Responses to the Copyright Crisis

Everybody's become aware that the concept of copyright is in crisis. Digital media love to be copied, and copies are perfect generation after generation. The people have demonstrated a willingness to ignore copyright rules if not given exactly what they want -- either in terms of convenience or price. In addition, those who have ignored the rules have embraced new technologies which allow distribution and sharing with unprecedented efficiency and ease.

At the same time, many feel society is moving toward an information economy, where building creative work, primarily monetized through copyright, is becoming a large part of the economy. In the future it may even dominate it.

So some system needs to be found, some way to assure that creators can make money from their efforts, the public's freedoms are not restricted and incentives can be provided to develop and invest in the development of important creative works. I call this The problem of the Creative Economy.

I'm collecting and trying to devise possible outcomes and solutions that can keep a creative economy going. Here are the ones I have encountered and some views. Many of these focus on music, as it is the first sector of the creative economy to become embroiled, but in fact solutions are needed for all the creative milieux -- movies, books, software, news and more.

I apologize for the use of the word "content" in this summary, as I know it bothers some who dislike summing up creative work with such a commercial word. It is probably still the best concise generic word for the job.

Pay creators with a tax or tax-like charge

This suggestion is growing more and more popular. In it, some sort of fee would be tacked on to media or bandwidth, and the proceeds from that fee would be distributed to copyright holders according to some formula.

This could be done as a tax, and in fact we have already seen such taxes on DAT tapes and blank audio CDs in exactly this style. Since many users no longer copy works to removable media like CDs, it has also been proposed as a surcharge on ISPs, presuming that users will use some portion of internet bandwidth to transfer copyrighted works for which compensation should be paid. It is uncertain how to fairly deal with the many different models of bandwidth sharing now extant and planned for the future, such as wireless community networks. Taxing bandwidth means registering and policing bandwidth.

Sometimes it is proposed that it simply come out of general tax revenues, to provide support for creative work.

It has also been proposed as a fee that is not strictly a mandated tax. The fee could either be voluntary or a protection against liability for lawsuits over copyright infringement. For example, ASCAP charges all music halls, bars, theatres and arenas a fee that covers all ASCAP member written music played there. If a venue doesn't pay, they face being sued if anybody ever plays such music there. ASCAP and its counterpart BMI have a near monopoly on popular music, so they are able to enforce such a fee.

If ISPs or media makers felt a fear of liability, they could be pressured into collecting such fees.

The fees would be distributed to copyright holders based on some measurement of the popularity of their works in the area in question. This could be done by using sales figures from other media, or by statistical analysis and surveys of popularity. A wide variety of formulas might be used. In the example of ASCAP, the formula is (with some controversy) based on the genre and style of music (jingle vs. score vs. song) and even seniority of the member.

There are many arguments about what to tax. Each has fair and unfair aspects. Taxing audio CDs punishes those who record their own music on CDs. Taxing internet bandwidth punishes those who make heavy internet use but don't download copyrighted material. (For example perhaps they just have a video-phone. Taxation from the general fund punishes those who consume far less copyrighted material than others, and those who buy it rather than take it without payment. (Of course most taxes penalize one group over another.)

In some ways this idea is quite old. The BBC is paid for by a tax on television sets, regardless of how much they watch the BBC, with TV police who search streets for unlicensed sets.

Many consider this to be one of the most practical solutions, but at the same time it raises serious questions about fairness, the rights of creators and government involvement in the business of creation. It is also worth considering that governmental and institutional solutions without fail become bent to the will of the most powerful special interests.

Copyright is Dead, Get Over It.

A growing group is saying that the concept of intellectual property was a mistake, and should be undone. Information wants to be free, and will be free no matter how people try to stop it. They sometimes mean free as in unbound, and sometimes as in at no cost, and sometimes both.

Copyright, they point out, is a recent invention, and the media industries are relatively recent inventions in fields like TV, music and so on.

Without copyright, they hope for new business models, or the resurgence of older ones. Musicians might rely on live performance rather than recordings, as they did before record sales became big. Some of the solutions below are mostly new business models that people hope will work without law or draconian technology to enforce them.

It's fair to say that some media would still thrive without copyright or money. The vast majority of musical acts and writers are not in it for the money. Anything that's a "one person show" will continue, paid or not, out of drive and dedication. However, things that require investment, like megabudget movies, many types of software packages and large scale investigative journalism would probably suffer.

In addition, some, though far from all, believe there are some moral rights or natural rights behind copyright. That it would simply not be fair to creators to have them lose all control of their creations.

There is also major concern over what would support the big media which form the vital "fourth estate" in a free society -- ie. what gives a news organization like the Washington Post the financial power to take on the President of the United States if there is no copyright?

Digital Rights Management

The favoured solution of big content distributors is to only publish their works locked up with technological protections. These protections, known as DRM, attempt to assure that only those who are authorized get to make use of a copyrighted work. They can both enforce the copyright law using technology, and also provide restrictions not possible under copyright law.

Due to the problems of making secure DRM, it has been coupled with legal efforts to offset its flaws. The Digital Millennium Copyright Act, for example, makes it illegal to bypass or make tools to bypass DRM, and a good deal more.

The push for DRM has extended into "trusted computing" initiatives which would arrange for formerly general-purpose PCs to be designed to support DRM and forbid their owners from accessing locked materials in an unauthorized manner even on their own computer.

There have been efforts for legally mandated DRM, first in Digital Audio Tape (DAT) and more recently in proposed bills for broadcast television and even all computers. These laws would make it illegal to make or sell computers, televisions, video and audio recorders and players which did not enforce DRM rules.

Many forsee serious problems with the widespread adoption of DRM and particularly laws mandating and protecting it, ranging from stifling of innovation and restriction of fair use, freedom to program and freedom of speech.

Advocates of DRM believe it brings several things to the table, beyond protecting the revenues of content sellers.

Without it works won't be released at all

Distributors claim they won't release their works at all in media where they can't protect them, or simply won't be able to get financing unless investors can be convinced of the security of their returns due to DRM. The first claim has historically turned out false. The latter claim is harder to judge.

With it works will be cheaper for all

If everybody pays, including those who pirate today, distributors argue the price can be lower for those who do pay, for the same effective revenue for the producer.

DRM enables new business models to allow market segmentation

DRM allows a distributor to charge one price for a "copy" that can be used again and again, and a lower price for a "ticket" to see/use a work just once. This benefits those who just wish to see something once. DRM on DVDs is used to restrict sales to one continent, allowing more efficient management of the cinema-only version of a film.

Other systems might also attain the market segmentation goals. Any viable system allows return for investors, though some systems will provide better returns.

It is generally accepted by those of technical skill that no DRM system can protect a work from a skilled attacker, who can then place a non-DRM version into underground distribution networks. DRM primarily acts to prevent or inhibit copying by ordinary users.

Legal attacks on distribution technologies and users

Since much of the copyright crisis has been realized through internet technologies that make it very easy for users to republish and share materials in ways unauthorized under copyright law, large content distributors have mounted legal attacks on companies providing things like file sharing technology. There have also been attacks on new media players (like the first generation of VCRs, MP3 players and Personal Video Recorders such as the Replay TV.) There have also been lawsuits against ISPs and web hosting companies.

More rarely, there have been legal attacks on individual users who were infringing copyrights. More common have been threats against their providers and DMCA "takedown" orders on such providers. The DMCA offers the ability for a copyright holder to demand that an ISP remove or disable individual infringements or infringing users. If the ISP does so they are shielded from liability for the infringements done using their systems.

Many worry these legal attacks will go after technology rather than infringement, and chill legal software development and the legal use of these technologies.

Micropayments & Digital Money

Many have desired a means to pay copyright holders quickly and directly online with digital money. Generally the payments for things like songs, short stories, web pages and such are small enough to come under the "micropayment" umbrella. Micropayments are small payments that must be done with little overhead. Since credit card transactions involve fees of at least 25 cents in most cases, it's not possible to do quarter or even dollar transactions with credit cards.

People seek a way to easily and reliably pay small amounts when they download or play a song or other similar material. It may be compulsory or optional, but either way, the micropayment digital money infrastructure is required.

Many companies have tried to build online digital money and micropayment infrastructures, but so far none have attained any success. Online payment is still largely done via credit cards, or the credit-card-like Paypal system.

Generally the most hope has resided in aggregators which would collect many micropayments into a single bill presented at the end of the month and charged via an older system like the credit card or EFT.

Micropayments, should they become popular, still beg the question of whether people will pay if they can get material without paying.

Recently, a cryptocurrency called Dogecoin was created using similar technology to Bitcoin. It was created as a joke, but its non-serious nature make people adapt it to being a fun and simple tipping mechanism which requires no 3rd party, and this is actually getting some traction. The satirical aspects drew people in, and the tiny value of Dogecoin (10,000 of them are worth just a couple dollars) makes people happy to throw them around for online tipping.

Crowdfunding and pre-sale

Some artists are getting funding for their work by selling copies in advance, before they produce it. Through sites like Kickstarter, they can describe a planned project, and then sell copies or access to funders, as well as goodies for true fans. The buyers only pay if a target is reached, and then they are owed the finished work.

A number of projects are getting funding this way, with some impressive numbers. Many liken kickstarter to investment (and there have been new laws allowing it to be more like that) but initially it is just pre-sale, and assures the project will be viable before it goes ahead, though artists tend to pay some development expenses to show what the project will be.

As noted, a typical donation will get you a copy of the work, so it's a bit like everybody agreeing to buy in advance. Often other things are sold, such as signed originals, interaction with the artists, attending openings, or at high prices, being included as a character in the work.

This is an opposite result to an early experiment by Stephen King on "The Plant," where he asked fans to pay for him to keep going on a serial. The novel was never finished and there is debate if declining sales were the reason.

New laws allow crowdfunders to also be investors, which may attract more money for projects that can make money via the other methods described here.

Just trust the public

In the absence of technological protections like DRM, one could also sell media as they are sold today. One could view this as trusting the public to be honest and still buy things they can get for free through other channels, or as accepting a greater amount of "shrinkage" because more business could be lost due to those who don't pay.

In fact, ever since DVD DRM was broken and the P2P networks sprung up, there is no real working DRM system in place, and by and large most providers are following the same business models as before and seeing what happens, so this is the solution currently in use.

Let the public proudly show their honesty

Those who do pay for their content could be given a proof-of-payment (via digital signature) which they would declare in public, to show they are honest. Social pressure might encourage people to pay in spite of the availability of copies without payment. There are privacy concerns here, since it must not be possible to copy the tokens.

Digital Reminder Management

One could build a "DRM" system which did not protect content, but reminded users if they used it in a fashion for which they did not have permission. Works would come unencrypted, with embedded tags indicating what uses they are licenced for. For exmaple the tags could declare a specific time period of use, or play on machines of a given family or location or other specific machines. Players would notice unapproved play (often correctly, though sometimes erroneously) and remind the user of it, but at worst ask them if they wish to continue.

Users wishing to not be reminded would have access to untagged copies on the darknet (underground P2P networks) so if they wish to remain honest to limited licence agreements, they might keep the reminders. Should they be too annoying or give false alarms too often they might strip them even though trying to be honest.

The market will figure it out

While it seems facile, a number of people point out that in the past, when new technologies have appeared to threaten the existing business models of the creative economy, something new has usually appeared that solved the problem or created a new business model. It's not usually been possible to predict what it would be, and certainly those most deeply involved in the existing business methods have had difficulty foreseeing the future.

New solutions that have arised have often been matched by new legal frameworks which either encouraged the new model or were created in reaction to it. Sometimes these new legal frameworks met the desires of entrenched special interests. Sometimes they truly fostered innovation.

As such, some advocate that while they don't know what the solution will be, they have strong faith it will be discovered in a free marketplace of ideas and technology.

Tips, gifts and shareware

A number of proposals have come forward to arrange for voluntary compensation of creators by fans. These include "tip jars" which are now available in online form, such as the Amazon.com honor system.

Some proposals borrow from the shareware world, where software is made available for free, but those who decide they like it are asked to pay or even repeatedly annoyed into paying.

This model has worked for some shareware authors, and is a serious source of revenue for things like Public Television and Radio with their pledge drives. However, shareware approaches also include a much larger number of failures to generate significant revenue compared to the failure rate of commercial ventures.

Patronage

For much of history, almost all art and creative work has been paid for by wealthy patrons. The patrons supported artists either to promote their own tastes, or out of a sense of philanthropy. In more recent times, governments have become the major patron of the arts, and in many nations they are the largest funder of certain genres of creative work. (Thus making this solution similar to the concept of payment from general tax revenues.) Some suggest a return to this system or a modern version of it.

Non-copy related business models

Associated with the idea that copyright might be dead, many have proposed that creators and their distributors seek other forms of making money from their work that don't depend on charging for individual copies. In music, common proposals including depending on live performance revenues (concert tickets) as well as sales of merchandise and other premium items. Money can also be made from institutional copiers (commercials, music halls, radio stations, etc.) and those wishing to make derivative works or use the music in other media (ie. music that ends up in a movie.)

Indeed some of the other proposals above would be added to the list of non-copy based revenue. Others have suggested that premium copies can make money while ordinary copies are free. For example, Red Hat Linux, to take an example from software, is free to download but they make significant money from boxes in stores with pre-burned CDs, manuals and support.

Special high quality copies, signed copies and so on might be sold even if ordinary copies are free.

Revenue levels for these methods are uncertain and in need of development. They can work for some media but not for others, or with different efficacies in others.

Your ideas as a service

Perhaps the most lucrative means of monetizing creative output is turning your ideas into some service, which can then be performed by software, particularly over the internet -- what is called the cloud. While selling copies of software suffers the same issue as selling books or music, if it's provided through the cloud it easier to monetize.

In a sense, Facebook, Google, Instagram and Whatsapp are creative ideas implemented initially by a small, skilled group which netted billions of dollars for their creators.

When results can be personalized in a meaningful way, this also provides a powerful channel that can't be easily duplicated or taken without payment.

Advertising

Of course, by far the largest business model in media already is not copy based -- it's advertising. That's also under threat because it's a terrible deal for the viewer -- watch an hour of ads and get 4 hours of programming worth $1.20. People are showing growing intolerance for inserted ads, fast forwarding over them, though today they are far from dead.

Some media will allow non-removable advertising such as product placements and whole-show-sponsorship. New forms of advertising will be invented. Some media are less amenable to advertising support.

Microrefunds

I believe that the failure of micropayments, and of voluntary payments, can be placed on the resistance of users to making lots of small financial decisions as they go about their daily reading and listening lives. I feel a solution might exist in asking users to make just one decision to participate in rewarding creators, so that the default whenever they "consume" creative work is to pay for it, with no action or thought required.

To make them feel at ease, the system would allow microrefunds of any fee paid by default. This would effectively mean all content comes with a money back guarantee, and that users can scan their charges at the end of the month and void any that are too high or which were for poor quality material. In a voluntary system they could void them all, or simply not join the system. This proposal is detailed here.