A study released Friday by the Berkman Center for Internet & Society at Harvard Law School makes the occasional cogent point on the issue of policymaking and digital technology. For instance: "For policymakers, evaluating the treatment of unauthorized consumer distributors is a complicated calculus." I agree wholeheartedly. Unfortunately, that is a rare nugget of wisdom in an 83-page study based on faulty premises that reaches a reckless conclusion.

Any hope of objective scholarship was doomed from the start, as revealed by the study's title, "Content and Control: Assessing the Impact of Policy Choices on Potential Online Business Models in the Music and Film Industries." Overlook the charged use of the word "control" for a moment, and consider this. A group of Harvard law professors has decided to preempt their colleagues at the well-respected Harvard Business School to take a stab at studying new business models. The lack of economic analysis in the study is painfully obvious, as the authors continually discuss social costs (impossible to quantify and subject to bias) but blithely dismiss any discussion of economic costs. In fact, existing evidence of direct economic costs suffered by the content industries is dismissed in a mere sentence.

The authors contend that there currently is no cause for alarm. "Although government action may be necessary at some point, it should respond to empirically demonstrated problems - not predicted crises - and must be carefully designed to balance competing interests and concerns." Music and film companies are aggressively pursuing online distribution, only to encounter the obvious, namely that it is difficult to compete with free. The crisis is already here.

In proposing four proposed online content distribution models, the authors appear to operate from a philosophy that the government should choose the best model, then adopt the policy prescriptions in the study that will result in that model's adoption. Again, the premise is flawed. What's wrong with policymakers trying to preserve the intent of existing copyright law, and thus allow various business models to emerge in a free market? I want content providers and consumers driving my market choices, not government.

The authors claim to have no particular favorites among their four models. It is true that they include statements for and against each model. But these descriptions are filled with misleading arguments, as discussed below:

Digital Media Store - (Selling downloads, i.e., iTunes) In this business model the authors write that commercial sites should "improve their features" to make them more attractive and user-friendly compared to P2P networks and thus compete with free. But they also point out that P2P software makers are improving their offerings, including using anonymizing features to protect infringers from legal action. What's to stop P2P from continuing to upgrade their offerings to keep the differentiation between them and paid sites a mere issue of cost? In that scenario, the copyright holder loses every time. Obviously more needs to be done.

The P2P Store - This model is of course encouraged by the P2P providers currently profiting from infringement. Whatever licenses might be negotiated between content providers and P2P network providers, what's clear is that this model does nothing to discourage unauthorized downloads. Yet the authors acknowledge: "The viability of this model depends on its ability to compete with free." They also argue that "Policymakers favoring this model should reject efforts to burden P2P networks through the imposition of secondary liability…" This is 100% wrong. A commercial P2P model can only flourish if the bad actors are taken out. With secondary liability, P2P providers will assume responsibility for illicit conduct on their networks, and this powerful technology could actually be used for legitimate transactions.

Collective Blanket Licensing - In their discussion of this terrifying model, the authors reveal their belief that changes in technology should force abandonment both of longstanding copyright law as well as the power of markets, odd for a study that claims to propose "business models." While they include the occasional passage suggesting the dangers of this approach, the language is far too passive. For instance, they write that a collective blanket license (CBL) "may decrease value in the system by removing the market signals that allow for efficient pricing." I'd replace "may" with "will." They do acknowledge the likely role of government mandates in this scenario, with government rate courts involved. As someone who has seen multiple Copyright Arbitration Royalty Panels up close, I know this model is a recipe for disaster. That's why I welcome this statement by the authors: "Continued reliance on property rules, contracts, and markets is generally preferable to expansive government involvement. A government-run system could suffer from price stagnation in the licensing fees, enormous negotiation costs to determine the fees, and distortions from industry rent seeking." But right after that breath of fresh air, the authors say policymakers who want to go down this road should support legislation repealing the DMCA's anti-circumvention provisions. The author of this legislation, Rep. Rick Boucher (D-VA), has always said his bill isn't intended to lead to a compulsory license, but here his Berkman allies finally expose that argument for the feint it is.

Ancillary Products and Services - This has to be the biggest chimera of the digital content debate, and is so absurd it doesn't even merit consideration. But the Berkman authors gave it equal weight to the other offerings, so I must respond. The model proposed by the authors is one in which everyone gives up trying to sell content. Instead, it's given away, and money is made on "ancillary" efforts like concerts and T-shirts. This is just absurd. My favorite new artist is Ricky Fanté, but I don't want to buy a Ricky Fanté backpack. I don't anticipate people lining up to buy an action figure set from The Green Mile, complete with John Coffey walking down a green linoleum hallway to a miniature electric chair, batteries not included. Dark humor aside, the authors should have thought about how this model stands copyright on its head far beyond music and movies. Should John Grisham give away his books and try to make a living off of speaking tours and keychain sales? At least the authors acknowledge that "not all creators are well suited to these alternative streams." Yet right after that they defend the model: "Musicians and occasionally directors endorse products and services, appear in advertising campaigns, and have tours and concerts sponsored by advertisers." Some do, some don't. In a free-market economy, this should be the choice of the artist, not a necessity to make a living at one's craft.

The study presents itself as an objective review of differing business models, and its extensive footnotes suggest weighty scholarship. However, most of the materials cited are papers written by academics from the Free Culture Movement and news accounts written by reporters sympathetic with their cause. This is not scholarship, it is propaganda designed to feign objectivity in an attempt to convince the reader that the age of copyright has passed. My colleague Solveig Singleton recently called for more scholarship in this debate, but the Berkman study doesn't qualify.

The study's authors call action by policymakers "premature," but that only makes sense if one believes that policymakers should be open to a fundamental rethinking of copyright. Copyright has served us well for centuries, and I believe can continue to serve us well in the digital age. Thus, the authors have successfully skewered a straw man. Government action that reinforces property rights while remaining neutral to technology will ensure the continued production of content and enable further development of new technologies. Is it challenging for policymakers to craft legislation that finds that balance? Absolutely. That's why I agree with the authors that it is a "complicated calculus." But I disagree that policymakers should thus throw up their hands, step aside and let a small segment of society degrade the very meaning of copyright.

The study, irresponsibly, argues that copyright is failing. Copyright isn't failing. Copyright remains as sound as it was when it was included by our Founding Fathers in the Constitution. Instead, copyright is being failed by a small but active segment of society, a segment that feels no shame in theft, a segment supported by academics such as the Berkman authors.

posted by Patrick Ross @ 9:23 AM | Internet: P2P, Search Engines...

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