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Book Review: “Free Ride: How Digital Parasites Are Destroying the Culture Business and How the Culture Business Can Fight Back” by Robert Levine

March 22, 2012 Comments off

There is something comforting about hearing the Speaker of the House of Commons crying “Order, order” and having the MPs actually heed that instruction.  It’s particularly comforting in light of the tragic wilding that has been occurring in the ancient city of London, the font of British civility and civilization.  But the rioting in London is really the stuff of the Internet made flesh, a virtual tableau come to life.  So this is as good a time as any to mention Robert Levine’s book, Free Ride, currently the subject of the Two Minutes Hate on the Internet.  Yet the book is, as Bill Keller, former executive editor of the New York Times, put it recently, “a wonderfully clear-eyed account of this colossal struggle over the future of our cultural lives.”

Let the Wilding Rumpus Start

Levine has written a book that is a must read for all policy makers and indeed all professional creators.  Free Ride is an excellent survey of the current state of play online but also examines the cultural underpinnings of the principle excuses (and in some cases, affirmative defenses) developed by the execuprofs like Lessig and the Berkman Center.  Not surprisingly, the wilding rumpus has begun online which is what happens when you poke the sacred cows.

(“Execuprofs” are those who are ostensibly employed by academic institutions, but whose work is primarily directed at benefiting the corporations who contribute money to their schools or causes.  If these academics were actually executives at the corporations who benefit from their work, they would not be able to proselytize as credibly.  As long as they keep the corporate contributions hidden in plain sight–or hidden–they can continue in this netherworld pretty successfully.  But they are neither executives (no P/L responsiblity) nor professors (conflicts).)

Review of Policy Based Academic Studies

Levine’s book takes a very even-handed look at topics that are generally spun so hard by execuprofs from big institutions like Stanford and Harvard that it’s often hard for policy makers to know what reality is.  Even the U.S. Government Accountability Office has been taken in by some shadowy “experts” who the GAO refuses to name in support of its conclusion that the U.S. government must take into account the positive effects of crime in considering intellectual property policies.  Levine reviews some of the studies the GAO refers to in the GAO’s “study of studies” as well as some of the studies the GAO should have reviewed but failed to include (possibly at the direction of their shadowy “experts”), which should be illuminating to policy makers around the world.   For example, Levine considers the study by Felix Oberholzer-Gee which concluded that policy makers need not worry about online theft because musicians would work for “free beer” and “admiration” (if you know what I mean) as well as the extensive work of economist Stan Liebowitz which, among other things, mounted a very effective criticism of the “free beer” campaign.  (The GAO included the “free beer” study, but not the Liebowitz work–probably on the advice of the secret “experts”.)

For this reason alone Free Ride is an important book for policy makers to keep close by.

Worldwide Blanket Licensing

Levine takes a look at Jim Griffin’s various unworkable ideas about blanket licensing that MTP readers will recall we have discussed in numerous fora and have criticized.  (See my lecture at Osgoode Hall in Toronto, for example and our article in the ABA journal.)  Unfortunately, Levine doesn’t take into account the use of the global database idea as a “bright and shiny object” to further delay the enforcement of property rights online and create full employment for consultants for what will inevitably prove to be a sideshow.  But this is a small criticism of the book and should not be taken as a detraction from an otherwise highly effective and well researched presentation.

The Hands of the Google

One of the truly significant themes in the book is how Levine has laid out in one place all the different ways that Google influences public policy around the world.  This is done through his discussion of the execuprofs, groups like the EFF and Google’s massive contributions to Creative Commons, as well as a history of the YouTube case.  I mean the Viacom case against Google–sorry.  (Saying “the YouTube case” alone is like saying “my brother is in the Army, maybe you know him.”)

For busy policy makers who are trying to get their arms around the Google debacle through the sea of hundreds of Google lobbyists that must cost Google hundreds of millions worldwide, as well as Google’s high levels of government influence (especially in the UK), Levine provides a handy scorecard to keep track of the players.  This is not a black helicopter exercise–Levine has put in the Herculean effort to follow the money from Google to its many front groups.

The book’s review in the Financial Times is generally positive, but has this to say about Levine’s Google analysis (full disclosure, FT is my favorite business website and I tend to overquote them):

“On Google, Levine is correct that this most powerful of digital businesses will  need careful regulation in future. Yet if the company’s “war on copyright” is as  cunning as the author claims, it remains mysterious why it has, as yet, been so  unsuccessful. True, this week Britain’s government did approve some relatively  minor tweaks  to copyright laws. But, on both sides of the Atlantic, sensible attempts to  stop copyright term extension, which often runs long after an artist has died,  have largely failed – usually in the face of fierce lobbying from the very same  media companies Levine paints as victims.”

I actually disagree with the FT’s conclusion.  If Google had just made illegal scans of millions of books without the hundreds of lobbyists and the proverbial legion of lawyers, Google executives would probably be in the federal penitentiary.  So since they are not–yet–in that sense, Google’s campaign has been highly successful.

More importantly, the last sentence may belie the FT reviewer’s sympathies for the arguments of Lessig and many other execuprofs:  Copyright terms that extend “long after an artist has died” is the key point that Google and its followers, including its followers in the press, are most interested in because they wish to cut off the benefits of copyright to the hated “heirs”.  (See also Lessig, “The Starving Artist Canard“.)

The author advances an argument based on duration of the copyright term that will sound familiar to readers of Free Ride.  Lessig wants artists to accept a 14 year copyright term and give up the current life plus 70 as the copyright term (allowing an artist’s heirs to capture the benefit of either a discovery of the deceased artist after their death, or the benefit of being provided for like the journalist’s heirs are from his own estate).  While the reviewer apparently deigns to allow an artist the right to benefit from their creation during their life, when they die, that’s it.  A 100% estate tax.

The FT, of course, makes a silly argument.  But it’s silly for two reasons.  First, artists who want to enforce their rights will be very unlikely to accept a legislated cut from life plus 70 to 14 no matter how much Lessig wants to disenfranchise their heirs.  Even if Lessig manages to pull off the U.S. constitutional convention which would allow him to literally rewrite the copyright clause and finally seek his revenge on the U.S. Supreme Court that denied him in his humiliating defeat in Eldred, it is unlikely that the rest of the world would follow.  (See the eponymous Con-Con-Con effort at Harvard–where else–later this year where there is to be a gathering of grifters of all stripes–or in the case of the Poker Prof, suits.)

Second, the reality is that we currently have a 5 minute copyright.  That’s how long it takes for most works to be digitized and placed on p2p, Bit Torrent networks or cyberlockers for which Google delivers search results and on which Google sells advertising.  Google is bitterly fighting any government effort to cut off this ad revenue by enforcing intellectual property rights through the Protect IP Act (or its predecessor COICA, that Levine discusses in Free Ride).  And as long as this is true, any success from Lessig’s Con-Con-Con job would only serve to drive a further nail in the coffin that I would argue his bizarre faux-philosphy built.

Why Regulation Won’t “Break the Internet”

Given the problems of the 5 minute copyright, Levine’s most important conclusion is the following excellent advice to policy makers who actually want to bring balance to the online environment that preserves consumer choice, protects intellectual property rights and defends the human rights of artists:

“We can do better.

No one believes that piracy could be stopped by a law like [the Combating Online Infringements and Counterfeits Act, a precursor to the Protect IP Act] or an agreement between media companies and Internet service providers [such as the Copyright Alert System]….But regulations like these, whether private or public, would allow a working market to emerge.  Creators would sell, consumers would buy, and both would benefit….Artists would have the option of working with big companies or making their own way in an online economy that allowed them to do business, not just take donations.

In a functioning market, online media would get better, not just cheaper.  And this, in turn, would fuel the growth of more technology companies.  This wouldn’t break the Internet; it would help it live up to its potential.”

Hear, hear.

______________________
Buy the book here:

In the US, Book People and Amazon

Brussels and United Kingdom 

And read Levine’s Free Ride blog.

Andrew Orlowski’s review

The Resonance of Moral Design or Looking for Small Change in a House of Cards

Great News Sultan, Pt. 2

November 5, 2009 Comments off

“What’s to stop students from paying for one month and downloading the whole collection? ‘Nothing,’ said Mr. Griffin….’Our gut tell us that the right model is flat fee, unlimited use.’”

Another Choruss sighting in the Chronicle of Higher Education (with a lovely picture of Peter Jenner and Jim Griffin courtesy of the Future of Music Coalition). I’m told that Jenner has been actively pushing a similar flat fee deal in the UK without much uptake.

The Chronicle also gives us the wonderful news that the Terry Fisher venture, Nowank Media, is planning on launching something in the fall fresh from testing in China. (China? Really? Maybe they can test it in a few other countries on that list with all that must-have government owned repertoire. At least Fisher is consistent, his version of collective licensing featured compulsory licensing and government pricing, which I’m sure the Chinese were happy to accommodate.)

Wow. I’ve kind of given up trying to pin down the inconsistencies in these stories over time, but if you have any interest in this topic….wait until somebody actually sees the actual service.

Until then, I guess you just have to say great news, sultan. Everything’s coming up roses.

Great News Sultan: Choruss is raking it in–Update

September 24, 2009 2 comments

Update: Choruss on the march–or at least on the panel again.

Jim Griffin was on another panel recently expounding on deus ex machina, the vulgar latinate for the Greek (e.g., Euripedes) “god in the machine” or the perfectly good English secular version, usually translated as the “ghost in the machine”.

For purveyors of vaporware, using the phrase “ghost in the machine” is ill-advised. Apparently our suspicions were correct–what Choruss has done is get one or more student government organizations to agree to give up part of the student activities fees they sort-of control (known as the “bursar’s bill,” “Bevo bucks,” etc., depending on which school you’re at) and pay these fees to Choruss. According to Griffin, Choruss is then going to give the money back to the school to support music education.

Lest that transaction just slip by–think about that for a second. Let’s see, it comes out of the student’s pocket and goes into the school’s pocket. Or said more accurately, it comes out of the students’ parents pockets, goes into the artist/producer/songwriter/publisher/record company pocket, and then Choruss decides to pay it to the school. The problem with that–Choruss is essentially a retailer, and once someone who is essentially a retailer “sells” the tracks to the students they have to pay a wholesale price (usually about 70% of the proceeds) to the rightsholders–songwriters, music publishers, artists, unions and record companies.

If Best Buy were to sell some CDs and decide not to pay the record company and give the money to the “Minneapolis Youth Orchestra” I think we would all find that odd and probably illegal. Unless, of course, all the rightsholders consented to it. So that means Choruss would have to identify the rightsholders to get permission (which they can’t, at least not yet).

When asked if Choruss would take a fee, Griffin said it would not. When asked what fee structure Choruss uses for its financial projections, Griffin said that Choruss doesn’t use finanical projections.

I’m sure A&R executives everywhere will be thrilled to know that someone somewhere someplace in the music business doesn’t have to run a P&L every time they want to buy a paper clip. Of course, if you are the ghost in the machine, maybe you don’t have to live under the same rules that everyone else does.But–what about the ghost in the machine? The ghost in the machine is supposed to be able to account to artists/producers/songwriters/publishers/record companies for their share of the student activities fees that Choruss is to collect. Two problems–the ghost doesn’t have a license and the hasn’t figured out how to account to anyone yet.

Let me offer another explanation for this phantasmagoria. Griffin also said that Choruss would be “going independent” soon. We used to call that running out of money, but let’s say it is “going independent” and will be taking in new money for whatever in the world this ghost is supposed to be. It is highly unlikely, particularly in this environment, that a VC would allow a strategic partner (such as Griffin’s putative investor, Warner Music Group) to set the valuation for the company. That means that in order to survive, Griffin must have some kind of validating commercial deal, preferably one that throws off what is lovingly referred to as “top line revenue” in the trade. Hence his deals with these six campuses (is that different than six universities? Time will tell.) The new money VC will then use these benchmarks to set a new valuation in what is sure to be an absolute knockdown dragout with WMG over liquidaiton preference, dilution, etc.

But of course, Griffin doesn’t do financial projections. Oh, no.

So–that means that the ghost is going to (A) have to get the deals to survive and (B) figure out what to do with the revenue. So in a flash of ghostly brilliance–let’s give the money away!! SMART!! The only problems with that are that the money is either (1) being paid for something other than rights and indemnity which is probably not what the students think they are getting, or (2) is being collected in return for rights, but Choruss can’t distinguish one song or recording from another so they don’t know how to divide it up, or (3) Choruss is collecting for a covenant not to sue (see Bennett Lincoff) and so doesn’t have to share the money with anyone but does not want to deal with the political fallout from artists/producers/songwriters/publishers/record companies who figure that out, which is unpopular among rights holders, not to mention Internet savants.

But wait–there’s more! Given Griffin’s public statement to The Register, it sounds like someone is going to be collecting millions of dollars. That’s definitely worth suing over.

I remember asking a guy from BMG why the company was still in the Napster lawsuit after Thomas Mittelhoff’s investment. He told me, make no mistake. That investment came from Bertelsmann, not BMG. Griffin may not be the only one looking for a deus ex machina in the third act.

To my knowlege–Griffin has no deals with any rights holders aside (possibly) from some elements within WMG and even then that will probably not hold if I had to guess. So what is he collecting money for, exactly?

Or to ask the musical question: Who you gonna call?

Liberté, égalité, fraternité et réponse graduée

May 13, 2009 Comments off

I was on a panel once with a real yahoo who was a grande fromage in the digital music world. This yahoo referred to the massive theft of economic rights and labor value occuring on the Internet as a “web phenomenon” and repeatedly refused to acknowledge any–any–connection between his “web phenomenon” and declining music sales.

This is not unlike saying Pol Pot was a guerrilla fighter and an American phenomenon, kind of a Wikipedia view of the world.

Not so in France today–the French legislature is getting real and not accepting any “web phenomena”. France is taking decisive government action to deal with the theft of artists economic rights in much-discussed legislation that shows President Sarkozy is not playing games. Given that France is one of the wellsprings of Western civilization, it is fitting in so many ways that the French government is the first to pass significant legislation to protect creators from the cruel theft of their labor value. The highly-negotiated “three strikes” legislation has survived minority party maneuvering and passed 189-14 in the French Senat. The vote in the lower body (Assemblée Nationale) was closer, 296-233.

There are a couple hurdles to go before the bill becomes law, but it clear that the veiled (and not so veiled) threats of the self-appointed “consumer” groups who wish to legalize the theft of labor value don’t seem to stack up to much in the political calculus of the French legislature.

There is no free lunch, there is no free culture, and the “web phenomenon” needs a government solution as does any crime.

The bill now goes to the French constitutional court, a uniquely French institution which reviews legislation for constitutionality before it is sent to the President for signature. (They also have a version of our Supreme Court for appeals in lawsuits or prosecutions.)

I think it is very important to see this legislation in context. The reason it is important is that establishes for the first time a clear government mandate that stealing the economic value of creators–all creators, not just their own French artists–is unlawful and will be prosecuted. This statute alone will not stop many dedicated followers of Lessig. They will continue to steal as they always have. The difference is that this time, they are violating a law that was expressly tailored to deal with them.

The real impact of these statutes will be the “average” user. The average user should now understand that stealing online is just as bad as stealing offline. Mothers trying to teach moral values to their children will now have one less objection from Little Britney at bed time about why can’t she download because “all the kids do it” because the country has come together and rejected stealing online.

Sure there will be some vocal opponents, but the basic moral lesson is much clearer today than it was yesterday. At least in France.

See Three Strikes Law Adopted in France.

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