and in doing so created expressions in turn copied by the language. None of this copying diminished the value of art; indeed, copying often enhances is: with the right quote or tune an artist links in to the rhythms and associations of an entire culture. If it were even possible for art to stand apart, entirely original, it would be no part of culture. Cut off from the culture which it feeds, art would wither and die.

We who are not artists also depend on their work. We dance to their music, lose ourselves in their writings, and are enraged and enlightened by their commentary on the politics and workings of the society we live in. It enlivens us because we participate – we hum the lyrics and change them, we dance and the player plays. Art is created not only by the artist, but also by the audience. It is no accident that great societies go hand in hand with great artists, from the philosophers and sculptors of Athens to the painters of Florence and Paris. Only inhuman societies (the Nazis, the Soviet Union) have been dead to art. We suppress it at our own risk.

Now we have the Internet, which has brought a gallery of art into our homes. Project Gutenburg publishes great books for all to read, galleries show images of famous paintings, music downloads abound. More: the barriers to entry are erased, the middle man eliminated. Writers upload their manuscripts and increase book sales. Musicians pound away in their studios and share their work for all to see. Surely this can be no threat to art!

But that is how we have cast it. The Internet is now the villain. Fear mongers cry that if we are surrounded by music we must inevitably lose it. We must shut things down, close the window that lets in the music. It is hogwash. The artists have nothing to fear. Musicians who make a bare few percentage points on the sales of their songs have an opportunity to work without the middle man. It is he who is afraid, for it is he who has become redundant. If he cannot find a function in a world with more and varied art than ever before, then he is not needed.

Furthermore, we cannot prevent this copying. Countries with stronger laws have had no more success. If a war on drugs cannot stop our children from using substances which harm them, what hope have we of stopping the ephemeral signals which carry their birthright and the lifeblood of their culture?

This battle over piracy and copyright is not about artists starving for lack of money. Some may believe it, but the Internet will no more destroy them than the VCR or the cassette recorder before it. This simply a battle for money and control by those who neither create nor participate in our culture. Copied music may not be noble, but as Justice von Finckenstein understands when he compares the computers on the Internet to photocopiers in the library2, there is no way to stop only some of the music. The file sharers may not be right, but those who wish to stop them are certainly wrong.

Notes

1 Despite the outrageous claim of the Globe & Mail, which claims that perhaps there is a business reason to allow copying on the Internet, but that “It does not speak to the right and wrong of the situation . . . it is vital that creators and performers be given legal recourse if someone uses their work without authorization.” Then we would be in thrall to those who create our art, mute spectators forbidden to participate in our own culture. If this is right and wrong then black is white and newsprint is worth less than it used to be (The Globe & Mail, editorial, 2 April 2004).

2 This is the judge who this past week ruled that placing music on a computer and allowing others to download was like placing a photocopier in a library and hence not illegal in Canada. His ruling has been interpreted as indicating that peer-to-peer Internet music sharing is legal in Canada.

2004-04-04

Commentary on Canadian Copyright Reform

Abstract

Copyright laws create a limited monopoly.  As copyrighted works (e.g. software) play such an important role in our economy, dramatic changes to these laws present serious economic risks.  We should take care to make such changes only where the benefits are clear.  Several of the proposed changes to copyright law, notably restrictions on reverse engineering and on devices that can be used to break copy protection, carry with them greater risks than benefits.

Content

Canada is revising its copyright laws because of new technologies.  As a software developer and consultant, and as a consumer, this affects me directly.  I am worried that in our haste to strengthen protections we will weaken the economy.  Other issues, such as fair use and the rights of consumers also concern me, but I will concentrate on economic issues because I believe that if the right balance is struck there, consumers will also benefit.

Copyright grants an artificial limited monopoly to a holder of intellectual property (IP), allowing that holder a certain amount of control over how that property is disseminated and used.  There are two related aims of copyright: first, to guarantee that the creator of a work is compensated for creating that work; and second, to thereby encourage the production of works for the benefit of businesses, consumers and the public at large.

The aim of copyright is not, and should not be, to make intellectual property equivalent to physical property.  After all, these have different qualities.  For example, all physical property is finite – there is only so much real estate or oil in the world, and the costs of production and the value of physical property increase in proportion to the quantity produced. This is not the case with IP – there is no limit to the number of books that could be written, or of songs that could be sung.  With IP, creation costs are one-time, and duplication (at least in a digital environment) is essentially cost-free.

New technologies have changed the IP landscape.  They make possible efficiencies in distribution that are not possible with physical property. This should lead to reduced costs and increased quality (e.g. from competition as a result of lower costs), quantity, and availability, benefiting everyone.  But as distribution is the bottleneck that has allowed copyright’s limited monopoly to operate, this also creates a risk that the monopoly will be weakened to the point where creators will not be adequately compensated and therefore will produce fewer works.

Any changes to the law should aim to prevent this from happening.  But there is a problem.  In the past, distribution and marketing (e.g. printing books, advertising films) often comprised the lion’s share of costs.  Therefore, the businesses that focus on distribution and marketing may feel they have the most to lose, as their share of overall IP market shrinks, and that strong copyright controls safeguard their industries.  This can place them in direct opposition to consumers, who would benefit from lower prices, and to many creators, who would otherwise have a wider market for their work.

Witness the battle over MP3 music.  Musicians are divided as to whether copying over the Internet is good or bad for them.  Consumers clearly see a benefit.  Publishers are terrified of being cut out of the loop.  But the Internet does not make creativity easier;  distribution is where market efficiencies are to be realised.  If the share of distribution in the over all value chain does not decrease, then that is a sure sign that the market is being distorted and the economy is suffering.  This hurts everyone – often even the distributors, because they could make more money with a smaller share of a larger market.

This is the same danger created by trade barriers and subsidies to unsustainable industries.  If Canada makes copyright laws too strong, we will weaken our economy:  IP costs will be artificially high, quality will suffer, and producers will actually be discouraged from creating more product because they are able to continue to rely on cash cows whose creation costs have already been paid.If we can strike the right balance, we will encourage growth in related industries, such as high tech and culture.  Canada’s market will be more efficient and competitive.  Witness the beneficiaries of the revolution in distribution, such as tremendous growth for telecommunications equipment makers (notwithstanding the recent collapse of the sector) and the service and consulting industries.  We want the minimum regulation necessary to encourage a large, efficient market.

I realise that we are drafting changes partly in response to international treaties, but this does not mean that we must exactly match laws elsewhere. If we can find a better balance, then we will enjoy a competitive advantage. I believe that the best law will provide protections necessary to ensure the creation of works, and nothing more.  The United States appears to have erred in its recent legislation (the Digital Millenium Copyright Act) by providing too much protection to its IP industries, and too little to industries and consumers who depend on IP. While this is unfortunate, it offers a window of opportunity for Canada to be more competitive.  In the long run, protecting the interests of consumers will make us all better off.

Trends suggest that things may well sort themselves out.  Many companies have shifted their emphasis from selling software to providing services;  examples include market giants IBM (services accounted for 36.7% of their revenue in 2001) and SAP.  Microsoft is moving in the same direction with its XP lines and its .Net and Hailstorm initiatives.  I believe that the most expensive infringers of copyright – businesses – will end up in a services model, in which they rent software and support, rather than buying them outright.  Individual consumers present a different problem, but in the past the market has found solutions. Television and radio had funding problems at one time, but they were resolved by a new business model.  Advertising provided the revenue, and the markets exploded because of the low cost to consumers. Similarly, the VCR was seen as being a threat to Hollywood, but has proven a boon.  While MP3s appear to have hurt music publishers, proposals for flat-rate subscription services might solve the problem efficiently. If, as with cable TV, virtually everyone subscribed, piracy would become a moot point.  Current copy-protection schemes for other works, such as DVDs and video games, although technically possible to break, are already effective for the vast majority of consumers.

While these solutions may not be the right ones for today, they suggest that the market is capable of finding ways to make IP profitable. The drive towards stronger protections appears to be an attempt to keep the landscape from changing, even though changes may well benefit all involved. It is premature to create burdensome new regulations when we aren’t even certain of the extent or existence of a real problem:  the economic costs for making a mistake could be severe.

Specific Comments

Regarding legislative measures to deter the circumvention of copy protection, I believe it is important that we tread carefully here.  If copy protection is circumvented in order to violate copyright law, then of course it is illegal. But I wonder whether it is practical in the first place – if someone is breaking the law by committing piracy, then that is already a crime. Making the capability to do so illegal will not stop the law breakers.  It will, however, prevent legitimate attempts to reverse engineer and analyse for the purposes of competing and for testing security measures (see below). We must also be careful to distinguish between breaking copy protection and violating copyright.  There are many circumstance in it is perfectly legal to make a copy of something – to transfer an old LP to cassette or CD, for example, or to write a review of a work. A reverse engineering law could make analysis of security difficult or impossible, as independent reviewers would be unable to properly examine the system.  This is somewhat akin to making it illegal for someone to test the strength of the locks on their own house, or to open their car when they’ve left the keys inside.  Banning the tools to do the job carries the same problems.  Furthermore, determining the intent of a tool can be difficult, as many devices that can be used to violate copyright have other uses (photocopiers and VCRs, for example).

As for forbidding tampering with rights management information, the same arguments apply. Breaking into a company registration database to grant yourself a license to a piece of software should clearly be illegal, but there is a very fuzzy line. What if the information is on your own computer?  Do we want to make it illegal to lie to your own computer (e.g. about your age or identity), even if no human being will ever witness the untruth?  Does a company have a right to control the contents of your own computer?  Can a music company sell you an MP3 and then tell you that you are not allowed to replace the hard disk with a new one, moving the MP3 in the process? 

These are both serious infringements on personal freedom, and should not be undertaken simply because they would make protecting IP easier.  We would be legislating to enable a particular business model, one which might not even be efficient or appropriate. We might be locking in complexity and costs in distribution which would cancel out the gains technology offers. For example, should companies focus on copy protection for music, or would a subscription model in which consumers pay a flat fee for unlimited access make more sense?  The second, if workable, entails far less overhead.  The same model could well apply to software.  I simply don’t see adequate or convincing evidence that the market would collapse without such legislation.

Finally, my understanding of the current liability of network intermediaries is that they are responsible only if they control the content of their network as a matter of course, or if they are made aware of infringement. This seems reasonable to me;  I believe the recent Napster decisions in the U.S. drew the line in about the right place, by stating that while the Napster software could be used to pirate music, in itself it was legal so long as the company took action to halt the piracy of copyrighted works once it had been alerted to their presence on the system.

Reverse Engineering

Disallowing reverse engineering is a bad idea. Reverse engineering is a costly process, and is usually only applied to very profitable works. The IBM PC market, for example, was created because the original IBM BIOS software was reverse engineered, allowing for competition. While this weakened IBM’s relative position, it grew the overall computer market tremendously and surely benefited IBM in the long run. If the United States had disallowed this, the high tech industry would probably be much smaller today, and it might not be centred in the United States.

Banning reverse engineering also carries serious risks in terms of security, because it makes it impossible to properly test critical software for flaws. With so much of the world’s network infrastructure reliant on a few pieces of software, it is essential that a process of analysis and peer review operates to minimise our vulnerability to hackers, viruses, and worms. Otherwise much of the wider economy would be at risk.

Conclusion

Copyright is an important concern, and we should take care that the laws are not left behind by new technologies.  However, we must balance this with the risks of such changes.  In my view, there is as yet no demonstrated need for a dramatic reform of copyright laws.  In particular, banning reverse engineering and devices capable of breaking copyright is unwise. The market may well find efficient ways to take advantage of new technologies without the need for reforms that could create a burden for businesses and consumers. For the moment, we should hold off on such laws until we have seen how the economy adapts.

I wrote this document in September 2001 in response to a request by the Government of Canada for public input about future changes to copyright law to bring it in line with WIPO treaty requirements.

2004-03-11
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