A VC

Musings of a VC in NYC

« Scrobbling Video | Main | The Shins Like Jonathan »

Copyright Is A Political Issue

Comments (28) | Posted March 14, 2007 in Politics , Venture Capital and Technology

Comments

"I'd rather this get settled in the marketplace."

Fred, you know we respect you and all, but as a VC, you and other VCs are biased and to a large extent wrong on this one.

VCs have shown a preference to invest in technology - because it scales - even if said technology violates copyright holders' rights. Examples are Napster and YouTube, and also, Google. Napster violated rights in audio, YouTube in video, and Google in text.

Forget the fact that content scales more than technology, that's a whole other post (though clearly I am biased).

The bottom line here is that yes, we love Google, but just because text-based content owners let Google build a business off of their backs does not mean that video-based content owners will do too, especially since video content owners tend to be media companies that don't need to be told by Mr. Schmidt that they have to prove that their content holds value. Schmidt replaced Semel as mismanager of the year.

Tech companies are arrogant, and VCs who back tech companies that violate copyright owners' right are even more arrogant. I am not talking about you, but backers of companies who think that they can "create value" and exit before the slow media companies realize what's happening.

Viacom might be unwise in suing, but Google deserves a lashing because of their hubris.

If VCs invested in content - as willingly as they do in such "disruptive tech plays" - they would be singing a very different tune.

I wrote about the chasm between tech and media here:
http://www.watchmojo.com/web/blog/?p=1248

And, I wrote something about how Google envy might kill the video star here:
http://www.watchmojo.com/web/blog/?p=1353

Enjoy. No disrespect intended. And yes, I am clearly biased ;)

Posted by: ashkan karbasfrooshan | Mar 14, 2007 8:45:34 PM

But if Steve is right, don't we need to settle the issue in the legislative arena before the market is meaningful? I mean, we agree that current copyright rules are no longer the best way to accomplish its stated goal (rewarding creativity), but doesn't the market require some official government endorsement to that effect? If Google loses the suit and owes V a billion and a half bucks (not to mention the follow-ons), us doves lose.

Posted by: jack phelps | Mar 14, 2007 9:31:01 PM

"Steve thinks that it's time to rip up DMCA and that our government can be trusted to figure this out with new legislation. Not me. I have never met a politician who really understands digital technology. I'd rather this get settled in the marketplace."

I dont know, here is some pretty compelling evidence to the contrary.

Video

Also, I like Eric Schmidt. Just saying.

Posted by: Cameron Koczon | Mar 14, 2007 10:16:47 PM

Sorry Fred, but you're not convincing here. Why are the IP rights of people who create digital things less worthy of enforcement than the rights of those who created analog things? Simply because it can be easily copied? Because copying doesn't deprive the person giving with the original of their copy?

You and others who put forth this thesis make the argument that things are different, but then immediately jump to a postion that seems to argue that content owners have no rights to protect the works they produce. The distributors and readers/viewers derive value from interacting with these works - why should they not pay for that recieved value?

Does copyright need to be rethought? Of course. But it's not reasonable to start from a position that the people who create the artistic work should have zero rights. Instead I think the discussion needs to start from a position that acknowledges that the creator of a work is the owner of their intellectual property and then go on to ask something like:

"What legal protections provide the best balance between

1) compensating the creator of digital works for the value that their work provides to those interacting with it (reading, distributing etc)

and

2) the valid interests of society in seeing creative works spread widely so that they can be remixed and inspire others?"

Those who argue that the cost of making copies is near zero so those works should be freely redistributed are missing the point - it's the value that we should compensate the creator on, not the cost basis. When that value becomes less than the value to society of releasing the work into the wild, the copyright should expire.

Posted by: rick gregory | Mar 15, 2007 12:11:02 AM

Fred-

Two problems with settling this in the marketplace.

First, there is no free marketplace, copyright law has been written by and for bif corporate aggregators of copyrights to be used as a legal cudgel to protect their business interests.

Second, copyright is a constitutional matter (Article 1, section 8, I believe), so copyright issues will always be political ones first and foremost.

If anything the laws need to change to reflect the original intention of copyright which was "to promote progress in the useful arts and sciences."

The first US copyright laws followed the British model, allowing a creator to control copyright for a maximum of 43% of the average life expectancy of the time. Today our laws allow corporate interests to control copyright for the life of the creator plus 75 years. That's not about promoting the progress of ideas that's about protecting Mickey Mouse as a perpetual franchise for the Walt Disney Company.

More at http://www.socialmediaclub.org/2007/03/13/social-media-now-dere-oughta-be-a-law/

Posted by: Jason Chervokas | Mar 15, 2007 12:16:37 AM

It bears mentioning that over the past few decades, U.S. media companies have successfully lobbied to expand the length of copyright protection dramatically beyond the original scope of the law. As Jason notes, it's about Disney maintaining control over Mickey Mouse forever.

Rights now extend far past the lives of the artists who create any of these works. Given that, I think it's a bit of a canard to defend the rights of artists in this debate. What we're arguing about is the rights of distributors and marketers.

In the analog world, those distributors had certain enormous costs that perhaps merited a level of protection. But today? Arctic Monkeys, dude. Lily Allen. LonelyGirl. Matt Drudge. None of them would have been available in an analog environment.

The existing system is simply a form of protectionism. Fred's right: it needs to be re-thought. And maybe a big, bruising legal battle can be the impetus.

Posted by: Gordon | Mar 15, 2007 12:47:19 AM

Thank god someone acknowledged the big Mouse in the livingroom, who plays so large in the expansion of copyright protection beyond the reasonable. It's one thing to be able to profit from one's creative acts, it's another altogethr to hold all cultural growth hostage. Anything beyond the lifetime of the creator is obscene. The British model of a maximum of 43% of the average life expectancy was fair and reasonable. Enough already, it's time for the Mouse and others like him to let go.

Posted by: J.D. | Mar 15, 2007 12:51:39 AM

Wow, this is the first time I have ever *almost* agreed with you on a copyright issue. I agree that it is a political issue. What is fascinating to me is to watch you and others talk about the way you wish things were instead and conflating that into the way things really are from a legal perspective. I think the copyright hawk and dove thing is a good metaphor.

But the one thing I am curious about is how you could *possibly* change copyright law to do the things that you want without one of this country's biggest assets, the content business, entirely falling apart. If we legalized the idea that people can publish other people's work with essentially no reasonable fear of punishment, huge pieces of the economy will fall apart. Because what is now a fringe activity will become mainstream (yes YouTube is still fringe). I think it is impossible for copyright law to survive without all of the things going on right now remaining copywrongs.

It really is a simple question. Can a creator of a piece of intellectual property control its ownership? Does intellectual property have the same value as a refrigerator?

Also, this is not a battle of monied interests. Not that it should matter, but one of the defenses of all this stuff is that the only people who complain are the megacompaines that can afford the legal bills and this doesn't damage the little copyright holder. Hogwash!

Almost all copyright issues quickly relate to the little guy since the ability to monetize copyright effects songwriters, authors, screenwriters, small production companies, etc. And I, as a creator of intellectual property, want the best possible environment for selling my wares.

Honestly, I really agree with a lot of the other commenters here in that this is really about people who want to monetize their technology at the expense of other peoples content. If it's so good for the content owners they have a right to figure that out without saying "yes were going to steal this, but you're gonna like it."

It's not your right to take their content and prove they are wrong - as if such a technologist could really judge whether he was benefiting the content owner.

The fact that we have technology that now makes it much easier to steal, does not mean that the idea that copyright owners should control their content is somehow broken or inappropriate.

I don't think, if you actually made money from content, that you would be a copyright "dove". Moreover, I don't think there is any conceivable legal framework to support the kind of wholesale copyright infringement that is going on today. Fair use can't mean "free to use" and it is inconceivable that congress will ever interpret it that way. Copyright in essentially its current form, is deeply rooted in our constitution and its here to stay. There is no other way.

Posted by: hank williams | Mar 15, 2007 2:15:09 AM

Q. Why is the onus on YouTube to determine if the person uploading a video is the owner or not?

A. It cant be YouTube's responsibility. But it should be YouTube's responsibility to effectively identify the owner *who* the uploader of the content is. So if you say its yours and you are willing to digitally sign that its yours, then give us a credit card and swear you have the right to do this.

The issue here is that anonymous posting of content is problematic. It allows people to hide behind Google. If what you are doing is legal you should have no problem standing up and being counted. In fact, if its your work, you should be proud to put your name on it. A lot of people would think twice if they could be easily liable for what they are doing. This would solve the problem.

Posted by: hank williams | Mar 15, 2007 2:23:28 AM

Q: Does intellectual property have the same value as a refrigerator?

A: Depends. Some pieces of intellectual property have values closer to that of an ice cube.

Serious A: Of course it does. But this does not mean that the way of extracting that value and compensating those who have rights to the property and must to be compensated must work the same way for music as it does for refrigerators. There are so many more ways to do it with music!

Fred has famously applied Herbert Simon's thirty-six-year-old statement "wealth of information creates a poverty of attention" to the our time where distribution cost of information is indeed zero (or even negative, if you look at things like agloco, previously known as alladvantage). A simple corollary is that holding on to business models built around cost of distribution is foolish, and creating business models built around cost of attention is smart.

RIAA is trying to make refrigerators out of MP3s, using the magic DRM dust. This is sad but historically insignificant. DRM will go away, and RIAA will become obsolete, but it does not mean that creative content will lose value.

Successful artists will continue to make money. Their managers and labels will continue to make money.

Many great but less "commercially" successful artists are just now starting to make money, all thanks to zero distribution costs of digital media.

Everyone else will keep losing money, just as they did before.

Posted by: Gene Linetsky | Mar 15, 2007 3:22:01 AM

rick

i don't believe i ever said that "content owners have no rights to protect the works they produce"

i simply want the rules to reflect the realities of the world we live in now, not the world we lived in 100 years ago or more.

fred

Posted by: fred wilson | Mar 15, 2007 7:31:33 AM

Gene,

Your attempted answer to "Does intellectual property have the same value as a refrigerator" was really non responsive.

You brought in the RIAA which is a smoke screen issue. It doesnt relate to the question, which is really about whether the owner of the IP should be legally protected in controlling the IP. This is not about DRM its about the law, and consequences for infringing copyright. The question would be the same even if DRM was never invented.

Your comment about successful artists will always make money is also off the mark. Property rights have nothing to do with whether people are making "enough" money. Its either proper to steal content or its not. The law does not and should not apply some kind of weighting to the merits of copyright on the basis that "successful artists make enough money". It is totally irrelevant. Thats like saying "best buy made enough money this week. We are not going to prosecute that thief for stealing that fridge."

It is also irrelevant that new technologies help new artists. If an artist wants his content distributed by others, he/she may release it under a creative commons license as many do. The point is that if I as an artist dont want you releasing my work on bit torrent, you have no right to do so on the basis that you are going to "help me out". Thats my decision not yours, and not some greedy tech company.

Posted by: hank williams | Mar 15, 2007 7:53:12 AM

Jason nailed it.

What makes it more egregious is that Disney largely ripped off content that was already in the public domain, wrapped a brand around it, and now comes after anyone who tries to tell the story of the "Little Mermaid" (aka Rusalka).

Posted by: Erik Schwartz | Mar 15, 2007 8:32:12 AM

Fred,
If we were discussing Patents or Trademarks
I don't think you'd have the same view.
Market forces will change the way owners of copyrights treat their assets. Copyrights have survived many technological changes and ownership of IP is a cornerstone of innovation. No government intervention and I hope the courts don't "change" the law.
I trust buyers and sellers to work it out.
Jay

Posted by: Jay Goldberg | Mar 15, 2007 9:14:41 AM

I think one of your readers already mentioned the constitutional underpinnings of copyright law. Ultimately, the viacom/google conflict represents a much more significant tension in basic intellectual property law: where should the line be drawn between protecting the property rights of those who create the content v.s. protecting the underlying goal of intellectual property rights, that of promoting the Progress of Science and useful Arts. Cut the line too close to the former, and no one wants to create content. At least that's the fear, anyway. Cut the line too close to the latter, and you lessen the rate of "progress" a society might otherwise achieve.

With regard to the fear that no one will want to create content if there are zero incentives to do it, it is worth noting that technology has brought down the cost of reaching a broader audience and also the speed at which this can be accomplished.

Maybe the wider reputational gain from producing content is one aspect of the compensation for the content creator, which no longer has to be reflected in the copyright term.

In other words, maybe one reason you needed the longer term of copyright (in the original copyright law) was to reach a broader audience: because it actually took 75 years, or whatever it was for you to get any meaningful reward for producing something that promoted the progress of science and the useful arts. But today, you can instantly reach a broader audience, so you can start enjoying whatever benefit of reaching (1) a broader audience; and (2) at an earlier time than your counterparts did a 100, 150, or 200 years ago. So maybe the term of the copyright which is a systemic variable no longer needs to have that built in.

If anything, the expansion of copyright term is a movement in completely the opposite direction than is dictated by the above.

Posted by: SS | Mar 15, 2007 12:07:07 PM

Just one point. Under the DMCA safe harbors, the onus *isn't* on service providers to determine "if the person uploading a video is the owner or not." The burden is on the content owner to notify YouTube (assuming YT qualifies as a service provider and meets the elements of the safe harbor provisions) of the identification and location of the allegedly infringing work. 17 USC 512(b)(3).

Placing the policing burden on content owners actually seems to be (or facilitate) more of a marketplace solution than you're recognizing.

Posted by: jim | Mar 15, 2007 12:54:31 PM

The worst thing about intellectual property - whether copyright, trademark or patents (especially fucking software patents) is that they have long sense stopped serving as an incentive for creators to create and been repurposed by large companies as barriers to entry for new competition.

Pro-business righty types think that serving corporations is the best way to serve the economy, while pro-freedom lefty types think that "information wants to be free". When we boil it all down the real question is "should content be locked up by default, or open by default".

The real battle will be fought to rework the DMCA and/or copyright law to answer that question. The winner shouldn't be "whoever has the biggest legal department and the most influential lobbyists". But in the past that is EXACTLY who has won. In that game, Google is on the side of businesses and products innovation and private citizens, just as Sony was in the betamax case.

Posted by: jonathan peterson | Mar 15, 2007 1:02:03 PM

fred,

We agree that the law should reflect the reality of what's happening today and what is likely to happen in the future. But any such change has to start from the position that content creators own the rights to their work. We can't start from the position that it's fine to appropriate their work and republish or remix it without compensation.

It seems to me (someone who reads a lot of tech feeds, but isn't intimately concerned with the Youtube issue) that Youtube are dragging their feet in implementing some way to recognize and take down work owned by others. All they need to do is to allow the owners of content to control it if it's been posted without authorization. Whether this is a smart business move by the content owner is another issue.

Posted by: rick gregory | Mar 15, 2007 1:32:38 PM

Excellent points, ss! No law is absolute and laws that hope to stick around can’t ignore their economic and social context. When the context changes, so do the laws (wasn't slavery legal until very recently?). And often what it takes to change the law is a better legal team (read: more money), as Jonathan pointed out above.

So, to Hank: of course it's about money. Viacom doesn't want a billion apologies from Google, does it? They want money, and to bring the suit, they have to allege damages (and be prepared to prove actual monetary damages at trial, which they say they will and I really hope they end up having to. See http://online.wsj.com/public/resources/documents/ViacomYouTubeComplaint3-12-07.pdf).

But it’s not just about the money. It’s also about enforceability.

When I steal a fridge from Best Buy, the financial damages to Best Buy, and by extension to its entire supply chain, including patent holders on the fridge’s more efficient cooling system, are obvious. The enforcement of Best Buy’s property rights has been perfected over centuries of trial and error under many different legal systems, and, at least in the U.S., it works reasonably well now (with a few minor side effects like the largest prison population of non-violent offenders per capita in the world).

When I buy your book, read it, and then give it to my friend to read, you lose royalties on the copy that my friend did not buy (and look at what the libraries are doing!) The damages are just as obvious, but the law protects me, my friend, and the libraries in this case. Why? When lala.com, on a massive scale, brazenly benefits from people exchanging CDs, and thereby, on a massive scale, deprives labels and artists of royalties on potential new CD sales, it’s legal. Why?

There’s no such thing as “controlling the IP”, and hopefully we’re not talking here about control for control’s sake. To label all content sharing “stealing” is, to borrow your expression, a smoke-screen tactic (unless you are prepared to argue that libraries are aiding and abetting theft).

What we are talking here is the ability of property owners (be it fridges or songs) to be fairly compensated. Right?

If yes, the details are irrelevant. Any reasonably transparent and enforceable mechanism will do. Just need to find it.

Posted by: Gene Linetsky | Mar 15, 2007 1:37:44 PM

Well, I guess I'm seeing this more cynically. I'm a writer and producer working in Hollywood -- have been for 17 years -- and the Viacom lawsuit, among the many things it accomplishes, does 2 big things for the company: 1) it asserts its right to control and profit from the places where its products are used as a vehicle for advertising revenue, just as it does when it sells television and film products to broadcast networks and cable; and 2) it establishes a perception that new media is a loss-leader for the studios, which, believe me, will be a big issue in the next 4 months as the studios and the various guilds try to thrash out another 2-year contract. This isn't really about copyright protection, or IP, or anything other than how much Viacom is going to get paid for its content (everyone agrees that it's going to get paid something) and, downstream, how much of that is going to get spoken for. Revenue sharing is something Hollywood does really really well. After a lot of screaming and fighting and paper-serving.

I know Viacom pretty well -- I had a production company there for 12 years, wrote and produced "Cheers," along with a lot of other (not so successful) shows -- and this is the way they usually negotiate.

Posted by: Rob Long | Mar 15, 2007 2:30:12 PM

Rob -- thanks for the real-world perspective! I don't think it's cynical at all though. It's just business.

Posted by: Gene Linetsky | Mar 15, 2007 2:48:35 PM

I remember a year or so ago, talking to a studio exec about YouTube, and he just shrugged. Not a problem to worry about. Maybe a place to virally promote shows. No big deal. And then the Google purchase, and everybody in Hollywood smelled money. We spend a lot of time in Hollywood trying to figure out who's got money and how we can get some of it -- which is why they have huge departments and armies of lawyers trying to squeeze revenue out of every possible medium, rather than what they should be doing: figuring out how to make product cheaper, faster, and more responsive to the market. (Think about how much time people in the web space spend optimizing their product, and compare it to the millions we spend out here on a TV show before it even airs!) Hollywood should stop worrying so much about the revenue side, and concentrate on the production side. I'm starting a web business of my own, and raising angel money to do it (along with my Old Media savings!) and it always amazes me that $1 million buys you a pretty interesting, great-looking web venture -- but that same $1 million buys you barely half of a 30-minute comedy pilot, which may or may not go to series, and if so may or may not be successful enough to make it to year 5, which it absolutely has to do in order to be successful at all.

Posted by: Rob Long | Mar 15, 2007 9:36:36 PM

Gene,

I did not say the viacom lawsuit was not about money. I said that IP law is not about whether someone makes "enough" money. The law is there to say certain things are "ok" and certain things are not. And it doesnt, and shouldnt care whether the IP owner is making "enough" money. Either the rules are broken or they arent.

Posted by: hank williams | Mar 16, 2007 6:31:59 AM

Hank -- what I'm saying is that laws are subject to exceptions (which I provided examples of), interpretation, and change.

It's not always 100% clear whether the rules are broken or not. That's why we have trials and juries. And many times courts have to guess at the true intention of lawmakers, or extrapolate the intention to the cases that lawmakers could not have possibly anticipated.

This particular law will have to change to adapt to the changing environment.

And then there's the spirit of the law, which, in the case of copyright, is about fair compensation, IMHO.

Posted by: Gene Linetsky | Mar 16, 2007 10:57:24 AM

Fred,

I agree with a lot of what you are saying here.

However, there is a subtle difference here between what you are semi-condoning and the reality of what YouTube is doing.

Fact is, they are trying to claim they are like an ISP, in that they do not know what is being uploaded.

Limelight Networks, Level(3), and other service providers that enable YouTube can make this 'I dont have any liability' argument in a legit manner, and their ability to do so is not in question.

YouTube cannot.

If Google plans on monetizing eyeball views of YouTube video, and the overwhelming majority of video is copyrighted, how is that fair?

Ultimately, how is Viacom or any content producer going to be paid for content here?

If I spend millions of dollars producing high quality content that gets uploaded to YouTube 3.0 Hi-Def that is downloaded by the entire world before I can even react (lawyers, DMCA takedown etc), how can content producers get paid?

Posted by: Raj Dutt | Mar 19, 2007 12:23:34 AM

Post a comment

This weblog only allows comments from registered users. To comment, please Sign In.

You are currently signed in as (nobody). Sign Out

Comments:

©Fred Wilson, AVC.com • • Design by UX Hero