Separating Science from Science Fiction on the Business News Network

Last week I had the opportunity to discuss the new copyright bill on the BNN show Squeezeplay. The other guest was Canadian singer-songwriter Dan Hill, and the hosts were Andrea Mandel-Campbell and Rudyard Griffiths.

It became obvious during the interview that the hosts had the misconception that they had a creator and a consumer, or even a creator and someone who wanted to infringe copyright. At one point Mr. Griffiths even asked me if I were supportive of the rule of law, which threw me for a loop as I hadn't expected that type of bias. What they actually had was two creators with a different level of technical knowledge, and thus a different understanding of the impact on creators of the policy we were being presented in the bill.

You do not need to take any computer science courses to be a politician, lawyer, musician or reporter. I do not say this to be insulting to people who I respect for their own skills, I am simply making an observation. This different set of skills is the largest contributor to this debate, given that people without important technical skills are unable to differentiate between helpful and harmful technical measures, or even whether what they are referencing only exists in science fiction.

I've learned over the years to try to stay on-message. I am a technical person with nearly 3 decades of computer knowledge, so I try to stick to the technological aspects of these bills. There are of course many other things I would like to say, and would love to have said if there had been more time. I thought it would be interesting to post some of those other ideas. I will paraphrase what some other people said, and follow it up with some additional comments.

Dan Hill: It is not really about me, per say. The people devastated by downloading is the record companies.

When I speak to independent musicians, they tell me that the days of the major label record companies are numbered. It is not because of copyright infringement, but because changes in technology have radically changed the relative importance of the record companies compared to composers and performers.

In the past the capital costs of purchasing the equipment necessary to record and distribute music was quite high. The labels formed and were seen as a type of specialised banking industry for musicians to be able to record and distribute their music.

We now live in a world where the equipment costs are quite small, and a small band starting out can even produce a CD with equipment that is not much more expensive than what some people consider a home computer. This means that musicians are now in control of the music industry. Many are leaving or never signing with traditional recording labels, and retaining copyright on their own work. They are then hiring people to do the promotion and other services that they do not have the skills or interest to pursue. This means that the music industry is being flipped on its head, and rather than the labels dominating and effectively controlling the industry, the labels have become "the hired help".

The reality is that even if there wasn't a single song infringed that the record companies would be seeing a similar decline. While their decline was caused by changes in technology, it was not caused by copyright infringement or anything which we should want to discourage rather than encourage. We need to avoid policy makers getting distracted by this, and have them recognise that the music industry as a whole is quite healthy and many would say more healthy than it was in the days that the record companies want to return us to.

Technology giveth, and technology taketh away. There was a time when the music industry comprised only the composers, performers were considered trained monkeys not worthy of their own rights, and people making recordings (or player piano rolls) were considered "pirates". This infringing activity was legalised, and the record companies had a good run of it, but their time of dominating the music industry is coming to a close. No matter what scenario wins out in the policy battles before us, nothing that will be done in technology or the law will change this inevitability. There is no DeLorean that will bring us back to the 1980's.

As well as fighting for my own interests as an independent software author, I'm fighting to ensure that both composers and performers come out of this transition in a better economic position than they have ever been in the past. In this I am working along side the Canadian Music Creators Coalition. It is very unfortunate that not all singer-songwriters recognise their allies.

Dan Hill: Stealing is stealing

Copyright infringement is nothing like stealing. (See: Jefferson Debate)

The closest analogy between tangible property law and copyright infringement is trespass. Like trespass it is easy to understand why the owner might be upset or even morally outraged, but this outrage is not itself evidence of economic harm.

We need to get past this notion that every copyright infringement is a lost sale. Study after study has indicated that those who infringe copyright are also the best customers of those same people they infringe from. Infringement is often a gateway to someone becoming a fan, and then later being the best customers.

Copyrighted works (excluding the tangible medium it might be stored on) has a zero marginal cost to the copyright holder. This means that while it took them time and other resources to record that album, it doesn't cost them any more for whether 1 or a million digital copies are made. This means that unlike that cab driver who had to pay gas and spend time for each individual destination a rider might direct them, a copyright holder does not have that per-audience member expense. Unlike cab drivers, a copyright holder should spend their time trying to translate any 'free riders' into paying customers. Since there is no cost to the copyright holder, other than possibly hurt feelings, it should be obvious that they should be using carrots and not sticks to encourage that translation.

The more copyright holders understand the zero marginal cost nature of their businesses, the more money they will make. I have also come to recognise that the reverse is true: that the more they treat their copyrighted works as if it were a tangible product, and treat their best customers as if they were thieves, the less money they will make.

There is a time to be morally outraged, and there is a time to be an entrepreneur working towards actually making a living.

Rudyard Griffiths: I assume you are in favour of the rule of law and contracts

I had to count to ten after this one for sure. I don't think the first words that came to mind would have been helpful. I really wanted to say that I would put money down that I infringe copyright less than either of the hosts or the other guest. The difference would be that I have spent the time to learn what the existing and proposed law considers infringement.

The host seemed to believe that I was an anti-copyright guest who wanted to listen to Dan Hill's music without paying for it. I didn't know who Dan Hill was, and didn't have any of his music in my library. I looked on eMusic, and despite all his support for the digital locks he appears to have no understanding of, there is quite a bit of his music available that is platform agnostic (IE: free of any digital locks).

I wasn't told who the other guest was, so couldn't have looked Dan up and asked him about this. Dan, apparently through no informed business decision of his own, has allowed me to purchase his music. This is very different than those people who are signed with major labels who refuse to make their music available through eMusic or similar platform neutral e-commerce sites. In far too many cases when they do make the content available, they add region restrictions such that the music is available in the USA but not in Canada. I have even found problems with audio book recordings of books from Canadian authors like Margaret Atwood which are available in the USA but not in Canada.

It is my belief from observation that "not for sale to you" is a far greater influence on the revenues of copyright holders than copyright infringement.

Rudyard Griffiths: Does the market sort this out. Will there be a demand for loose locks?

Much of this question comes from a lack of understanding of the real-world technology we are talking about, and seeking to protect rather than prohibit in the law. I believe it is critically important for everyone to become better informed. Without a basic working knowledge of real-world technology it is impossible for people to differentiate helpful from harmful technical measures.

From my bill C-32 Clause-by-clause notes:

Many copyright holders point to the rise in the use of new communications technologies like the Internet as being the source of their problems. Along with these new technologies came various technological measures that were marketed to copyright holders, some which are helpful and some which are very harmful to the interests of copyright holders. Most of the statistics used to indicate losses do not differentiate between losses due to infringement and losses due to unintended consequences from misunderstood and misapplied technological measures.

Phrased another way, the market can not sort this out if the seller is unable to acknowledge which business decisions they are making are helping or harming their own revenues. When they incorrectly attribute a decline in revenue to infringement that is actually caused by the misapplication of a technical measure, they end up making additional decisions that will further harm their bottom line.

If we lived in a market where we allowed bad business decisions to lead to business failure, I would not be as concerned. What we are observing is those making bad business decisions going to government to change the law in ways that will not help those businesses, but will greatly harm other businesses. Governments are not known for being good at picking winners and losers in the marketplace, and in this case the government is contemplating passing laws that will make those losses greater.

The reality is that the technology industry sector is much larger than the content industry. I once had an employee from Intel come up to me after one of my presentations. He told me that if the content industry went too far and started to advocate for things that harmed their bottom line, that they would just purchase them. He suggested they had the money available to essentially buy the major recording labels, as well as the major studios that made television and movies.

Since Intel offered a content distribution technology platform of their own, they were quite willing to encourage copyright holders to play that game. Policy around technical protection measures is really a game of Russian Roulette being played by large high technology companies, with the content industry as pawns in their game.

If you read my Protecting property rights in a digital world notes you will learn that the only thing the locks applied to content we are largely talking about can do is ensure that the content can only be accessed using an "authorised" technology platform. The theory is that copyright holders are entrusting the technology platform provider to protect their interests, and not actually deliver the content directly to audiences. That technology platform provider then sells that platform to audiences, as well as the limited access to that content the platform provides.

The first thing to note it that, in the end, the platform provider has the more valuable product/service under their control. They can easily turn the content industry on its head and use a broadcast TV style business model. In TV the product is the audience which the broadcasters sell to advertisers. With a technology platform the product will again be audiences, which that platform will be able to sell to copyright holders. I can easily envision a day when these platforms become large enough that some copyright holders will have to pay to reach these audiences, rather than be paid.

The rules about what you can and can not do with these technology platforms are authored in software by the platform provider. They lock down the digital hardware such that the platform provider, not the owner, is able to decide what software will run.

In this scenario it is not a "contract between copyright holders and audiences" as Rudyard and Dan tried to suggest it was, but contracts between copyright holders and platform providers, and separate contracts with the platform providers and audiences. In this the party that has the most influence in any contracting is the platform provider who, if allowed to grow, will be able to dictate terms to both copyright holders and audiences who want to be able to reach each other.

Independent copyright holders will always have the option to unlock their content and try to access customers who have unlocked platforms. This niche market will always exist, but over time is unlikely to be large enough to make a living with. Just as the major labels were in the past able to direct the majority of music fans to specific music through promotion (and illegal payola), the platform providers will be able to direct music fans to the music provided through their platforms. These technology platforms will replace music labels as the intermediary between creators and audiences, and I don't see how legacy record labels will exist at all if these technology platforms become too successful.

Dan Hill: Not trading houses, not trading cars back and forth

This was a perfect time for a Department of Homeland Security reference.

"It's very important to remember that it's your intellectual property -- it's not your computer. And in the pursuit of protection of intellectual property, it's important not to defeat or undermine the security measures that people need to adopt in these days."

- Stewart Baker, US Department of Homeland Security's first assistant secretary for policy, speaking to a group of copyright holders in 2005.

Dan thought I was talking about copyrighted content, while I had just referenced information technology property rights.

Rudyard Griffiths: Why not give more control to creators

There are many ways to answer this, some of which I have said above.

In order to give "creators" more control, then creators need to take control away not only from other creators (The software authors who would otherwise be able to write software for devices people own), but owners of digital technology as well.

It is a rob Peter and Mary to pay Paul type of suggestion, except that with these technologies Paul (in this case Dan) won't get paid.

The library scenario is one that far too many librarians and policy makers believe is real. They believe that they can encode content such that it will "self destruct" after a certain amount of time.

Here is what happens in the real world. The content is encoded with an expiry date, and then encrypted such that it can only be accessed with a specific platform (specific brands of technology). If a library patron has access to the right platform, then they can access the content. The software running in that platform looks at the expiry date and refuses to display the content once the date has passed. Nothing has "self destructed", and the whole scenario hinges on the library patron owning the same brands of technology as the library is using.

In this scenario the only people who are allowed to be patrons of this library are those that are already customers of a specific technology platform. If you are the customer of other brands, then tough luck : you are no longer a member of the "public" that this "public" library will offer services to. You are now a second class citizen that will only have the option to read the books in paper format, at least as long as that option is kept available.

In my case I am an independent software author, and as such none of my software will be on these locked platforms. This means that these libraries are driving their patrons to a marketplace where they can no longer be my customers. This transforms public libraries from being a public service, to being a marketing arm for my competitors, contributing to putting me out of business.

I believe that not only should this scenario not be legally protected, but that it should be legally prohibited. I believe we need to expand section 77 of the Canadian Competition Act to prohibit these types of ties between the provision of service (library, etc) or the provision of copyrighted content on the purchase of a specific technology platform.

Yes, I believe in the rule of law -- and again, my belief in the rule of law is why I oppose the legalisation and legal protection of certain types of technical measures.

Dan Hill Protects the music that is being freely shared around

There is no evidence that these technologies accomplish this goal. This myth is based on science fiction.

In order for content to be viewable in someone's home, the encrypted content and some hardware/software which contains the keys must be present. To believe that it is difficult to unlock content in this situation is to believe it is possible to put a safe and the key in the home of a locksmith, and for it not to be relatively trivial for that locksmith to unlock the safe.

For copyrighted content it only takes one person out of the 6.5+ billion people on the planet to unlock the content and then make it available to be shared with others. At that point, for those who wish to infringe copyright, it is as if the lock never existed. In fact, for those who wish to infringe copyright, these digital locks have absolutely no impact.

These locks only impact otherwise law abiding citizens. For these people they will see ties between specific content they wish to legally acquire and specific technology brands they must also purchase. Some will refuse to buy into that tie, and thus will not purchase the content. Some will be frustrated with their lower ability to make their own content and technology brand choices, and recognising the lower value of the content will purchase less than they might otherwise.

In other words, since these locks on content lower the value of the content (content that works on some devices is less valuable than content that works on all devices), it will lower sales.

This is exactly what I observed in the industry. As copyright holders adopted the technical measures that have been marketed at them, their revenues declined. These copyright holders still claim that copyright infringement and P2P networks are the source of their problems, but the "evidence" they use does not differentiate between losses from copyright infringement and losses due to technical measures which lower the value to their paying customers of their copyrighted works.

Dan Hill: It is the whole economy... I'm not fighting for my job...

All these have been discussed. The technology sector represents a larger part of the economy than the entertainment industry, so we should clearly not be damaging competition in the technology sector for something that doesn't help but actually harms the entertainment industry.

The other is to recognise that copyright infringement has minimal impact compared to all the other changes that are happening in creative sectors over the last decade and a half. In some cases, like the major labels, they would be seeing similar declines in revenue even if not a single music copyright had been infringed. There are so many other changes happening: the rising amount of money youth are putting towards communications (cell phone plans and smart-phones), as well as the rise in revenues for video games come from somewhere. For those who live in a Star Trek science-fiction world they may believe money just appears infinitely out of a replicator, but the reality is that this money is money that might in the past have been spent by youth on music.