A hard must-read for creators

I have been trying to read a paper published by the Creators' Rights Alliance in April of 2005 titled Repositioning Creators' Rights in the Digital World (HTML and PDF versions online). It is co-authored by Susan Crean (co-president of the Creators Rights Alliance) and Virginia Jones (Lawyer with Access Copyright). Ironically I debated Susan Crean as part of the Rabble Rumble back in October 2002, and Virginia Jones at the 2005 Council of Federal Libraries (CFL) Annual Fall Seminar.

I have made reference to this paper in the past in relation to its redefinition of the term "Copyleft" to mean something quite different than those who self-identify with that term.

I believe that this is a must-read paper as it exposes the state of the thinking in this community towards the wider spectrum of ideas from creators in the copyright debate. It is critical that we know what people are thinking if we are to somehow eventually come together as creators to lobby for laws that serve our collective interests, rather than the current situation where some creators are lobbying for laws which stifle the creativity of others.

I am finding it a very hard read. I am only on page 19 (of 53) after working at it for a few months. I'm finding that much of the discussion of alternative viewpoints will not be recognizable to those who actually have those viewpoints. I know that it is not intentional as I feel I know Susan and Virginia well enough, but it is only because I know these two people that I have not felt either insulted or personally attacked.

I am going to avoid extensively quoting from the article, but instead post a few thoughts. I expect I will have more to say as I manage to read further.

One of the hardest and most often repeated myth is that people either support the collection of monopoly rents (royalties) for every possible use of a work (every copy, every communication, every performance), or they oppose the idea of authors getting compensated for their work.

I am an example of a growing part of the creator community that supports alternative methods of production, distribution and remuneration (Note: I prefer the term "funding", but this is the language promoted by the Professional Writers Association of Canada). Monopoly rents (royalty collection) is simply one method of remuneration among many, and it is simply false to suggest that it is the only model.

The economics behind works of the mind

To understand how various alternative models works, and some of the benefits or preconditions of each, requires thinking about economics.

Every good or service has a cost to produce the first one and the incremental cost to produce each additional unit (the marginal cost). When producing tangibles an obvious business model is to amortize the cost of producing the first one (research, development, capital costs, etc) across the price of each of the units, making the price of the unit to be the amortization of the initial cost, plus the marginal cost, plus your profit.

There is also economic theory that suggests that in a competitive market that there will always be a pressure to bring the marginal price closer to the marginal cost.

Intangibles are different, although because of the state of technology in the past this was not always visible. In the past we always had a tangible container that had its own marginal cost, whether that be the paper and bindings of a book, a record, a tape, a CD or DVD. Audiences did not have access to technology that would make replicating the content in their own containers cost effective, and thus in most cases it was just as cheap (often cheaper) to simply buy the commercially produced container+content than to attempt to reproduce their own. This suggested that the pricing structure for tangibles made sense even when you were bundling both tangibles and intangibles.

As technology changes, so must business models. We now have an environment where it is possible to distribute a work to a customer without the need for any tangible container. We also have increased efficiency of distribution, with systems such as peer-to-peer externalizing the cost of distribution to audiences such that the producer doesn't need to pay. We live in a world where the average citizen has access to technology to reproduce and distribute content cheaper than commercial distribution mechanisms.
These changes in technology exposes the fact that pure intangibles such as works of the mind have a marginal cost of zero.

We still have that inevitable economic pressure to bring the marginal price closer to the marginal cost. For industries surrounding works of the mind this has has come both in the form of reduced unit pricing, but also with increased instances of copyright infringement and even faster increasing costs of attempting to police this infringement.

Many people who have understood this economic reality have realized that fighting a cold war against our own customers is the obvious outcome of the belief in a need to increase policing to stop the marginal price being illegally reduced to the marginal cost. Since it is not possible to "win" a war against out own customers, we embrace business models that intentionally equate the marginal price with the marginal cost when it is zero.

Some of us go further by believing there is a moral imperative to find alternative mechanisms of production, distribution and remuneration. The concept of increasing policing to the level where the very devices people have in their homes to access digital content are operating as part of a post-Orwellian surveillance and control system is simply not worth it. This is already the system that is being legalized by many interpretations of the 1996 WIPO treaties, and some extremists believe that these treaties didn't go far enough. I am one of those people who would rather see creators not get remunerated at all than to expose society to this level of attacks against our basic human rights.

Fortunately we do not live in a world that forces this type of choice on any of us. Just because we don't charge royalties does not mean we don't get paid. What we do is devise a multitude of business models which focus entirely on paying for the fixed costs of the first unit.

My business model for software can be called the 95% solution: 95% of what a customer needs of some software is already complete in existing FLOSS. I am then paid to finish the remaining 5% to give them their solution. I then take the useful part of that 5% and release it under an appropriate license to the community. I never charge a marginal price for my software, and thus never need to be involved in the high economic and social costs that come from trying to police a non-zero marginal price. Getting paid is a simple transaction with a customer where I don't deliver the distribute the program at all until I am paid, and thus there is no way for them to gain unauthorized access to my work through some other channel.

The wide variety of business models which fund Open Access publishing also focus on paying creators up-front for their creativity, rather than charging after-the-fact royalty fees. In many cases creators get paid more money, not less, when they get paid up front rather than the administratively and otherwise more expensive per-unit remuneration systems.

Little credible evidence of economic problems

I also see evidence that there is still a large market for container+content business models, where the marginal price is non-zero. While a growing number of people have access to the technology to make their own copies of works without authorization, very few do.

While the big-4 major labels, major movie studies and major "software manufacturing" industry associations continue to misinterpret statistics to claim that they are hemorrhaging money, further claiming that it is entirely due to copyright infringement, there is little credible evidence of this. Physical CD sales of independents and unsigned musicians seem to be up, along with the sale of other products and services of musicians that compete for our entertainment dollar. Many people are moving from "Software manufacturing" software to Free/Libre and Open Source Software, with applications like OpenOffice.org and FireFox replacing Microsoft Office and Internet Explorer even on the Microsoft Windows desktop.

While there are many signs that the incumbent transnational businesses associations , this is indicative of a functioning competitive economy and not indicative of a problem in industries that rely on monetizing works of the mind.

Real repositioning creators' rights

In order for there to be forward movement in the creators' rights community we must have forward movement from those who have made their money from the narrow business models that were successful in the past. The Creators' Rights Alliance "repositioning" contained misinterpretations which seemed disrespectful of alternative methods of production, distribution and funding. We need to move towards the respect articulated by the four core principles essential for the ongoing copyright reform articulated by the Professional Writers Association of Canada.

Maybe at some point the Creators' Rights Alliance and the Creators' Copyright Coalition will decide to adopt these four principles as their own.

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Further thoughts

I have now finished the article. While I may be wrong, I got the impression that this was written in two parts by the two authors as the voice seems to change at one point. While I don't want to offend either writer, I found the second part much easier to read as it seemed much more respective of the diversity of views within the creator community. It also recognized that this was not a debate between creators and "someone else", but between different ideas within the larger creator community.

Free/Libre and Open Source Software (FLOSS) consultant.