Our laws shouldn’t preserve business models
by Tom Merritt
I have often argued that attempts by the media industry to deal with digital media, especially on the Internet are examples of people who used to game the system and now can’t so they resort to the law to make it illegal for them not to game the system.
That’s one of those glib statements that is easily disputed by folks saying “what the hell does that even mean?” I figured I’d take some time to explain. And in the process I’ve laid out my thinking on intellectual property and my position in the debate about copyright.
I’ll start by using politics as an example of gaming the system, show how that applies to media, talk about how things would be if we always had infinitely copyable files, and then point in the direction of where we should go next.
Gaming the system, what the heck does that mean? – an example from politics
Here’s what I mean when I say gaming the system. Democracy offers us an excellent example. Let’s say the principle of a given representative democracy is to vote for the best person to represent your local interests in a large assembly of representatives from different locales. Then in that assembly the representatives decide to pick the best person to be the overall leader of the assembly, and thereby, the government. It’s a beautiful idea. If all goes as planned, the best people bring their perspectives and choose the best leader.
Until people begin to game the system. It starts when someone decides they desperately want to be the representative. They can’t bear the thought of someone else being chosen as the best person to represent their local area. They must win! This impulse to win is admirable and part of what moves the species forward. But it has side effects.
Instead of allowing everyone to go unpersuaded to the polls and pick the person they think would make the best representative, our power-hungry hopeful representative tries to convince everyone to vote for her or him. They campaign. But campaigning is tricky. It takes money, time and effort to sway people, especially once other people who also want to be representatives start doing it too. So it makes sense to band together with like-minded folks, and representative wannabes from other locales, to form an organization that helps raise money, devotes time and puts in effort to campaign. Eventually through competition, only a few, or maybe two, parties can collect enough support to keep going.
Now the parties have control of who runs for election. They have gamed the system. What started as a pure idea of selecting the best person from the community, has become a competition between two or three organized elites, that need to consider popular opinion, but can foist their own selected people into the race for the job of representative.
We could easily get distracted into a discussion of what this means for government and democracy, but I’m stopping here. This is a natural outgrowth of human society in a democracy. Within a standard deviation, this is what happens in most democracies that avoid becoming one-party dictatorships. It’s natural. It’s taking an ideal system and working it to your advantage.
So how does this apply to media?
Up until the last decade the media had gamed the system in many ways. Let’s use music as an example, though similar arguments can be made for movies, newspapers and other forms of media. Our ideals in music is that a musician makes great music, and we support that artist as best we can. In the 20th century that had progressed from passing the hat at the pub, to paying for records and concert tickets. In all cases though, ideally the best artists made the most money.
In reality record companies figured out a similar manipulation as political parties. If somebody wanted to make their band more successful than another band, they could join a record label and use the time, money, and effort available to persuade people to pay attention to their band. A better band might exist, but if it wasn’t on a record label, it might never get heard. And even if it was heard, marketing might persuade the less particular members of the audience that the label’s band must be better, because it seemed so popular. When the main conduit for hearing bands was the radio, a tight system came into place.
Radio had a limited number of songs it could play. In fact it found the more it limited its playlists the more popular it became, all complaints about repetition aside. Record companies provided free records to radio stations in exchange for exposure. Among the limited number of songs they played, some became popular and the radio played them more and thus they gained more exposure. To support the artists you heard, your easiest choice was to go to a record shop and purchase an object which had their songs recorded on it. In rarer instances, the artists might come to your town and play a concert to which you could buy a ticket. Your only other choices were to go see bands who were not on labels at smaller venues like bars. That never threatened the major system. It didn’t have the quality control or the reach. And those bands had limited distribution, if any, for recorded objects. The easiest thing to do was go to the shop and buy records you heard on the radio.
Then came the Internet. Buying records you heard on the radio at the shop was easier than scouring bars for bands you liked and buying their albums directly from them, But downloading music from the Internet was much easier than leaving the house and going to the shop. Now bands could market their music directly to consumers, social networks could allow you to share discoveries with thousands of like-minded people, niche websites and Internet radio stations could help you discover music you never would hear otherwise and radio no longer had a lock on how people discovered new music. Fans could show their appreciation for a band by starting a fan site, visiting the band’s website, buying t-shirts or even signing online petitions for the band to come to their town. This didn’t break the recording industry system, but it eroded it.
And so we saw two major initiatives to attack this threat, both attempts to formalize the previously-gamed system into law.
One was done against Internet radio. If people had millions of ways to discover music, then labels lost some control over which bands became popular. An effort was made to make Internet radio stations pay a punitively high license to play music. Radio had never had to pay this fee, because the service they provided to music was so valuable. But Internet radio was a threat not a service. In the waning days of this battle, the industry has turned to assaulting radio, figuring if they can’t reduce the number of venues for discovery on the Internet, then the service provided by radio is no longer as valuable, and radio better start paying.
This approach has failed because the ways of discovering music on an infintely-copyable medium are not limited to streaming radio stations. Straightforward Internet radio proliferation has certainly been hindered but only to see innovation in streaming services that license music for sale like Spotify, Rdio, Pandora and the like. Facebook, MySpace and Twitter also serve as discovery mechanisms as do artists themselves with fan pages. The assault on Internet radio has succeeded only in making Internet radio worse by driving people away from trying it. It has done nothing to preserve or promote the recording industry.
The second assault is the assault on piracy. When the only way to get music was to buy it in a shop on vinyl, the recording industry was in heaven. Here was a gold mine. Up until that point all you could do was buy sheet music and play it yourself or wait for a concert. Now you could have the artists in your home. And through the limitations of technology and the fact of physical objects you had no choice but to pay for the privilege.
Then recordable tape, particularly cassettes, arrived and a threat was perceived. Consumers could make their own recordings. They could record music off radio, or at concerts, or even reproduce the physical objects they purchased from the stores and then hand them out for free as “mix tapes”. The recording industry’s reaction was to fight this hard. They fought it in the courts, lobbied for laws against duplicating tapes, and laws against selling the electronics (like dual cassette players) that allowed it. In the end they lost and gave up the fight as they realized the damage was minimal, and they could adapt in other ways. Cassettes had sound limitations, so CDs were pushed as a much better way to hear music. Sure you could duplicate cassettes, but it was low quality. CDs were the real thing and unparalleled.
Then digital music came along and made it possible to not only duplicate CDs but actually digitize all kinds of music and share perfect copies. The recording industry went back to the exact same strategy they tried against cassettes (and videotape).
They wanted to preserve the way they gamed the system. When you couldn’t get an artist’s music any other way, you paid for copies. But now you didn’t have to. You could get perfect copies of music and once a file is made the cost of duplication and distribution is almost nothing. There is no system to game. So the industry moved to change the laws, or interpret old laws to apply to preserve the system they learned to game so well.
What if the Internet always existed
What if there had never been a music industry and we had always had infinitely copyable music files and cheap distribution of recordings. Would there be no music? The industry implies this as the subtext of their arguments, but it’s false. Before recorded music, there was plenty of music of high quality and low. We don’t lose musicians by having the Internet.
That doesn’t mean musicians all have to be poor and play music for free. How could musicians game the system then? Obviously in a system where media is infinitely copyable, you don’t game it by trying to sell files. Let’s go back to the start.
The idea is we have musicians who play music and we want ways to support them and reward them for what they do. In the ideal, individual artists put their music online and we give the best artists our money, possibly for tickets to concerts, for merchandise and maybe even as donations.
But if they organize they can increase the time, money, and effort put behind getting attention to their music and receiving money for it. They can better plan and promote events and appearances, and sell unique items and collectibles and better argue why you should donate to their causes. There is a role for an organization like a music label. They just need to provide different services to the artists than they used to.
So what do we do now?
All of this applies to movies, publishing and journalism in various ways. One major question then, is will this industry be as big as it used to be? The answer is, it doesn’t matter. We shouldn’t base our laws on whether we can preserve an industry’s profitability level. If that were the case, we should have outlawed automobiles for the damage they did to the buggy industry.
The problem is the industry is waging a massive campaign to keep you from discussing that point. They want to distract you with arguments about thievery and artists getting paid. There can’t be real thievery when the original item is left, and there are plenty of other ways for artists to get paid. Maybe not as much in aggregate, but paid nonetheless. The industry organizations seriously argue that we may not have newspapers, books, movies, or music, if they don’t get their way. They are patently wrong. THEY won’t make the levels of money off those things, true, but that’s a much different argument than saying they will disappear entirely.
More reasonable arguments assert that quality will drop if the industry doesn’t make its previous levels of money to support good projects. This is most frequently applied to journalism. But where has this quality been? Is it common to hear people rhapsodizing about how amazing the movies from Hollywood are? Have we lived in a paradise where everyone not only reads the daily newspaper but raves about how amazing the journalism is? The fact is that there is good media and bad in the current system and it doesn’t seem that the good is so incredibly common. It’s not apparent that the good to bad ratio would even change if the system was overhauled. It might even get better. There will always be a market for high quality art and journalism, just as there will always be a market for overwrought fluff and vapidity. We just need to change how we monetize it.
And I don’t think the industry executives are villains for wanting to maintain profitable businesses. It’s perfectly natural to not want to change a business model that has worked for so long. What if you change it the wrong way and go broke? That’s frightening. But that doesn’t mean the rest of us have to put up with ISPs spying on us, restrictive bandwidth caps being put in place, and draconian copying legislation being shoved down our throats, just so media executives can sleep better at night.
So what should we do? What we do now is hold off enacting more laws to preserve old ways. We stop thinking of digital media as physical objects. We stop fretting that we will lose our culture if we don’t do something drastic, and we realize all that will be lost is a very small number of people’s money. We repeal laws like the DMCA that work only to stifle innovation and keep us in this quandary longer than we need to be. We re-evaluate intellectual property law with an eye towards re-focusing it on the purpose of encouraging the arts and promoting innovation, rather than keeping revenue streams going for certain companies.
We face the fact that nobody is making sure your kids still get paid for the work you did 40 years ago, so why should that be true for others? And we spend our time and energy on figuring out new ways to support artists, journalists, writers, and musicians, based on the realities of a world where the majority of works of art are no longer unique objects that can be sold because of scarcity. Artificial scarcity is not the answer. And that’s good. Because it forces us to once again put a truer value on what is being created and possibly limit the effects of people trying to game the system. And that, in my humble opinion, is a good thing.
Our laws shouldn’t preserve business models by Tom Merritt is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Based on a work at www.subbrilliant.com.
Sometime before Christmas, I got a package in the mail from 
