Author Dominic Young

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I’ve been around the news media and the internet since the beginning. I am interested in copyright as the basis for a thriving and balanced creative sector and society. Also interested in how the failure of copyright and other laws has led to terrible outcomes for the internet and everyone who uses it. I’ve done a lot of things around these issues. 

 Dominic Young

Hargreaves sallies forth

May 18, 11 11:52 AM

So, it’s out. The Hargreaves review has published its findings today. Unsurprisingly most of the leaks were well informed and it roughly says what I thought.

So far it seems to have achieved the remarkable feat of pleasing both the Cory Doctorows of this world (a passionate advocate of liberalising copyright) as well as, from what I’m hearing, many media companies and rightsholder groups.

Doubtless they’ll all come out with public positions soon but if it has managed to avoid polarising people that’s pretty impressive.

Things I like: government to stimulate, facilitate and help fund creation of a “Copyright Exchange” but not own or run it. The fundamental proposal is about seeing and realising the potential for growth. The idea of introducing US-style Fair Use into UK law also rejected, but with an interesting analysis of the arguments to explain the decision.

Things I like less: the idea that we need more exceptions more quickly. I just disagree with that. I think exceptions should serve the public good when the market fails to do so – to make a judgement about this the market has to have a chance to succeed. The examples of some (but not all) digital products coming with a “format shifting” licence – I think this is referring to things like DVDs which have a copy for your iPod on them, and some (but not all) ebooks coming with the ability to lend them to people is cited as a reason for more exceptions. I look at these things and see an industry in transition, moving to recognise the needs of the market. It might be confusing, but it’s also in flux. Exceptions would not help.

All in all, though, at first glance it’s a great piece of work. The omens were not good: the manner of the announcement, the incredibly tight timescales, the passionate and polarised views. I think it might be the first copyright review (the first of many) which actually achieves something.

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Right to register?

May 17, 11 10:32 AM

The Hargreaves review looks like it’s about to de-cloak. As the umpteenth review of copyright recently, and having been conducted at breakneck speed, the signs are that the outcome is better than we might have hoped. (I had a word or two to say about this review before).

Zone of common sense

For one thing, the idea of introducing US-style “fair use” into UK law seems to have gone away. On the one hand this isn’t surprising, because the idea doesn’t stand up to an iota of scrutiny, not least because the claim that it somehow helps nascent digital businesses with a mythical “zone of oxygen” is completely wrong headed. On the other hand, since David Cameron specifically mentioned this as a desirable outcome when he announced the review, it must be a bit awkward for Hargreaves to reject it.

Thankfully it looks like he has, and is distracting us by coming up with a few better ideas instead.

Rights registry

The one which seems to be attracting the most attention is the idea of a copyright hub, or rights registry, through which copyright can be licenced.

This is a great idea and one which for me is one of the foundation stones of the future for copyright. In order to licence something the first thing you need to know is who to go to for the licence and a rights registry will enable that.

But the devil is in the detail, and this needs to be done well to work well. There are plenty who would love to see it get bogged down in an administrative political swamp, and when governments try to do things themselves, it can turn a bit messy.

What I have been reading so far sounds a bit like a call for a single, monolithic, registry, and statutory registration hasn’t been a requirement since the advent of Berne Convention. I hope that’s not what emerges, because along with monolithic solutions always come politics, cost and inefficiency.

Learn from what already works

I am hoping that what we end up with is a distributed rights registry, with minimal central infrastructure and lots of people competing to provide services to the market. Obviously there needs to be an authoritative registry at some place in the system, but it should be as lightweight as possible, simply signposting the way to whoever can actually deal with the content in question rather than getting involved in the transaction itself.

In some ways (although by no means all) there are some lessons to be learned from the Domain Name System here. Name servers provide the actual information about a domain, all the central registry does it say which name server is responsible for a particular domain.

KISSS – Keep It Seeming Simple, Stupid!

Name servers in turn are more complex signposts – sending email to one server, web traffic to another and so on. And those servers can be anywhere, and can do anything. A simple signposting system facilitates, rather than interferes with, the behaviour of the actual domains. All the user does is click on a link and within a second or so they connect with one of multiple millions of possible servers on the internet. The complexity is hidden but the system is flexible.

I think we need something like this for content. Better security and a less dysfunctional central governance than the domain name system has would be good, but the distributed and competitive nature of the actual market it facilitates are essential.

A solution for the whole internet

Actually, I think they’re inevitable too. The UK can’t set up a single, central function for the whole world. Whatever happens it will need to interact with other similar systems elsewhere. Ideally they will be built on a single set of protocols which will be open and non-proprietary.

Hopefully the next step will be for the UK government to sponsor the creation of the infrastructure and protocols needed, without trying to own or control them other than doing whatever needs to be done to protect the authority and trust in that central “root” database. That way they can move the whole internet forward as well as putting the UK in pole position to show the way to a new phase of growth and creativity.

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What do you use, in the end? End (re)users and the evolution of licensing

May 6, 11 2:05 PM

End users are the focus of everyone in the creative industries. But they’re strangely neglected. It’s time to think of them as active, not passive, customers.

The customer is always, um, licenced

End users are strange beasts, in the copyright world. They’re the ultimate goal of all creative endeavours… what’s the point of creating something nobody wants to see?

But in terms of their interaction with the actual nuts-and-bolts of how copyright works they’re treated almost as an afterthought. They’re the passive recipients of content and they are expected to stay passive.

So while the business of passing copyright around, licensing and trading, is a very active, involved and evolved one for everyone else in the chain – the creators, the publishers, the distributors and others – it’s curiously ossified for End Users.

“Not to be shown on oil rigs”, the warning sternly says at the start of a DVD. That’s a licence, of sorts, but not one you get much say in. “Not to be stored in a retrieval system” say books before you get to the actual story.

You’re not allowed to do anything other than what they say, you’re positively discouraged from doing so. I have no idea what is involved in legally showing a DVD on an oil rig, and the warning notice doesn’t explain, but I’m sure it’s not simple and not cheap.

Previously passive

There are good reasons for this. Principal among them the fact that in the past end users only wanted to consume things. They were naturally passive creatures in a disconnected world. Which is good, because managing the complexity of everyone needing a slightly different licence was way too expensive for the mass market. It all came together in what management consultants would call a virtuous circle, passive consumption leading to a mass market for cheap products, leading to a huge diversity of products and generally falling prices.

But it has changed now. End users are no longer passive. They do things other than just sit and stare. They tweet, they blog, they email, they chat, they link, they post, they comment, they mash-up. They include the content they consume in the output of their online life.

The era of End Re-users

They – we – are not End Users any more. We’re End Re-users.

As far as I know, the term “End Re-user” was coined in the News Corporation submission to the Hargreaves Review of Intellectual Property in the UK (I had a hand in drafting this submission).

I think it’s a useful concept, because it encapsulates both the challenge and the opportunity for the future.

The challenge: End Re-users are often accidental infringers

The challenge is the obvious one. If users want to do all sorts of “use” of content, they’re no longer passive and they’re straying outside the boundaries of the licences they have been given. That makes them infringers. And that fact alone gives rise to a range of proposals from legislators, anti-copyright activists and an assortment of thinly disguised vested interests to change the law. It can’t, many say, be a good law if it throws so many people into breach of it.

Considering this from the point of view of the law is the wrong perspective, though. The law gives end users virtually no rights at all. The thing which allows a user to do something with a piece of content is the licence from the content owner, not the law. The problem isn’t with the law, it’s with the paperwork.

The opportunity: more use of content creates a new market

Which leads to the opportunity. Very few businesses have become really successful by refusing to give their customers what they want. This emergent generation of End Re-users should represent a huge new business goldmine.

All these people who want to user material in different ways are potentially more valuable customers. Every time they want to do something beyond just sit and consume, they’re creating value.

They might not be worth much individually, but there are millions of them out there. And as long as you can collect it simply, even a few pence can be profitable. Just ask The Sun.

The practical barrier to treating them as an opportunity, the complexity of managing all those licences and payments, ought to be eliminated by technology.

A quick word about cost vs value

Some people argue that technology, because it drives the cost of copying content to zero, will inevitably lead to content being valued at zero.

I would make a different argument. In freeing ourselves from the limitations of the physical supply chain for creative products we have also freed ourselves from the mass market constraint that every customer has to want, and get, the same thing.

The real liberation of the move from atoms to bits isn’t the end of cost and price, but the end of the need for one size – and one price – to fit all. It ought to be feasible to cater for the blogger, the passive consumer and the large scale commercial publisher individually and cheaply.

The advent  of the zero-cost copy frees the creative industries, and their customers. from the straitjacket of mass production. Technology creates the opportunity for fabulous growth and innovation, with everyone’s needs met by the right content and a fair price for them.

Meanwhile, back in the real world…

All of which sounds wonderful, but it doesn’t bear much resemblance to the real world of the internet today. If this huge opportunity is lurking in the shadows, why hasn’t it come out into the open yet?

Surprisingly, the answer is only partly that the technology doesn’t yet exist. Most of it does, and what’s left really needs a market to evolve around, at which point it will begin a symbiotic flourishing along with the market.

Perhaps the same could be said of many of the existing media businesses. Incumbent players are rarely the best innovators – they need to be shown the way forward, usually by younger, nimbler competitors snapping at their heels.

But those new entrants don’t really exist, leaving the existing media companies and their still substantial existing businesses with the classic innovators’ dilemma. The absence of these new entrants is another signal that all is not as it should be.

So things grind on, slowly

So evolution online, when it comes to content businesses, has moved at a glacial pace in the last ten years.

New entrants restrict themselves, by and large, to gaming the advertising market with low content costs and clever search optimisation.

Older players, with their high investment in content, struggle to find success to match their huge online audiences.

The underlying issues

In my view the enemies of change in this area are the vested interests of the dominant players on the internet and to some extent the law.

Many companies which make fortunes from the internet depend on the chaotic and un-evolved market of today remaining.

What is needed is technology to manage billions of complex licences, at low cost, on behalf of millions of creators and hundreds of millions of consumers.

The potential of technology to manage these relationships remains unfulfilled not least because it would damage the business of Google (whose aggressive lobbying against the Automated Content Access Protocol betrays their real fears in this area). And without Google’s support, or at least compliance, anything which affects the web broadly has little chance of getting established.

Anyone making billions of dollars a year from the ability to treat the whole internet as a free resource understandably wants to maintain the status quo. As the ultimate re-user they would have lots to lose, and at first glance little to gain, in a world where their use, along with everyone else’s, could be properly licenced.

The law, often, doesn’t help

The law, in the form of various internet–friendly statutes enacted to protect the then nascent ISPs and search engines, to a great extent enshrines and protects this status quo. So it shares the blame.

While copyright law may remain largely intact, the law creates perverse incentives which, my providing immunity for ISP and service providers, effectively protect the interests of infringers. As long as the law makes infringing use of content free and virtually risk-free, it will be hard for competitive new markets to emerge. So the law preserves and protects the new status quo.

But the status quo, while serving a narrow range of limited interests well, serves everyone else badly. End Re-users, the obvious big opportunity online, are un-served by antiquated processes and approaches to licensing. A range of entrepreneurs who would like to be able to use content more easily in their businesses, find it difficult and frustrating to do so. And content owners are wilting in the harsh reality of a digital environment in which audiences generate pitiful returns.

The End Re-user is always an opportunity

So I think we should all keep the End Re-user in mind when we consider the online landscape. Their interests are paramount not just to them, because they want to be able to do what they want with the content they like, but to everyone in the digital ecosystem because well-served end-users will be the generators and beneficiaries of much of the unfulfilled potential of the internet.

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Not enough money in advertising? Duh…

Apr 24, 11 11:00 AM

The Guardian has a report which tells us (apropos my previous post)  that there isn’t enough money in advertising to fund tiny startups. Which rather begs the question why anyone thinks there’s enough in it to fund entire newspapers…

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Third worst?

Apr 20, 11 6:19 PM

Apparently, UK copyright law is the “third worst” in the world, from the point of view of consumers. A gleeful press release from an organisation called Consumer Focus highlights this, based on some rather subjective research and assumptions, and in particular points to the fact that some kinds of format shifting and backing up are technically illegal.

What they don’t mention is the actual consequences for consumers. I am not aware of a slew of lawsuits against people copying their CDs to their iPods, for example. Nor do they mention the benefits to consumers of a strong creative sector, or the costs of piracy.

Consumer Focus is a state funded body in the UK. It’s role is as “statutory consumer champion” and its aim is “persuading businesses… to put consumers at the heart of what they do“. (As a consumer, and in fact as a businessman, this is the first I had heard of them. Perhaps that’s why they’re being abolished).

What I don’t quite understand is how this sort of thing fits with their remit. Surely for businesses to put consumers at the heart of what they do they need to actually be in business, and have something to sell to consumers. Generally speaking the best outcomes for consumers are driven by well functioning markets rather than legislation.

Sometimes, and this is a sign that the market is working well, things happen on their own without any law demanding it. Many DVDs now come with a digital copy to download onto a portable device. For free! Apps bought from the iTunes store can be installed on all your devices not just one. No extra cost! There’s a reason for this and it is because businesses generally, as a matter of good business sense rather than legal obligation, put consumers at their heart.

If this isn’t happening as much as Consumer Focus would like – although it’s an increasing trend for businesses to choose this sort of approach because it’s good for business – it doesn’t necessarily make sense to either blame the law or look to it for a solution.

There are lots of “consumer unfriendly” things that are allowed by law, if you believe that consumer unfriendliness is defined as being anything which stops consumers doing whatever they want. It’s perfectly legal, for example, to charge a lot of money for something rather than a small amount. Rolex can, legally, sell watches for thousands of pounds while Casio, equally legally, can sell them for about a tenner. I’d quite like to be able to buy a Rolex for ten pounds but I can’t. How unfriendly!

It’s also perfectly legal to not sell something at all, and instead rent it to people who turn up in person to experience it. And it’s also legal, in the field of creativity, simply not to create something at all in the first place, to keep it inside your head and deny anyone else the pleasure or enlightenment they might otherwise get from it.

In fact copyright law itself, which is essentially a law which bans doing something (copying), could be argued using the same logic that Consumer Focus applies, to be inherently consumer unfriendly because it makes it illegal to do things which “most people consider to be harmless”.

I wasn’t previously aware that the test for good law was whether or not most people consider something to be harmless. Surely the test of good law is whether or not it produces generally positive outcomes, and incentives, for society as a whole rather than whether a self-selecting group of “most people” consider it to be harmless.

The reason the things that Consumer Focus complains about  do or don’t happen is mostly to do with the incentives the law creates (or fails to) rather than legal obligations or exceptions. On the whole, businesses which are wilfully unfriendly to their customers aren’t very good businesses. Writing a law forcing creators or anyone else to do something which they perceive to be harmful to them is a risky business if at the same time you destroy incentives or create unintended consequences.

Perhaps Consumer Focus should have a look at James Gannon’s article (previously linked) before they put out another press release containing the words “Nobody supports large scale copying but …”

And in the meantime they should consider that the “third worst” copyright regime in the world supports more than 2m jobs, 182,000 businesses, £17bn of exports and about 8% of the economy, in the UK alone. Despite the challenges of the internet. This results in enormous, inestimable diversity and choice for UK consumers alongside the huge economic benefits. Who exactly would benefit from further damaging that?

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Who needs payment? There’s always advertising…

Apr 20, 11 8:23 AM

I suppose the central dilemma for creators on the internet is how hard it is to get paid. Becoming popular, unfortunately, doesn’t often equate to becoming rich. This is a bit odd, and one of the key differences between “old media” and the internet, and I think it’s also the central challenge.

I mentioned previously that one of the oft-suggested ways of addressing this dilemma is to use creative output as the loss leader for something else. People who download your tracks might come to a live performance. People who read your blog might book you to make a keynote speech.

The other way, far more common on the internet, is to sell advertising. Use your popularity to serve up more pages, more pages equals more ads, more ads equals more money.

Sounds fine in theory, but works less well in practice. There is a detailed financial analysis to be done by someone more that way inclined. If I find it I’ll link to it.

But my view on this is quite simple and based on experience and logic.

Experience is that ad revenues don’t grow, in reality, anything like as quickly as traffic. The actual amounts of money to be made are quite pitiful when viewed against the amount of consumption.

Logic says that if everyone relies on advertising to fund their creativity then there isn’t going to be enough money to go round.

Both of these lead to the same outcome: the winners in the ad-funded content game are those who pay little or nothing for content. The investment has to be scaled down to match the size of the opportunity – and when the opportunity is only marginally above zero, the winning model will be the cheapest.

We all know who those winners are – endless sites serving up scraped or “farmed” content, with more investment going into SEO than anything else to maximise traffic. Or the big search and advertising giant itself, Google.

There’s plenty of analysis and de-constructing of this to be done, and doubtless I’ll do more of it at some stage, but actually the simple logic doesn’t require any understanding of the internet at all.

Traditionally creativity, and the huge success of the creative industries, has been funded by a combination of advertising and other revenue sources – principally from actual customers paying for the creative output.

If it is now going to be just advertising, and given that the advertising market is by-and-large static in overall size (or at least doesn’t grow in line with audience and consumption), it means less money is going to be available to invest in creativity.

In my view, more investment in creativity is a good thing. More opportunity for creative people is a good thing. Popularity leading to success is a good thing. So a shrinking opportunity is a bad thing and this is the dilemma which needs to be solved.

For this reason, I think anyone who believes that an ad-funded model leads to good outcomes for creators (and therefore for users) is a mite delusional. Of course, it has its place and always has.

But even if you choose ad funding, rather than having it forced upon you, it’s a pretty tough market. When ad spending moves from offline media to online, a whole load of it gets swallowed by Google and other intermediaries. The bit that’s left is competed for by thousands of new, zero cost, competitors who ae mainly gaming search algorithms to acquire traffic.

But media overall has always thrived on having other sources of revenue too, often direct from the consumer. Some form of cover price. For the most part, and for the time being, these are simply unavailable online.

Charging for content is still a controversial idea, and conflicts with the desire to reach a large audience. This is seen by many as a good thing – cheap is better than expensive, free is better than cheap.

I don’t agree with that, and I think the outcome is the obvious one – you get what you pay for.

How we can move the internet away from the obsession with free is for another post (another few hundred posts). But this much I know: advertising isn’t a viable way to fund creativity online. It wouldn’t be even if every penny of ad revenue went straight to creators.

But with pathetic dribble of revenue which remains after the scalpers and middle men have taken their disproportionate cut, the idea that it can sustain serious enterprise is ridiculous.

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How I Learned to Stop Worrying and Love the Copy (via James Gannon’s IP Blog)

Apr 19, 11 6:20 PM

I think this puts it very well…

How I Learned to Stop Worrying and Love the Copy I was wrong. After years of reading intellectual property law blogs from some of the greatest legal minds, I’m finally ready to admit that I was wrong. The fight against illegal copying is one that cannot be won. I can no longer deny the simple truth that it is ultimately futile to try to create artificial scarcities in what would otherwise be non-scarce goods. The digital revolution has allowed us to copy and share media for free and we should n … Read More

via James Gannon's IP Blog

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Giving and taking back

Apr 15, 11 1:51 PM

It’s a bit late to say much of interest about AOL’s acquisition of Huffington Post (other than to wonder whether they ever had any senses to take leave of) but the news that Jonathan Tasini is suing HuffPo is worthy of comment.

Tasini has form when it comes to lawsuits. His name is on one of the most famous, tedious and pointless copyright cases of recent years. In that case he was arguing, basically, that journalists should be paid again when the publications which commissioned them made the content available through databases.

Based on that case, you would expect that Tasini is the kind of writer who is strictly coin-operated. He doesn’t seem like the kind of guy who’ll let any publisher use his words without paying him for his efforts.

Yet, it seems, he was a willing, despite being unpaid, contributor to Huffington Post. Like many others he chose the nebulous and intangible reward of exposure through her site in preference to money. In his case it was to publicise his senate election campaign.

Now, though, he says he deserves some of the absurd sum she received for her site, because although he knew he wouldn’t be paid and didn’t ask to be paid, he thought maybe he would be one day anyway. So the money she has made in the transaction is “unjust enrichment” and he and his fellow bloggers deserve a third of it. $105m.

Now, in my view the amount paid for Huffington Post was unjustified by any sane assessment of value, but it wasn’t unfair on anybody (except, perhaps, AOL shareholders). She has done extraordinarily well to have pulled off such a deal, the fact that she managed to persuade so many people to work for her for free is testament to some kind of skill she must have.

Truth is that contributors to HuffPo knew the deal. Their contributions weren’t done in exchange for shares any more than money. A deal’s a deal, and whinging about it afterwards when you realise you got the raw end of it seems pointless to me. (Who is that guy who sold his Apple shares to Jobs back in the day? He got some trifling sum for them, would be worth billions today. Haven’t noticed him whinging).

And where copyright is concerned, I think that as long as the deal is clear, and you agree to it, then it’s fair and square. That idea, in fact, formed the basis of Tasini’s previous lawsuit, where because publishers hadn’t explicitly obtained rights to use content in databases, contributors demanded to be paid again. Notably, Tasini’s case this time doesn’t mention copyright.

There’s plenty of use of content on the internet which is both unrewarded and infringing – that would seem like a better target for lawsuits.

In the meantime, there’s a lesson here. If you give someone something valuable without asking for anything in return, don’t be surprised if they end up better off than you.

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Perfect economies

Apr 6, 11 7:42 AM

Is free really a radical price or just radically irrational?

Some say content will become free as a matter of economic necessity. That as the cost of copies of content approaches zero, so will its price. That we are in the grip of an all-powerful economic principle which will sweep whole industries before it, and the fact that so much content is given away online proves their point.

I say that the cost of content, in pure economic terms, has always been zero. That the “pure” economics of physical goods, applied to intangible products like content, led to terrible outcomes the last time it was tried, leading to a change in the law to prevent it happening again. And that this law, now being widely ignored, is the answer both to the “content wants to be free” pseudo-academics and also the problem the content industry now faces.

Cost=value?

I am not an economist. I am not an academic. I didn’t study much of anything. So forgive me if I tempt fate by taking a mighty leap to address a – seemingly academic – point which has become trendy among certain prophets of the digital age who, presumably, hope their wisdom will become self-fulfilling.

The academic point in question concerns the price for which content is sold online. More specifically, the point made by many that the rules of the internet radically change the economics of publishing, such that the aspiration to charge users for content is hopelessly unrealistic. Only dinosaurs think that way, we’re told: people who understand the internet also understand that giving things away is the key to reaching a lot of people, and reaching a lot of people is the key to making money.

So free, to quote the cover of Chris Anderson’s counter-intuitive but attention grabbing book “Free”, is “a radical price” which will define the future.

(An aside: I tried to get a copy of Free for, er free. It was available as a digital download for nothing at the time it was published. However now it’s not available free. The “hardcover” edition is available as a Kindle download for £12.15. The “paperback” edition – with a new, less embarrassing, strapline – is available for £5.45 in print but not at all on Kindle. So much for the radical economics of the internet).

Anyway, the argument goes something like this: making copies of digital things doesn’t cost anything. Economists tell us that in a perfect economy the price of something will tend towards its cost of production. For something which costs nothing to produce, like a digital copy, the price will tend towards zero. The fact that so much content is available for free is proof that the market is working well and the internet is fulfilling its potential. (Expand this argument to 400 pages and sell it and you too can be an internet guru as well as a rich author).

The sub-argument is that having so many consumers of your stuff gives you the chance to sell them other things, like concert tickets instead of CDs, or slightly better things, like CDs instead of downloads for your hardcore fans (or, like Chris Anderson, hardcover books, speaking engagements, consultancy and a day job editing an old media magazine as well as temporarily free downloads). So you can make money that way, in a way the content is a loss-leader for whatever else it is you have to sell. This is known as “Freemium” – you reward the people who care little for your stuff by giving them what they want for nothing, and punish those who really love it by charging them for consuming a lot of it.

Circular thinking

I think these arguments are a perfect illustration of what is wrong with internet thinking. So much of it is a post-rationalisation. It starts with a utopian picture of the internet the way the thinker would like it to be, idealised so that everything they care about is plentiful and – with the exception of whatever it is which makes them money – free. It progresses into the real world, via people and businesses simply behaving as if their utopian ideal were a reality (this is called, proudly, “a disruptive business model”), unencumbered by any old-world rules. It finishes with a seductive, intellectually feeble, post-rationalisation of the outcome whose main purpose is to justify itself and perpetuate the insular interests of those who profit most from the changes. An honest consideration of the broader picture almost never features and the interests of users and society as a whole, almost always claimed as the ultimate justification for whatever is being argued, are virtually never really considered.

So, back the economic argument for content being free (or, in some cases, for copyright no longer being relevant). The central point is that the cost of a digital copy is zero.

Cost has always been zero

My counterpoint is that the cost of copies of content has always been zero. When books first started being mass produced, the cost of the content, as opposed to the paper, ink, binding, distribution and so on, was always nothing. You used the same amount of ink however you arranged it on the paper. The words themselves made no difference to the cost. A CD costs the same (about 9p) to manufacture whether it contains a Lily Allen album or Microsoft Office but might be sold for anything from a few pounds to a few thousand pounds depending on what it contains.

It’s the content which creates the value. The bits, not the atoms, are the product whatever it looks like on the shelf of a shop.

So in my view, it’s pointless to consider the economics of content in terms of the manufacturing cost of copies because doing so not only defies everything we know about the content economy but also leads to perverse outcomes.

Weve been here before…

There was a time when the “natural” economics were the only kind around. The world was about supply and demand, the materials which went into something more or less defined the whole. You could add up all the costs of something, add on whatever margin you thought you could get away with, and sell your product.

The thing which changed it was books. The advent of the printing press revolutionised the way in which knowledge could be shared and spread. For the first time mass production could make books affordable to the masses. Great things would happen.

However, the economic realities lagged behind the industrial surge forward. Although printing was indeed cheaper and easier than ever before, the main value of a book was the words on its pages rather than the pages themselves.

Bits and atoms 300 years ago

Unfortunately the laws of supply and demand didn’t recognise this. They only dealt in atoms, not bits. So the people who wrote the books, who created most of the value, tended to get a bit of a raw deal – however successful their book might be they rarely made much money. So not many books got written. The authors usually had better and more lucrative things to be doing.

So a law was written, the now infamous Statute of Anne, the first modern copyright law. Its aim was to ensure authors were properly rewarded for their work, to end the “ruination” of them and their families which too often had happened in the past. And it did this in a simple way – by giving them control over copies of their work. By recognising that the bits had a value beyond the atoms of the paper and ink, and putting in place a solution which would allow the value to be determined by the market.

And so, a book or CD which costs a few pence to produce is sold for a few pounds. JK Rowling is a billionaire. Hundreds of thousands of books are published every year, hundreds of TV channels flourish and thrive, countless movies are made every year and the creative economy supports 8% of the overall UK economy and over 2 million jobs. Even the printers, publishers and distributors of books, who would have seem to have got the raw end of the Statute of Anne, are still doing fine. Taking a smaller, fairer, slice of a much bigger pie, and thriving nonetheless.

All be recognising that the words, or the bits, have value separate from the paper they’re printed on, or the atoms.

Forward to the past

Fast-forward to the internet. Here we find ourselves in a situation a bit like the pre-copyright era. For a number of reasons, most of which are for another day, mass market publishing is only possible online for no charge. The only direct revenues available to publishers are from advertising, but they are competing for a smaller slice of an ever-diminishing advertising pie (I’ll come back to this point in another post as well). Success is about scale, quantity trumps quality.

So the people making money are those who pay the least for their content. The most money is made by the people who pay nothing (Google, overwhelmingly). The people who pay nothing, who benefit the most from content being free, are also the strongest advocates of content being free as a force of nature or of economic reality. They ignore, because it doesn’t matter to them, the actual reality that if the returns on the investment of time, money and creativity diminish so will the investment.

Free isnt worth the paper it isnt written on

To me the “free” idea is as worthless as it suggests. To my mind it’s simply wrong, and it destroys value for almost everyone except the person sitting at the tip of the pyramid.

Anyone who wants to be able to make a living from their creativity should be able to choose to do so, and choose their way of doing so, without the odds being so heavily stacked against them. I hope this is about to become a bit easier.

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How do we know copyright is working?

Mar 29, 11 5:03 PM

I have spent a working lifetime sitting on one side of the copyright debate – broadly the “copyright is good” side. I have also, latterly, spent a lot of time listening to people telling me why Im wrong, why I am a dinosaur who cant let go of the past.

Obviously I have spent my career being driven by vested interests – I have worked for companies which are strongly dependent on copyright. So when I have been defending copyright I have also been defending their interests and my own job.

Equally obviously, many if not most of the people on the other side of the debate have vested interests of their own. Search engines and aggregators, academics, thinkers and would-be futurists – even newspaper editors, sometimes – have their own reasons for predicting or relishing the imminent demise of the copyright-based business model.

But what if we step back from both sides of the various vested interests and try to think about what we want, as a society, from copyright. Ignoring the commercial interests, what as an ordinary person can be regarded as a good thing? Perhaps then well have a new perspective from which to consider the polarised opinions being so freely touted.

I had a go at this for a talk I did towards the end of last year. I came up with a list of about fifteen signs that copyright is working well which I managed to distill down to three pithy ones: diversity, investment and reward.

Diversity. A diverse and growing ecosystem of content and creators, leading to a large and increasing choice for consumers, greater access to knowledge and effective and increasing competition for audiences.

Investment. A growing investment of time and money in creating content, products and innovative new ideas which effectively address the needs of the market. Risk-taking by investors and creators, new players entering the market, and a diversification of business models.

Thirdly, and perhaps most all encompassingly, the best and most popular content to be recognised and rewarded. The possibility for big winners to emerge, adaptable, clever companies and creators winning out over slower, less nimble players and not just by appropriating their raw materials from elsewhere.

The reason I think these three things particularly matter is because of the most important outcome of all: access to knowledge and creativity.

Its a good thing if people in general have wide access to the maximum amount of other peoples output and intellect – as well being educational it is the engine of culture and of inspiration and that is the central purpose for which copyright was devised. We are entertained, informed and enriched by other peoples creativity and ensuring that continues has traditionally been the central public good which copyright law seeks to promote.

So: I think a key sign of copyright working well is that lots of people are producing lots of output, and the most popular are the most successful (in whatever terms they judge success – which may or may not be financial).

Am I right about desirable outcomes? If I am, then it provides an interesting backdrop to the debate about if and how copyright needs to change in the internet era. If not, what should they be?

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