Disappointing innovation – pitch 1

I have just spent a day with people talking about the future of the media. In amongst the usual presentation, panels, Q&As and watery coffee they have been hosting brief talks by interesting innovators in the media sector in Europe.

They were mostly perfectly nice ideas, plausible and well explained. But perhaps I have been hearing these ideas and pitches for too long because they felt a bit disappointing. Not only are many of them small, unambitious and in some ways an admission of defeat, but fundamentally they are little changed from the hopeless pitches I was listening to twenty years ago and more at News International.

Here, for example, is one generic pitch which has been around as long as the internet and still keeps popping up with different names…

The “Incremental Revenue” pitch (aka the “money for nothing” pitch)

This one involves saying to an existing media player with an established brand that you are going to conjure them up more money out of thin air. Better than that, it will be money that they can’t themselves get on their own. Better yet, there is no risk of damaging their existing business. What’s not to like!?

The ask

The existing media player is asked to give the start-up access to some or all of their content, plus their brand. The start-up will then cleverly combine it with other content and brands from other places and sell it (under their own brand, but heavily using the established media brand to help) to people who would never buy the core product (this will be young people / foreign people / people in niche sectors being targetted by a special product / people whose purpose is badly served by the core product / a whole new product etc)

The payback

Revenue share. Sometimes of subscription fees, more often of advertising. Usually calculated in a rather opaque way, or as a “revenue pool” which is shared between all the content providers on an arbitrary basis such as how often their content is accessed. If there is revenue then some fraction of it gets paid to their partners. Sometimes they offer a tempting non-financial morsel to appeal to operational people which gets their signature-hand twitching (being able to add to the circulation figures of print products for example, is better than gold to some circulation-focussed publications)

The promise

Nothing really. The established brand and content is zero-valued up-front, they just get a cut of revenue. Inevitably when this pitch is made revenue is approximately zero but huge sums are anticipated by year 3 and after year 5 it will have overtaken Google, Amazon and Apple combined.. Despite the confidence that these predictions are, if anything, conservative, no guarantee of revenue is available (“we’re a startup, we can’t afford to make guarantees”). The established brand is invariably used in pitches to other people (despite being zero rated financially).

The threat

If they deliver their lofty promises, they will get bigger than the brands that are contributing content and become a strategic threat.

The rational response to the pitch

“Come back when those big numbers you’re expecting start to become real” (the likely reply is “but we won’t get there without your content and brand” which leads to the obvious conversation about value)


“no guarantee, no deal”.

The ways the start-up might get people to sign up anyway

Either get them to irrationally over-value your offer (auditable circulation is like cocaine to some print publications) or get them to follow the crowd for fear of looking foolish or missing out. Depending who you’re talking to they might be tempted by equity.

Likelihood of the big numbers eventually being delivered

Almost zero (meaning the threat is, in reality, low as well). But some of these turn in to perfectly decent, if unexciting and minimal, revenue streams.

The blog awakes…

Obviously, since the blog is sure not to have any followers left, the fact that it has awakened will be of little consequence to some people. In my new world my thoughts and efforts are mostly directed elsewhere. But every now and again something get me going, and it’s not really appropriate for me to rant with a Copyright Hub hat on.

I have a couple of rants bubbling away which will probably appear here shortly. When they do, please remember, they are my personal rants. Any ranting the Copyright Hub might want to do (or I want to do in its name) will appear elsewhere…

A new world

As you may have seen elsewhere, I am going to be the new CEO of the Copyright Hub. While this was absolutely not what I had planned for myself, it’s too tempting an opportunity to pass up.

I have been of the view for years that the problem with copyright is not the law, but the way in which it is implemented in the digital era. While the problems have been obvious (it’s too hard to get things done, fundamentally), I have strongly believed that the solution is not to change the law. It has been frustrating that we have not made more progress towards changing the mechanisms of copyright to work better in an internet world.

My view on this has translated into action in a number of things, big and small. I have been involved with.

The ACAP project, which started from the simple observation that complaining about the way search engines crawled content wasn’t very constructive but helping them along by developing a means for their crawlers to talk to content web servers was, is a project aimed at making practical solutions to otherwise difficult problems.

The NLA e-clips project, as well, has been a great and enduring success based on the idea that if the (in this case newspaper) industry invests in creating great technology and services in response to changing needs, good things can happen. They did, and they continue to do so.

And the Copyright Hub is the most ambitious that I have been involved with yet. Recognising that the mechanisms of copyright need to radically change in an era when everyone is a creator and user, and that these mechanisms aren’t going to invent themselves, we are setting out to make good, practical, things happen.

Ultimately copyright needs to work in the interests of end users and creators (who increasingly overlap) if it is to work at all. The Copyright Hub sets out to improve the way it works to this end. It has huge support from right across the creative industries in the UK and beyond. I have a clear view of what I want it to do (and – just as important – what I want it NOT to do). If you want to know more about either, ask me… or just wait and I’ll tell you anyway.

In terms of this blog, which is rather randomly updated anyway, I’m going to keep randomly updating it with thoughts and ideas.

It’s probably necessary to point out that it is, and always has been, a personal blog expressing personal views and venting my frustrations, often on matters way outside the remit of the Copyright Hub. My views are not necessarily those of the Hub.

We’re going to try to make a really positive difference for everyone in the creative industries. Wish me luck!

Fearlessly speaking common sense

I have often made the observation that for the business of media to work well commercially, there has to be a link between popular success and commercial reward.

One of the great frustrations of the internet has been that this is, largely, no longer true: even staggeringly popular sites like MailOnline (117m monthly unique users) earn pitiful revenues (£20m for the half year to March 2013).

This is partly to do with the internet, the changed rules of the game which produce perverse outcomes all too often, and about which I have written much.

But it’s also to do with the tactics many of the media players have adopted in the game.

Despite years of failure, despite other winners clearly emerging, despite years of data and obvious simple logic which show it can’t ever work, the strategy of many media brands has been to treat popularity as an proxy for commercial success, whatever it costs. Earning money, if it puts consumption figures at risk, is deemed too risky to try.

Even in the old world, though, there were trade-offs. It was still possible to undermine your business by being too cheap, screwing up the balance between reach and commercial return. Popularity was important, but not at any price. The bottom line mattered more.

So, for example, while free media products existed and still exist, many of the most successful sacrificed some of the reach they would have obtained from being free for the greater commercial strength of being paid by their users.

In other words, even in the past popularity was a central goal but not the only one. Common sense, intelligence, flair and a hard nose were always needed to get it right.

All of which have been notably lacking in many erstwhile rational players’ approach to the internet.

So it’s refreshing and to see one of the masters of the media game saying some controversially common-sensical things in public.

Mike Darcey, new CEO of my former employers News UK (née News International) made a speech last night and said some things which, despite their seeming… well, almost banality, are so counter-cultural that they are still capable of being controversial in some quarters.

For example, Mike says:

there are real problems with giving your product away for free over the Internet

A little later he tackles one of the reasons some people find this comment so controversial:

Some people have argued that the problem with a pay-wall strategy is that you lose reach, while others who maintain a free web presence continue to enjoy large numbers of Unique Users and Page Views.

To which I say: to what purpose? – this reach doesn’t generate any meaningful revenue, and the pursuit of it undermines the piece of the business that does make money.

So if your purpose contemplates still being here in 5-10 years time, then the choice seems clear: it is better to sacrifice reach and preserve sustainable profitability.

Moreover, when we sacrifice this so-called reach, what have we really lost?  A long tail of passing trade, many from overseas, many popping in for only one article, referred by Google or a social media link, not even aware they are on a Times or a Sun website, wholly anonymous.

That passing trade was good for the ego, if Unique User stats do that for you, but they don’t really add to our purpose at all.

It’s only a short speech, but it contains within it a large amount of good sense, which other media executives would do well to think hard about, resisting their natural instinct to dismiss their rivals.

Hopefully the whole thing will end up online soon, in the meantime here are some links to coverage which includes other quotes.

UPDATED: News UK have now put a video of the speech on their website here

Media Week

Dominic Ponsford in News Statesman

The Guardian

Google seeks licences from rightsholders, world still turning

So, despite a campaign to prevent it, the Germans have changed their copyright law a little bit, raising the possibility that search engines might have to pay a fee for news content they access.

Google has responded by changing the rules of Google News in Germany to make it “opt in”.

In other words, before Google will crawl German news sites, they will obtain permission from the publisher.

A licence, you might call it. The thing copyright law always said you needed before copying and exploiting someone else’s content.

I have seen no mention of any basis for sitting down and, you know, actually negotiating the terms of the licence with Google, talking about what you want from them in return. I presume their opt-in is a “take or leave it” sort of thing. They don’t seem to be offering money, which we can all clearly see they couldn’t possibly afford with only $10bn profit last year on a pitiful $50bn turnover.

All the German news publishers can have, it seems, is their random share of the supposed 6 billion (mostly completely worthless) visits which Google News sends to publishers. I hope they find this offer resistible bearing in mind the minimal impact that being out of Google News is likely to have on their bottom line.

Still. Google seeking licences, eh? Asking permission? Admittedly, they only seem to be doing so to avoid being forced to share a tiny slice of their enormous wealth with those who provide their raw materials. A little tight-fisted perhaps.

But it shows that their might be new life in the old copyright dog yet. And new value, if a permission based internet starts to creep slowly closer.

Unintended consequences

The government is concerned. Bad things are happening. The internet is a corrupting and subversive influence, tipping bad people over the edge into depravity and evil deeds. Something must be done.

So, ministers have summoned internet companies. A Code of Conduct is under consideration for ISPs. We need their help to stop the bad things.

Child porn, radicalising websites, other distasteful or criminal material need to be controlled. They are damaging our society and creating deviants and criminals.

The call for “internet companies” to step in to try to prevent this is understandable. After all, they stand between the bad people publishing this bad stuff and the innocent users who risk being corrupted, radicalised and deranged by what they see.

Responsible action by “internet companies” is needed to tame the wilder, antisocial extremes of behaviour online.

If you pause to think, you might wonder why these internet companies aren’t already doing something about it without being dragged in to see the headmaster. Everything on the internet has some sort of interaction with an “internet company”, whether it is hosting, uploading, streaming, aggregating or whatever. If their users are doing bad things, you would have thought they might want to do something about it. Why do they need to be summoned by the government to point out the obvious?

Well, one reason might be that there was a law passed more than a decade ago which specifically exempted them from any responsibility for what their users do and publish using their facilities.

In fact, because of the way the law is worded, it almost obliges internet companies not to check or have any awareness of what their users are doing. Once they are aware of illegal or infringing activity, they are obliged to act to stop it, but as long as they’re unaware they have no liability.

The law actually enshrines ignorance as a legal defence. Awareness is an expensive and risky business so actively policing and monitoring what people are publishing is an unappealing option. Ignorance is bliss. Profitable bliss.

The law in question is the european E-commerce directive which creates broad exemptions for “intermediaries” on the internet.

The rationale for that law is obvious but the effect it has had is perhaps less positive than was intended. I have written before about the catastrophic effects for copyright and the creative industries. The problems of criminal and deviant activities which are so exercising the government at the moment would seem, at the very least, not to be helped either.

Of course it’s not true to say that internet companies should be blamed for the bad things that other people do. It’s not their fault and it’s not entirely within their power to prevent it either.

However, when you have written a law which specifically disincentises them from doing anything at all to exercise any control, and then find yourself calling them in for a meeting to ask them nicely if they wouldn’t mind making a little more effort, you should perhaps ask yourself whether you have got the balance quite right.

Pub landlords don’t make anybody get drunk but they can still lose their licence for allowing excessive drunkenness. Football clubs don’t organise riots but they can still be penalised for the bad behaviour of their fans. Where responsibility is at least partly shared, more responsible behaviour tends to emerge. Where someone is made immune from consequences, responsible behaviour is less likely to emerge.

The e-commerce directive is the unintended consequences law. Whatever protection it gave to the mewling, vulnerable, infant internet is no longer needed. The internet has grown up into a strapping teenager, able to stand on its own two feet and behave like a grown-up. It’s time it was given the responsibilities to go with the freedoms and profits.

The IPO hits back

AND SO BEHOLD, ladies and gentlemen, the hastily cobbled together rebuttal that the Intellectual Property Office has put forward to defend their orphan works legislation which became law last week. Andrew Orlowski has his own useful explainer here

Since it is cobbled together and defensive, the IPO document is not very detailed and focuses mainly on photos (the source of the loudest criticism). It seems to be trying to debunk some of the criticisms which have been made of the new provisions on “orphan” works.

One thing it doesn’t do is admit to anything. Fundamentally it seems to be trying to say that all the negative accusations which have been made are wrong, and there’s nothing to be worried about because we’re only doing the same thing as the Canadians.

It doesn’t have the nerve to admit that the drafters of this legislation believe that there is a greater good to be served, and the price paid by the losers is outweighed by the benefits to whoever they think might be the winners. It’s not a document which suggests that the writers have the courage of their convictions; there seems to be a reluctance to even acknowledge the existence of potential losers from this.

The actual “myths” it addresses are curious. Some are things I haven’t seen mentioned. That’s not to suggest that they’re not real, but from my perspective anyway they’re not particularly high profile. For example it is very specific in rebutting a slightly obscure “myth” about sub licensing:

Myth: a company can take my work and then sub license it without my knowledge, approval or any payment
Fact: The licences to use an orphan work will not allow sub licensing.
Thanks for telling us, I’m sure whoever it was who was specifically worried about sub-licensing will be reassured.
Issues which have been mentioned more prominently and seem rather more substantial are left unmentioned.
Take the above example, and change it a tiny bit: “a company can take my work and then use it without my knowledge or approval”. The answer would surely have to be “Yes they could”. It might be a frequently asked question but you can’t call it a myth. Best to leave that one out then.
Myth: I will have to register my photos to claim copyright
Fact : Copyright will continue to be automatic and there is no need to register a work in order for it to enjoy copyright protection

Up to a point, Lord Copper, but unregistered works (not just photos) will be harder to trace provenance for and so are more likely to be “orphaned”. So they will have copyright protection, in the sense that permission will be required to use them, but the permission won’t have to come from you. The works will have protection, but the creator won’t. Best gloss over that one too.

Some of the “myths” are answered with the aid of a crystal ball (emphasis added):

Myth: the Act is the Instagram Act
Fact: Given the steps that must be taken before an orphan work can be copied,such as the diligent search, verification of the search and payment of a going rate fee, it is unlikely that the scheme will be attractive in circumstances where a substitute photograph is available. The rate payable for an orphan work will not undercut non-orphans

This is a very dodgy basis for policy making. Dismissing the possibility of negative outcomes by predicting that people will do something else instead is hardly reassuring. In my limited experience of the legislative process, measures intended to do one thing based on assumptions about human behaviour are the most likely to produce perverse outcomes (don’t get me started on the DMCA and e-commerce directive – although I have ranted about them on other occasions). Unintended consequences are almost inevitable when you’re not sure, or are unable to say, what consequences you were intending in the first place.

And I have no idea how there can be any basis for claiming that the rates paid will “not undercut” non-orphans. For that to be true there would have to be some sort of “going rate” but there isn’t. In my dealings with photographs I have dealt with a range of prices from zero to over £100,000 for a photo depending on the subject and the relevance it has at the moment of sale. A market price, you might say, agreed between willing buyers and sellers, using the “negotiation” method.

There is no objective way of evaluating worth because photography, like all creative output, isn’t a commodity despite the best efforts of some to make it so.

And on, and on. Debunking all the “myths” individually seems a bit unnecessary.

I have to admit I’m struggling a bit here.

If there has been an honest and open process – and since the law got passed we can safely assume there must have been – by which politicians have decided this, why be so coy?

If the decision was to remove some rights, in some circumstances, from creators because they judge there to be a greater good served by doing so, what’s the problem with just saying so, and telling is what that greater good might be? Sure, people like me might shout and loudly disagree but that’s in the nature of the democratic process.

Perhaps there’s some other reason why they’re being so shy.

D-ERR. UK copyright owners no longer control the right to copy their work

The UK abolished copyright today. At least, they abolished a large part of the “framework” which supports it by doing away with the requirement, in many cases, to have permission from the owner before you use someone’s work. Now, if you don’t know who the owner is, you don’t have to ask them.*

The UK government, or more particularly people within the Intellectual Property Office, don’t see copyright as a “right”. They see it as “a framework“. Nothing fundamental, just a bit of meccano to be fiddled with and re-configured at will.

So they have decided to remove the foundations the framework stands on,  passing a piece of legislation, the Enterprise and Regulatory Reform Act (ERR), which includes a provision to allow politicians to give away your work at a whim. If your work is “orphan” (in other words if it’s not easy to track you down without any clues other than your actual work – and if you have ever tried this with a random photo you’ll know how hard it is) then other people can use it on terms and at prices set by a quango.

If these were “rights” they were messing about with, it would feel wrong. but since they’re only tinkering with a “framework” it’s OK.

“The powers do not remove copyright for photographs or any other works subject to copyright”, says a spokeswoman for the Department of Business, Innovation and Skills in a rather feeble attempt to make it sound innocuous.

She omits to point out that the powers do remove the right of the copyright owner to decide whether or not they want to licence their work, negotiate the terms on which they want to licence it, the price, the credit and the moral rights. In other words most of the “acts restricted by copyright”, the ones which are the “exclusive right” of the copyright owner (in the words of the Copyright Act), are now no longer in the hands of the copyright owner, but someone else.

Maybe the new powers don’t technically remove copyright from the work, but they certainly remove it from the copyright owner.

“Nor do they allow anyone to use a copyright work without permission and free of charge”, she continues. But someone other than the owner, who has no ideal who the owner is or whether they have any views on the matter, will giving permission and setting the price. Copyright – the “exclusive right” to decide who copies and on what terms – has been abolished for the owner of the work.

The right to say no is an important one. The right to set prices, to price yourself out of the market, or to be the cheapest, or simply not be in the market in the first place all matter.

The fact that someone wants to use your work doesn’t mean you have to let them – and it used to be your exclusive right to decide. If you have a desire to keep work private and restricted, or only licenced on carefully controlled terms, you can and many do. Now if you try that you might just be decreasing the chances of a “diligent search” tracking you down and so decreasing your chances of escaping this odious scheme. If your work is hard to find it becomes subject to compulsory licensing with no appeal and no compensation beyond whatever price a stranger decides to put on your work.

Just as bad as the legislation is the process by which it came about. There is no credible evidence or research which makes a compelling case for it producing any benefits at all. Opposition has been ignored, debate kept to a minimum.

It has been done in the form of “enabling legislation”, stuck into an entirely irrelevant Act, which transfers the making of specific rules from Parliament to a minister. This is frequently justified as allowing quick action to be taken in a fast-moving world. In this case it looks a lot more like a way to avoid discussion and give minsters a huge honeypot of free goodies to dish out to those upon whom they wish to bestow great gifts (in this case the beneficiaries – and the wealth we are passing to them – almost all reside in Silicon Valley).

Law-making based on whims and completely imagined, speculative benefits is best avoided, all the more so when the whimsical Utopia you hope to create comes at the price of an established and valuable contributor – professional creativity and the media – to the economy and culture.

Stupider still when the alternative future, in which creators benefit from increased competitiveness and a growing market for their work, has not had a chance to emerge thanks to piracy and some already demonstrably ill-conceived legislation which had already weakened the “framework” on which creativity depends.

Absurd when at the same time as you’re creating this giant gaping hole in your creative economy, you’re engaged in another process to solve the underlying problem which, if successful, would massively reduce or eliminate the perceived need for such drastic and sweeping change.

If you’re a creator, get your stuff off the internet. And best find another job too, since yours just became a whole lot more perilous.

*this is a slight oversimplification but not much. When the final text of the Act is published I’ll add it here.

Who’d have thought China would be the defenders of copyright?

When I was a nipper, trying to licence rights in various things, it was widely reckoned that it wasn’t worth trying to do business in China because they pretty much ignored copyright there. If they wanted to use something they just did, without asking first.

Whether that was an unfair generalisation or not, the same cannot be said now. Here’s news of a judgement in China against Apple.

In short it says that Apple is responsible for third parties uploading infringing content into Apple’s systems. In other words, the basic principle of copyright law – that you need permission before you use someone else’s stuff – is being upheld in China, and just pointing the finger at someone else doesn’t get you off the hook.

That might sound like common sense but that same principle has been all but eliminated on the internet in the USA and Europe (and so most of the world) by ill-conceived legislation and an avalanche of business models which aim to enrich businesses by exploiting other peoples work without paying.

How different the internet would be now if the common-sense of copyright still applied everywhere.

How ironic that China, not the USA and Europe, is now the state upholding the basic principles which underly professional creativity.

Perhaps they understand what the USA and Europe seem not to – that without economic incentives for creators, creativity and the creative economy cannot thrive and no amount of tech startups can compensate for that.

Laurie Kaye on the Supreme Court’s weird NLA judgement

The always-wise Laurie Kaye has some useful memories which concur with mine. His take on the Supreme Court’s recent judgement about the NLA is useful reading. Lord Sumption should give it a squizz.

As I recall, the majority of the discussions around Article 5.1 concerned these kinds of temporary copies made by the Telcos’ networks and machines. True, the reference to “lawful use” pointed to other, “off the network” technical, temporary copies such as cached copies in a computer’s memory which were incidental to some other “lawful use” e.g. prior to a download. But this was not the central point and the notion of “lawful use” was seen in the context of technical copies which happened in the course of some other licensed activity.



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