The Controversy Over Content: Piracy 101

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The Controversy Over Content: Piracy 101



By: Scott Piercy and Nigel Woodford


An increasingly hot topic of discussion, the infringement of copyright has become a divisive issue. As technology catches up with and surpasses copyright holders’ ability to protect their works, more and more invasive technologies come to the fore. Real privacy concerns abound as well, as copyright holders become more insistent and bold about protecting their content. You can naively argue the simple "it's right, it's wrong" approach to determine where you personally stand on the issue of copyright infringement, but the world rarely blesses us with the ability to categorize complex issues so easily. Let's take a deeper look into the actual issues, along with some historical perspective so that we can have a better understanding of what's really taking place.
Many think that this is a relatively new issue. History though, shows us that it's anything but recent. As long as human beings have been living in organized societies, reaping the benefits of technology, they have had to embrace and adapt to the societal shifts caused by technology. In every historical instance involving a technological impact, it is the society that has to adapt to those consequences, rather than the other way around. Oftentimes those consequences are quite unforeseen, even by the people who are responsible for the development of those technologies.
Fast forward. Today we see the internet becoming an utterly pervasive aspect in our lives, and even in its infancy having fundamental impacts on society at large. While I could write an entire book about those impacts, I'll limit myself to how these impacts relate to the two most popular entertainment mediums, audio and video. As I hope you'll see, it's not a black and white issue at all.

First off, let's discuss exactly what copyright is and the purpose it was intended for. Though various forms of copyright law have existed throughout the ages, I'll not turn this into a dissertation and focus on the law as it's used in the United States. The first Copyright law in the United States was enacted in 1790, "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." What copyright law does is provide a legal framework for artists and (and here is the point) content distributors to make money.
Look at it this way. Artists are not infrastructure people, nor do they usually involve themselves in distribution on a grand scale. Authors rarely go to trade schools to learn how to bind books. Your average singer certainly doesn’t have a factory for pressing CD's. By allowing an artist to copyright their works, it gives the artist legal clout, and the ability to make legal contracts with others so that both entities can potentially make money off of the endeavor.
This is a business model that has worked successfully for centuries and has survived by cautious adaptation when threats arrive to the model. The current situation is really no different (except perhaps in scope) from the "controversies" that erupted over the introduction of other modern technologies, such as the 8 track tape, cassette tape, VHS, Betamax, introduction of the DVD, ect... No movie studios went bankrupt, and no recording studios closed down as a result of these past threats. Indeed, one can look at the recent past, and realize that media industries have adapted extremely well, using these new technologies to open additional avenues for generating revenue. Even going back to the Gutenburg Printing Press, piracy/forgery has been an unavoidable consequence of technology. We still have books don’t we? Publishers and authors still make money right?
Thirty years ago, when a production company released a movie, it played in the local movie theater. If you were lucky, it might be on network TV heavily edited a few years later. Now? You see VHS releases, DVD releases, special DVDs with additional content, boxed sets, Cable, Satellite, and Pay Per View. Most movies will make the bulk of their actual profits from outlets other than the traditional movie theatre. Technology has clearly opened many additional avenues and revenue streams. Most consumers have adapted to this status quo and have accepted the fact of paying for the same thing multiple times for multiple experiences as a matter of course. Why? Mainly because there were few realistic alternatives.

The "Fair Use Clause" in American copyright law was put in place as a protection, so that consumers need not worry about the legality of doing things like making archival copies for personal use. After all, physical storage mediums no matter what format they may be, have finite life spans. Historically though, actually exercising your rights was often a complicated process, because making archival copies was often either technically challenging or expensive. Today, there are two fundamental changes in the landscape for consumers and media companies. First, actually exercising ones "Fair Use" rights is pretty easy these days. As always, technology is an "enabler" allowing people to do things they otherwise could not. Secondly, a better more efficient and less expensive method of content distribution has come into being. This is that "internet thingy" you've all heard about on TV.
Despite reports to the contrary, media companies have largely ignored the internet and its potential for content distribution until quite recently. Well, it would be more truthful to say that they've avoided it. Plain old fear is the most obvious reason. Let's rewind to the day's of Napster (the original one, not the shadow of it's former self it is today) so you can begin to understand why that fear exists and is justified.
Though not by any stretch of the imagination was it the first way of distributing music files, Napster was the first EASY enabler of sharing music content, and boy was it popular. If you look at historical graphs of record company sales against the history of Napster, it's clearly evident that as Napster's popularity increased, so did record sales. Why is this? Well, during that timeframe CD burners and blank media were rather expensive so many were using it as an avenue to get music on their PC's only. Also during that timeframe, record companies had mostly eliminated the distribution of CD singles and cassette singles because they ate into the sales of higher margin albums. In this sense, Napster filled a gap in consumer need, by satiating the people who wouldn’t buy a whole album for one song, as well as giving people a previewing tool (better than the randomness of radio play) to decide what to buy. While this fact was evident and obvious to many (including many a dissertation at esteemed business schools and countless independent industry studies), it was a fact that just didn't permeate the ivory towers of media giants. Why? If you look at the larger picture, you realize what a scary thing Napster was.
Remember that thing we discussed earlier, called copyright? As a legal tool to enable artists to sell limited rights to content producers and distributors, it has a valid purpose. However, it does nothing to protect content producers and distributors from the inherent inefficiencies of their aging business model. Imagine if you will a comparison between a pay-for-media service on the internet, and the average path of content distribution in traditional business. Bear with the oversimplification. In the case of the internet once media is created you need a server, advertising, and a way to collect money and that's pretty much it. Issues such as format and packaging thus become the problem of the customer to figure out. In the traditional business model, you have factories that press CD's, factories that make the packaging, factories that make the cellophane wrap, design houses that make cover art, warehousing companies, trucking companies, regional distributors, and retailers. All of these involved entities naturally must hire employees to service all of the customers along the supply chain. It's not rocket science to grasp that the first method is easier, with significant potential in reducing overhead cost. It should also be evident that the traditional method is inordinately more complex and more expensive in comparison. Can content distributors afford to make their entire infrastructure nearly obsolete? Obviously they can't.

Not to ignore copyright law itself, it has undergone many a facelift in the United States in recent history. The first copyright law enacted in the United States in 1790 had a term of 14 years with a renewal provision, meaning an artist could effectively retain control over their work for 28 years. Considering the average lifespan of that time period, the terms seem quite reasonable. And besides, if you can't profit from your work in 28 years, maybe it was because your work had no merit or value. With recent changes in copyright law however, the terms have become utterly absurd. How absurd you may ask?
Have you ever heard of the song "Happy Birthday"? Initially published in a book "Song Stories for the Kindergartener" in 1893 and originally titled "Good Morning To All" a second stanza was added in 1924 (note: the actual "Happy Birthday" part). It was eventually republished and copyrighted in 1935 as the song we know today. With current U.S. copyright law's, the copyright holder (currently a division of Warner Communications) has rights to it until the year 2030, and still averages making about $2 million a year off of commercial licensing fees of the song. Don’t worry; singing Happy Birthday to your 8 year old won’t land you in jail. Sharing the song in Limewire though would be illegal, even if it's older than your great grandmother. The last of the two sisters, Mildred and Patty Hill, who were the artists responsible for creating the tune, died 59 years ago. Ironically, because the original song and lyrics were published in 1893, the actual tune itself is now public domain. If you cannot see the absurdity here (and I do admit it is an extreme example), I suggest a visit to the optometrist. Copyright law has thus evolved beyond merely being a mechanism to protect artists. In this author's view it has become a mechanism primarily to protect industry, simply because the terms of copyright have far extended beyond ones own reasonable expectations of living. Look at the fortunes of a mega-star like Elvis Presley whose estate has somehow made far more money after his own death than he ever made when alive. I’d call that pretty talented for a corpse. It's situations like these that bring to me the realization that copyright has become something intended to protect asset's more so than an artist’s work. In effect, copyright has become a tool to make the wealthy even wealthier by riding on the coattails of someone else’s accomplishments.
Today, it's certainly no secret that there are a myriad of ways to gain access to copyrighted material without paying for it. The most common ways today on the internet involve P2P services, which are person-to-person (hence the nameP2P) file sharing services and applications. I doubt I can recall all of the methods off the top of my head, but anyone with the capability to Google will find a lot of information pertaining to such choice search words as "Ares, Piolet, Limewire, Bearshare, Kazaa, Morpheus, Grokster, WinMX, IMesh, Emule, Edonkey, Shareaza, Bittorrent, Azureus, Bitcomet, Bittornado, Bitlord, ABC Torrent, DC++, IRCSpy, Usenet, ect..." Some of these services have had to bow to inevitable pressures from industry lawsuits, but most of these still exist. You can argue that these P2P services are either right or wrong, and easily tie yourself up in endless debate over the moral and legal issues involved. One thing is clear. This is very popular activity. Sure there are some pay-for services, but most of them are various combinations of clunky, cumbersome, limiting, and/or expensive. Why should one pay $.99 cents for a song from a "legitimate" service and be limited what you can do with it, and where you can listen to it? When you do the math, it's more expensive and less convenient than buying an album, and at least when buying the album you can easily rip the songs to MP3's to play on your computer or portable media device. Even this is becoming a more difficult activity as of late, with new CD protection schemes. And let's not forget the debacle not too long ago with Sony and their "rootkit" fiasco.
The thing to realize here is that media companies are at least at this point in the game focusing on offering different experiences, rather than content. Digital Rights Management technologies are the attempt to limit what one can do with the media they pay for, and thus turn content into yet another "experience" to make money off of, rather than it being an actual purchase of content you can use as far as your "Fair Use" rights supposedly allow. Consumers have been trained to accept this way of thinking of course; otherwise there wouldn't be such a hungry appetite for all the additional revenue streams that now exist for content producers. What's worse is there are a myriad of different DRM schemes. The reason for this is simple. Greed. Companies like Sony, Microsoft, Apple, and others are attempting to capture market share and keep that market share tied to their method of distribution. Interoperability and ease of consumer use are not issues that matter in this context. This is the sole reason why we now have two new competing formats for high definition video, known as Blue Ray and HD-DVD. Fracturing consumer markets with two formats is done on purpose, because it's all about licensing and market dominance, with the technical merits of either format a secondary issue.
Some changes are happening though. The growth this year of video services like Google and Youtube has spawned a small sea-change in video distribution. Some television studio's, seeing cable, home theatre, and the internet steal their customer base, have begun releasing some downloadable video content online, to raves and significant levels of success. But it's still a drop in the bucket, relative to what goes on in the P2P universe.
It is true that media companies are slowly embracing the internet, but only in the half hearted ways I've described. They're still realistically threatened with the impact embracing technology would have on their traditional business models. There are simply too many "middle men" that have a vested interest in the status quo. Even with the threat though, one fundamental tenet of dealing with customers is most definitely playing out. If you do not offer what a customer wants, they will most assuredly go elsewhere. It's this singular reality that fuels the growing popularity of P2P services, and until content providers, government, and law come to terms with this undeniable reality, P2P isn't going to go away anytime soon. (Addendum: last years Supreme Court decision in regards to Grokster vs. MGM, and recent shutdowns of other services really does nothing to change this, despite a lot of media "spin" to the contrary.)

Today, the media giants exhaustively wage media campaigns, push for increased use of Digital Rights Management, and are continually pushing the boundaries of privacy, by actively monitoring the internet, having courts subpoena information from Internet Service Providers, and suing "grandmothers and children" along with hardcore file sharers. Why do I think they're engaging in this rather unfriendly seeming behavior?
My view is this: media companies are not ran by idiots, and though most people have a somewhat low opinion of lawyers and lobbyists, you can’t be a moron and pass a Bar exam. Anyone with a clear sense of all the issues involved would have to realize that eventually, technology always wins. People adapt to technology, and embrace the aspects of it that give them the experiences they want. Society, government, industry, all must adapt to the consequences of this, or different models of behavior will become the norm. Flip open a history book, if you honestly think that's a crazy assumption. What we're seeing today in the news and media, as well as in courtrooms, is little more than a holding action, the intention being to give industry much needed time to put their own strategies to the fore. It's quite obvious within the media giants and lobbying groups that the intent is to slow the rate of change to foster adaptation, and quite naturally continue to rake in the same massive profits they always have. It's not a crime to look out for the interests of your share holders. It is disturbing; however, how the current legal landscape seems to overwhelmingly favor big business. Even worse, industries are choosing methods of Digital Rights Management that do little but punish the very customer they're supposed to cater to.
Technology coupled with desire is a hard nut to crack though, and most all of the industries strategies to protect it's content, crumble within days or weeks of their introduction. Being a realist it would seem to me the easiest solution would be to reduce the focus and R&D expenditures on DRM (since it's so far been a huge waste of effort), and simply offer more content, more easily, at much lower prices. There are some, a vociferous minority perhaps, who wouldn’t ever pay for content again, simply because they've gotten used to not having to pay for it. Others view the actions of such groups as the MPAA and the RIAA with disgust, and choose not to purchase content legitimately for reasons of protest. And let's be frank, nothing can be done about those two groups, as it's basically too late to win them back as customers short of changes in law and enforcement of law. The devil is always in the details, and at this point it still remains to be seen just how law, and its interpretation and enforcement will play out against issues such as privacy and “Fair Use.” It's already becoming quite Orwellian in nature if you ask me.
What is clear to me? Piracy of content has gone on as long as humans have organized into societies and created content. My favorite historical example was the widespread use of counterfeit "indulgences", shortly after the invention of the Gutenberg Printing Press in 1450. Think of "indulgences" as sort of "Get Out of Hell Free Cards" (apologies to any Catholics or Christians for comparing the consequences of sin to a board game) the Catholic Church made and sold during that time period. Not only were these a significant revenue stream for the Catholic Church, they were also barterable items, often sold or traded among those who could afford them. Last time I checked Catholicism was still the #1 Christian religion (though the printing press did play a fundamental role in Protestant Reform).
No amount of law or enforcement of law will eliminate the appeal of new technologies. The trick is determining where to draw the line between law and individual freedoms, so that the adaptations of new technology become accepted and normalized. Right now the line is not only blurry, but jumping dangerously close to having negative consequences for individual freedom and expression.
Piracy has always existed in human society in one form or another, and to an even greater degree, individuals have always been willing to do what it takes to get the things they want. It's clear that piracy for profit is on the rise worldwide, and unfortunately that activity is also driven by consumers. Some content providers, such as Warner Communications, have attacked this problem in unique ways, by offering very cheap content in countries that have poor legal structure for dealing with copyright, such as China. Nevertheless whether you're talking history or just yesterday, companies are still managing to make a lot of money, and no societies or economies have collapsed as a result. Businesses adapt, and time marches on. Let's hope sanity marches alongside.
It is a great time to be witnessing another historical paradigm shift in progress don't you think?
Want some popcorn?