Bad Copyright Laws Scaring Off Necessary Investment In New Digital Platforms

from the shooting-themselves-in-the-foot dept

Thu, Mar 26th 2015 9:27am — Mike Masnick

For many years, we've noted that while some in the legacy entertainment industry seem to think that there's a "battle" between "Hollywood" and "Silicon Valley" it's a very weird sort of war in which one of those parties -- Silicon Valley -- keeps supplying more and more "weapons" to the other party to help it adapt and succeed in a changing world. There are many examples of this, but the clearest is with the VCR, which the MPAA fought hard to outlaw in the 1970s and 1980s. The MPAA's Jack Valenti famously said in 1982 that "the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone." It was just four years later that home video revenue surpassed box office revenue for Hollywood. It wasn't the Boston strangler, it was the savior. Similar stories can be told elsewhere. The legacy entertainment industry has sued over MP3 players and YouTube, yet has now (finally) embraced online music and video years later than it should have.

And yet, that same legacy industry keeps trying to do everything to hamstring innovation that will only help it. A few years ago, we wrote about a fantastic post (sadly now gone from the internet) by Tyler Crowley, talking about the entrepreneur's view of innovation options and how many areas are welcoming for innovation -- which he described using the analogy of islands:

For tech folks, from the 35,000' view, there are islands of opportunity. There's Apple Island, Facebook Island, Microsoft Island, among many others and yes there's Music Biz Island. Now, we as tech folks have many friends who have sailed to Apple Island and we know that it's $99/year to doc your boat and if you build anything Apple Island will tax you at 30%. Many of our friends are partying their asses off on Apple Island while making millions (and in some recent cases billions) and that sure sounds like a nice place to build a business.

But what about Music Biz Island? Not so much:

Now, we also know of Music Biz Island which is where the natives start firing cannons as you approach, and if not stuck at sea, one must negotiate with the chiefs for 9 months before given permission to dock. Those who do go ashore are slowly eaten alive by the native cannibals. As a result, all the tugboats and lighthouses (investors, advisors) warn to stay far away from Music Biz Island, as nobody has ever gotten off alive. If that wasn't bad enough, while Apple and Facebook Island are built with sea walls to protect from the rising oceans, Music Biz Island is already 5 ft under and the educated locals are fleeing for Topspin Island.

As we pointed out, this leads to the legacy entertainment companies poisoning the well that contains the innovation water it desperately needs.

There's a parallel to this in terms of copyright laws. As the legacy entertainment industry keeps pushing for more draconian copyright laws, it only serves to scare more investors away. When we get good results, like the ruling in the Cablevision case saying that cloud-based services were legal, it resulted in a huge growth in investment in cloud services -- in contrast to much less spending in Europe, where the laws were a lot more ambiguous.

A new study from Fifth Era and Engine takes this finding even further, highlighting how bad or vague copyright laws are seriously scaring off investment in necessary platforms and innovation. A big part of this appears to be worries about absolutely insane statutory damages awards. The study surveyed tons of investors around the globe and they found an obvious concern about investing in areas where lawsuits could so easily destroy platforms:

In all eight countries surveyed, early stage investors view the risk of uncertain and potentially large damages as of significant concern as they look to invest in [Digital Content Intermediaries]. 85% agree or strongly agree that this is a major factor in making them uncomfortable about investing in [Digital Content Intermediaries].

And they're very specific about how the direct concern involves music and videos and the threat of a lawsuit that could simply put those companies out of business:

88% of worldwide investors surveyed said they are uncomfortable investing in [Digital Content Intermediaries] that offer user generated music and video given an ambiguous regulatory framework.

This is really unfortunate on a number of different levels:

First, it limits the necessary innovation in services and business models that are likely to create the success stories of tomorrow. We need more experiments and platforms that allow places for artists and creators to create, promote, connect with fans and make money for their efforts. Yet if the legacy industry is scaring away all the investors, that's not going to happen.
Second, it locks in the few dominant players of today. Want to build the next YouTube? Good luck. You'll need lots of money to do so, but you're less likely to get it at this stage. The legacy players keep hating the big successful platforms, but don't realize that their own moves lock those players in the dominant positions.
Third, without competition in these spaces and platforms, content creators are less likely to get the best deals. When the legacy industry basically allows one player to become dominant, then it can set terms that are more in its favor. This is what so many from the legacy content industry are complaining about today -- without recognizing that their own actions regarding copyright law have helped create that situation.

Of course, many in those legacy industries actually see this sort of thing as a feature not a bug of pushing for greater copyright protectionism. They think -- ridiculously -- that by hamstringing innovation and investment they get to hold onto their perch longer. This is just wrong. It's trying to hold back the tide, while driving fans to alternative and often unauthorized platforms instead. Rather than supporting the innovation they need, pushing for bad copyright laws only helps to alienate the innovators the industry needs the most and the biggest fans whose support the content industry needs to thrive.

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Filed Under: copyright, digital platforms, intermediaries, investment, movies, music, studies

23 Comments

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Ninja (profile), 26 Mar 2015 @ 8:16am

Now, we also know of Music Biz Island which is where the natives start firing cannons as you approach

Too modern, I'd picture them throwing rocks while brandishing a few roughly assembled weapons made of wood and stone and making grumbling noises. The mere sight of the led lamps in the boats is met with wild and violent reactions. It seems they haven't discovered fire yet.

Sounds like Back To The Future IV: Jurassic Music.
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Anonymous Coward, 26 Mar 2015 @ 9:32am

no surprise here then. move along!
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Anonymous Coward, 26 Mar 2015 @ 9:42am

I think the tech industry must be hindering the development of "Fifth Era and Engine", as Google search reveals nothing about them except a link to this article about their "study".
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Eric Stein (profile), 26 Mar 2015 @ 9:55am

These are the metaphors, this is the explanation
I think this is the kind of article that techdirt was created for. This is the article I would have wanted to send to my father. It's one of the clearest explanations of the drag of copyright I've seen here in a long time. Bravo Mike, this feels like the mission.

Music island seem like a place where Lord of the Flies is played out daily.
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Anonymous Coward, 26 Mar 2015 @ 10:05am

Re:
They're protecting the starving artisans of the Hand-Sized Rock and Stick Sharpening industries.
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Tom Mink (profile), 26 Mar 2015 @ 10:23am

Though, sometimes investment /= innovation
The actions of the entertainment industry are unambiguously bad, but the results seem to be mixed. The MPAA and RIAA act like they're slowly losing a game of whack a mole partly because their opposition to innovation has spurred so many varied efforts to work at the problem from different directions.

If there were a clear, legal path to distributing content that investors could get behind, I feel like we would have long since settled on a standard market with a few big players offering services that were just good enough. Presumably, a competitive market would still spark innovation but if a Pandora or even a Popcorn Time had the investor backing, we'd no doubt see the lobbying clout and the patent knives come out to defend their market position.

It's funny to stupid anticompetitive behavior from one industry foster actual competition and innovation.
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Anonymous Coward, 26 Mar 2015 @ 10:29am

Whatever
Investment does not always mean things are better/worse gained/lost.

I have seen where certain investor get in and screw shit up. While it is true that the laws are complete shit, they did this to themselves. Now we just need to let them not get their money while the community moves on in other ways and directions.

And since a lot of people are still voting with their walls, they obliviously [word play intentional] like it this way.
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David, 26 Mar 2015 @ 10:30am

It's a feature, not a bug
Third, without competition in these spaces and platforms, content creators are less likely to get the best deals.

If we were worried about content creators getting a fair deal, they'd get to know what they are actually selling.

"25 years of marketable work, and then, considering the artist is still alive, an option for him to market 25 years again". That's a pretty clear value.

Sholem Secundam was ripped off on "Bay mir bistu sheyn": got something like $20 for the whole Yiddish opera containing a major hit turning in millions of revenue. With today's rules, he and his heirs would have been ripped off permanently.

With the rules in pre-Disney times, he got to reregister his copyright after the 25 years were over and actually get some serious recompensation for what was mostly his work.

If you now sell your rights, you have no idea how many years you are selling. In fact, due to Mickey Mouse laws, you get repeatedly posthumously ripped off for more and more years and slip into oblivion while the Music Industry Vampires drain the carcass of your cultural heritance and significance beyond what you contracted your artistic lifeblood for.
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Brad, 26 Mar 2015 @ 10:36am

Weird war?
America has a proud tradition of getting involved in weird wars where we supply our enemies with "weapons" to use against us. Why should we expect any different from our entertainment industry?
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David, 26 Mar 2015 @ 10:47am

Re: Weird war?
Because you'd think you'd have to run out of morons eventually if you wanted to cover every enterprise and agency?
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Anonymous Coward, 26 Mar 2015 @ 11:19am

One casualty has been the internet search engine, because getting hit with an onslaught of auto-generated DMCA takedowns will substantially add to the cost of running a small site, and often drive it under. So we are left with mega-corporations like Google that can afford the high cost of hiring a large workforce dedicated to handling the millions of (mostly-bogus) takedowns.
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Anonymous Coward, 26 Mar 2015 @ 1:35pm

Luddite is too kind a term for these people and insulting to the other Luddites.

How about a new term: Doddite?
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Bob, 26 Mar 2015 @ 2:29pm

Nah-- it's the piracy and the pirate apologists who hang out here
I'll tell you what scares investors: not getting a return on their investors. And I'll tell you what signals this danger: a bunch of loons believing in magical business models like giving everything away for free. This web site and the loons who hang out here are scaring away investment by insisting that somehow there is some magic way that this will pay off.

As far as I can tell, the only above-board solution has been a paywall. Yet everyone around here hates the idea of actually paying for something you consume.

Now there are some sites (who will go unnamed) that work sponsored content into the mix. Sometimes they add little labels in the lightest grey fonts. Those are pretty sleezy and I see it all of the time these days.
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One word, 26 Mar 2015 @ 3:31pm

Re: Nah-- it's the piracy and the pirate apologists who hang out here
Just one word in response to this: Payola.
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Anonymous Coward, 26 Mar 2015 @ 3:34pm

Re: Nah-- it's the piracy and the pirate apologists who hang out here
What you mean is if artists are prepared to give their work away, and rely on fan support, then you masters cannot make money from their works by gaining the copyright.
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Al, 26 Mar 2015 @ 3:48pm

Public Domain and hollywood
It is ironic that as copywrong laws have been strengthened hollywood has run increasingly out of ideas, could it be related to the advantage they took of public domain works to make movies for so many decades? and now they have backed themselves into a corner where writers know that productions make 100's of millions to multi billions and they now wont sell there script for less than a big cut?

Pretty Pink Breakfast Foot is going to be the the LOMG, GMWAS hit for next year...
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Anonymous Coward, 26 Mar 2015 @ 3:51pm

Re: Nah-- it's the piracy and the pirate apologists who hang out here
This site also has loons (more often referred to as trolls) that believe that copyright is god's own gift to the idiots that are killing the entertainment industry through protectionism.
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Anonymous Coward, 26 Mar 2015 @ 5:49pm

Re:
Hey, bob! Have you heard? Your copyright superstars Perfect 10 got their asses handed to them in court, again!
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MrTroy (profile), 27 Mar 2015 @ 12:37am

Re: Though, sometimes investment /= innovation
The actions of the entertainment industry are unambiguously bad, but the results seem to be mixed. The MPAA and RIAA act like they're slowly losing a game of whack a mole partly because their opposition to innovation has spurred so many varied efforts to work at the problem from different directions.

Survivorship bias. If they hadn't been opposed to innovation at every step, how much better would the services we have today be?

Investment does not directly lead to innovation, but lack of investment absolutely prevents innovative ideas from taking off.
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Anonymous Coward, 27 Mar 2015 @ 5:25am

Re: Though, sometimes investment /= innovation
But there already is a legal path (not very clear though).
Too bad most of the time it boils down to: "you can distribute our content but only on these terms using this platform spec. We want to know everything our customers do on every device that we support (where the manufacturer paid our extortionate patent fees)".
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Anonymous Coward, 27 Mar 2015 @ 6:20am

Re: Nah-- it's the piracy and the pirate apologists who hang out here
Here's the problem: every now and again rightsholders insist on locking everything down as hard as possible.

On the media side we had "protected media path", Ultraviolet, the Sony rootkit.
On the gaming side we had StarForce, and we now have Denuvo(brought to you by the same assholes).

However it has been shown time and time again you can't lock down machines you don't control.
In fact most DRM solutions on the market should be illegal simply because they have rootkit behaviour.

I'm perfectly ok with a paywall if:

1) It runs on a reasonable number of platforms (and not just a handful of devices that cost 599.99$).

2) It doesn't "need" to install system level drivers or otherwise muck about with the OS kernel.

3) It accepts at least 2-3 forms of payment from a large enough of countries (NOT JUST US, Canada, France, UK, Spain, Germany and Italy - other countries do exist you know).

Additionally Big Media must accept that we're no longer in the f'n 1950's. They should stop the self-perpetuating "cross-media initiatives" bullshit because it wastes THEIR OWN money. Those people would be of much more use working on stuff in their own media specialization.
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Pragmatic, 27 Mar 2015 @ 7:08am

Re: Re: Though, sometimes investment /= innovation
^THIS!!

I wish I could give you more Insightful votes but sadly I can only click the button once.
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Anonymous Coward, 3 Apr 2015 @ 5:40pm

But has digital innovation actually created good content?
Look, don't get me wrong, I'm all for breaking the monopoly of the CopyReich cartels. But the sticking point for me is whether these smaller upstarts gaining footing through iTunes or YouTube or X other digital platform can produce the same quality as a DeMille or a Spielberg. Call me an elitist, but I just don't see a whole lot of quality material being distributed over the Internet like the studios have come out with (maybe not in the past 10 years, but then again neither Marvel capesh-t nor Disney kids' fare are really my thing).

I look at the most popular "content creators" on YouTube and I see nothing but lame teenage sketch comedy acts who nobody outside a niche circle of die-hard 12-year-olds has ever heard of. Elsewhere on the site I see nothing but tutorials on various subjects filmed with shaky cell phone cameras, and the usual America's Funniest Home Videos style of family/animal bloopers. Other than that you have, well, copyrighted clips from Hollywood movies, and mashups of said Hollywood productions set to music from major-label artists, basically summed up as the famous Say Anything meme with Rick Astley playing on the boombox in place of Peter Gabriel. As the old saying goes, nothing new to see here, folks, move along.

I'm not arguing for protectionism on the part of the studios, and yes, I agree that they're running out of ideas and resorting to remakes of their '80s back catalog. I don't listen to top 40 radio and think the labels should be brought before the Hague because Katie Perry's screeching voice ought to be declared a weapon of torture in violation of the UNDHR. But aside from that, I don't see a whole lot worth writing home about on the digital outlets either, and one isolated Kevin Spacey show on Netflix does not a revolution make.

Yes, copyright laws as we've perverted them are an aberration, but maybe they're irrelevant to the issue of whether good new content is being made on any medium? Maybe we as a society have all simply run out of ideas and are burned out creatively. Otherwise why would the most popular television programs be talent shows of people singing karaoke cover songs, and the most popular website content being rehashes and pastiches of "old favorites" in BuzzFeed listicles and video mash-ups? Why would the most popular movie franchise of 2015 be an adaptation of a book series that was originally a fan fiction version of the most popular franchise of 2007?

Perhaps as another old saying goes, there is nothing new under the sun.
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