Friday, 24 February 2012

The Content Providers Strike Back

It is a period of great conflict on the Internet. For years, the War against Piracy has pitted content providers (the entertainment industry, movie studios, record labels, publishers) against guerrilla bands of techies and lone digital freedom fighters with the ordinary consumer caught in the middle. Following a massive wave of protest against digital restrictions when hundreds of websites took themselves offline to protest the USA’s restrictive SOPA and PIPA legislation, the content providers have struck back and are driving the conflict to a head: the file hosting site Megaupload was shut down and the owners including Kim Dotcom (1) arrested for copyright infringement; the ebook hosting site library.nu was shut down after a coalition of publishers issued an injunction against the site; earlier this week, the UK High Court ruled that the torrent hosting site, The Pirate Bay, facilitates copyright infringement and could potentially be blocked by UK ISPs. 


Short of shutting down every new torrent hosting site, how can content providers effectively combat piracy? How can they survive in a new digital-based economy? Who will emerge triumphant from the battlefield of the War against Piracy? 

A couple of years ago, I wrote this article for The Guardian’s Comment is Free in which I argued that treating digital commodities like physical commodities is a mistake. In an economic system based on physical commodities, resources are controlled by scarcity, by physical distributions, and by resources’ natural decay. Content providers have total control over these products – where they go, how they are used, etc. A vinyl record cannot be easily copied, can only be manufactured by the content provider, can only be obtained from a designated shop, and eventually degrades. The quintessential physical resource, gold, is only valuable because of its scarcity. In short, the economic system of physical commodities is based on physical restrictions. 

Digital commodities don’t have physical restrictions and therefore require a different economic system. An MP3 file can be copied ad infinitum, can be shared easily through the framework of the Web, and will remain playable for as long as the software is available to play it. The balance of power has shifted and the customer has a lot more control over the product. Rather than adapting to digital commodities, many content providers have simply imposed – or tried to impose – physical restrictions on digital resources: making files with DRM, files that cannot be copied, files that can only be opened a certain number of times, ebooks that can only be opened by a certain number of users at a time (2). These methods of restriction are artificial – they are imposed by the content provider to generate artificial scarcity – and they are a way of holding on to an out-of-date economic system. 

Over the past few years however, a new economic system has developed: one that is more suited to digital commodities and the increased control of the customer. A ‘trust economy’. In the old economic system, customers paid for content for one reason: it was the only way to get the content. In our new economic system for digital products, customers aren’t forced to buy movies, books, music, etc.: there are other ways to get them. And so we have different reasons for paying for content. First, because we feel it is the right thing to do: that creators deserve to be rewarded for their work and creativity. Second, because the paid content is easier to get than the pirated content (3). 

These reasons for paying for content both involve trust and openness. If content providers trust their customers to do the morally right thing and treat them like adults by providing high-quality content and being open by not imposing artificial restrictions, then customers reward them by pay for their content. Rather than the cynicism and distrust of artificially generating scarcity or imposing artificial restrictions, the trust economy returns to a more basic economic philosophy: ‘if you so something well, you get rewarded’. (4) 

Piracy tends to occur in circumstances where content providers are not open, do not provide a high-quality product, and do not trust their customers or treat them as adults. This recent Oatmeal comic demonstrates this in the case of HBO’s Game of Thrones (5). The comic prompted an interesting comment discussion on Gizmodo about why people pirate content. And Cory Doctorow discussed this recently on BoingBoing in relation to a study which showed that US box office returns are not correlated to BitTorrent sharing. Rather, torrenting increases when a content provider makes a resource artificially scarce: the example used is piracy driven by the gap between US and UK releases of The Muppets. 

The economic principles of the trust economy are openness, mutual respect between content provider and customer, and trust. Digital commodities have already given customers more control: content providers can either treat them like adults and trust them to do the morally right thing or continue to artificially restrict digital content. The content providers who recognise this developing landscape and who adapt to it will be the ones who survive the War against Piracy. 



(1) Not his birth name but it’s not as bad as some of the other pseudonyms listed on his Wikipedia page.

(2) As a librarian working with e-resources, this last one is the one that really gets on my nerves. It’s often the high demand ebooks, the ebooks labelled as required reading on reading lists, that run into these limits and result in students being unable to get access: a problem that is exacerbated by the high demand that caused the problem in the first place. 

(3) The economic principle behind iTunes Music Store. 

(4) On the theme of treating customers like adults, consider that patronising ‘You wouldn’t steal a handbag; you wouldn’t steal a car’ film at the start of DVDs. This film is so irritating because: 
a. it demonstrates the content providers’ lack of understanding and makes a category mistake by equating a digital commodity with a physical commodity. 
b. it punishes precisely the wrong person. It makes someone who has done the right thing by buying the DVD suffer through a patronising video which accuses them of being a criminal. 

(5) FYI, even though that comic has been doing the rounds, Virtual Shackles made exactly the same joke months ago and did it a lot more subtly.

3 comments:

Richard Veevers said...

Brilliant, glad this subject is beginning to get attention.
I'd like to add a couple of quotes "Intellectual property is the oil of the 12st century"
Mark Getty.
No it isn't Mark http://www.nytimes.com/2008/02/26/business/media/26getty.html?scp=1&sq=hellman+%26+friedman&st=nyt

"Intellectual property is neither"
Siva Vaidhyanathan.
There are some excellent documentaries about this issue, "Good Copy, Bad Copy" "Steal This Movie" and "RiP a Remix Manifesto"
This is an issue that will not go away however much the established distributors want.

Simon Barron said...

It's an issue that I imagine will get more prevalent in the next few years: digital commodities are such an intrinsic part of our lives and our social structure now that there's no ignoring them.

I'll be sure to check out the movies you've recommended. My favourite books on digital rights issues are Free Culture and Remix by Lawrence Lessig and Cory Doctorow's essay collections Content and Context.

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