Smart legislation would be great, lets get rid of the dumb laws too

We might, as Neelie Kroes suggests, be losing the battle to enforce copyright. The hearts and minds of many users might already be lost to the more tempting promise of limitless supply in a copyright-free world. But what role has the law played in creating this situation and what could politicians do to fix it? The e-commerce directive and DMCA need to be back in the spotlight, and the dreadful, if unintended, consequences of those hasty laws need to be recognised and reversed.


Neelie Kroes has made an interesting speech, much of which it’s hard to disagree with. Her theme is “who feeds the artist” and it refocuses the discussion about copyright on its core objective: to ensure that creators get paid.

She states the following objectives for copyright:

Legally, we want a well-understood and enforceable framework. Morally, we want dignity, recognition and a stimulating environment for creators. Economically, we want financial reward so that artists can benefit from their hard work and be incentivised to create more.

And she says she’s an “unconditional supporter” of these objectives. Which is good news. I agree.

She comes out as a strong supporter of a better licensing infrastructure, making it easier to legally acquire the rights needed to use content legally. I agree with this too. It’s more or less the same line of thinking I have been promoting since the idea of ACAP was a twinkle in my eye, and it’s strongly supportive of the approach which the Linked Content Coalition is now developing actively.

Smart legislation

She says that “smart legislation” can play a role in bringing about her vision of a better future for creators. Three cheers for that, I say, because the bleak choice to litigate endlessly and expensively is not appealing to anybody least of all the beleagured creators.

I also hope that along with introducing “smart legislation” she also gives consideration to abolishing, or at least modifying, some dumb legislation of the past.

Kroes says:

legal enforceability is becoming increasingly difficult; the millions of dollars invested trying to enforce copyright have not stemmed piracy

This is true, and this is a problem which has been in no small measure caused and exacerbated by the law. Specifically one law.

Dumb legislation

The European e-commerce directive (along with its counterpart the Digital Millennium Copyright Act in the USA) has created the giant loophole through which the coach-and-horses of businesses contemptuous of copyright can be driven.

This directive created the “safe harbour” (to use the american term) which makes internet companies effectively immune from liability (or damages) for the infringements of their users.

In so doing, it went beyond protecting vulnerable new players from the possible  consequences of old law applied to the new world. It also created a huge opportunity for anyone to build a business which can make vast sums of money exploiting content – as long as they don’t do anything to monitor or proactively act on infringements.

Ignorance is not just a defence, it’s a necessity

As far as copyright is concerned, their obligation is to do no more than wait for complaints and then act on them. In fact if they do do more than this they actually increase their liability – ignorance of the infringement is their defence. So the law actually rewards a lack of governance and punishes responsible behaviour. Ignorance, in this case, is not just a defence but an obligation.

Their users aren’t similarly immune, of course. They are expected by the law to take full responsibility for their actions. On the face of it this seems fair; there’s still someone who has liability, it’s just not the internet company who merely provided a facility which a naughty user abused.

ISPs are immune, users are unreachable

However, while the liability may pass to their users, the internet companies don’t actually have to know who their users are to benefit from the immunity the law gives them. Nor are they obliged to hand over whatever details they do have about their users, and most of them will refuse to do so without a court order (after which it may turn out they have little or nothing to give – the one time I pursued this all I got at the end of it was an IP address belonging to a university).

So the copyright owners have to police the entire internet, all the time, in respect of every piece of their content, in order to get infringing copies removed. In reality taking further action against users is expensive, unlikely to result in any meaningful recompence and often impossible even if they are prepared to go to court twice (once to obtain the user details and then again to actually take action against them). And internet companies, freed from the irksome responsibility of even basic governance, are able to build huge businesses with very little cost or risk.

So, unsurprisingly, some of the biggest businesses on the internet depend on this for their viability and enormous profits.

Legislate in haste, unintended consequences guaranteed

One way of thinking about this law, and the DMCA, is that they codified the status quo on the internet at quite an early stage. The internet had largely grown up from a utopian vision of a world free from many of the constraints of the regulated world outside.

This utopian vision used to extend well beyond copyright. I remember when people thought that they were truly anonymous on the internet, that they couldn’t be traced or monitored as long as they used a pseudonym. When people thought that national laws would be unenforceable and that traditional law would never reach the internet. It was truly a utopian vision, from the perspective of those who built it starting with a blank sheet. The hope of many of them was that commercialism and old legal frameworks would never rule the day because in the intangible, borderless new world of cyberspace individuals held the power.

But gradually the real world has chipped away at that vision. Some of it is still there, but just like the real world we have seen the full mix of human nature move online. And as it has the internet has changed. Criminal activity has had to be curbed. Regulation and law enforcement have become an ever growing reality. Surveillance and intrusion has become a fact of life too, with complex steps needed for those who want to try to evade it. Security has improved, peoples willingness to trade online has improved too, and the ingenuity of criminals has raced ahead. An endless cat-and-mouse game. It was ever thus.

Almost no aspect of the internet is recognisable from those utopian early days from the way in which web pages work to the protocols which underpin the most basic functionality

Copyright has been excluded from the evolution of the internet

However, strangely, the internet is no better at dealing with copyright than it ever was. Despite the ability of the internet to simplify immensely complex things – from finding a website to dealing with your banking – copyright remains as old-fashioned and clunky as ever and the internet’s ability to deal with it remains entirely undeveloped. Buying a licence – or even knowing who to buy one from – is, as Kroes points out, is absurdly complex and expensive.

As far as copyright is concerned, the internet remains much as it was when Tim Berners-Lee had the first twinkle of a web page in his eye. Which is unfortunate because at that stage the internet without any effective mechanisms for managing copyright at all.

But why was copyright left behind as the internet raced ahead? What held it in that simplistic, stunted state of evolution?

Well, in part it suits those who have the greatest influence over the way the internet works, so they have (at best) avoided putting any resource into the issue and (at worst) done everything they can to prevent other initiatives from gaining ground. Whether for ideological or commercial reasons (and one very often masquerades as the other) they have no desire for change and can kill any attempts by pronouncing that they would “break the internet”.

But they have been aided and abetted, and latterly incentivised, by laws made in haste for simplistic reasons and which have held the internet suspended in an embryonic form, destined like Peter Pan never to grow up, for the last decade or more.

Poor copyright functionality is complimentary to the new mega-businesses

What it has given rise to is a small cadre of mega-businesses, who monopolise the content-related revenues of the internet and prevent development of new business models. It has impoverished content businesses and destroyed, in many instances, the rationale for investment in creativity.

These mega-businesses, made bullet-proof by the law, have also created a world in which copyright has become demonised and where the less you invest in content the more you make.

Kroes is right to point out in her speech the shame that creators make so little from their creations but she is ducking a big issue if she fails to address the real cause of the problem.

It’s true that enforcement is a losing game but hardly surprising given the protection that the law has given to infringement. Imagine if the law made dealing in guns and ammunition legal and unrestricted, and only criminalised use of guns. Would we have more or less gun crime? Imagine if we abolished speed limits and allowed drivers to decide for themselves how fast to go. Would we have more or fewer road deaths? Imagine if the job of setting duties on fuel were put in the hands of car manufacturers. Would we see cheaper or more expensive petrol prices?

Letting people write the law to favour their own interests is likely to result in laws which minimise their obligations and and maximise their opportunities regardless of the impact on anyone else. That’s why, in democracies, they’re not allowed to do it. The role of politicians is to prevent this happening and ensure that the law strikes a fair balance. With what were doubtless impeccable intentions at the time to protect vulnerable underdogs in the new digital world, the safe harbour provisions of the E-commerce directive and the DMCA have failed the test of time and has proved themselves to be a disaster. ‘

Failed laws should be changed, even if it upsets the status quo

It’s no surprise that these invulnerable internet businesses lobby strongly for the laws which protect them from normal vagaries and costs of business governance, and even for further relaxation to make life even easier for them. Their absurdly self-interested and disingenuous arguments have been given so much exposure, courtesy of their enormous consumer reach and the lobbyists they fund, that they have begun to feel to some as if they are givens, natural truths. We are in danger of getting the world they have wished for.

Nor is it any surprise that their users, who are also the beneficiaries of the impunity to infringe that has been created, dislike copyright and resist attempts to enforce it. Someone threatening to take away the cheap and seemingly limitless fuel that they have grown so used to putting in their cheap and gas-guzzling cars, and they want to keep it.

While it’s great to hear politicians talk about using “smart legislation” to improve things for creators in the future, they shouldn’t consider the recent past as anything other than a salutary lesson. As well as creating better new legislation they need to get rid of the disastrous old legislation which has destroyed much of the opportunities the internet should offer creators.

While I share Neelie Kroes’s frustration about enforcement, I find it equally frustrating to see politicians talking about this as if it’s nothing to do with them. Of course we need to move on, and the first thing we need to do is remove the legal incentives to build massive businesses on copyright infringement.

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

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 internetfriendly 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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