The Chilling Effects On Innovation Caused By Bad Copyright Law

from the it's-feeling-frosty-in-here dept

Wed, Jun 20th 2012 10:49am — Mike Masnick

We've talked a few times about how attacks on new innovations in the name of protecting copyright can create massive chilling effects. For example, the increasingly questionable arguments against Megaupload have created a real chill for online cloud storage providers. That was likely manifest last week in the news that Dropbox was killing off its "public folders" feature in deference to its link feature, basically making the product less useful.

Matt Schruers, from CCIA has an interesting blog post up which ties actions like those done by Dropbox here with a new study showing how the chilling effects of bad copyright law can impact innovation. The full study (pdf) is actually something of a follow up to an earlier study we wrote about, which showed how good judicial rulings on copyright which allowed for greater innovation (such as the Cablevision ruling, which allowed cloud-based DVRs to exist) contributed directly to greater funding of innovation.

This new study, also by Harvard professor Josh Lerner, highlights the unfortunate opposite impact: the chilling effects on investment in innovation that comes as a result of anti-innovation judicial rulings. In this case, Lerner looked at specific rulings in the EU:

We analyze the effects of a court ruling in France and several court rulings in Germany on VC investment in cloud computing firms in these countries. These court rulings were seen as negatively affecting the development of cloud computing, and our findings confirm this view by showing that these rulings regarding the scope of copyrights had significant, negative impacts on investment. Specifically, we find that VC investment in cloud computing firms declined in Germany and France, relative to the rest of the EU, after the French and German rulings. Our results suggest that these rulings led to an average reduction in VC investment in French and German cloud computing firms of $4.6 and $2.8 million per quarter, respectively. This implies a total decrease in French and German VC investment of $87 million over an approximately three year period. When paired with the findings of the enhanced effects of VC investment relative to corporate investment, this may be the equivalent of $269.7 million in traditional R&D investment.

Combine these two studies and you can see how these chilling effects can be quite massive in terms of investment in innovation. Of course, investment alone is not the sole determinant of the pace or success of innovation, but it is a key factor. And scaring investors away from innovations can have a major impact on the public and the economy.

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Filed Under: chilling effects, european union, investment
Companies: cablevision, dropbox

34 Comments

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Anonymous Coward, 20 Jun 2012 @ 11:02am

convincing governments that innovation is of more importance than protecting companies that produce little plastic discs is where the difficulty lies. it's very hard to 'encourage' politicians to look to the future and support a business that hasn't yet thrived when pitted against one that is already established, even though it is well out of date. but then, living in the dark ages is where so many politicians prefer to be, given their own ages
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average_joe (profile), 20 Jun 2012 @ 11:10am

We've talked a few times about how attacks on new innovations in the name of protecting copyright can create massive chilling effects. For example, the increasingly questionable arguments against Megaupload have created a real chill for online cloud storage providers. That was likely manifest last week in the news that Dropbox was killing off its "public folders" feature in deference to its link feature, basically making the product less useful.

Yeah, it's terrible if tech companies have to think about other people's rights when choosing what features they provide. Not.
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Applesauce, 20 Jun 2012 @ 11:11am

Stopping Innovation is the intention.
The legacy players WANT innovation prevented. For them, this is a feature, not a bug. Disruption is the biggest threat to their rice bowl.

A naive observer might wonder why the legacy players don't try to innovate themselves, but that would require work, thought, and foresight. Much easier to simply shut down any competition.
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bob, 20 Jun 2012 @ 11:16am

Astroturfing from Big Search...
What do you expect?

I can tell you that copyright law also increases innovation and investment. If there's no return on making a movie, book, album, etc., no one is going to pay for it.

Here's an experiment for you: go to investors and ask for money to make something and release it into the public domain. Then go to a control group and promise to copyright it and sell it. You'll get a much more positive response from the second group. That's the kind of innovation that real copyright supports.

Big Search just wants to make sure that its source of free content keeps flowing because they can't make their billions selling ads if they actually have to share with the content creators. (That's one kind of sharing that Big Search doesn't believe in supporting.)
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Anonymous Coward, 20 Jun 2012 @ 11:20am

Sure we may be killing maybe $1 billion dollars of investment in the economy with our strict IP enforcement, but it's well worth the cost considering we're saving $1 million dollars a year for legacy industries.

Oh wait, our deterrence isn't saving ANY money for legacy industries? Well then we'll have to pass even more draconian laws that cost us $10 billion a year in investments, and if that doesn't work then even more draconian laws will be needed!
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Anonymous Coward, 20 Jun 2012 @ 11:21am

Re:
What about my right to use Dropbox to help distribute things that I've made?

Why does the possible thought that someone, someday might use this feature for something that other people dislike more important than my ability to use this feature right now for legitimate reasons?

Why do they win? Because they have more scary lawyers?

Are you also pro gun-control because someone might do bad things with them? What about banning bleach and ammonia because you can do bad things with that combination? What about banning soft drinks because people might get fat? Where is the line where the possible bad use outweighs the possible good use?

We have DMCA takedowns when actual bad use is discovered. They weren't using it. That's not my fault. But now I can't use Dropbox for legitimate purposes.
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Anonymous Coward, 20 Jun 2012 @ 11:25am

Re:
Tech pirates on the other hand have no problem innovating.
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average_joe (profile), 20 Jun 2012 @ 11:45am

Re: Re:
And they'll go right on innovating. Innovation doesn't mean doing whatever you can think of. It also means thinking about what you're doing. It's not only what can be done--it's also what should be done.
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:Lobo Santo (profile), 20 Jun 2012 @ 11:47am

Re: Re: Re: Classic!
Ah yes, the old "you'd best think hard before trying to improve your corn crop by selective breeding because Monsanto might sue you" argument.

Man, that's a classic!
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arcan, 20 Jun 2012 @ 11:48am

Re:
maybe there should be age caps and term limits on any elected office then. like no one over 50 could be a senator or no one over 45 could be a representative. and i mean they can't run not oh you turn 51 your fifth year of senate-hood we can't let you run.
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average_joe (profile), 20 Jun 2012 @ 11:51am

Re: Re:
There will always be services for sharing legitimate files, and the ones that do it best will be rewarded by the market. The law will always have a pull on technology. Less money being poured into questionable services isn't really a bad thing, IMO. That means the system is working. Sorry, but not all innovation is good innovation. Innovators need to take the law into account.
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arcan, 20 Jun 2012 @ 11:52am

Re: Astroturfing from Big Search...
Micheal bay's 500 million dollar boom-fests are not innovative in the slightest. they are just massively wasteful. the average surat could make a better movie for a 10th that price.
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Anonymous Coward, 20 Jun 2012 @ 11:52am

Re: Re: Re:
There is nothing questionable about the fundamental principle of a public folder. I upload stuff, people download stuff. Whether I use it for good or bad has nothing to do with the concept itself.
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The eejit (profile), 20 Jun 2012 @ 11:52am

Re: Re: Re:
Oh the irony.

What should be done is to scrap IP in its current forms and a complete reboot of the whole damned thing.
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The Groove Tiger (profile), 20 Jun 2012 @ 12:03pm

Re:
As usual, average_joe demonstrates a complete lack of journalistic integrity with this comment. Not a single source cited, nothing fact-checked. Just the worst type of "reporting" possible to come from a wannabe journalist like this.

And you claim to be a reporter? C'mon, you can do better than that.
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arcan, 20 Jun 2012 @ 12:12pm

Re: Re: Re:
any sort of innovation is better than no innovation. which is what legacy industries want.
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freedom (TM), 20 Jun 2012 @ 12:14pm

Re:
simple minds with simple answers
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Anonymous Coward, 20 Jun 2012 @ 12:14pm

Re: Re: Re:
What exactly is a "questionable service?" Who gets to define what a "questionable service" is? How is the public folder feature of Drop Box (or equivalent features of other online storage systems) in some way "questionable?" Is a storage location accessible by anyone on the internet somehow "questionable?" If so, we'd better shut down the internet.
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VMax, 20 Jun 2012 @ 12:18pm

Re:
You mean Granted Monopoly control, not right.
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Anonymous Coward, 20 Jun 2012 @ 12:27pm

Re: Re: Re:
Name one service for sharing legitimate files that hasn't been dumbed down to the point of uselessness.
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E. Zachary Knight (profile), 20 Jun 2012 @ 12:32pm

Re: Re:
Don't forget, he did not negotiate with Mike in order to quote that paragraph. He is violating his own principles.
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zippy, 20 Jun 2012 @ 12:32pm

"BUT, BUT... COPYRIGHT MUST BE PROTECTED AT ALL COSTS!!! EVEN IF WE HAVE TO DESTROY ALL OF CIVILIZATION TO DO IT! OLD GUARD LEGACY MEDIA INDUSTRIES MUST NOT BE FORCED TO CHANGE, EVER!! THEY MUST ALWAYS BE ALLOWED TO SWINDLE�ER, EARN�AS MUCH MONEY FROM THE PUBLIC AS THEY HAVE ALWAYS MADE, REGARDLESS OF THE ADVANCE OF TECHNOLOGY! TECHNOLOGY MUST BE DESTROYED, EVEN THOUGH THE MODERN RECORDING AND FILM INDUSTRIES WOULDN'T EXIST WITHOUT IT!!! YOU CANNOT MAKE US CHANGE!! NEVER!!! PIRACY!! PIRACY!! PIRACY!! RANDOM CATCHWORD #62497581!! MAXIMALISM!! MAXIMALISM!! MONEY!! MONEY!! MONEY!! WAAAAAAAAHHHHHHH!!!!!"

/sarc
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Anonymous Coward, 20 Jun 2012 @ 12:57pm

Re: Re:
if you are referring to megaupload - they were using DMCA takedowns, and are claiming they were within the law on that aspect. in fact a major issue of the case is about links vs files, which in my view is a drummed-up bogus argument by the DoJ trying to turn a technical issue into proof of criminal intent. In this sense - even worse. Things were done according to the law, and this is precisely because other cyberlockers are now falling over themselves to avoid the same fate - all pretty arbitrary.
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average_joe (profile), 20 Jun 2012 @ 1:02pm

Re: Re: Re:
lol
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arcan, 20 Jun 2012 @ 1:17pm

Re:
where is your start sarc.... according to you everything above the /sarc is all sarcasm...
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Anonymous Coward, 20 Jun 2012 @ 1:29pm

Re: Astroturfing from Big Search...
"Here's an experiment for you: go to investors and ask for money to make something and release it into the public domain. Then go to a control group and promise to copyright it and sell it. You'll get a much more positive response from the second group. That's the kind of innovation that real copyright supports."

That almost sounds like a challenge for an interested individual and Kickstarter to take on at some point.
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Anonymous Coward, 20 Jun 2012 @ 1:36pm

Re:
This time period is going to be referred to as the "Second Dark Ages" by historians a few hundred years from now. Because by then I bet a lot of the stuff that survives from this period will be locked down in DRM and/or proprietary formats from companies that have long since gone out of business and taken all their precious imaginary property into the same black hole that they and their massive arrogance collapsed into.

That said, given the success rate of DRM in the present time, odds are that cracking through the digital handcuffs and releasing the culture of the past probably won't be that difficult for the historians of whatever enlightened era follows this one after our present civilization is dragged halfway back to the stone age in the name of copyright and monopoly protection.
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Anonymous Coward, 20 Jun 2012 @ 1:54pm

Re: Re: Re:
Just like those pesky 'colonists' took English law into account when they were 'innovating' a new country....

Oh snap... they totally ignored the laws that they did not agree with as free thinking individuals and attempted to create a more free, open, and honest society (and look how well that turned out...)

Sorry, but not all laws are good laws. Laws need to take the will of the people into account. (FTFY)
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Richard (profile), 20 Jun 2012 @ 2:00pm

Re: Astroturfing from Big Search...
Here's an experiment for you: go to investors and ask for money to make something and release it into the public domain. Then go to a control group and promise to copyright it and sell it. You'll get a much more positive response from the second group. That's the kind of innovation that real copyright supports.

Funny thing is that when that experiment has actually been done (eg on Kickstarter) the result has been the exact opposite of what you claim!
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Richard (profile), 20 Jun 2012 @ 2:04pm

Re: Re: Astroturfing from Big Search...
I challenge you to get some investors together and beat the $68k that Musopen raised on Kickstarter for classical music recordings.

http://www.kickstarter.com/projects/Musopen/record-and-release-free-music-without-cop yrights
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Richard (profile), 20 Jun 2012 @ 2:10pm

Dropbox public folders
As a committed dropbox user I have to say that - whatever the merits of this story in general terms - I can't agree with the comment about dropbox public folders. The link feature is actually a better way of achieving the same thing. You can post a link to any dropbox folder - which then becomes effectively a public folder. It made no sense to have two ways of doing it. If I was running dropbox I would have done the same. This has nothing whatever to do with chilling effects, it is just a sensible technical rationalisation.
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Anonymous Coward, 20 Jun 2012 @ 2:33pm

Re: Re: Re: Re:
Well scrapping IP completely from one day to the next will probably cost like 2-5 % of the western countrys jobs. That is a pretty steep cost for something like scrapping IP. Might as well illegalise import and gathering of oil.

While the intentions are good, it is just a catastrophy economically! The right way to do it is to keep laws reasonable(that is close to status quo or slightly laxed), have judges be pragmatic and tell the industry to live or let die...
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The Groove Tiger (profile), 20 Jun 2012 @ 3:10pm

Re: Re: Re:
I see. Obviously, claiming to be a journalist is not an excuse to steal other people's hard work. Thousands of corn farmers probably lost their jobs due to the amount of text he quoted for free.

His fixation on 12-year old boys only makes his lack of morals more obvious.
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Anonymous Coward, 20 Jun 2012 @ 5:46pm

Re: Astroturfing from Big Search...
I can tell you that copyright law also increases innovation and investment. If there's no return on making a movie, book, album, etc., no one is going to pay for it.

"Is the copyright on this piece of entertainment still enforced? If not, I'm simply not going to partake in it!"
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