March 16, 2010

The digital economy is all about the content

Yesterday I and about 100 other people attended a seminar here in London, jointly arranged by Queen Mary Intellectual Property Research Institute (QMIPRI) and the Institute of Computer and Communications Law. The focus was the Digital Economy bill which is trying to address the ever-present issue of rights holders’ rights and possibilities for enforcement on internet.

However, the discussion yesterday circled much around if and how internet users could be cut off or suspended from their internet connection because they had been involved in illegal file sharing. The issue is an important one and I have trouble seeing the proportionality in restricting access to internet for what in many cases are small amounts of direct loss in sales revenue, which apparently is one of the suggestions in the bill. Jim Killock from the Open Rights Group, did also point out that downloading was more like trespassing than theft. This is true, but it is still illegal in the system that we have today. The discussion about changing the copyright system is partly a different and much bigger one.

I do however believe that the discussion we are having today about illegal file sharing and how to enforce it will pass over as a result of technical development and new ways of consuming content.

Carrot and stick
The industry representative, Richard Mollet of British Phonographic Industry (BPI), did go about quite hard on why enforcement was important. It was an expected point of view and he had a fair point in that enforcement is part of a system where that is the stick in one end and legal services, such as Spotify, are the carrot in the other end. Both sides need to exist.

Richard Mollet’s argument continued in the lines of that the rights holders were to scared to put out content in this uncertain environment without strong enforcement measures. This is where I do not agree.

Business model innovation
One of the first portable MP3 players was released some 12 years ago. Steve Jobs presented the first iPod in 2001. This is of course all known and the discussion about the rights holders not understanding the potential in the technology and that the old business model of selling content on physical carriers was and is outdated, that discussion is not new. What still surprises me however is the total lack of innovation in new business models and product offerings when it comes to rights intense industries such as publishing, film and music.

Intellectual property in the form of copyright is one of the most easily distributed forms of property. It lacks the need to be bundled with physical carriers, it can be packaged in various forms and the legal wrapping can be crafted in just any way.

To be fair, there are several services and platforms offering copyrighted material digitally and with consent from the rights holders. Spotify and Hulu are two examples of this.

I do however believe that there is much more that could be done, if just the interest was there. The technology is there, the consumers are there. The content is not nearly there.

The legal dimension
The issue has of course also a legal dimension, something the third speaker, Graham Smith of Bird & Bird, pointed out. It is far from certain from a legal perspective what is actually legal and what is not and how to enforce it. It is even harder from a consumer’s perspective to do this distinction. It is can be argued that this becomes the result if you let the development happen by itself and not being part of crafting the norms in the marketplace.

As I pointed out earlier, IP in general and copyright in particular are well suited to be developed in to new contractual models. The content can without any particular problem be packaged in just about any way. To look at the problem from the perspective of enforcement of content that has been distributed and copied by norms created by the users themselves, will probably almost always be messy. Especially when the behavior of consumers has been more or less accepted for over 10 years.

If the rights holders on the other hand are the directors on the distribution end and take advantage of the versatility of the content and distribution methods that could be used, I believe that the need for enforcement would be radically less and the revenues would be greater. It just takes someone to be brave enough to let go of the known models and revenue streams and focus on how to embrace the technology and meet the consumer need in a legal way.

Johan Orneblad
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