IP

File Sharing and Copyright

Felix Oberholzer-Gee and Koleman Strumpf (Harvard Business School) have a paper out in which they examine whether file sharing (and thus a weaker copyright) does negatively impact on incentives to create, release and market cultural works. Their answer is no (to the extent that data is available). Both for empirical reasons (considerably more music, books, and films have been released in 2007 and in 2000) and theoretical reasons (substitutes vs complements; artistic motivations vs financial motivations).

Warner Music Videos Heading Back to YouTube

NYT has a short note that a deal between Google/YouTube and Warner Brothers has been reached. Terms are not disclosed, but it ends the row that had forced Youtube to remove all WB contents from its site last December. According to Business Week:

"Google says the new deal allows Warner to sell ads against its own music videos, as well as user-generated videos that contain clips of its songs."

Yet another indication that the majors can force good deals for themselves, while all others, the indies, will see no money from Google. The media industry turns into a content oligopoly.

CC Study defining 'non-commerical'

Copyright law works with the distinction between 'public' and 'private' whereas CreativeCommons introduced the distinction 'commercial' and 'non-commercial'. But since the beginning of CC in 2001, it has been unclear what these terms mean. Now, CC published a study that tries to come up with a common definition of the term, based on user feed-back. This will be used when it comes to developing the new version of the license (v.4.0), a multi-year process to be started in 2010.

Study findings

Creative Commons noncommercial licenses include a definition of commercial use, which precludes use of rights granted for commercial purposes:

… in any manner that is primarily intended for or directed toward commercial advantage or private monetary compensation.

The majority of respondents (87% of creators, 85% of users) replied that the definition was “essentially the same as” (43% of creators, 42% of users) or “different from but still compatible with” (44% of creators, 43% of users) theirs. Only 7% of creators and 11% of users replied that the term was “different from and incompatible with” their definition; 6% or creators and 4% of users replied “don’t know/not sure.” 74% and 77% of creators and users respectively think others share their definition and only 13% of creators and 11% of users wanted to change their definition after completing the questionnaire.

Prices, competition and crowd sourcing

NYT has an interesting article on the multi-year competition to come up with better recommendation algorithm, where the winner won one million $. Two things are worth mentioning. Netflix CEO summed it up as this: "You look at the cumulative hours and you’re getting Ph.D.’s for a dollar an hour." Not only that, they are also motivated, because self-selected.

But, for companies taking part in the challenge may be worth it, even without winning.

Arnab Gupta, chief executive of Opera Solutions, a data analytics company based in New York [which came in second], took a small group of his leading researchers off other work for two years. “We’ve already had a $10 million payoff internally from what we’ve learned,” Mr. Gupta said.

Working on the contest helped the researchers come up with improved statistical analysis and predictive modeling techniques that his firm has used with clients in fields like marketing, retailing and finance, he said. “So for us, the $1 million prize was secondary, almost trivial.”

RIAA-funded copyright curriculum

Ars Technica has an article on how the cultural industries are pushing their "copyright curriculum"  into US schools. An much expanded update of that old classic "don't copy that floppy" and similar to Canadian attempt of 2006, Captain Copyright (soon abandoned). Bottom line: it's a disgrace to the very idea of education.

The Benefits of Weak Copyright

File-Sharing and Copyright, by Felix Oberholzer-Gee and Koleman Strumpf, Harvard Business School, Working Paper 09-132

From the Introduction:

The advent of file-sharing technology has allowed consumers to copy music, books, video games and other protected works on an unprecedented scale at minimal cost. In this essay, we ask whether the new technology has undermined the incentives of authors and entertainment companies to create, market and distribute new works. While the empirical evidence of the effect of file sharing on sales is mixed, many studies conclude that music piracy can perhaps explain as much as one fifth of the recent decline in industry sales. A displacement of sales alone, however, is not sufficient to conclude that authors have weaker incentives to create new works. File sharing also influences the markets for concerts, electronics and communications infrastructure. For example, the technology increased concert prices, enticing artists to tour more often and, ultimately, raising their overall income.

Data on the supply of new works are consistent with our argument that file sharing did not discourage authors and publishers.

-> Michael Geist's summary

youtube's failure to generate substantial income

The register has a story on an analyst's estimate (whatever that's worth these days) that youtube will be losing close to half a billion $ this year. They take this as an indication that the ad model is not working. After discussing two reasons why this might be the case -- either Google doesn't know how to do it (unlikely) or the model is fundamentally broken (more likely) -- they come up with an option for Google to make money out of youtube.

Of course, there's a third option for YouTube. Its parent company - whoever that may be - may want to cross-subsidize the operation in the hope that will drive traffic elsewhere on the site. Don't laugh - that's exactly what Google's new music service in China does. Google China pays rightsholders much more than 0.22p per song - about ten times as much, according to industry estimates. As Baidu has shown, music drives enormous traffic to the rest of the operation.

See also Ars Technica's article on the same subject.

Update (14.04.): On the other hand, artists are demanding that Youtube increases it's payment to them.

Update II (15.04). A detailed breakdown of revenue and costs. The most interesting figure is the amount given to independent creators through it's revenue sharing program.

Revenue share: If you provide videos to Google and join its revenue sharing program, then you get a commission if ads are shown alongside your content. Credit Suisse estimates that YouTube will "share" away $24 million this year -- $66,000 per day.

Ups and downs Economic and cultural effects of file sharing on music, film and games

On Februry 18, a report commissioned by the ministry of Economic Affairs, the Justice Department and the ministry of Education Culture and Science called "Ups and downs Economic and cultural effects of file sharing on music, film and games" was released. A few days ago, the official English translation was released as well.

The research shows that the economic implications of file sharing for welfare in the Netherlands are strongly positive in the short and long terms. File sharing provides consumers with access to a broad range of cultural products, which typically raises welfare. Conversely, the practice is believed to result in a decline in sales of CDs, DVDs and games.

Determining the impact of unlicensed downloading on the purchase of paid content is a tricky exercise. In the music industry, one track downloaded does not imply one less track sold. Many music sharers would not buy as many CDs at today’s prices if downloading were no longer possible, either because they cannot afford it or because they have other budgetary priorities: they lack purchasing power. At the same time, we see that many people download tracks to get to know new music (sampling) and eventually buy the CD if they like it. To the extent that file sharing does result in a decline in sales (substitution), it usually entails a transfer of welfare from producers to consumers. With estimated welfare gains accruing to consumers totalling around €200 million a year in the Netherlands, music producers and publishers suffer turnover losses of at most €100 million a year. These calculations are necessarily based on several assumptions and contain uncertainties as many of the underlying data are not precisely known. Whereas comparable figures cannot be provided for the film and games industries, they follow a similar logic.

Why Copyright? Canadian Voices on Copyright Law

In June 2008, the Canadian government introduced Bill C-61, new copyright legislation that closely followed the U.S. Digital Millennium Copyright Act. The public response to the bill was both immediate and angry - tens of thousands of Canadians wrote to the Minister and their local Members of Parliament, leading to town hall meetings, negative press coverage, and the growing realization that copyright was fast becoming a mainstream political and policy issue. This film, produced by Michael Geist and Daniel Albahary, asks Canadians from across the country and from a wide range of sectors the question - "why copyright?"

Clay Shirky responds to my review

A few weeks ago, I published a review of Clay Shirky's new book "Here comes Everybody" on Metamute.

In the mean time, Simon Collister was able to ask Shirky about my review, where I criticized him for talking only about non-controversial issues and omitting major questions such as copyright and business models / profiling / privacy.

In his response, Shirky focused only on the question of copyright, claiming, strangely, that while he had written a lot about in the past it is was not a real issue in the big picture. Here is what he had to say:

local copy (12MB)

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