Creators: Kill The Hobbit To Save Regular Earth, And Win!

from the with-apologies-to-martin-freeman dept

Last week, we wrote about an article by Joe Karaganis discussing the huge tax subsidies and political concessions wrested from the New Zealand government by Warner Bros. in order to film The Hobbit in the country. The editorial was entitled Kill The Hobbit Subsidies To Save Regular Earth, which inspired an editorial cartoon that Bloomberg View attached to it, which in turn has inspired Joe to launch a contest for creative interpretations of The Hobbit as an allegory for the situation.

First, I confess I hadn't fully thought through how to map the various heroes and villains of ‘Kill the Hobbit’ back onto ‘The Hobbit.’ But on reflection, this drawing seems a bit off. In my version of the story, the hobbit is the villain, stealing gold from the people of New Zealand (I guess to take back to Hollywoodshire?) This would make Smaug the dragon the public, and Smaug’s giant pile of gold the commonwealth (that’s why it’s so large). Smaug should be casting the Expecto Patronum (EP) spell to banish the Hobbit, not the other way around.

But hey, people may see it differently, and their right to publish those perspectives on our common culture is part of what’s at stake in ‘Kill the Hobbit to Save Regular Earth’ (pivoting here to New Zealand’s support for the IP-enforcement-on-steroids Trans-Pacific Partnership Agreement).

So with that in mind, I am happy to announce the ‘Kill the Hobbit to Save Regular Earth’ Initiative– KH2SREI for short (pronounced Kisstory, after the ancient Elven admonition to beware Hobbits bringing gifts).

I invite you to flesh out the Kisstory allegory in whatever direction makes most sense to you. If you send me pictures, I will publish them here (as long as they are not obscene or gratuitously nasty). I will even try to talk the good people at Bloomberg View into running them. And if we get enough submissions we will have a public vote to award copies of the “semi-epic” Media Piracy in Emerging Economies to the two most worthy entries (plus whatever other awards we can accumulate in the meantime.)

As for those "other awards", we're throwing a Techdirt t-shirt into the mix. So if you're a creator, whatever your medium, we hope you'll submit something! Head on over to the contest page for more details and some "extra points" guidelines, including a "Special award for the best pro-Hobbit, pro TPPA, pro Warner Bros art, if we get any" because hey, political cartoons can cut both ways.

Filed Under: hobbit, hollywood, infringement, movies, new zealand, subsidies

State Subsidies To Hollywood: Almost Every Program Has Been A Dismal Failure, Costing Taxpayers

from the where-are-those-jobs? dept

So we've had a couple stories recently about the immense failures of taxpayers being forced to shovel money to Hollywood studios via various local "incentive" programs to try to convince the studios to film their movies in various locations. The studios, with the help of the MPAA, of course, continually argue that these programs create jobs, jobs, jobs. However, as the NY Times investigation pointed out, those "jobs" really don't seem to be appearing. Instead, film crews ship in a crew from LA or NY and hire just a couple of locals for low-level jobs... which last a few months and that's it. The impact on the local economy appears to be minimal. And, basically, the studios just keep asking for more money playing different locations off of one another.

Adding more data to this mess (which has grown massively in just the last decade), Adam Thierer points to a survey of studies looking at how successful those programs have been in various states... and found that nearly all of them have flopped. The various studies show that the return for such subsidies tends to be less than par (i.e., a loss) in nearly every state studied. There were only two exceptions: New York and New Mexico -- and both of those studies were done at the behest of the local film offices. With New Mexico, in particular, a separate, independent study found the exact opposite to be true, and found that the subsidy resulted in significant costs to the economy.

“Based on fanciful estimates of economic activity and tax revenue, states are investing in movie production projects with small returns and taking unnecessary risks with taxpayer dollars,” noted a 2010 Tax Foundation study. “In return, they attract mostly temporary jobs that are often transplanted from other states.” Studies of specific state incentive programs confirm this finding, almost universally finding miniscule revenue gains for every dollar of film subsidies offered. The adjoining table, derived from a meta-survey of film incentives studies by the Center on Budget & Policy Priorities, illustrates how much revenue was lost per net job created by film tax credits as well as how little revenue each program generated for every dollar of state revenues awarded.

State	Net Revenue Foregone per Net Job Created by Film Tax Credit	Revenue Gained from Feedback Effects per  Dollar of Film Subsidy Claimed($)
Massachusetts	$88,000	$0.16
Connecticut	$33,400	$0.07
Louisiana	$16,100	$0.13
Louisiana	$14,100	$0.18
Michigan	$44,561	$0.11
New Mexico	$13,400	$0.14
New Mexico	($400)	$1.50
Pennsylvania	$13,000	$0.24
New York	($2,000)	$1.90
Arizona	$23,676	$0.28

The only two studies that have revealed positive results for such film incentive programs were both conducted by Ernst and Young on behalf of the New York and New Mexico film offices. All others have shown consistent negative returns.

In case it's not clear, that last column shows the return per dollar spent on subsidies. If it's less than a dollar, it means that taxpayer money is being lost and it's not benefiting the local economy. If you're wondering why there's such a big difference in those two New Mexico studies, the full report goes into detail of just how weak the methodology was for the NM study claiming economic benefit. It involved massively overestimating the tourism benefits, contrary to actual data, and then double counting much of the supposed "benefit." For example, the study claims that a significant "benefit" is the salaries provided to producers and directors... but those are rarely local residents:

As discussed above, such highly skilled talent tends to be imported from other states, especially California and New York. Consequently, these individuals likely spent a much smaller percentage of their compensation in New Mexico than resident employees did. While non-resident employees do spend money on food, housing, meals, and other items while working in New Mexico, those expenses are covered by allowances, which did qualify for the film subsidy and, therefore, whose economic impact had already been taken into account. E&Y’s apparent assumption that highly paid non-resident employees spent most of their salaries in New Mexico, on top of their living allowances, amounts to double counting.

Basically, nearly all of the evidence shows that these programs harm the economy, rather than help it. But they do seem to help studio bosses.

So why are states (and countries) so eager to hand over taxpayer subsidies to Hollywood?

Filed Under: hollywood, subsidies

The Hobbit Took $120M From Kiwi Taxpayers - Maybe They Should Own The Rights

from the we-wants-it-back dept

Yesterday, we wrote about how US taxpayers were handing over approximately $1.5 billion to Hollywood to get them to film movies in certain locations -- and how little of that money actually generated jobs (though, lots of it flowed into the pockets of Hollywood studio execs). Even worse, the story highlighted how there's a nasty "race to the bottom," where Hollywood demands increasing subsidies from different locations, with promises to only film movies in the locations with those subsidies. That means more and more taxpayer money going to Hollywood, for the sake of a temporary production, which often brings in workers from LA, and has only a brief, marginal impact on the local economy -- usually much, much less than the subsidy in question.

While the NY Times article explored how this was happening in the US, a new article at Bloomberg highlights how this is happening around the globe, using key examples from the subsidies around The Hobbit and Harry Potter -- both of which involved massive subsidies in response to Hollywood threats to film elsewhere.

How much taxpayer money can Warner Bros. demand from the government of New Zealand to keep production there (rather than, say, in Australia or the Czech Republic)? That answer turns out to be about $120 million, plus the revision of New Zealand's labor laws to forbid collective bargaining among film-production contractors, plus the passage of three-strikes Internet-disconnection laws for online copyright infringement, plus enthusiastic and, it turns out, illegal cooperation in the shutdown of the pirate-friendly digital storage site Megaupload and the arrest of its owner, Kim Dotcom.

[...] The U.K. government found this out in 2005, when Warner Bros. threatened to move "Harry Potter" productions to the Czech Republic. The government of Gordon Brown caved in to studio demands and passed new subsidies. In 2009, New Zealand also gave in and now faces demands for more.

Again, if this actually created the economic activity that Hollywood claims it does, perhaps it would be worth it. But both articles highlight how this isn't true at all. It just shifts money from local taxpayers to Hollywood execs.

The worst part is that, for most of the wannabe Hollywoods, it's bad economic policy on every level. The productions bring in mostly low-end, temporary jobs, while the high-end jobs remain in Hollywood or New York. Call it the Curse of Harry Potter.

That article, authored by Joe Karaganis, who has been studying this issue for quite some time, suggests that if the public is financing these movies, then perhaps the movies should belong to the public if the studios can't pay back the loans. The suggestion is a really creative one. If the movie actually makes money, then the studios can pay back the loans. If it's a flop, then let the movie go to the public via a Creative Commons license, and let the public do something with it.

One way to break the curse is to route public money through what we might call an Expecto Patronum license -- named after the powerful defensive charm in the Potter series. Under the license, public money takes the form of a conditional loan rather than a grant or tax break. After five years, producers have a choice: Pay back the loan or re-release the film under a Creative Commons attribution license, which would allow it to be shown freely.

If a film is among the few that have longer-term commercial value, its producers can choose the first path. If it isn't, they lose nothing by taking the second route. The license thus underwrites creative risk-taking without squandering public money on blockbusters. It also ensures that public investment generates public culture -- not works controlled by the studios for the next 95 years.

It's such a reasonable idea that you know that Hollywood would freak out at any legitimate push to use it. In true "entitlement mentality," they believe such taxpayer-funded subsidies are their right, and that localities that won't pay up are missing out. Yet, as the data clearly shows, most locations would be much better off saying "no," as the benefit is minimal. Or, at the very least, they should make the terms similar to what the article suggests. If you want the public to finance the movie, then make it conditional. In the end, you pay back the loan or the public gets the movie.

Filed Under: copyright, hobbit, jobs, new zealand, subsidies

$1.5 Billion In Taxpayer Funds Go Directly To Movie Studios Each Year... And Very Few Jobs Created

from the and-they're-complaining-about-what? dept

If you've been following MPAA boss Chris Dodd ever since the death of SOPA, you'll be aware of his stump speech. He seems to give it every chance he can: "the movie industry is all about jobs, jobs and more jobs." Of course, he lies about the number. He usually trots out his favorite 2.1 million figure, ignoring the fact that the Congressional Research Service showed it's really 374,000 people employed in the movie business.

What isn't mentioned so much (though, it depends on the audience) is the fact that various tax subsidies that different states pay to movie studios means that $1.5 billion in taxpayer money goes straight to Hollywood studios. Perhaps that would be justifiable if it created jobs. But the evidence there is actually lacking. That link involves the NY Times looking closely at Michigan, which not too long ago put in place massive subsidies for Hollywood to make movies in their state. The cost? Suffering Michigan citizens foot the bill. However, Michigan Governor Jennifer Granholm thought it was worth it because a local movie director wanted more work at home (and because, when she was younger, she had hoped to be a movie star). Lots of studios are looking to make movies in Michigan now, because the cash back from the state is way too lucrative to pass up.

Within two months, 24 movies had signed up to film in Michigan — up from two the entire year before. The productions estimated that they would spend $195 million filming there, and in return they would be refunded about $70 million in cash.

Before long, residents were rushing out on their lunch breaks to catch a glimpse of celebrities like Drew Barrymore, who was filming her movie “Whip It” in Ann Arbor, and Clint Eastwood, who was shooting “Gran Torino” in the Detroit area. Even Michael Moore, who was filming a movie about corporate welfare called “Capitalism: A Love Story,” sought and received incentives.

But does it create jobs? Not really. The story is horrifying. It involves Hollywood hotshots continually demanding more and more subsidies from the state and insisting that jobs would be plentiful as soon as they could get things up and running, but balking any time anyone asked them to put the job promises in a contract:

Ms. Granholm declared the city in a financial crisis in February 2009 and appointed an emergency manager, Fred Leeb. The city’s budget was $54 million a year, but it was overspending by an estimated $7 million to $12 million. Pontiac was also still weighted down by old incentives it had given to businesses like G.M.

The movie studio was an added challenge, since it was seeking financial incentives from the city — not to mention from other branches of the government. It won redevelopment tax credits from the federal government and separate aid from the state that included incentives for technology companies that hire residents.

Job creation became a point of contention with beleaguered Pontiac, which was being asked to waive virtually all property taxes for the studio. The investors claimed that thousands of people would be employed, but Mr. Leeb said that when he asked for job numbers to be written into the contract, the investors refused. “We started seeing some backpedaling,” said Mr. Leeb, who added that the negotiations featured “knock-down, drag-out fights.”

But wanting to bring the big lights of Hollywood to Michigan, eventually the state agreed to it. Who paid for the subsidies? Former state workers basically were forced to bet their pensions on Hollywood:

Over the objections of some local officials, the state agreed to use the state workers’ pension funds to guarantee the bonds. If the investors failed to pay, the retirees would be on the hook.

And the promised jobs? Keep looking. Sure, some crews from LA flew in, but for locals? Almost none.

The studio had created only 200 positions by the summer of 2011, according to correspondence between the company and local officials. And when temporary construction workers were excluded from the tally, Pontiac’s records show, the studio reported only two employees in 2010 and 12 the next year.

Earlier, in the article, they note that this particular project was pushed through with the promise of 3,600 jobs. You don't do that by hiring two people one year and a dozen the next.

How about tax revenue from the local operations? Yeah, big Hollywood studios have ways of avoiding paying that sorta thing, even as they're collecting millions in local subsidies:

The city later had problems collecting some of the taxes because Disney operated through a separate business entity that was difficult to track down, he said.

“This is a glamorous industry if you want to talk about Hollywood, but it’s not very glamorous for the municipality that wants to collect something,” Mr. Schimmel said. Pontiac, he said, was outgunned.

Disney declined to comment.

And... soon after that, the studios moved on to other sexier states that suddenly offering up bigger incentives than Michigan. And who did it cost? Oh yeah: remember those state workers' pensions? Yup. Them.

When the bill for the studio’s bond interest came due in February this year, it paid only a portion, $210,000. The state pension fund had to pick up the remaining $420,000....

In August, the studio defaulted on the entire $630,000 payment on the bond, despite a decision by Mr. Snyder to temporarily allocate some film incentives.

All around, it's a horror story that's being repeated in other states and countries around the globe. Hollywood studios go around pitching "jobs!" and demanding special taxpayer-funded incentives, offering giving them millions to film in a certain location. The filmmakers take the subsidies, bring in crews from LA, hire a couple people here or there... and then move on, leaving a mess in their wake. And this is the industry that is demanding even more protection from the federal government via copyright law? When is enough enough?

Filed Under: chris dodd, economics, jobs, michigan, movies, subsidies, taxpayer
Companies: mpaa

More People Realize The Obvious: Telco Regulatory Capture Is Why We Have Crappy, Expensive Broadband

from the wake-up dept

This is hardly a new thing, but it's nice to see it getting more attention. There's a new book, The Fine Print: How Big Companies Use 'Plain English' to Rob You Blind, by reporter David Cay Johnston that points out that regulatory capture and a lack of competition are why we have crappy, expensive internet (and mobile phone service). Among the points he raises, summarized over at Yahoo's Daily Ticker, are the following:

• Americans pay four times as much as the French for an Internet triple-play package—phone, cable TV and Internet—at an average of $160 per month versus $38 per month.
• The French get global free calling and worldwide live television. Their Internet is also 10 times faster at downloading information and 20 times faster uploading it.
• America has gone from #1 in Internet speed (when we invented it) to 29th in the world and falling.
• Bulgaria is among the countries with faster Internet service.
• Americans pay 38 times as much as the Japanese for Internet data.

Of course, we've seen most of this before, and we've heard all the excuses, about how we're more spread out. But, in the long run, the facts remain: we're piss poor at the internet, and that's a pretty big problem when the internet has become so important to so many people's lives and jobs. Johnston highlights the key problems:

"The telecos got the rules changed while we weren't watching," says Johnston in the accompanying interview. Basically, the phone and cable companies lobbied Washington to change laws and regulations to favor their businesses over their customers.

And remember the so-called "Information Superhighway"?

Over the course of the last 20 years, nearly $500 billion has been collected by the telecom companies to (allegedly) bring America into the 21st century with an "Information Superhighway," says Johnston. That works out to $3,000 per household to have access to high-speed Internet.

But America did not get what it was promised and much of the country will never get fiber optic lines...

Indeed, this is nothing new. We've been writing about this for about a decade now. It's also why we're uncomfortable with net neutrality laws, even if we believe the concept of net neutrality is quite important. We've seen how the telcos are very, very, very good at working the system to their advantage.

The only real answer to our problems is to encourage more significant competition. The question that's reasonable to ask is where that competition should be. It's not at all clear that it needs to be at the infrastructure level -- since that can be redundant. However, as Australia is now doing, you could invest heavily in a core fiber network that brings tremendous high speed access everywhere... and then let service providers compete at the service level, rather than the infrastructure level. Yet there appears to be little appetite for such things in the US these days. Rather, you have the big telcos and cable companies creating their own little controlled markets, with crappy service and inflated prices... while the rest of the world does much, much better. We've been able to get away with it in the short term, but over time, the lack of good broadband in the US is going to hurt us economically.

Filed Under: broadband, competition, regulatory capture, subsidies, wireless

This Goes Beyond Tablets: Apple, Amazon & Google Are Betting On Economic Philosophies

from the different-bets dept

Amazon's recently-announced tablets are interesting for a variety of reasons, including that Jeff Bezos made it quite clear that he's taking a very different approach to the market than the one Apple has taken. Lots of attention was (quite reasonably) paid to Bezos' key line:

"We want to make money when people use our devices, not when they buy our devices."

It's a great line in so many ways, because it highlights the different philosophies of Amazon and Apple. John Gruber's summary of those differences is a really worthwhile read (you should read the whole thing). His take on that particular line is dead-on:

Bezos's we want to make money only when you use it framing works two ways. First, it explains the Kindle Fires' noticeably lower retail prices in a way that doesn't make them seem cheaper, only less expensive. It frames Apple's prices -- and profit margins -- as greedy. Second, it works as a sort of guarantee -- if you don't actually use it, we won't even make any money on it.

Later Gruber made a second point that got me thinking (and rethinking...)

Apple's goal is to sell as many iPads as it can. Amazon's goal is to sell as many Kindle Fires as it can to a specific audience: active Amazon.com customers.

I've talked in the past about how Apple's digital goods sales have really been about being the "low margin" leader (if not the loss leader) to drive more sales of the hardware. The digital goods -- content and apps -- make the hardware much more valuable and help drive up the amount people are willing to pay. And that tends to fit with the basic economics I believe in: focus on using the "abundant" (digital) to make the "scarce" more valuable, for which people will pay a premium, especially since that "scarce" can't be "pirated." Apple has, in many ways, put that particular economic concept at the center of how it does business, even if I'm uncomfortable with the closed nature of its overall setup around that.

Amazon, however, has flipped the equation. Their "low margin leader" is the hardware, and they basically appear to want to make their money up on the digital goods purchases. Just as Apple doesn't lose money on selling digital goods (it just makes a very little amount), it appears that Amazon will be making only a little bit on the hardware, but hopes to make the big money on selling the abundant: digital goods via the Kindle store.

I will admit that I struggle with this a bit. I find it hard to bet against Bezos, because on an awful lot of things I think he makes the right bet. Plus, frankly, I'm a lot more comfortable with Amazon as a platform than with Apple. Finally, from a consumer standpoint, I think Apple's hardware seems really overpriced, but Amazon's new prices are really compelling. But economically speaking, there's a voice in the back of my head that says that Apple has this right and Amazon has this wrong. Apple is betting on using the abundant to increase the value of the scarce and then selling that. Amazon is betting on using the scarce to increase the ability to sell the abundant. Perhaps it works because of Amazon's closed Kindle platform and its dominance in the market allows it to make this counter-economical bet. Artificial limitations allow for such things, and Amazon's got the power to control a large segment of the ebook market, which really helps the company out.

In the long run, though, if a competitive market is truly created, it seems more likely that there will be more pricing pressure on Amazon's bet than on Apple's. But, in the short term, Amazon's flip-flopped market certainly could make a lot of sense.

Of course, if you really want to make this fun, just add Google to the equation. It, like Amazon, seems to be focusing on cheap, barely profitable hardware, a la the Nexus 7. It's also put a big effort (recently) into selling digital goods via the Android "Play" store. But Google's business has always been about ads, so it actually adds a third factor to how it views the world, and which part of the business subsidizes which other parts of the business.

In the end, you're left with three big bets on tablets, with very different underlying business models*:

• Apple: High margin hardware (scarce); make just a little on digital goods (abundant).
• Amazon: Low margin hardware (scarce); make the real margins on digital goods sales (abundant)
• Google: Low margin hardware (scarce); make some margins on digital goods (abundant), but cross subsidize both with the ad business.

* Yes, there's also Microsoft Surface tablets. For the life of me, I can't figure out where they place in this particular chart. Which may say something all by itself.

Which strategy works in the end may say a lot about how you view the world economically.

Filed Under: abundant, business models, economics, scarce, subsidies, tablets
Companies: amazon, apple, google

France Gets Taxpayers To Subsidize Music Downloads

from the i'm-sure-they-want-that dept

Nicolas Sarkozy had talked in the past about taxing Google, Microsoft and Yahoo to fund the recording industry. Apparently, in the meantime, he's just going to tax citizens instead. The EU has apparently given approval to a plan that will have the French government paying half the cost of special music download cards, with the goal being to attract users to pay the half-price fee to get them using authorized music services. Of course, it seems worth pointing out that Sarkozy's wife is a recording artist, so it does seem a bit unfair for him to have taxpayers forking over money which is going to end up with his wife. There are, of course, also anti-competitive concerns when the French government is subsidizing specific music services, but the EU apparently claimed that the "benefits" of the plan outweighed those issues. What benefits? If there are benefits to offering music for less then, um, shouldn't the record labels just be lowering their prices?

Filed Under: downloads, france, music, subsidies

Gov't Reminds Colleges They Need To Start Taking Money From Students And Sending It To The Entertainment Industry

from the nice-of-them dept

You may remember that the entertainment industry was able to get a nice little clause inserted into the Higher Education Opportunity Act of 2008 that required universities to educate students on the evils of file sharing, to try to block file sharing on campus and also to sign up for "legal" alternatives (i.e., charge students more money to filter it directly to the record labels and movie studios). Yes, you read that right. The law requires universities to push their students to use "legal alternatives," even to the point of having the university take "activity fees" from students for that purpose From the Department of Education's website:

34 CFR 668.14(b)(30) also requires that an institution, in consultation with the chief technology officer or other designated officer of the institution, to the extent practicable, offer legal alternatives to illegal downloading or otherwise acquiring copyrighted material, as determined by the institution. An institution must periodically review the legal alternatives for downloading or otherwise acquiring copyrighted material, and make the results of the review available to its students through a Web site or other means.

It was a clear case of the government creating subsidies for the entertainment industry, by taking money away from students and education. It's difficult to see how anyone can defend such a law. Universities that fail to do this face the possibility of losing financial aid for students. Seriously.

We hadn't heard much about this in a while, but Michael Scott points us to the news that the Department of Education has started sending out letters reminding universities and colleges that this part of the law goes into effect in July. The letter itself reminds universities of the various requirements to stay on the entertainment industry's good side. Higher Education Opportunity Act or Subsidize the Entertainment Industry Again Act?

Filed Under: colleges, copyright, education, financial aid, subsidies, universities

CEO Of UK Collection Society: We Don't Want Gov't Handouts, But The Gov't Must Give Us Everything We Ask For!

from the promotional-value dept

Well, this is nice. Fran Nevrkla, the CEO of PPL, the collection society for performance rights in the UK, recently gave a talk that shows the ridiculous extremes with which some folks in this industry view the very consumers they're failing to serve. Last we checked in on PPL, it was trying to shake down charities for more money and had lost a massive ruling that said it had greatly overcharged multiple venues and owed them refunds. Towards the end of the talk, Nevrkla claims that he's disappointed that capital punishment for file sharing isn't available. Obviously, this is a joke -- but it does show how these people think:

Thank you, David, and thank you for putting some of those pirates behind bars. I know that regrettably capital punishment was abolished in this country some 50 years ago, sad it is, but a few years in jail is probably pretty OK...

This particular quote was highlighted on Boing Boing, and gets most of the attention, but it is really just a joke (we hope). What I think is a lot more worrisome is much of what he said, which is blatantly false and misleading, in the rest of his talk. It starts with this tidbit (also in the BoingBoing post):

To the industry I would say, we would be well advised to delete two or three words from our vocabulary entirely and they are 'promotion' and 'promotional value'. There is no such thing in the 21st Century. There is usage, there are benefits, hopefully often, if not always to both sides but there is no favour in it and no indulgence and no promotion.

That's early in the presentation, but he digs in deeper later on:

The only thing I would say (to broadcasters) is 'please, stop all that stuff about "promotion."' It really becomes incredibly tiresome and it's grossly overused and it's very old fashioned. It should have no place in the modern era.

Yes, please. Let's ignore the facts of what's happening in the market, because it goes against our business model. There absolutely is promotion and promotional value. In fact, many musicians have not just recognized this, but have embraced it. The problem, of course, is that PPL's entire setup is based on there being no promotional value of music. So it has to lie and tell people and itself that there's no such thing, despite mounds of evidence to the contrary. To then claim being factual is tiresome and "old fashioned" isn't just wrong, but insulting to people who actually understand the facts of the situation.

There's also the fun part where he rails against "free":

Now, whether it is the copyright tribunal or society in general, is it now guided by this foolish and, to me, entirely bogus concept of "for free." And, frankly, the music industry is no different than any other business or industry or service. Sir Terry Leahy, the phenomenally successful businessman, business leader and entrepreneur, would see his business in ruins after six weeks as would Lord Sainsbury, Lord Sugar and many others, if they were having to compete with free next door or across the road.

Of course, his examples are folks dealing in physical, tangible goods. Leahy and Sainsbury (if I'm getting the people right) both built up supermarket/grocery store-type businesses. Those are businesses that have always had to compete with others at near marginal cost, because they sell commodities. They were not given gov't monopolies, or had a gov't "tribunal" setting an artificially high price, which PPL enjoys.

And, it seems worth pointing out that PPL appears to have put this particular video out for free, as an attempt to promote its own services. But, I thought that there was no such thing as "for free" or "promotional value." Except, of course, when PPL does it for itself? Hypocrites.

Now, with no hostility, but with a touch of sadness, regret and frankly astonishment, I ponder, about the pronouncements of some -- perhaps a small minority -- of academics and various other thinkers and all the digital freedom fighters in terms of their arrogance, hostility -- usually deliberate -- and frankly, gross ignorance and naivete.

Um. Wait, you're the guy supporting sending people to jail for "free" and falsely claiming there's no promotional value to music and no legitimate concept of "free." And you blame others? From there he mocks the National Association of Broadcasters for being against the Performance Rights Act, while using copyright itself -- not realizing that just being against a performance tax is not the same thing as being against copyright. This guy basically seems to not actually be honest in his responses to anything.

Now, why is copyright so fundamental to performers and record companies? It should be obvious. It's the bedrock of creativity, because it is a property right. Please, don't listen to the demagogues among the digerati who, in a completely false way, try to present copyright as a monopoly right. A nonsense. Every intelligent person and a real legal person will tell you that it is a property right.

I'm sorry, but he's lying. Flat out lying. Plenty of very smart "real legal" persons will tell you that it's a monopoly right -- including numerous copyright experts and legal scholars. I recognize that Mr. Nevrkla might not like this fact, and that it contradicts with the way he tries to run his business, but he can't deny reality just because he doesn't like it.

Next up, he goes on to talk about the 300th anniversary of the Statue of Anne, and reads a selected quote from Daniel Defoe, often credited as being one of the first to use the term "pirates" to describe publishers who reprinted his poems without authorization. Not surprisingly, Nevrkla leaves out many of the important details of that story, including Defoe's statement that he actually had no problem with publishers reprinting his work and even selling it for money, as long as they "print it true according to the copy." That is, Defoe's real worry wasn't that it was taking money from him, but that people were making copies that were not accurate. In fact, Dafoe then figured out how to use the "pirate" copies to his own advantage. He used the widespread copies of his work to build up his own reputation and name recognition, allowing him to make significantly more money on commissions for future works. Dafoe is, in fact, one of the earliest examples of a smart content creator who did not need copyright, and actually learned to use the lack of copyright to his advantage.

Why do you think Nevrkla would leave all that out?

Nevrkla then goes on to whine and complain about governments not just rolling over and forcing everyone to give him more money. He does this with a straight face.

Now, not only are we desperately short on the copyright protection for sound recordings. Frankly, we are short on the basic PPL public performance rights environment. Several successive governments have failed us to introduce legislation which actually is a mirror image of European law. And we have done something about it. We have taken legal action and will pursue it until we get the right and just result.

Ah, the "right and just" result is to tax all music so PPL gets paid. Even if it harms musicians and the public. This is not the "right and just" result. It's the one that most benefits PPL and Nevrkla. Then he complains that most musicians don't make enough money, saying that they should have "the right to proper working conditions" which seems to involve extortionary powers on the part of PPL. Of course, he ignores that the greater fees PPL gets to charge, the fewer venues are willing to play music and the more harm done by PPL. He also ignores the fact that part of the reason so many musicians make so little money is because the way PPL is structured, where it often samples performances, such that larger artists get their songs noted as being performed, but smaller artists may get skipped over entirely. The problem isn't copyright. The problem is PPL.

Nevrkla then starts talking about copyright extension for performance rights, with a story that is almost certainly made up:

It has been said to my face several times, usually out of frustration when these people run out of arguments. So, when musicians get to their old age, can no longer play and exercise their profession, and are losing all their copyrights, just as they get old and infirm and ill. And you know what the answer is? "Let them sell more t-shirts."

He's being misleading here as well. I'm curious, when he's old and no longer working for PPL, if he thinks that PPL should keep paying him for the work he did in the past? He's making the false argument that copyright is a welfare system for musicians. It's not. When people get old and retire, they're supposed to have saved up money from back when they were working. And no one is actually saying "sell t-shirts" to make money in their old age. They're saying they should have a decent business model and not expect the gov't to tax everyone just because they did not have a good business model. That these musicians might not have done so is tragic, but is no excuse for copyright extension. And, of course, Nevrkla leaves out that studies have shown extension of performance rights go almost universally to the record labels, not to the musicians. He mentions session players and the like, but most of them were work for hire situations, who got paid for their time and that was it. They're not getting royalties anyway. If he wants to help them, perhaps he should fix that, not lie to everyone about what's actually happening.

Record companies need to make money. Let's not get deceived by some of that PC nonsense out there. It is not a crime in the United Kingdom in the year 2010 to make money and make a profit. That profit is not eaten by someone. It is plowed back into the business into new talent and new music. And I am delighted to say that as an industry, we have always been proud, self-reliant, successful industry which also enhances Britain's standing in the world.

Wait, what? Just a couple minutes earlier you were whining about how governments aren't giving you enough money, and now you claim you're self-reliant? I do not think that word means what you think it means. It's really quite incredible how he spends so much time demanding more privileges from the government, trashes the copyright tribunal for telling him he's charged too much, and then pretends they're some sort of "self-reliant" business that has any actual business sense. His entire revenue base is from the government forcing people to give him money. He doesn't have to convince anyone to buy, the gov't forces them to. Sickening. And it gets worse:

Now we are not, and I hope we never will, ask for subsidies or state handouts.... And please, let's not go down that way.

Uh, but you are. And have been, and continue to do so, and then when you don't get them you complain that it's not "just" and mock people who suggest you should have a better business model. Stunning cognitive dissonance.

But what we must demand is proper valuation of music and proper commercial valuation of the underlying rights in music. We cannot do DIY in copyright. For that we need the gov't, the civil service, the UK IPO, and other authorities in Brussels. And it is their responsibility at the end of the day to do the right thing, finally, by our community too.

Uh, wait. You just said you weren't asking for a government handout, and then immediately turn around and ask for exactly that, claiming that the government must give you a hand out and a subsidy. Your rhetorical trick is to claim that this "handout" is "proper valuation." It's not. Copyright is a subsidy. It's a purposeful breaking of the free market, in order to allow PPL to charge a higher than market price. It's not a "proper" valuation. It's a monopoly valuation.

To all those clever, smart, smug, cynical thinkers and others: HANDS OFF OUR COPYRIGHT. Hands off our employment opportunities, our income streams, our livelihoods and our future.

Um, ok. How about hands off our privacy. Our culture. Our ability to share and communicate and to express ourselves? Hands off our wallets (via the government). Hands off our ability to use new and smarter business models.

From there, Nevrkla goes into his "thank yous," naming lots of organizations and people who we normally see in these pages for trying to take away consumer rights and force the government to provide greater monopoly rights and subsidies. That's where the "capital punishment" joke comes in.

Overall, however, the speech is stunning in its blatant dishonesty and cognitive dissonance, railing against gov't hand outs while not asking for them, but demanding them, as the only "just" way. The capital punishment statement is ridiculous, but at least we think he was joking. The rest of the speech is just dishonest and misleading -- and, for that reason, is much more worrisome.

If you want to be frustrated by this ridiculousness, you can watch the whole thing (for free, for the "promotional value" of it), below:

Filed Under: copyright, fran nevrkla, government handouts, subsidies, uk
Companies: ppl