New Study From Booz & Co. Shows That SOPA/PROTECT IP Will Chill Investment In Innovation

from the indeed dept

Wed, Nov 16th 2011 12:19pm — Mike Masnick

Booz & Co., which is one of the most respected consulting/research firms around, has come out with the results of a new study, looking into how venture capital and angel investors will respond to new laws like PROTECT IP and SOPA, and found that a large majority of them would avoid investing in user generated content sites over fear concerning the liability.

A large majority of the angel investors and venture capitalists who took part in a Booz & Company study say they will not put their money in digital content intermediaries (DCIs) if governments pass tough new rules allowing websites to be sued or fined for pirated digital content posted by users.
More than 70% of angel investors reported they would be deterred from investing if anti-piracy regulations against �user uploaded� websites were increased.

In fact, the survey found that investors actually would prefer to invest in a weaker economy than a stronger economy with SOPA/PROTECT IP in place. But if the definitions were actually narrowed to not impact so many legitimate startups, they'd invest again:

More than 80 percent of the angel investors would prefer to invest in a risky, weak economy (with the current internet regulations) vs. a strong economy (but with the new, more stringent proposed regulations on copyright infringement).
If the legal framework for digital content was clarified, and penalties on copyright infringement were limited for content providers acting in good faith, the pool of angels interested in investing would increase by nearly 115 percent.

Hollywood can continue to pretend that only its jobs are the ones that matter, but repeated studies have shown that job growth comes from new startups, and VCs and angels are what make new startups possible. Chilling investment is no way to help create jobs.

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Filed Under: angel investors, copyright, investments, protect ip, sopa, studies, venture capital

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Anonymous Coward, 16 Nov 2011 @ 12:25pm

Unfortunately and ironically, the tech community bought these over reaching measures on themselves by rejecting ANY copyright based potential business models for the future. That left the old school copyright based industries no choice but to fight for its survival. You guys should have compromised and used your "intellect" to incorporate the new with the old - instead you said "screw copyrights" - BIG mistake.
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Scooters (profile), 16 Nov 2011 @ 12:29pm

Bad gateway on the image click.
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Hephaestus (profile), 16 Nov 2011 @ 12:33pm

Re:
"That left the old school copyright based industries no choice but to fight for its survival."

Adapt or Die ...
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Anonymous Coward, 16 Nov 2011 @ 12:34pm

Re:
are you going to copy/paste that on every article on techdirt? In that case, flagged for spam
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Anonymous Coward, 16 Nov 2011 @ 12:42pm

I think it really doesn't matter what laws the entertainment industry buys, sooner or later they will become irrelevant. We the people will only obey a law if it suits us.
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DannyB (profile), 16 Nov 2011 @ 12:47pm

Couldn't this be used as a metric for SOPA?
An earlier TD article asked how to measure the success of SOPA.

Couldn't the chill in innovation investment be used as a metric?

How about jobs lost? Noninfringing matierial removed from the internet.
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DannyB (profile), 16 Nov 2011 @ 12:48pm

Re:
The pendulum will swing back.

I wouldn't want to be on your side of it when it does.
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Clouser, 16 Nov 2011 @ 12:49pm

Curtailing of Innovation
Powerful report. Wow. This is dark news for innovation and those of use who believe in the internet and its possibilities to drive more of it.
-Academic Entrepreneur
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Anonymous, 16 Nov 2011 @ 12:50pm

Re: Re:
Seriously, the copyright-based industries also rejected any copyright-based potential business models for the future. They finally got on board iTunes but didn't exactly try very hard themselves.
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Anonymous Coward, 16 Nov 2011 @ 12:50pm

You did it! SOPA-Dirt!
10 articles posted so far today; 10 articles with SOPA in the title!

Almost as good as Super Troopers and the Cat Game...

"All right meow. Hand over your license and registration"
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hothmonster, 16 Nov 2011 @ 12:51pm

Re:
"by rejecting ANY copyright based potential business models for the future"

do you mean not wanting to pay ridiculous license fees that keep a service from being profitable like pandora or netflix or do you mean we didn't turn the internet into broadcast television?
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Anonymous Coward, 16 Nov 2011 @ 12:51pm

Re:
oh, also, that is not ironic
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hothmonster, 16 Nov 2011 @ 12:52pm

Re: You did it! SOPA-Dirt!
I know right, how dare they focus on a horrible bill that congress is trying to push through at the moment. Can't we get some articles about the beiber baby or something, this whole focusing on major current events is really stupid.
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Anonymous Coward, 16 Nov 2011 @ 12:54pm

Re:
"by rejecting ANY copyright based potential business models"

Why should the tech community have to accept an IP based business model?
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out_of_the_blue, 16 Nov 2011 @ 12:56pm

SO? Proves no /value/ in "user-generated" UNLESS means "pirated".
Those sites have to have a /big draw/, NOT videos of cats.
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Anonymous Coward, 16 Nov 2011 @ 12:57pm

White House Petition reached its goal today I wonder how long before the white house responds. Or if they even will respond.
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Anonymous Coward, 16 Nov 2011 @ 12:57pm

Re: Re:
and your statement isn't true anyways. Microsoft uses copy protection laws to protect Windows, Youtube pays royalties when people view certain videos. So quit your lies.
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Anonymous Coward, 16 Nov 2011 @ 12:59pm

Re:
"You guys should have compromised"

We're the one's not compromising? Look how long copy protection lengths are. Look how absurd infringement penalties are. IP maximists practically get everything they want and we're the ones not compromising?

and your argument suffers from the middle ground fallacy.
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out_of_the_blue, 16 Nov 2011 @ 1:01pm

Re: Re: Answer to "Why should the tech community..."
Anonymous Coward, Nov 16th, 2011 @ 12:54pm

Why should the tech community have to accept an IP based business model?
------------------

Because the "tech community" /relies/ on IP that they don't produce. If you don't /pay/ for the production of content, then you /don't/ get to use it to make money.

IF producing "content" is SO easy and profitable, then why isn't everyone in THAT business instead of "tech"?
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Anonymous Coward, 16 Nov 2011 @ 1:03pm

Re:
"We the people" aren't pirates. A small minority of users who cause disruption of services for others will result in punishment by "We the people". It has happened time and time again, how many people have tried to fight copyright issues in court before a jury of their peers and lost? The fines suggested by the jurors is usually higher than the judge levies. "We the People" are tired of pirates - this is your notice - stop stealing content or face the consequences of your actions.
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:Lobo Santo (profile), 16 Nov 2011 @ 1:04pm

Re: Re: LOL
Yeah, like being deemed "guilty" by a group of people who weren't bright enough to get out of jury duty proves anything...
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Anonymous, 16 Nov 2011 @ 1:13pm

Tell that to Facebook
Tell that to Facebook.
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Anonymous Coward, 16 Nov 2011 @ 1:13pm

Re: Re: Re: Answer to "Why should the tech community..."
I know you overvalue content and devalue service and I think I may understand why now. Since its nearly impossible for you to type a sentence and have it make sense let alone make it through a whole paragraph you must think people who can write an entire story are gods.
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Anonymous Coward, 16 Nov 2011 @ 1:14pm

Re: Re: Re: LOL
Aren't you the elitist troll. Jury duty is a civic responsibility, no one likes it but if everyone avoided it criminals would never be sent to jail.
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Anonymous Coward, 16 Nov 2011 @ 1:17pm

Re: Couldn't this be used as a metric for SOPA?
There is one pretty big problem with this study: It didn't ask the angel investors what they would do instead. These guys don't sit on their money and wait for it to rain gold, they go out and get involved in things. If they aren't invest in DCI, they will look somewhere else.

Perhaps the smart ones will look for DCIs that have legal or supportable models, and be able to actually attract an audience and thrive.

It's hard to measure the "chill" in this case, because a lack of investment in A doesn't preclude them from doing B.

I would say that the study is a little bit one sided.

Oh yeah, let's play fair here:

"This report was financed by Google Inc."

Smells like they got the result they were looking for.
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:Lobo Santo (profile), 16 Nov 2011 @ 1:18pm

Re: Re: Re: Re: LOL
Oh AC, you seem to be suffering a failure of differentiating between the reality of a thing and what it's supposed to be.
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out_of_the_blue, 16 Nov 2011 @ 1:21pm

"venture capital and angel investors" = grifters
They're in the 1%, or trying to be. Yet again, Mike's focus is on the already upper class, and specifically here, on a species of grifters whose notion of "business model" is EASY QUICK PROFITS by leveraging the actual work-products of others.

"VCs and angels are what make new startups possible" -- Not true. Ideas plus labor to produce actual goods are what /add/ value to society. Mike simply favors those looking for easy ways to skim values. Henry Ford wasn't under any such delusions (I don't recall exact quote): The product pays the workers.

Mike wants to further help those who get their products FREE from someone else -- whether user generated or pirated, it's someone other than the site owner -- and their income ALSO comes from someone who has REAL products: advertisers. The mentioned "VCs and angels" wish to just sit in the middle there and SKIM. That's no way to run a "capitalist" economy, it's JUST re-distribution!
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Anonymous Coward, 16 Nov 2011 @ 1:21pm

Re:
Complete bullshit.

You guys should have compromised and used your "intellect" to incorporate the new with the old

The tech industry was willing to and did engage in substantial compromises. What we didn't do is capitulate, which is what you really want. To techs, compromise is finding an equitable balance between the needs. To old media, compromise is giving them anything and everything they ask for no matter what.
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Gwiz (profile), 16 Nov 2011 @ 1:25pm

Re: Re: Re: Answer to "Why should the tech community..."
Because the "tech community" /relies/ on IP that they don't produce. If you don't /pay/ for the production of content, then you /don't/ get to use it to make money.

Wait. Are you saying tech companies shouldn't get paid for providing services?

Isn't that like saying a waitress shouldn't get paid because she didn't cook the food?
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Dark Helmet (profile), 16 Nov 2011 @ 1:28pm

Re: "venture capital and angel investors" = grifters
Have you gone completely bonkers? VCs FUND the very labor and product creation you're talking about. They don't skim, they invest. And if you think being a successful VC has ANYTHING to do with "easy quick profits", you're so far gone that you may need serious psychiatric help....
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Anonymous Coward, 16 Nov 2011 @ 1:31pm

You want to know what investors will do with their money instead of SOPA passes? They'll sit on it and wait for something safer with less liabilities to come along.

All the money (and tax revenue) that could have been generated from Internet successes will be gone, starved in their infancy.

Just because something is worth investing in for how it'll benefit investors/customers doesn't mean it gets invested in. There's ways to build coal powered plants that create energy twice as efficient as any power plant in the US (most power plants run on coal even today). No one in the US has invested in it however, why? Because the start up costs are too expensive, and back when the technology was first thought up it was viewed as too risky. Now the Russians have that more efficient coal powered plants, and American investors still aren't willing to invest in it, since the Russians would charge them too much for using their technology, technology that was first dreamed of by an American inventor who tried and failed to get US investors and the US government to invest in his idea.
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Jay (profile), 16 Nov 2011 @ 1:33pm

Re: Re: Re: Answer to "Why should the tech community..."

Because the "tech community" /relies/ on users that they don't produce. If you don't /attract consumers/ for the production of content, then you /don't/ get to use it to make money.
FTFY
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Anonymous Coward, 16 Nov 2011 @ 1:42pm

Re: Re: Re: Re: Answer to "Why should the tech community..."
If you delivery garbage that no one wants they will not use your service. It really is co-dependant relationship between the tech industry and the content industry.
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The eejit (profile), 16 Nov 2011 @ 1:42pm

Re: Re: Couldn't this be used as a metric for SOPA?
And yet any report financed by the IFPI and the MAFIAA is automagically correct?

Can't have it both ways.
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Anonymous Coward, 16 Nov 2011 @ 1:48pm

Re: Re: Re: Couldn't this be used as a metric for SOPA?
No, both sides would be equally full of shit, especially if they don't ask the next logical question:

If you aren't investing in X, what are you doing with your money?

Google wanted a specific set of answers, and paid for them. The survey has no crediblity, because it is financed by a company strongly opposed to SOPA, asking a group of people opposed to SOPA if they are actually opposed to SOPA. What the heck do you think the answer would be?

I think that there are many better questions that could have been asked, ones that would be much less slanted.
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Anonymous Coward, 16 Nov 2011 @ 1:57pm

Re: Re: Re: Re: Re: Answer to "Why should the tech community..."
i'm thinking you're just wishing that were true

..some of the garbage i see on youtube with hundreds of thousands of hits.. unbelievable

i think if youtube was able to remove all content it didn't have rights to distribute, it would still be gang busters
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gorehound (profile), 16 Nov 2011 @ 2:02pm

SOPA will make me not want to invest money in tech.It is a very disgusting and scary Bill.I think tech stocks will drop as a result of this bullshit.
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Anonymous Coward, 16 Nov 2011 @ 2:04pm

Re:
That left the old school copyright based industries no choice but to fight for its survival.

there comes a time to see when you're pretty much doomed either way, even if you win you win at a huge cost to everyone else including yourself

is it really worth living then?

might aswell make it quick and just pull the trigger yourself, end that misery
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Anonymous Coward, 16 Nov 2011 @ 2:10pm

Re: Re:
so you can either have the quick loss, leaving behind hope for the future

OR

you can have the long drawn out loss disguised as a (hollow) victory in which everybody loses world-wide

copyright based industries are doomed and they know it, i am just at loss to understand why is it exactly that they think everyone else needs to be dragged down with them
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Anonymous Coward, 16 Nov 2011 @ 2:15pm

Re:
You guys should have compromised and used your "intellect" to incorporate the new with the old

also, NO U
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Anonymous Coward, 16 Nov 2011 @ 2:18pm

Re: Re: Re: Re: Answer to "Why should the tech community..."
Are you trying to speak blue?

You can argue with blue until your head turns blue but it's not going to teach him anything, no matter what language you use.
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Anonymous Coward, 16 Nov 2011 @ 2:28pm

Re: Re:
I hate to tell you, but people were watching movies and listening to music before the internet existed. The entertainment industry isn't dependant on you, its the other way around. In fact they are doing everything they can to keep there content off of the internet.
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athe, 16 Nov 2011 @ 2:36pm

Re: Re: Re: Answer to "Why should the tech community..."
I'd like to see how the "content" industry would do without the "tech community".
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Planespotter (profile), 16 Nov 2011 @ 2:36pm

Re: Re: Re:
Yes and people watched movies and listened to music before the VCR/DVD, tapes and CDs existed, do you not see the internet as a "game changer"?

Why don't you ask the entertainment industry to stop using the internet and we'll see what that does to their profits.
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A Dan (profile), 16 Nov 2011 @ 2:36pm

Re: "venture capital and angel investors" = grifters
How do you propose to start a business with no money, if not by getting other people to invest in it?
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Planespotter (profile), 16 Nov 2011 @ 2:41pm

Re: Re: Re: Re: Couldn't this be used as a metric for SOPA?
So the report on SOPA not breaking the Constitution paid for by the MPAA is:

a: True
b: False

?
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athe, 16 Nov 2011 @ 2:43pm

Re: Re: Re:
Yes, and as people are realising that as distribution is easier and cheaper with the Internet, those same people aren't willing to pay the exorbitant costs that the gatekeepers are still demanding.

It's the content guys who need to compromise, no one else.

They need to provide a convenient, reasonable priced alternative to piracy, and people will pay. They just can't expect people to buy the same thing multiple times for different platforms at what people see as an unreasonable price for the means of distribution.

The days were "big content" can command monopoly prices are gone, and if they don't adapt, so too will they be...
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Planespotter (profile), 16 Nov 2011 @ 2:45pm

Re: Re: Re: Re: Couldn't this be used as a metric for SOPA?
And thanks... the next time I read a report by the RIAA/MPAA that asks the Music/Movie Industry if Piracy is causing them to lose millions of dollars a year I can now think back to your post and think... bullshit.
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Anonymous Coward, 16 Nov 2011 @ 3:06pm

Re:
Fight harder you are not winning LoL
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Anonymous Coward, 16 Nov 2011 @ 5:22pm

Re: Re:
>The fines suggested by the jurors is usually higher than the judge levies.

The jurors in said cases are an even smaller minority. Only two cases (Thomas-Rasset and Tenebaum) have ever made it to jury, and said juries were staffed by technophobic people who lapped up the RIAA's words like phoenix balm. Your "we the people" is a misnomer.
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Anonymous Coward, 16 Nov 2011 @ 7:21pm

Re: Re: Re: Re: Re: Couldn't this be used as a metric for SOPA?
Actually, Mike calls bullshit on every one of them, because he doesn't agree with them - but he is more than willing to run this one sided piece of shit because he agrees.
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Jay (profile), 16 Nov 2011 @ 8:17pm

Re: Re: Re: Re: Re: Re: Couldn't this be used as a metric for SOPA?
And yet you miss ALL the stories that align with this data...
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btrussell (profile), 17 Nov 2011 @ 4:41am

Re: Re: Re: Re: Re: Answer to "Why should the tech community..."
Has anyone tried Klingon?
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btrussell (profile), 17 Nov 2011 @ 5:01am

Re: "venture capital and angel investors" = grifters
You don't really think everyone gets the same interest rate at the bank do you?

Banks also want that money on their books and they will compete to get it. They will pay the 1%ers more interest to get it.

Don't think that the 99% are left out though. It works for them also. Next time you get a letter in the mail from a competing institution quoting lower mortgage/credit card rates than you are paying, take it to your bank manager and ask if they can at least match it. If they won't, change banks.

You are the customer!
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btrussell (profile), 17 Nov 2011 @ 5:03am

Re: Re: "venture capital and angel investors" = grifters
I do this with my ISP as well.
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Any Mouse (profile), 17 Nov 2011 @ 9:37am

Re: Re: Couldn't this be used as a metric for SOPA?
This question was not asked as it was not pertinent to the study. The study was to measure the effects of SOPA on the DCIs (Digital Content Intermediaries), which is a broad category. You do not ask 'what would you invest in' when you want to know how a new law would impact investments in a specific category. One question in the study was I am uncomfortable investing in business models in which the regulatory framework is ambiguous. I would really recommend you read the whole thing. It's only 28 pages, and quite interesting. Especially the methodology.
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Gwiz (profile), 17 Nov 2011 @ 11:12am

Re: Re: Re: Re: Re: Re: Answer to "Why should the tech community..."
Has anyone tried Klingon?

Nah. The Klingon language is much too intricate.

Perhaps the language of the Ravenous Bugblatter Beast of Traal would work.
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nasch (profile), 21 Nov 2011 @ 8:03pm

VCs and jobs
Not to sound trollish or anything, but... "VCs and angels are what make new startups possible" contradicts your earlier position that "The nice thing today is that more and more businesses can be started, built and can scale without that need [for venture capital]."

http://www.techdirt.com/articles/20090920/1925336249.shtml

You probably just weren't very careful with your wording, and should have written something like "VCs and angels can help make new startups possible", but things like this feed into the paranoid fantasies of Techdirt trolls about how you make stuff up to suit whatever story you're writing at the time.
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