ACTA Failure Inspires The Most Clueless Column Ever

from the do-these-people-think? dept

Last week was a good week for those who believe in the internet and culture, with the rejection of ACTA being a key moment in Europe, on par with the rejection of SOPA in the US six months earlier. Of course, as we saw with the defeat of SOPA, a number of ACTA supporters who haven't come to terms with why the public was so upset are lashing out. One of the more outspoken responses against the EU Parliament's decision came from Ewan Morrison for The Guardian, in a piece that I honestly read over a few times to make sure it wasn't satire. I don't think there's a single truly accurate statement in the entire thing. It sets the bar of misinformation so high that I think from now on I will compare any clueless article to the newly developed Ewan Morrison scale of wrongness, with this column scoring a perfect 10 out of 10. Let's explore why.

The headline defines the kind of malarkey we're in for, stating: Throwing out Acta will not bring a free internet, but cultural disaster.

Really? So blocking an agreement that ratchets up copyright enforcement marginally, and which might criminalize a few things that are widely accepted in the public, means we're headed for cultural disaster? How so? Morrison never bothers to tell us. He makes no reference, whatsoever, to anything that's actually in ACTA, but seems to merely assume that ACTA would have magically made piracy go away and sent people back to buying CDs and DVDs... and even paying for news again. Clearly he has never read ACTA. Many of our concerns about ACTA weren't in what it would directly do, but in how it would set new floors that meant today's problems in copyright law couldn't be fixed going forward. There were also issues of vague definitions that we were afraid would be used overly broadly ("commercial scale" for example), but that wouldn't have changed the basic issues Morrison seems concerned with.

History is strewn with moments when politicians made swift decisions that led to disastrous consequences. One such moment has just occurred. In throwing out the Acta (Anti-Counterfeiting Trade Agreement) bill on Wednesday, MEPs in the European parliament have unwittingly signed their countries up for a future in which internet piracy will lead to the decline of film, the novel, journalism and music on an industrial scale.

This is pretty funny, in that this was actually quite the opposite of a "swift decision." Copyright expansion, on the other hand, has a long history of government officials pushing for "swift decisions" that expand copyright law, without giving anyone any actual economic evidence that it's needed, or explaining any logical rationale. This is an issue that goes back centuries. Copyright expansion is always rushed through. We almost never see thoughtful debate on the issue. Instead, the rejection of ACTA was quite the opposite. It was a case where the public spoke up, and many MEPs actually took the time to inform themselves of the details and realized that ACTA is not a path forward. In fact, many MEPs changed their minds on the issue over the last six months as more data and evidence was presented to them. That's the exact opposite of what Morrison claims happened.

This is not scaremongering. One need only look at the stats from the US, where during the Clinton administration the internet companies were given free rein to pillage copyright material via the rushed-through Digital Millennium Copyright Act (DMCA).

I have to assume that Morrison was not paying much attention during the battle over the DMCA, because it was anything but "rushed through." In fact, if Morrison actually knew anything about the history of the DMCA, and the long and hard-fought battle that went into it, he would know that it was championed by the legacy entertainment industry as the savior for their business (just as they demanded SOPA and ACTA) and it was the other side -- those who believed it would lock up culture -- who were protesting against it, and worked for years to have it repealed. For the "copyleft," the DMCA was considered a huge failure. For Hollywood it was considered a long-fought win. Pretending it was quick and a victory for the other side, is an attempt to either rewrite history, or is history written by someone who is ignorant of what really happened.

This revisionist history of the DMCA is really amusing for those of us who lived through the original battle. However, due to some misinformation, a few new copyright maximalists today pretend that the DMCA was a bad law for them, even though it was what they fought for. Of course, their real complaint is with just one aspect of the DMCA: the section 512 safe harbors, which the ISPs fought to have included in the law, because without it, folks like the RIAA and MPAA (and, apparently, Ewan Morrison) would try to sue the ISPs if they didn't wave a magic wand and stop their users from infringing. If you actually take the time to understand the safe harbors, they make perfect sense: they say that you blame the party actually infringing, not the tools they use. To people like Morrison, apparently, it's better to blame the tools. For what it's worth, the DMCA only applies in the US. If Morrison -- who appears to not live in the US -- is really so troubled by it, I'd imagine he'd have proof of services in other countries that succeed in stopping piracy because they can be sued out of existence based on their users' actions. Oh, he doesn't?

According to Robert Levine, in his book Free Ride, the music industry in the US has declined by over 55% in the last decade. Film is following with its first decline in recorded history. Journalism is heading towards "free". All because people now assume that "ripping" is the norm. If "aggregation" is OK, as the Huffington Post do it, then why should we pay for journalism? Why should we be branded pirates? This is what the European parliament has just ruled. Everything on the net, from now on, will be free.

Almost everything stated here is wrong. First of all, the music industry in the US has not declined by over 55%. The recording industry has. But the recording industry is not the music industry. The music industry continues to grow (and that's based on the IFPI's numbers -- yes, the industry's own numbers).

As for "film," more and more films are being produced every year, and all sorts of new business models are popping up. 10% of the movies at Sundance this year were financed by Kickstarter -- a site that was less than 3 years old at the time. Imagine how many films will be financed by new business models and services going forward?

As for journalism, that's not heading towards "free" because "ripping" is the norm, but because of the basic economics of the internet and the fact that there's a lot more competition. The attack on HuffPo is just totally misinformed, since HuffPo/AOL actually employs a ton of journalists, contrary to Morrison's claim. Besides, if "aggregation" is beating your reporting, you're doing it wrong.

And, as for that final line: "This is what the European parliament has just ruled. Everything on the net, from now on, will be free." I'm curious if Morrison can point out (1) where it says that everything online will be free and (2) where ACTA would have stopped that? Does he think that ACTA would have magically stopped fundamental economics of competition? That ACTA would have magically wiped out free content online? The failure of ACTA doesn't make content free. Morrison seems to think ACTA is something that it is not. And ACTA supporters claim that those who fought ACTA ran a misinformation campaign -- where are they denouncing Morrison's crazy claims? ACTA would not have had any impact on the online services that Morrison seems to think are the root of all of the problems in the world. It didn't address that issue at all.

As a journalist, novelist and a friend of many who "used to be" musicians, I see the wrong in this.

"This" being the strawman that Morrison just set up -- that without ACTA, everything is free. You see the wrong in a claim that you totally made up out of thin air that has no basis in reality. Kudos to you.

I defend copyright because it is the lifeblood of the creative industries and of democracy.

And yet... somehow, magically, as copyright has become less and less respected, content production has increased by orders of magnitude and creative industries have grown as well. If it's the lifeblood of creative industries, then that wouldn't be true. In other words, this claim is flat out wrong.

And, uh, copyright is the lifeblood of democracy? How so? Morrison provides no other explanation and there is none, because that's a ridiculous claim that has no basis in, well, anything. Hell, here in the US, the first major democracy, we came quite close to not having copyright law at all. No one -- on any side of this issue -- thinks that it is necessary in a democracy. You might argue that it's a good thing, or a bad thing, but no one thinks it's the lifeblood of democracy.

Other unexpected voices have joined the cause of copyright protection – Dr Dre claims there will be no future generations of rappers because of piracy and the expectation that recording artists will put their work out for free.

Hello, totally random non-sequitur. Why is Dr. Dre an "unexpected voice" in all of this? I could just as easily list off tons of musicians who claim otherwise. If we're looking at the rap world, why not talk to Chuck D or Hank Shocklee or 50 Cent -- all of whom have stated the exact opposite. I actually tried to look up the details of this claim by Dre, and couldn't find it anywhere. The only thing I found was that he followed Lars Ulrich's original lawsuit against Napster with his own such lawsuit. That was more than a dozen years ago. The market for rappers has not disappeared at all. In fact, it's grown. Why? In large part because of the mixtape world, in which artists put their work out for free -- which has resulted in many of the top rappers today getting discovered, and making a ton of money down the road. So, forgive me for not buying the claim from Dr. Dre when reality has shown the exact opposite.

Modern consumers don't think of the next year – they are hooked on the short-term quick fix. They don't understand the negative impact of piracy.

Of course, we're still waiting for the actual economic evidence of the "negative impact of piracy." Most studies don't seem to show that. They do show that it has caused some difficulty for some record labels, and shifted around where some of the money goes, but that's about it.

Over the last year, I've conducted surveys of the students I've lectured and 90-98% of them, between the ages of 18 and 32, are involved in daily acts of piracy.

Not quite sure where he lectures, but there is absolutely no reasonable study that supports this claim. None. Zilch. Zippo. Music Ally, who's really good on these things, did a survey a few years back, and found that the rate of infringement among younger people was actually decreasing -- and they were looking at those who did it at least once a month (not daily, as Morrison says is the case of the young people he talks to). In 2009, they found that the percentage of teens who file shared once a month was 26% (down from 42% two years earlier). And yet Morrison claims that it's 90 to 98% infringing daily? Meanwhile, a study done at Columbia University last year found that 70% of those 18 to 29 had acquired some infringing content, but that "large scale" piracy was exceptionally rare. Of those in the 18 to 29 year age bracket (closely corresponding to Morrison's 18 to 32) a mere 7% had large digital music collections -- which you would expect if they were sharing every day.

So forgive me for putting on my skeptic's hat, but that 90 to 98% claim doesn't pass even the simplest laugh test.

Oh, and let's not even start discussing the fact that every single study on the subject has shown that "regular" infringers spend more on content than those who don't infringe at all. In other words, if Morrison's number was actually accurate, there likely would be a lot more spending on content.

They no longer pay for music or films or journalism.

Again, the actual evidence has shown that those who infringe actually spend more than those who don't bother. But why let facts get in the way of good rant?

They have a vague idea that what they do is left wing, that it has somehow to do with freedom of speech. And I say to them, but don't you want to make films, be journalists, make music? Where will the money come from if you don't pay? This is a blind generation. And there is no point trying to convince them person-to-person that what they are doing is damaging their own future.

Which of course ignores the fact that many of these kids are likely aware of all sorts of new business models that have been popping up all over the place. They know that the live music market has grown tremendously. They know that there are platforms like PledgeMusic and Kickstarter and IndieGoGo. They know that services like Spotify are now paying larger and larger sums and many users are switching to them away from infringement out of convenience. They know, then, that there's still plenty of money to be made.

The only solution is governmental.

Er, except that we've already seen that the actual solution is not governmental, but is coming from all sorts of amazing innovations and new services that help artists create, distribute, promote and monetize already.

And the problem started with legislation: the DMCA, with Clinton, who was bullied into it by the tech companies in Silicone Valley.

Again, this is an astounding rewriting of history in that it flips the story completely on its head. First of all, it's Silicon Valley, not Silicone. Second, the DMCA was pushed almost exclusively by the entertainment industry, and its passing was celebrated by them, and decried by the tech industry in Silicon Valley who, for years, sought to have it repealed. It's difficult to take Morrison seriously when his key talking point appears to be the opposite of what really happened.

The ruling makes it impossible to sue internet providers for copyright infringement on their own sites. So for example, if I am a band, it will be my responsibility, or that of my record company, to trawl the tens of thousands of rips of my songs and send out writs and sue individuals. Meanwhile, the internet companies who profit from piracy are left scot-free, legally.

First of all, the DMCA is a law, not a "ruling." Second, it is not impossible to sue internet providers for copyright infringement if they're responsible for the infringement. It only says that if they are the tool provider, you don't blame them for how people use the tool -- but you can use the DMCA to have them take down infringing content. And I wonder: how "scot-free" did Veoh get off? That company was sued by Universal Music for copyright infringement and had to shut down because of the legal costs... even though the judge eventually ruled Veoh legal. YouTube has been fighting a massive infringement lawsuit from Viacom. Scot-free? Meanwhile, lots of other companies have been shut down in a post-DMCA era, including Napster, Grokster, Aimster, Kazaa, Morpheus, Zediva, etc. Scot-free? Even if you believe many of these companies should have been found legal, it's clearly 100% false that any company can use the DMCA to avoid legal impact.

And, these days, nearly every major user-generated content site offers a copyright filter, anyway, that lets copyright holders "register" their works and have them blocked.

According to Robert Levine, 75% of all material on YouTube is in breach of copyright. That's a $36bn company, with 75% of its content based on piracy. And don't forget that Google owns YouTube. Also, Google Adsense places advertisements on YouTube pages, and makes money from them, without any proper legal procedure to test whether such pages have been ripped. Google and YouTube also sell ads on pirated pages. And 99% of their income is based on selling ads.

First of all, I'm not sure where the "$36 billion company" part comes from. Google is valued at closer to $200 billion. Perhaps he means just the YouTube part of it, which perhaps is valued at $36 billion, but as a subsidiary of Google I'm not sure that number is accurate. Either way, even if we accept the claim that 75% of the material on YouTube is infringing -- a claim that seems dubious -- that doesn't mean squat. Where is YouTube actually making its money? Videos on YouTube are not all equal.

And, here's the big thing that Morrison leaves out: YouTube long ago instituted ContentID -- a system that lets anyone designate all of the content they hold copyright on, and prevent any of it from being uploaded to YouTube. It also has this amazing thing that lets copyright holders monetize the videos by putting ads on them and having Google give most of that money to the copyright holder. In other words, for many, many copyright holders, YouTube has become a massive profit center. And Morrison doesn't even mention that, bizarrely suggesting that only Google makes money on those ads. Also, while some Google ads have made their way onto sites that offer infringing works, Google is pretty good at policing that. In fact, part of the evidence against Megaupload was the fact that Google cut off their ads on the site. That seems to disprove the basic claims Morrison makes.

The internet is a vast succubus that preys on the content made by the creative industries. Ask yourself why it is that recent culture has ground to a halt.

Er, culture hasn't ground to a halt. More music is being released today than ever before in history. More movies are being released today than ever before in history. More books are being released today than ever before in history. More sources are reporting the news today than ever before in history.

There is nothing radical or hip about being a pirate. Those who think they are being counter-cultural by ripping content off the web are fools, and this includes those who fought against Acta in the name of "freedom of expression". They want the internet to be some kind of 60s utopia where everything and everyone is free. But we still live in capitalism, and if you make culture free, you make it a ghetto.

I have no words to respond to this paragraph, because it makes no sense and has no basis in reality. In all the years that I've been involved in these discussions I have never, not once, heard anyone claim that they're looking for some sort of hippie/utopian vision where "everyone is free." In fact, many of us believe strongly in true free market capitalism, where we try to minimize things like government granted monopolies on abundant goods. And, again, this idea that if culture is "free" it's a ghetto is again proven wrong by reality. Shakespeare wrote in a time without copyright, and seemed to create some pretty compelling cultural artifacts. Oh, and if you look at the data, it sure looks like public domain works sell pretty damn well. The copyright-free world is not a cultural ghetto, and we have empirical evidence to show that.

The internet is not free. It is about as free as the free market. And the companies that run the internet are all massive US corporations. When you rip material on the net, there is a cost. You are handing over you own country's cultural content to US corporations, who will never pay a penny in return.

Really, now? Of course, paying the RIAA/MPAA labels and studios -- who both have a long and very detailed history of failing to pay royalties -- is somehow better? Whereas, when you actually look at the companies that Morrison is slamming, you discover a very different story. We've already discussed Google's ContentID program, which returns a hell of a lot more than "pennies" to content creators. And then you look at things like Kickstarter, in which more than 90% of the revenue goes directly to the artist -- completely flipping the traditional label structure on its head (where standard royalty rates are 10% to 15% and only if you recoup).

After Acta has died, we must go back to US legislation and overturn the DMCA. Sites like YouTube would then be deprived of 75% of their illegal content. It won't be much fun – 75% less fun, but then maybe we will start to understand that we have to pay for culture.

As if ACTA would have changed the DMCA? It would not have. At all. Morrison clearly has not read it. Second: if, in this mythical version of the world, we did in fact "overturn the DMCA" (or, rather the only part he really dislikes -- the safe harbors -- because I imagine he'd throw a complete shit-fit if the rest of the DMCA were overturned), there wouldn't be 75% less content on YouTube. YouTube would basically cease to exist. There would be 100% less content. And you know what? For all of those who want to distribute and share their content, they would no longer get to use YouTube's storage, bandwidth and software for free.

You see, these services he's slamming as somehow profiting unfairly, also happen to provide tremendously useful services for content creators. Before YouTube, if you wanted to post video online, you had to install a complex and expensive video server that had serious compatibility issues, and you had to pay for all that bandwidth at crazy high prices. But YouTube provided all that stuff for free... and made it easy. If he's so concerned about "free," then I assume that he doesn't use any of these free services online.

Over the years, we've seen all sorts of ignorance spouted in support of copyright maximalist positions, but I have to admit that this piece takes all of that to new and never-before-seen levels. As far as I can tell, there is not a single accurate or sensible sentence in the entire piece. Kudos, Ewan Morrison, for setting a new bar in ridiculous articles. All others shall, in the future, be measured on the scale you set in this entirely fact-free piece.

Filed Under: acta, dmca, europe, ewan morrison, journalism, piracy, rob levine, safe harbors

What Happens When You Get Two Internet Haters Together? An Interview That Kills Brain Cells

from the you-said-what-now? dept

I've recently (separately) questioned some dubious claims by neo-luddites Rob Levine and Scott Timberg, so when the two of them get together to have a conversation, I have to admit that it almost made my head explode in seeing almost every sentence be chock full of "wrong." Let's dive in to some of it:

The premise of my book is that most online companies rely for their content, and hence for their money, on traditional media companies. If they destroy that business model, it’s unclear what they’re going to have to distribute.

Yes, because no one else ever shows up to fill that gap. Does Levine have no idea how culture responds to demand? Besides, this is just another line like Valenti's old "Boston Strangler" line. People who don't know or understand culture or history always blame the new technology for "killing" off the old industry. The reality -- as shown time and time again -- is that it actually enhances and grows that industry. You see it again and again. The sheet music industry insisted the player piano would kill the music business. John Philip Sousa insisted that the phonograph would kill the music industry, because with it, no one would ever learn to play music or want to hear live music again. The publishing industry insisted that the photocopier would be the end of its business model.

Levine follows in a long line of people who got it wrong. People who don't understand technology or culture or trends. When technology makes things more efficient you get more of it, not less. It may change business models, but in the end it always creates greater output, greater value. Timberg, of course, doesn't challenge Levine on this bizarre assertion, but remember, Timberg is the guy who claimed our creative class is gone because no one works at record stores any more.

If you look at YouTube, eight of the top 10 videos are major-label music videos. If the major labels shrank to the point where they can’t make videos, YouTube isn’t much of a business.

Does Rob not know how much money YouTube is making for the smart acts that use it correctly? Ask the band OK GO where they'd be without YouTube. Ask the Gregory Brothers. For content creators that know how to use the platform (not Levine, apparently), it's a huge boost to their business. And, if the major labels shrank to the point where they can't make videos, (1) others would still make music videos and (2) YouTube is still a huge business. Levine offers no proof that without Universal Music making videos YouTube stops making money. That's because he can't. It's a blatantly ridiculous assertion.

technology creates uncertainty and regulation solves uncertainty.

I'll just leave that one hanging for people to laugh about. I'm wondering which world Levine lives in where regulation solves uncertainty.

When the car was [created], no one knew how fast you were allowed to drive. We came up with speed limits and that solved some of the uncertainty – didn’t solve it perfectly, but it made the roads safer.

Actually, it didn't. As multiple studies have shown over the years, speed limits have had almost no impact on road safety. Well, that's not entirely true. One report says that the implementation of speed limits appears to decrease road safety. And that's because speed limits were never actually put in place for road safety, but for state revenue generation. How can anyone trust Levine when he claims things to be facts that the data shows just isn't true?

Then [Congress] came up with the DMCA, which I think was sort of the original sin. The idea was we have to say something before you want to take something that infringes on copyright down.... The important provision was notice and takedown. You have safe harbor from copyright liability if you follow this notice and takedown procedure. It turns 300 years of copyright law on its head by making it an opt-out system instead of an opt-in system.

Someone doesn't know the history of copyright law at all. The notice and takedown provision certainly has many problems, but the idea that you properly apply liability to those who actually do the infringement is sorta common sense. The problem is that Levine is confused. He seems to think that a site is the content creator or publisher, rather than the tool. We never blamed the physical printing press for the infringement that was done on them. So why does Levine want to blame the tool now? That would be turning copyright law on its head.

And, if he's honestly talking about what turned copyright law on its head by making an opt-in system into an opt-out system, he must actually be talking about the 1976 Copyright Act, which put all new creative works under copyright at the moment they were fixed, rather than requiring you to register and follow certain formalities. That was about turning copyright on its head. Using the DMCA to clarify that you don't blame the tool for the user's actions? That's just common sense to keep the clueless in line.

Dozens of sites will use this interview until you specifically tell them not to.

Including mine. And in this case, it's called fair use. But Levine prefers permission culture. And that should be scary to anyone who understands how culture works. You don't want artists asking for permission. You want them to create.

One of the desirable things that copyright laws do is create some kind of market for intellectual property

This is economically wrong. While it's true that copyright law creates a market for copyright, there's no economic evidence that that, in itself, is desirable. If you have something that is infinitely reproducible, such as ideas, to put artificial limitations on them is economically inefficient and limits growth. It's the opposite of a "desirable thing." There's this problem with people who know just enough economics to be dangerous, where they learn that "free markets" are a good thing, and they seem to think that means all markets are good things. But artificially created markets are, by their very definition, inefficient. The value brought about by markets is in their efficiency.

A simple example. We could, if we so chose, create a "market" for air. You and I breathe freely (in monetary terms), but based on Levine's reasoning, we'd be better if we charged. After all, it would create a market for air. That would make some people rich, but it would make most people poor (and potentially kill a bunch too, but that's besides the point). Putting in place an artificial barrier to create a market where none is needed is not "desirable," it's the very definition of economic waste and inefficiency.

Google News is not as useful if there’s not as much news to Google. I mean, Google is an information search tool, right? It’s not a moral issue. But the problem you’ve created, you create a very powerful incentive for somebody to create a better search engine. You eliminate [the] incentive to create better journalism. That is a problem.

As far as I can tell, the number of sources within Google News appears to keep going up. And, frankly, I'm seeing better and better journalism. Even Salon, which has published this Timberg/Levine disaster, often has good journalism (just not in this particular piece). So, um, where's the evidence that journalism is somehow getting worse. I just don't see it.

The middleman hasn’t been eliminated. There’s a new middleman. YouTube is the new middleman. YouTube, just now, was giving professional content creators advances against future royalties. Is it a good middleman? I don’t know. YouTube has a lot of good technology. They obviously have other advantages. It could be a smart deal. It depends on the advance; it depends on what you want. But I would say that the idea that YouTube is fundamentally different from a record company is silly. YouTube probably has a higher percentage of the market for online video than all four major labels combined have of recorded music. Who’s stopping their market power? No one, and everyone is saying it’s a progressive thing.

Wow. Levine was an executive editor for Billboard. He must be familiar with record label deals. To claim that YouTube is the same sort of middleman as a record label pretty much destroys any and all credibility he might have. And, as we've pointed out many, many times, the whole idea that middlemen go away is a myth. It makes for a nice strawman from Timberg, but it's always been a myth. What go away are gatekeepers. There's still obviously a massive role for middlemen who enable artists, but that's different from gatekeepers who give back very little to artists.

A record label deal involves giving up all of your copyrights, entirely. It involves one of the worst deals you'll ever see, in terms of getting a tiny percentage of royalties, and every expense that the label spends on your behalf first has to be "recouped" out of just your (tiny) portion of the revenue. Basically, the labels give you a loan with ridiculously bad terms... and then get to keep the collateral no matter what. When YouTube starts offering deals as ridiculous as that, let me know. Because as far as I can tell, it seems to be enabling careers of all sorts of new artists who are making tons of money off of YouTube (or because of YouTube) without having to give up any control or all future profits.

What you rarely hear is that the French tradition – and this applies, to varying degrees, to a lot of other countries in Europe – copyright is a fundamental right. It is your work and you have a fundamental right to it. What’s interesting is you have a lot of people talking about the right to remix. In Europe, not only is there very little legal support for a right to remix, there’s a decent amount of support for a right not to be remixed. You have a right to the paternity and the integrity of your work. It’s a moral right. So someone says, “I want to remix Rob Levine’s book so that every 10 words it’s going to say: Rob Levine eats stinky poo” – by the way, I’m fairly certain that somebody would call this an art project – I can say, “No. I have a right to my work.” I think a lot of people would find that very reasonable.

I really do wonder why that's "very reasonable." If someone were to write that remix of Levine's book... who would care? Would it impact Levine's actual book? Would the creation of such a work somehow make Levine's actual book disappear and the only way you could read his book is with the words "Rob Levine eats stinky poo"? Of course not. No one would care, because putting such things in his book is a stupid idea that no one in the market would care about. Now, if someone actually does create something that the market cares about, in the form of a remix (for example, someone like Girl Talk or Kutiman), then the world is actually better off. It takes nothing away from the original and people get an amazing new work. How is that a bad thing? It seems like a very good thing.

When Google says newspapers should be free on the Internet, they may really believe that, but you also have to keep in mind that it’s a huge help to them. Right?

I'm curious where Google has ever said that newspapers "should be free on the Internet," as Levine claims here. I distinctly recall Google actually building its own tools to help with paywalls. So I'm at a total loss as to why Levine would claim this. Furthermore, Levine seems to not understand the nature of non-zero sum markets. If something benefits Google (or any other third party) that doesn't mean it can't also benefit the content creator.

This is a common logical fallacy among folks who don't understand new business models and new platforms. They seem to think that these markets are zero-sum games. Thus, when iTunes starts doing well, the record labels freak out that it's making too much money (as if some of the money Apple made for dragging them into the digital era belongs to them). It's why you now see Hollywood trying to cripple Netflix, and the TV guys trying to kill Hulu (even though they own it). They're treating these all as zero sum games. They see Apple, Netflix and Hulu making money and they say "that's not fair, that's money that's being taken away from us." What they don't see is that these systems are doing no such thing. They're expanding the market, making things more efficient, and moving away from old inefficiencies. And, yes, they put in place smart business models so that they get a cut of that, but that doesn't mean they're not also incredibly useful to content creators.

The interview goes on and on from there... in a similar vein. At this point, my brain is so full of wrong ideas from the two of them that I'm giving up. This is pretty disappointing from Salon, which I thought would like to publish things that were, you know, based in fact.

Filed Under: culture, economics, free rider, internet, regulations, rob levine, scott timberg

The Latest Entrant Into The Economically Clueless, Luddite 'Internet Is Evil' Book Category

from the it-must-sell-well dept

Last we heard from Rob Levine, he was saying that people in the music industry shouldn't pay attention to what's popular on file sharing networks, because you can't learn anything from that. That was when he was executive editor of Billboard, and clearly was trying to defend Billboard's obsolete listings of what was popular. Very, very shortly after that he was out of a job quit Billboard. Now he's back and it seems like he's barely lost a beat on saying clueless things. He's got a new book out about how the internet is evil, destroying all of the media, and to kick up some publicity for it, he's got a piece over at The Guardian that you guys just can't stop submitting. It's provocatively titled: How the internet has all but destroyed the market for films, music and newspapers.

Of course, that's fascinating, since pretty much every study we've seen shows that the market for films and music has increased, and while for newspapers it has shrunk, that's unfairly limiting the market to the paper side. The market for news has continued to grow. Most of Levine's article seems to be made up of typical wishful thinking, carefully choosing how he defines markets, and a strong dose of traditional economic fallacies, with just a pinch of luddism. The article opens with the classic trick of pretty much anyone who's data can't back up what they're selling: use random correlations, rather than any evidence of a causal relationship. So, he talks about the declines of NBC, EMI, the Washington Post and MGM. And, somehow, that's proof that the internet is at fault. I won't go into each case, but there are many, many other reasons why each of those four companies ran into tough times recently, almost none of which has to do with the internet (and much of which had to do with ridiculously bad management).

From there he makes a massive leap to basically blame the tech industry for the entertainment industry's problems. Stop me if you've heard this one before. Apparently, you see, The Pirate Bay, Google & the Huffington Post sucked every other industry dry. This, of course, is not true. It's a made up scare story for entertainment industry executives and politicians. I mean, this kind of scare mongering has been debunked so many times that you'd think Rob must have to pay someone for rehashing such old news. Let's dig into this just a bit:

Over the past decade, much of the value created by music, films, and newspapers has benefited other companies – pirates and respected technology firms alike. The Pirate Bay website made money by illegally offering major-label albums, even as music sales declined to less than half of what they were 10 years ago.

The Pirate Bay made a tiny amount of money -- barely a blip on the radar -- and given the continued research showing that those using sites like The Pirate Bay tend to be the industry's best customers, it's entirely clear (unless you are willfully ignorant) that the issue is a business model problem, where the labels failed to offer what consumers wanted. Furthermore, since he brings up "music sales," he's flat-out wrong. Sales of recordings may have dropped, but if you actually look at the real market which Levine conveniently ignores, which includes live, publishing, advertising, direct-to-fan and others, you discover that the money that actually goes to musicians has gone up tremendously. Sure, the record labels are suffering, but that's because they set themselves up to focus only on the part of the business that got disintermediated.

YouTube used clips from shows such as NBC's Saturday Night Live to build a business that Google bought for $1.65bn.

Ah, the industry's false line again. YouTube provided free software and free bandwidth (at a huge expense to the company) and combined that with a large community to become the defacto place online for video. Lots of smart folks -- including NBC's Saturday Night Live, eventually learned to embrace that and use YouTube as a tool to gain viewers. In fact, if you want to look at who benefited more from SNL's videos showing up on YouTube, there's a pretty strong argument that it was SNL... not YouTube.

And the Huffington Post became one of the most popular news sites online largely by rewriting newspaper articles.

Nice line. If only it were true. It's not. The Huffington Post launched with a ton of new and unique content from lots of people. Huffington called in a bunch of favors and had a ton of her famous friends writing for the site from day one. On top of that, the company has a large reporting staff that does plenty of original and unique reporting -- much of which accounts for its traffic. Yes, it also does some aggregating of content -- but nothing that any other news publication couldn't do as well. If it's really true that HuffPo somehow hurt other media, they could just tack on the same sort of aggregating. Anyone who claims that HuffPo became popular by rewriting newspaper articles is lying.

This isn't the inevitable result of technology. Traditionally, the companies that invested in music and film also controlled their distribution – EMI, for example, owned recording studios, pressing plants, and the infrastructure that delivered CDs to stores.

I read this and all I see is that EMI is the horse buggy maker, who invested in wooden wheels and buggy whips just as the automobile was coming around. Look, if you invest in the parts of the business that become obsolete in the digital age, you kinda deserve to die. I'd hate to live in Levine's world where the buggy maker should have been able to stop the automaker. We had our red flag laws that required people to walk in front of automobiles waving red flags, and everyone learned they were stupid.

But, Levine thinks red flag laws are the answer to saving his incompetent buddies in the entertainment industry. You see, he blames one of the few good regulations out there, which he hopes gets taken away:

The internet changed all this, not because it enables the fast transmission of digital data but because the regulations that enable technology companies to evade responsibility for their business models have created a broken market. Scores of sites now offer music, while hundreds of others summarise news. Part of the problem is rampant piracy – unauthorised distribution that doesn't benefit creators or the companies that invest in them. It also puts pressure on media companies to accept online distribution deals that don't cover their costs.

Anyone who thinks that the market didn't change because of the ability to more efficiently distribute data is making a joke. But, let's go on. Levine is, again, misrepresenting reality. The laws he's talking about -- mainly the DMCA's safe harbor -- do not allow tech companies to evade responsibility. Levine is, again, being intellectually dishonest. The safe harbor merely means that liability is properly applied to the actors actually doing the infringement. Apparently Levine prefers to blame Ford for any car accident.

As for that last line about "pressure on media companies to accept online distribution deals that don't cover their costs," that's a howler. Just take a look at the "deal" that Pandora has for streaming music, which has set up Pandora to never be profitable. And what "costs" do the record labels have for those deals? It's a sunk cost. They recorded the album and they just hand over the digital files to Pandora. No marginal costs at all.

But the underlying issue is that creators and distributors now have opposing interests. Companies such as Google and Apple don't care that much about selling media, since they make their money in other ways – on advertising in the first case, and gadgets in the second. Google just wants to help consumers find the song or show they're looking for, whether it's a legal download or not, while Apple has an interest in pushing down the price of music to make its products more useful. And this dynamic doesn't only hurt media conglomerates – it creates problems for independent artists and companies of every size.

Another favorite of the entertainment industry. It sounds good if you aren't actually thinking this through. But there's a weasel phrase in there that lets Levine say something that he can insist is true, while it's totally and completely misleading. He says they don't care about "selling media." But that assumes that selling media is the only way for the entertainment industry to make money. Google and Apple care very much about making sure that content creators get paid, because they need content creators to keep making money to keep producing works (which, by the way, is happening, as we have record numbers of new music, movies, news and other products coming out each year -- a fact that Levine seems to completely ignore). But they know that there are better ways to get them paid than just "selling media." In fact, when you just look at the music industry alone (the industry Levine should know best), he must know that actual artists are now making significantly more than they did in the past, thanks to the industry shifting away from "selling media" to other business models.

Then he jumps in with the luddite's favorite line about how everyone who disagrees with him tosses out "information wants to be free." Of course, as Cory Doctorow pointed out last year, the only people who seem to toss out that line are entertainment industry execs pretending that's what people who disagree with them say.

The crux of Levine's argument (and the title of his book) is that all of this shows the problem of "free riders." This is another popular entertainment industry trope, which sounds good... other than the fact it's economically clueless. Yes, there are certain areas of economics where free riders can be a problem. But there are also such things as positive externalities and economic growth created because of free riders. There's a serious book to be written on the subject, but it's not this one.

Certainly, copyright laws need to be updated for the digital age. Many reformers say they favour protection, but view any attempt to enforce it as unacceptable. This doesn't make sense: a market can't be based on voluntary payments, and laws don't work if they can't be enforced. There needs to be some penalty for illegal downloading, although slowing the access speed of a lawbreaker makes more sense than cutting their account entirely. By the same token, why should internet users be allowed to access sites that clearly – and that last word is important – violate UK law? If the UK simply declines to enforce its laws online, it will leave many of its businesses vulnerable as the internet becomes more important to commerce in the years ahead.

Note the implicit -- but false -- assumption in there. Without copyright, the only business model is "voluntary payments." That's funny, I didn't realize I had ever been "forced" to pay for all of those CDs, concerts and movies... A market is always based on "voluntary" transactions between willing buyers and sellers. That's the definition of a market. How can he say otherwise?

I'm guessing he really means "voluntary" in the idea of "tips" or "donations," but that again presumes (totally falsely) that the only way to make money is from the direct sale of media. It's not. And he must know that.

Honestly, for all the trouble I've given Levine in the past, I always thought he was pretty sharp on the larger issues. But this column (and, I presume the book it advertises) seems to have simply taken all the tropes, ignored all the data, misrepresented wherever possible, and packaged it all together under a silly economically ignorant title. I'm sure it'll sell just great. Thankfully, though, if you read through the comments on his article, nearly every one of his ridiculous statements is dismantled item by item. Ah, crowdsourcing to the rescue.

Filed Under: economics, free rider, internet, regulations, rob levine

On The Media Takes On The Music Industry

from the good-summary dept

WNYC's excellent radio program On The Media this week decided to spend an hour discussing the music industry. It's quite well done, in that it highlights how this is actually a great time in the music industry for musicians and fans -- with the only party really in trouble being the old record labels. The program talks to numerous knowledgeable people, including James Boyle, Amanda Palmer, Greg Kot and others. The one section, however, that I thought was a bit weak, was the section on live shows. That section only focused large stadium/amphitheater shows -- the kind that only a very small number of bands deal with. It doesn't even mention the much more common forms of touring and live shows. Furthermore, that section only seemed to talk to one individual -- a smaller concert promoter who used the part to basically bash Live Nation. Now there are things you can complain about with Live Nation (though, I'd argue that they've got a much better understanding of where the market is heading than most people give them credit for based on conversations I've had with Live Nation folks), but that segment was incredibly one-sided.

The other thing that I found incredibly telling was that the person who sounded most out of date and most in denial was not the RIAA representatives (who actually sounded at least somewhat circumspect on how the music industry was changing), but Rob Levine from Billboard Magazine, who still insists that it makes no sense to pay attention to "those who steal music." He brushes aside the band Ok Go for just doing "ok" as if you don't count unless you go platinum in record sales. He dismisses things done "as a hobby" as simply not mattering. He is, of course, defending Billboard's obsolete "charts" which are still based mostly on CD sales and radio play, but just comes across as someone who doesn't even realize what he's measuring (at 43:15 on the podcast):

"Right, okay, the one thing that does skew our ratings is that older people buy more music. They steal less music.... So like, you know, a Bruce Springsteen or a Madonna might overperform on the album sales chart relative to some more subjective measure of their popularity. But as far as like who's stealing what... I mean, what use is that?"

And that, right there, is why Billboard has become so obsolete. It's lead by people who think that file sharing is "stealing" and that it's meaningless in figuring out where the money is in music. It ignores the studies that have shown that people who download also end up buying more music. It ignores the studies that show people who download are more likely to attend a show or buy merchandise (things that Billboard doesn't appear to think matter at all in the industry). It's as if Billboard wanted to judge the popularity of the transportation industry by judging how many buggy whips are sold. Yes, as automobiles became more popular, buggy whip sales declined. Sucks to be you if you're focused just on measuring buggy ship sales, but the problem is that you're measuring the wrong thing.

Instead, the guy who sounds like he's really looking to the future is Duncan Freeman, of the site Band Metrics, who shows that the really important thing is not figuring out how many CDs are being sold, but how much fans are devoted to an artist (disclosure: I've met Duncan a few times at events, and talk to him occasionally about the music industry -- he's also given me an account on Band Metrics to check it out, even though it's not yet fully public -- though, I actually haven't used it yet). The program shows how a band can actually figure out where their biggest fans are, where they're getting the most buzz, and actually helps bands better connect with fans in multiple ways -- not just on the old model of selling them more CDs.

Oh yeah, one other point. Some Hollywood lawyers were getting on my case earlier this year, every time I claimed that the RIAA announced last year that it was no longer suing end users, even though it did keep suing. Those lawyers insisted that the RIAA said no such thing (even though that's what all of the press reported). In this podcast, the RIAA's Jonathan Lamy repeats: "Last December, we officially announced that we would end the litigation program against end users." Except it hasn't.

Overall, the program is a really great hour's worth of discussion on the types of things we regularly talk about here, and well worth a listen if you're interested in these things.

Filed Under: duncan freeman, james boyle, jonathan lamy, music, music business, on the media, rob levine
Companies: band metrics, billboard