It waddles and quacks, but is the Internet still a duck?
The Guardian published on March 28th 2013 an article by Cory Doctorow with the headline ‘Copyright wars are damaging the health of the internet’. His argument is simple and persuasive – that the Internet has become too important to our civil, cultural, and personal lives and well-being, and our ability to protect our freedom, to be compromised in the attempt to prevent copyright infringement.
But many people, mostly without knowing it, have already deserted the Internet. Their traffic is now carried over private networks owned by large content and service providers. The Internet is by definition a network of networks, and your packets used to find their own way often across many other networks. The Internet still exists, but compared with these high capacity and well connected private networks, internet traffic is decidedly second class.
If this seems surprising, consider a few of the more popular internet activities. Watching a cat video on YouTube, for instance. Google has been keeping up with YouTube’s huge traffic requirements by connecting to all the large consumer ISPs directly. GMail the link to a friend, G+ it, and you use the same private connection. Tweet it and even for such tiny data demand as tweets, quality of service issues could well have driven your message via Twitter’s private connections. Your DropBox is hosted by Amazon – yes really, the online shopping site -, another private network currently spinning its own web. If it is big or successful, the chances are it is getting off the Internet as fast as it can.
This does not mean the Internet is not healthy. Far from it. The open Internet is enabling extraordinary innovation all over the place. Having the giants on their own expressway ensures that the smaller players don’t get flattened on the common roads.
It does mean, however, that for ordinary users, including bloggers and tweeters of all persuasions, the health of the Internet is irrelevant. Regulators are now dealing with the behaviour of a relatively small number of very big companies, not with anything that can really be considered a ‘common’, or public space.
A much deeper understanding of today’s reality and direction of travel is needed if those regulators are to protect open innovation and communication for us. The fact that internet protocols make seamless the connections between networks that allow public ‘rights of way’ – the old public Internet – and the new private networks, should not confuse us. It might still waddle and quack, but the Internet is no longer the duck it once was.
YouTube’s generous approach to on-demand video streaming, while historically the cause of some friction with copyright owners, is also this year a great blessing to anyone interested in the regulation of copyright business. For it has provided a platform to view and review a length discussion between some of the key figures about Europe’s policy on collective copyright management.
Watch here a Midem panel dominated by Maria Martin-Prat:
Simultaneously, large owners of rights in songs have been withdrawing from collective management. Just before Midem news broke that Sony/ATV had struck a private deal with Pandora. The man with the big cigar was reported to have said that it was ‘hopefully the first of many’. And not to be outdone, there are some signs that even where there are compulsory licences available, labels and services are finding a private path more advantageous. For instance, MRI is assisting satellite broadcaster Sirius XM to deal direct at rates lower than SoundExchange offers. The 50% SoundExchange deducts at source for performer payments might have something to do with this, as labels rarely pay out half of public performance, especially where there are unrecouped advances.
The costs of finding rights owners, and the costs of doing the deals, are rightly considered great impediments to the development of exciting and popular digital music services. The number of successfully licensed services might suggest that other problems are equally critical; licensing efficiency does however deserve the attention it is getting from regulators and law makers in the main copyright territories.
Is the emphasis on better regulated collectivisation the right way to consider the problem however? It seems that even the very well informed and cautious European bureaucrats risk taking an idealistic view of the collective, as well as an over-optimistic one of how much regulation can achieve to create better governance and behaviour. ’Rocked by scandals’ is a very emotive phrase, but has been widely used in the last few years about the world of collective rights management as artists in particular find their voices. Even the Pirate Party’s MEP points out how unambitious the current EU reform proposal is by modern standards of business and administration.
Generalising from some of the changes that are affecting the market during the digital transition suggests that other approaches might be equally valid, and might even be easier to achieve. For instance, once the larger copyright owners develop the capabilities in house that they previously outsourced to collecting societies, simple organisational inertia will maintain them even in preference to a cheaper option. Add to that the ever growing catalogue that has never made it into a collecting society, as digital production and distribution technology breaks down barriers to market. In some markets collecting societies actually know about only the top 25% of the extant catalogue, and are reluctant to bear the costs of dealing with the rest.
Classes of rights are being brought together, particularly by new entrants, in ways that collective administration certainly has not anticipated, and seems still quite radically opposed to. Cooperation between performer and performance rights societies seems still reluctant and rudimentary at best, despite the need for each of their customers to obtain complementary licences. This is pushing rights owners who would ordinarily be collectively minded to find other more transparent and faster routes into the previously blanketed world.
These realities are behind the tendency for Karaoke machines, Juke boxes, and piped music to come as a bundle of service and rights. The internet scales this up to a huge degree, to the point where it is now imaginable for a specialist music service to carry only what it can license ‘all rights’ directly. It might not be the most comprehensive or exciting service in the world, but it will certainly have a value.
And, at the other end of the scale, a phenomenon that is very visible in territories with one dominant record label, a select catalogue provided into a heavily branded service. Without wishing to promote one particular supplier, here’s Universal Music’s ‘one stop shop’:
http://u-bee.biz
with its own surprisingly corporate promotional video:
Short of forced collectivisation there’s not much regulators can do to deter rights owners from putting together bundles to suit different customers in different markets. Maybe they should embrace it instead? Just as patent pools enable rights owners to bring complementary technology together to enable markets that would not otherwise exist, perhaps copyright pools could do the same for music. So instead of the owners of each class of rights sitting in their separatist stockades waiting to be regulated, pooling and bundling could create the efficiency that regulators want, with transparency provided through terms of engagement open to all participants.
To me at least this seems much more progressive, and business friendly. How to get there? Well, a command driven economy is as fragile thing as an unregulated one, as we have discovered over the last few decades.
As the increasingly frantic public domain regurgitation business trawls through 1942 deaths of authors and composers (sadly we shall have to wait another 4 years for a copyright free revival of Chu Chin Chow unless someone wants to set the lyrics to new tunes), it seemed the right time of year to offer a different approach to the question of an optimal length for copyright.
If you buy the arguments of either extenders or shrinkers, copyright term has the ability to change things for better or worse, for creators and for the public, and for investors as well. Of the shrinkers, the favourite argument was advanced with some almost robust reasoning by Rufus Pollock. Here’s the formula:
a single simple equation which defines optimal copyright term as a function of exogenous variables potentially estimable from available data: the discount rate, the rate of ‘cultural decay’, the supply function for creative work and the associated welfare (and deadweight-loss) associated with new works.
Without going into a lengthy discussion, what Pollock leaves out is as important as what he includes. His answer seems to me to be more an artefact of our current complex of interrelated interests and terms than a ‘start from elsewhere’ route to optitopia.
Lengtheners either cite a fundamentalist belief in property – in which case any diminuendo from infinity is a blow against natural justice – or appeal to ‘fairness’, sometimes on behalf of people they neither represent nor intend to benefit. Lobbyists managed to halt the slide into the public domain for sound recordings in Europe at 1963 – that’s Love Me Do for us ordinary folk who had to make do with another remastered special edition. Citibank must have breathed a sigh of relief.
It would seem absurd to cite a crisis of supply, when the available catalogue is rapidly climbing through the 20s of millions; or indeed a crisis of quality as the production cost of music is often now dwarfed by the marketing cost, and there are many efficiencies yet to be realised in the processes that bring new music to market. So for those reasons there is little to justify any change at all. If incumbent catalogue owners are behaving badly with exclusive rights perhaps some incentives need a shuffle, but that is no reason to weaken the position of the creators. They are as much at a disadvantage as the rest of us if the global music groups decide to hold businesses and consumers to ransom over how we may buy and listen to music.
No. In the age of nutraceuticals, the only justification for fiddling with term of copyright has to be a humanitarian one. Here’s a suggestion.
Artists and other creators famously die young and often lead troubled and wretched lives. It is often a young person’s career, involving the stress of fame and overwork, and the prospect of abandonment by the industry when the hits dry up. Here’s a heart wrenching story from 2000 about Steve Strange, style icon and Visage singer. Thankfully he seems to be a music industry survivor.
So, what about linking copyright term to the national average life expectancy (NALE) and bundling it with a compulsory life insurance scheme to deal with the genuinely unexpected? In the UK, an average 20 year old would need a 60 year term to see them out. So lets make it life for the creators and artists, and bribe record companies and other exclusive assignees with an additional two years for each year that the artist lasts above NALE minus 10.
In case you think I have really lost the plot, here’s a bit of research that shows how much ground needs to be made up.
South Korea has given us a fantastic global hit recently, but spare a thought for the already mature pop star Park Jae-sang, 35 years old, who according to Professor Kim Jong-In (in Korean here) is likely to live only 65 years. That’s right, entertainers have about a 15 year handicap over other professions. Even politicians live for 79 years in South Korea. How unfair is that?
So an entertainer or artist who failed to live the requisite length would be doing their label out of valuable years of protection, at no benefit to themselves, as well as depriving the beneficiaries of their life insurance of whatever the extra premiums might buy. Would this not give creators the right kind of incentive to lead long, healthy and productive lives, and assignees the motivation to help them? And Government too would have a much easier route to helping the ‘creative industries’, via policies that benefit all of us.
Lobbyists sometimes try to simplify issues, for policy makers and for grassroots and other supporters, and one of the most potent ideas surrounding Internet policy is that what you don’t like will ‘break the Internet’.
Here’s John Naughton neatly encapsulating this approach for the UK’s Guardian newspaper in a comment on SOPA/PIPA early in 2012:
…the most worrying aspect of these bills is that they would distort the architecture of the internet in ways that would cripple its capacity for enabling innovation
The attraction of this is easy to understand. For any highly technical question with complete uncertainty about the outcome of any policy decision, all the attention-deprived Government official or politician has to do is ask, ‘will it break the Internet?’ If there is sufficient noise in the ‘ayes’, risk that they may be right will ensure inaction.
While this is going on in public, privately companies are breaking the internet in all sorts of useful and interesting ways. For a small business I am a large buyer of datacentre services and connectivity, operating a highly connected music platform hosted at Interxion in London. For many reasons we own and manage our hardware – but I can now, should I so wish, buy private connectivity within the datacentre to Amazon’s Web Services. Here’s what they say about it:
Using AWS Direct Connect, you can establish private connectivity between AWS and your datacenter, office, or colocation environment, which in many cases can reduce your network costs, increase bandwidth throughput, and provide a more consistent network experience than Internet-based connections.
A quick survey shows that Amazon has been rolling out private connectivity via high quality datacentres around the world. You can bet also that the peering points which connect consumer access providers to the Internet also benefit from these direct connections, alongside connections to Google, to Akamai, Limelight, and other providers of media and application delivery services.
The chances are increasingly slim these days, if you stick to fairly popular sites and services, that your bits will ever touch the Internet. In fact the real Internet is already significantly more expensive, more congested, less reliable and less consistent than all these private platforms.
Why is this important? Well, perhaps monopolies built on private networks should be regulated as private businesses, rather than as users of a miraculously unlimited and unfettered Internet commons. So when Google in Germany launches a campaign saying ‘Defend Your Network’ (Verteidige Dein Netz), it is important to understand that Google no longer uses our public Netz, it has its own, private Netz.
Google’s property rights in its network should of course be respected, and robustly defended, in all the territories it operates in. Help them if you wish, but not in the name of the extraordinary communal efforts that enabled them to achieve their scale, and which they have now left behind.
We have been conditioned to think that developing nations are somehow privileged to have the opportunity to skip whole generations of technologies, moving straight to what we in developed economies are embracing because of its promise for the future.
Here’s the Economist, writing in 2008:
The mobile phone is also a wonderful example of a “leapfrog” technology: it has enabled developing countries to skip the fixed-line technology of the 20th century and move straight to the mobile technology of the 21st. Surely other technologies can do the same?
The full article is here, and despite the common sense conclusion, that sometimes new technologies are dependent on a whole set of building blocks that might not be present, it reflects a prejudice against the past that only the rich can afford.
Another example, from an arbitrary blog:
The internet is growing in India, and most of it is on the mobile phone. Many, perhaps most of the world, will access the internet only on their phones. They are skipping the PC and not even blinking or thinking twice.
So how important is the mobile OS market? It will rule the digital world sooner than you think. (the rest here)
On a visit to Vietnam in 2008 I too was struck by the way that the mobile phone had become the ubiquitous and essential tool for business, and for all the normal traffic of life. But there was something else too. Computer shops came in two types, one familiar from poorer shopping streets in developed countries, with components and a few low end desktops and laptops, second hand and repairs. The other type presented top end tower systems in perspex cases, objects of aspiration and desire.
Market research site iSuppli sees this same pattern in China, with the PC being the aspirational home media centre for emerging middle class households.
…the PC appears to be winning as the main source of evening entertainment in China’s households—for playing games, reading, watching videos, listening to music, communicating and emailing, as well as shopping.
The fact that we are excited about our smartphones and tablets, and are devoting less attention to our two year old home PCs, should not lead us to assume that a broadband connection and a PC would not therefore seem like the apogee of well equipped home life in countries where it has so far been unattainable for the vast majority of families.
So perhaps when you have had a fully connected and well equipped home for ten years the next frontier might be mobility. Ordinary families in developing economies might prefer to catch up with the rich, rather than go without the benefits of the last decade of connected home computing.
For music this means preserving what we have learned about music on the PC, about downloads and home media servers, and about a more social and versatile approach to delivering music. It might well mean multiple modes of acquisition, including peer-to-peer, for much longer than seems likely in developed countries. Synching with cheap and portable MP3 players would be much more important than music through the cloud to smartphones and tablets.
In fact, while the CD remains a mass market music product, we see in some developing markets all the conditions that fed the growth of Napster, but on a far larger scale. The disutility of a music subscription service, tethered inconveniently and expensively to an account and a limited number of devices, seems to be less exciting a vision of the future than the idea of ‘leapfrogging’ suggests. I suspect, given a choice, many of us would happily leapfrog right back to 1999. Maybe in China, Latin America, Malaysia, Vietnam, and many other countries there will be more of an incentive to embrace and develop with the market rather than fight it this time around.
When I formed the idea for a new business bundling broadband with music, in 2003, my thinking was guided by two simple principles. The first was that customers already saw music and broadband as a natural bundle. And the second was that making ISP networks able to manage and account for music services was a difficult but achievable stretch, and once completed would be a much stronger partnership and more effective competitor for unlicensed music than would over-the-top services.
November 2012 saw Google tightly integrating its storage locker service to its email product, so that up to 10GB of files can be quickly and simply shared with friends, family, and colleagues, as email attachments. One simple and obvious use would be an email revival of the tape trees that <irony> nearly saw off the recorded music business in the 1980s </irony>. So what the right hand giveth with the very innovative and exciting new music service in Google Play, the left hand might not exactly take away, but it certainly helps music fans level the music distribution playing field a bit.
The commentary on Google’s move is about competition between services, how Dropbox and Box might struggle against such convenient integration, and how email is a natural sharing medium. It illustrates how fierce that competition is, and how much churn there is as one service displaces another. This is also true in music, both licensed and unlicensed.
But let’s imagine for a while that we can move the business end of music copyright out of the services market and onto the networks. For an ISP, music is currently just data. Charging for it as music, and using the ability to build library management and playlists, and offer a coherent delivery path to consumer electronics, all this would add up to a considerable win. For services of course, authorised music is just a more expensive form of unauthorised music. Licences buy the right to innovate around the identity of the consumer and a knowledge of what they listen to, but the benefit seems not to be there for many businesses, or at least not significant enough to go through the licensing pain and cost.
My 2003 startup – Playlouder MSP – now operates a white label service enabling networks to offer music tightly integrated into their customer management and billing systems. Record companies have not yet been bold enough to offer true network licences, preferring the comfort of a managed service environment. Meantime competition rages over the attention and data that network users create, without really discovering the services they might actually directly pay for. ISPs and other network owners are music’s ideal partner in the quest to turn data back into music, while services push back by selling music by the GigaByte.
Tin Cheuk Leung at the Chinese University of Hong Kong published in 2009 a paper entitled, ‘Should the Music Industry Sue Its Own Customers? Impacts of Music Piracy and Policy Suggestions.’ The updated version is available here.
Parts of Leung’s paper need special training to understand (which I do not have) but some of it is easy to grasp. Lots of music makes an iPod more valuable to its owner. People want much more music than they can buy. Demand moves between channels as the cost per track changes, but being a simple pirate is quite rare – most of us buy, beg, and borrow in differing proportions.
I am pulling out just one of many interesting sets of numbers where Professor Leung tries to model worlds with either no piracy, or free music. Killing piracy he suggests would reduce overall consumption of tracks by 68%, where making music essentially free would increase consumption by 527%.
More music translates into more iPod owners, and demonstrates how the cost of a transitioning market falls on content creators, through leakage as well as through the need to get the new means of consumption into as many hands as possible.
Knowledge of the shape of the music industry however highlights another aspect to the complex picture of music demand. Diversity and opportunity in music would seem to come from a middle class market, with hardware manufacturers benefitting from the explosion in consumption free music would bring, and the biggest music companies benefitting from total anti-piracy.
Somewhere between what we have now and making music free there is a sweet spot which can deliver more good music to more people, while at the same time sustaining the skills and infrastructure which will create opportunities for the musicians coming into the market in the future. We owe it to music makers and music lovers to try to work towards that destination.
