Arrington On Copyright: Wrong

I have always disagreed with Michael Arrington’s position on copyright, which seems to be that people are going to steal, no one should do anything about it, and that copyright-based businesses are going to die and that’s not bad in his mind.

In January, Michael wrote:

Personally, I think a new era of free recorded music and paid live performances is a very good thing. Recorded music will become a marketing tool to get people to pay for concerts and merchandise. Overall the music industry will be smaller in terms of revenue. But the artists who are driven to create their art will continue to do so, and many will make a very good living from it.

First, to be clear if music goes down, so will every other form of copyrighted material including ultimately books, movies, TV, etc. What we will be saying is in the Internet era, copyright doesn’t matter. And this is good?

Second, there is no evidence *at all* that free music on the Internet is an effective (i.e. successful career building) marketing tool. There have been no blockbuster successes that have come from, for example Garageband availability. I don’t think you could even count more than a handful – if that – Internet-based artists making a living from music. I believe several of the American Idol contestants have been on indie music Internet sites, but you cannot attribute their success to the Internet.

Third, if the recorded music industry goes down, concert sales will not grow – they will shrink. This is because the money that goes into creating concert demand (all from record label marketing spends) will disappear. People *will* see fewer concerts and they will cost less money because of reduced demand. So not only will the recorded music business disappear, but so will the much of the live music business. So there will be no “live music windfall” to share. Revenue in live music will shrink substantially from where it is today.

In a continuation of the theme, Today Arrington writes:

My position is that it’s bad to criminalize natural behavior. And watching a clip of The Office, whether it’s legally on Hulu or illegally on YouTube is natural behavior. The only question is whether or not people are getting sued, or going to jail, for doing it.

There are several problems I have with the above statement. The first is that no one is criminalizing the viewer. In all p2p cases and in the YouTube case, the entity being criminalized or sued is not the viewer but the “facilitator”. This means the person who posted or makes available the content, or the service itself.

In the case of Limewire, the software (I think by default) makes your music collection available to others. Most but certainly not all people know they are becoming *sources* of pirated content as well as consumers of it. But just to be clear, you can use Limewire without making your music available to others. In any case, I do not believe there has ever been a case of someone being charged with anything for receiving, watching or listening to pirated content. It is always for making it available to others in some way. So on the face if it, Michael’s statement is misleading.

The second problem I have with this statement is that it reflects a misunderstanding of the purpose of law. I know Michael is a lawyer and I am not, but nevertheless, the purpose of law is most generally to stop people from harming each other, or society at-large, whether it is natural to do so or not. Certainly not paying taxes would be more “natural.” And while we might argue over taxation levels, few would agree that allowing tax evasion would be socially beneficial.

The way it works is if the activity is harmful to others, we make the activity illegal. The larger the harm, or the more difficult it is to catch, the harsher we tend to make the offense in order to create a deterrent effect. This is the absolutely appropriate and necessary role of law in this country and actually more generally on our planet.

But the third problem I have with Michael’s statement is that it suggests that he has some reasonable alternative in mind to monetize content published in this free-for-all way. But he does not. What he said today is this:

It’s time to rethink copyright laws, and it’s time for copyright holders to rethink their business models. The winners won’t be the companies that win or lose billion dollar lawsuits. It’ll be the companies that throw out everything that’s come before, and build new businesses around the natural behavior of people. Remove friction and win.

Without specifics, this is an empty, meaningless statement. Without enforcement and/or monitoring, whatever scheme one might come up with can’t work. We don’t currently have the technology to track every copyrighted piece of work, and we are unlikely to have any such technology in even the medium term. There is just too much content. Such tracking may be possible for TV shows and some music because of the severely constrained pool of content, but it will be impossible for everything else.

So generally, if we were to legalize the free trading of copyrighted works it would really be the end of monetizing content. Among other things, this would mean no more $100 million movies. Even $5 million movies would likely be impossible to recoup. Our visual entertainment would be confined to things like Star Wars Kid.

As I see it, the concept of “rethinking copyright” without specifics and without the willingness to follow things through to their natural conclusion is dangerous. This discussion must be about consequences. If you cannot propose solutions and provide reasonable answers to what the consequences are, such suggestions are only harmful because they embolden people to think that stealing intellectual property is acceptable and that IP protections are bad. But, In fact without intellectual property and attendant protections, we will be flushing down seven or eight percent of our economy directly, and indirectly twenty percent or more.

In other words, the stakes here could not be larger.

Interestingly, in the narrow confines of music, where usage could be tracked at least fairly well, Michael’s concept of not punishing file sharing but turning it into a business might be possible. But this idea would, since there is no viable advertising model for music downloads, require that we tax ISPs and distribute the money in some way to copyright holders. But Michael is vehemently against that, calling it extortion.

The bottom line is you must do some combination of :

  • stopping the illegal publishing of the content through laws and/or technology
  • providing a means of monetizing free-for-all publishing through a tax of some sort
  • finding an advertising model on the net that really works broadly – so far most advertising outside of search has failed (including YouTube) or is failing, and music download ads have failed horrifically.

The argument that copyright holders are wrong or stupid for not coming up with some new business model and for trying to enforce the law is not just wrongheaded, but as I said above, it is dangerous.

A big piece of our economy and our value in world markets is tied into the creation of intellectual property. The collapse of the concept of intellectual property will have devastating economic effects on everyone in every post-industrial economy. This may seem like it is just about illegal downloads, but the issue is much more serious and if not addressed portends an economic melt down of unthinkable proportions. A little “straight talk” is really critical at this point, because we really are talking here about economic Armageddon. And so I hope that real conversation can begin soon, before it really is too late.

Post Author: Ruby H. Rosenbaum