Google Print and the economics of copyright

I started to first think about the theory of group polarization. According to Lessig, a victory for copyright owners would be “the biggest landgrab in the history of the Internet” and “chill a wide range of innovation”. According to book authors and publishers, Google engages in “massive copyright infringement” which results in “napsterization” of the publishing industry. They fear a win for Google would give an unintended sign for Internet-companies with “who knows what result in the future”. And so on…

Both lines of argument are of course worth to think through. They are, however, based on unfitting analogies and special-interest politics (copyright owners v. copyright users) gone into extremes.

Thus, I propose a more analytical approach. I’d ask, for example, the following questions:

1. Does copyright cover format? From “right maximizer” perspective it would appear so. Author’s guild and prior case basically say that if you are a business user, you are not allowed to rip books or CDs to your database. Reason: copying to other than private use. Thus for example Gramex (collecting society for record labels) in Finland wants money from DJs who play music from iPods instead of CDs or LPs. Just 30 CDs meaning c. 300 tracks costs 200 eur / year… I think this is economically unsound (no effect to markets) and is based on formal legal reading of the law. If Google’s case will be decided on this ground – which I think is indeed highly probable – the whole affair will have no impact whatsoever to anything. The public policy sucks but what can you do.

2. Does fair use / citation right cover a case where a firm advertises with “fair” clips on the Internet? Now the question is not about users who take citations from books themselves (traditional meaning of a “citation”). This is about a company advertising a product with a random “clip-right”. Well… I think an economically justified fair use right should cover reasonable ad citations. Good clips only increase sales so it’s a win-win for everyone. However, some time ago was it Danish supreme court which decided 30 sec clips on an Internet music retailer’s website are not fair use. In Finland, Gramex seems to sell licenses to such purposes. Max length being 30 sec 100 discs (10000 tracks) would cost you 10000 eur / every 3 months. Quite a lot. And the same thing to Teosto (collecting society for composers) I suppose. So again Google’s position is economically sound but legally somewhat in the gray area…

3. Does copyright cover a case where a firm builds a huge database of copyrighted content and then makes business by giving Internet users clips of that stuff – with a careful reading of the limits of fair use rights? From policy perspective this one comes close to Grokster – which, by the way, I think was a good decision from economic perspective. If you think Grokster from bottom up sure it sounded “ok”. They don’t control the network, they just make the tech, etc. But the big thing was that there was a company profiting from a gray area in copyright law. Now I’m not against Google as a company. But in this particular case I think a Gokster-analogy is perhaps the real public policy nail in their coffin. Google Print must fail and my only hope is that the decisive argument will be this one.

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Overall, I think the real problem in Google Print is copyright’s term. Fair use has nothing to do with copyright’s term. We have an enormous back catalogue of all kinds of out-of-print works with no publisher interest to republishing. It makes sound economic policy to allow Google and others to put that stuff in the pipeline right now. However, at the same time when we would legalize abandonware, Google and others should not have any right to scan every new bestseller without a contract (or blanket license) to benefit their business. It simply makes no sense unless you fundamentally denounce the economic logic of copyright law.

Sony just hit consumer hostility

Ok, my 5 cents to the ongoing Sony bashing. It is found that their “rootkit” crap not only fucks your system up but also infringes copyright. Unless the developers have been bought out, which I suspect is impossible, someone should advice the class-action-sharks in the US law firms to add statutory copyright infringement claims in their cases. Of course Sony can surrender the sources and thus fix any possible “irreparable harm” but I don’t think they can avoid basic infringement payments since they have already profited from a product based on the copyright of others. Meanwhile, the only viable option seems to be this russian retailer if you need quality music files without DRM-insults.

Are Finnish IP scholars sold out?

I wrote today a critical opinion piece to a local intellectual property lawyers magazine about the academic IP studies in Finland. The Finnish Academy funded seven university projects during 2001-2004. Yesterday the academy held a seminar where every project gave a presentation about what they had achieved. Practising lawyers – from a legislation drafter to patent attorney and corporate counsel – gave comments.

What I sensed was confusing. Just one of the projects wasn’t clearly politically hostile towards IPRs. Others had a bunch of critical views. Every argument type was used from economic theory (IPRs are inefficient) and developing nations (they need to free-ride) to human rights (freedom of speech etc.) and competition policy (IPRs are anti-competitive, of course).

Those practising the art didn’t buy the arguments at all. Many gave extremely critical comments. Are your policy recommendations just academic day-dreams, which can’t be implemented ever? Are you guys just following some fashionable international scholarly trends? Why don’t see the picture from corporate perspective? (Well, here is one possible answer)

I had to agree with those who delivered the critique. The researchers are wrong if they don’t answer to the needs of the Finnish industry and economy at large.

As a former “activist” of sorts I understand that it is relevant to bring dissending opinions into public policy discussions. Five years ago there didn’t really exist IPR policy discussion in Finland. But today the picture is different. We just had a 200-300 people demonstrating against the recent copyright law amendment. In this situation, I don’t think that every IP scholar in Finland should study IPRs from normative perspective. They have nothing to add. Moreover, there are many philosophers, social scientists etc. who are now studying IPRs as well and can perhaps bring some new insights into the public policy stuff. No one could do that yesterday.

I think IP scholars should start cooperating with the Finnish technology and media companies to bring their research agendas and goals more in line with the needs of the Finnish economy. I’ve been doing just that for over five years now. Forget repeating Lessig and his pals, they’re being heard everywhere by now. Go figure something original and useful.

Something to study

Ok, something else in the mid of all that running crap.

First, the next morning we’ll meet Helsinki city’s IT chief. On the table is the idea that the city would support / fund a municipal wifi initiative. I’ve heard the guys here are not that supportive to the idea but we’ll see… I hope there will be at least some sort of study of wifi’s possibilities.

Second, I noticed that the local TV news finally found out that the EU is proposing that car registration taxes should be zero. As someone who has imported two cars with crazy 100-150% import taxes I really love the idea. Finnish tax policy has been in this regard unsound, based on the 1970s principles of local transport industry protection without taking into account neither the EU economic policy (free movement of goods & people) or environmental policy for that matter. Maybe I should try to publish some sort of critical primer for the Finnish “tax professionals” about the whole tragedy.

A solution to Internet music

Ok, let’s have a sensible solution to the Internet music distribution controversy. A sensible approach is not to want music to be free. A sensible approach is not to use DRM either. A sensible approach is to focus on the quality of the listening experience, wide availability of the material, and happy users & artists.

First, there are different kinds of music. At least the following can be separated: (1) new MTV/radio feed, (2) back catalogue in stores, (3) non-published but protected stuff (4) download-free music (copyright expired, creative commons etc). The last is not a problem, others are.

So let’s take (1) first: new feed. I turn on my MTV, it’s U2. Apple’s website, the same guys. I turn on my car stereo, it’s again the same U2 and Vertigo. Streaming on and on. I don’t feel quilty downloading the same stuff online. I don’t think I should pay for it. MTV, Apple and radio do already, millions of times. Singles, big hits. It’s the demo stuff. I think that what they put in the big feed should be consequently free to rip and distribute. By an implied license or whatever. The same as you publish a homepage; it’s implied that anyone can download the stuff and forward it (as a link) to friends.

Then (2), back catalogue, which I think is the main problem. I don’t think P2P is ok for that stuff. There won’t be a choice for artists if Kazaa, Grokster et al and any Torrent community would be “legal”. Consequently music would be free. 90% on the albums that are not frequently played on the radio are not producing anything unless sold in a bundle. I’d keep that possibility with the artists. However, I’d require that labels can’t mandate DRM, can’t mandate quality and can’t mandate format. It’d be instead of iTunes. CD-quality with cd-price, mp3 192 kbs quality with 1/5th of the price or so. And no DRM whatsoever. Basically CD-model to Internet mode, mutatis mutandis.

Finally (3), bootlegs of favourites and any stuff from nonames. This is not a straightforward case. I’d like to see any bootleg of Jimi or Stones to be free out there for anyone to download. For the sake of culture. However, I’d keep artistic control definitely with the nonames. So this one boils down to a privacy analogy. If you are a public person, any yellow paper can write about you, take pics and publish them on cover. However, if you are a noname, there’d be a privacy violation.