Kant on Aesthetics (3): Nature versus Art
Philosophy of Wii (ihobo)

File Sharing as Forgery

Piracy-by-mikel-casal.cropped File sharing is often characterised as stealing, but this analogy is flawed. When a thief steals something, someone is deprived of it. When a pirate “steals” a file, they make it more available for greater numbers of people, not unavailable to the copyright holder. It would be fairer to compare file sharing to forgery, for this is the crime it most represents.

With this in mind, consider what would happen if a new device were available in your home that could photocopy any object perfectly (somewhat like the replicator in Star Trek). Clearly, this piece of equipment would thoroughly undermine the institution of cash: coins and paper money, now able to be forged by anyone, would immediately cease to be viable. A new approach to money would be required.

So it is with file sharing. The pirates are certainly complicit in crime, but focussing on this aspect of the situation is naïve. The problem is not that pirates duplicate files illegally, but that the business model of media as packaged goods is now irreparably compromised: like replicated money, a new approach is required. (I gestured at this same point previously, in comparing the file sharing situation to the effect of the advent of the telegraph on the Pony Express).

Perhaps the most viable new option is to switch from a goods model to a services model – media companies would gain revenue for providing media on demand in return for a subscription fee. (An alternative, per download fees, risks heavy invasion of privacy issues). Heavy-handed defences such as DRM are not strictly required for the service model to work, and may indeed be counter-productive to making money when one considers how much media revenue comes from cross licensing (e.g. using songs in advertisements or movie soundtracks; merchandising from TV and movies etc.). Getting a song in circulation adds value to a media corporation's portfolio of assets; the loss in fees implied in personal sharing may be negligible by comparison.

The greatest irony about this situation is that the pirates are already paying for their media on a subscription model. No-one gets internet service for free. Seen from this perspective, the problem is not one of crime prevention, but of broken revenue streams: internet service providers are not passing money onto media providers for the services they are brokering (for pirates). This simple fix could solve the problem in a stroke, but it will not be easy for giant multinational media corporations (who are on the defensive because they are haemorrhaging money) to negotiate fairly with the rather smaller ISPs. But as long as they don't, their leaky revenue model is to a significant degree their own responsibility.

The opening image is Piracy by Mike Cassel, which I found here. As ever, no copyright infringement is intended and I will take the image down if asked.

Comments

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a) How does an ISP-based subscription model handle device-to-device copying?

b) How does an ISP-based subscription model handle varying quantities of content consumption by different people?

c) Given the topic of the article, I love the disclaimer on the opening image.

Hi Peter,

My claim here, I suppose, is not that the ISP should be monitoring the specific uses of media on a case-by-case basis - this would necessitate the per-item fees, and the invasion of privacy that goes with it. My claim is rather for a fixed media licensing fee to be paid to the media copyright owners by the ISPs.

This arrangement may sound difficult to implement - but as I understand it, the general licensing allocation for music rights already solves this problem. General fees are collected from restaurants and bars at a fixed rate and are distributed according to percentages derived from radio airplay statistics. There is no reason that downloads cannot be similarly mediated.

Furthermore, once the hurdle is crossed, the media companies can set up their own portals for torrents et al, they can generate their own ad revenues from file sharing, and their usage data can be used to redistribute the ISP license fees in a manner parallel to the general licensing allocation, but based on torrent cloud sizes.

The logistics have already been solved. The barrier is that media companies do not want to give up the highly profitable packaged goods model that is now thoroughly invalidated. In this respect, their commercial losses are as much their own responsibility as it is the pirates! :)

It may seem that there is a problem here in that users who do not acquire media in this would be paying greater fees to the ISPs... This would be the case if two things happened: the ISPs raise their cost to cover the cost of the license, and consumers did not switch to the file sharing model as their major source of media. Weighing this scenario against the invasion of privacy implied by a per-download scheme, I believe the inconvenience to some ISP users is a relatively small cost, and one in which they still stand to benefit in other ways.

This is especially so if one considers that under a model of this kind, television becomes an ISP provision. Now it's already the case that all cable companies act as ISPs, so there isn't a specific problem in these cases. For those ISPs that are not express television providers, they could experience significantly higher operating costs as a result of the media license and thus might have to raise fees. But this would be balanced by the greater services they would be providing - file sharing services currently illicit that would become licit.

Cut price ISPs could still exist, but they would have to block all protocols that could be used for file sharing (perhaps supporting web email only, with no attachments). I'm not certain such a service would have much of a commercial niche, though! :) (It might not even be possible - your technical know-how exceeds mine in this regard).

This suggestion may not be perfect, but I believe it is the simplest and fairest solution, and infinitely preferable than the invasion of privacy implicit in the obvious alternative of per-download fees.

I welcome debate on this, of course!

Restaurants etc. do indeed pay such a fee. It is per-venue and paid only if the venue chooses to join the scheme. A restaurant that elects not to play recorded music, or elects to use a different model for its licensing (such as purchasing covers of songs under an agreement expressly designed for public performance) need not join the scheme.

In your approach, by contrast, I think the ISPs pay the media providers, no matter how much of their traffic is generated via pirated content? I can't think of an equivalent in the current media world.

I cannot see a case where the ISPs would not have to pass this on to the customer. Internet service provision is already a commodity business, and ISPs are already upset at the amount of P2P traffic going through the system as it's expensive to handle (it uses scarce upstream bandwidth). P2P file sharing is a cost to ISPs, and increasing it is only in their interest if they can charge for that.

More later - need to get to work.

Peter: It sounds as if you agree that the ISPs are the locus of the issue, but don't necessarily agree with my suggestion that fixing the cashflow leak is a particularly viable solution. :)

I'm not against the ISP passing the cost onto the consumer, if this is part of a widespread transition to peer-to-peer media distribution. What this would mean is that internet services, television services and music services would become rolled into one package. This might necessitate working out a way to get internet without the additional media services in a "cut price" version - but can they realistically provide internet and email services without opening the door to peer-to-peer? I'm uncertain.

On the whole, I think I prefer fixing the cashflow leak to stamping down on individual internet use in a draconian fashion. I don't see peer-to-peer services being stopped any time soon, so it makes sense to me that we should find a way to take account of it, rather than pretend that it will be suppressible.

Hope to hear more of your views on this when you get a chance!

(written in another short gap over lunch, apologies. Also, beware: rant ahead)

The distribution network is the locus of the issue, and ISPs can be viewed as the gatekeepers to that distribution network. The British government certainly views them as such, judging by the rather simple-minded view it has of intercepts and logging around the Internet being done at the ISP.

I don't believe that forcing the ISPs to fix your "cashflow leak" is viable. To do this, an ISP would somehow have to monitor what each user is downloading and charge them - technically infeasible, and irrelevant if the rights holders use the likely blunderbuss approach of "you have x,000 subscribers, therefore you will pay us $y per annum". Instead, an ISP would probably have to offer a fixed-fee, fixed-service model, similar in principle to the tiered offerings now in place with different transfer limits. There's then the horrible issue for the ISP of adverse selection bias, where only the heavy consumers will go for the high-end plans, so those plans have to be even more expensive as there are fewer subscribers, and round and round we go.

Outside of all of this fuss, I actually think it's a very good thing to have such a disruptive innovation as the Internet. I think the current model of charging for media is doomed, as it has been for some decades as the cost of good-enough copying has reduced. Your cashflow leak is my indication that the business model is broken. The Internet has merely replaced informal peer-to-peer networks of "lending your mate that record so they can tape it". Ultimately, value is relative not absolute; while the media companies persist in trying to obtain more revenue than a portion of their audience is willing to allocate as the value of a piece of content, then the battle will continue. On the whole, I hope the large content producers lose. The end effect is likely to be the death of some large companies that rely on their back catalogs of content (no bad thing in my opinion) and the rise of new content producers who can distribute almost for free and can survive on much lower revenues (also no bad thing in my opinion, though I suspect you will disagree as you enjoy films while I generally dislike them). I would much, much rather see that future than see a very useful and highly functional tool - the Internet - be locked away, or kept out only in a mangled and blunted form, unable to support the innovation that has characterised it to date. If keeping that tool usable causes some damage to some existing organisations, that needs to be evaluated; but from my point of view, the advantages to humanity of an innovative Internet far outweigh the disadvantages of some high-profile bankruptcies and fewer actors and pop stars living incredibly lavish lifestyles while their record company executives drive around in $car_of_the_moment.

Art has traditionally survived on charity, and the artist starving in the garret is a literary staple. This has changed for a few artists recently as industrialisation and advances in mass production briefly led to economies of scale when copying content - factories to press records, record tapes, press CDs and DVDs.... This model is an historical aberration, no matter how much we might like to look back at only the last hundred years and pretend otherwise. There is, to me, no obvious reason to defend or protect it; no more reason to artificially tilt the playing field to maintain such a short-lived model than there was to ban steam ships at the end of the age of sail.

Societies and institutions evolve. Information flow is a massive evolutionary pressure. Why can we not accept this, diversify, and see what survives rather than employing every artifice at our disposal to try to hold back the evolutionary pace?

Erm. That appears to have turned into a rant, rather than a response. I'm still posting it to see what you make of it - and so that I can come back to it in 30 years time and see how much of it I still agree with!

Peter: thanks for your rant here! You raise some interesting points, and I'm not in enormous disagreement with much of what you say.

But what I am trying to do in this piece is give a fair crack of the whip to the media corporations, and ask the question: if they want to fix their cash flow problems, what are their options, and which of those is the best option?

It seems to me that a flat license, such as the one I propose above, is a good option from the perspective of the media corporations, and not impossible to bear from the point of view of the consumer (although in this regard I might have missed some of the subtlety of your complaints!)

I think a large number of rationally-minded technophiles have the same attitude as you i.e. "screw the media corporations, I would *love* to see them fail" but I think this is a fairly blinkered perspective on the media corporations who, for all their manifest ills, still produce some quality media content that we all enjoy (even if only in part - but then, no-one claimed all media was good for all people!)

The consumers as a whole continue to want TV, films, music etc. which the media corporations fund and provide. Some alteration in approach must take place to account for the dramatic changes brought about (as I mentioned before, and you flag here) by the incredible advances in data storage and copying fidelity.

Just waiting for the corporations to fail seems like asking them to attempt to infringe on our personal liberties. To me, the flat rate license fee for media seems like a positive alternative.

Cheers for wading back in! :)

I don't think "forgery" is a good metaphor either. It is perhaps closer than "piracy", but not by much, I think. I think that IP in the digital age doesn't fit well into any classic law paradigm. Forgery, for instance, implies some sort of misappropriation/misannotation, if not identity theft, that rarely applies in digital media reproduction. Furthermore, traditional forgery implies the use of an inferior reproduction that can long term devalue the original. Certainly digital reproduction rarely results in inferior copies.

I don't foresee any easy answers to the questions at hand, and I don't think your forgery metaphor does any more to help the process than the existing pirate metaphors. I think IP law has to be treated very differently than any traditional property law, regardless of the metaphors you prefer to present your arguments by.

Max: I take your point here, that comparisons with any "old crime" don't stack up in the digital age.

I hope, at least, you can see my point that forgery is a fairer comparison than stealing - even if it too is wildly inadequate. :)

It's true that digital *reproduction* rarely results in inferior copies, but *piracy* does frequently result in inferior copies, doesn't it? And in this it *can* devalue the original. So there is another angle in which the forgery metaphor can be applied that I hadn't considered. :)

"I think IP law has to be treated very differently than any traditional property law, regardless of the metaphors you prefer to present your arguments by."

This is undoubtedly the case. The bottom line here is that the internet requires that we rework the IP laws - but we should not undertake such a revision without first considering what it is that we are doing, and it is this which is difficult to do since media creators and the corporations that fund them are in a state of panic.

It may be necessary to find viable ways to stem the panic before an IP law reboot becomes a possibility.

Thanks for your comment!

Chris, you ask "what are their options, and which of those is the best option?"

"The" best option implies, however unintentionally, some universal Good against which the choices can be judged. Could I ask you to clarify: "the best option" for who? The media companies? Their consumers? The world's human population taken as a whole? Some Benthamish balancing act?

A flat rate, appropriately set, is clearly not impossible to bear from the point of the consumers. The societies in which we choose to live already have many such flat-rate levies, whether they're for road maintenance, policing, the job laughably called "defence" or schooling. One can argue about the appropriateness of any of these. However, I'm very concerned about the appropriateness of the legislation that would be required to put your proposal into practice (for it would need primary legislation, at least in the UK, to force the ISPs to comply and to allow the relevant derogation from the ECHR). Laws defending corporations against the individual have a long history of unpopularity, and laws enshrining the ability of shareholder-owned multinational corporations to screw over citizens and subjects in multiple countries whenever they like feel rather too dystopian for me.

Peter: fair question. Rather than "best option", perhaps I should have said "which of the available options best balances the needs of the consumers against the needs of the media corporations" (and yes, I am assuming that a balance of this kind is possible, however unlikely! :p)

What you write here seems to assume the consumer has nothing to gain in the flat rate solution - but such a solution puts a vast array of media, currently available principally on a "packaged goods" model, into the hands of the consumer at what could be a very reasonable price. Do you not think there is anything for the consumer to gain here?

"The consumer" is not a single individual.

I think there would be winners and losers in any such flat rate solution. I would lose - heavily - as my consumption of the content that would be made available is presently very low. My company's internet connection would presumably also become more expensive due to such a levy, despite our overall very low media consumption via that connection.

I'm also concerned about what happens to the levy once the media companies open up in such a way. My concern relates to the tragedy of the commons. Let us assume that the availability of such a vast array of content causes a renaissance in the arts, a rediscovery among some fraction of the population in general of the delights of Pink Floyd, Bucks Fizz and the published works of Mel Blanc. They consume it avidly, and hence overall consumption increases. After all, there is now little to no incentive to limit their consumption. Then the bill comes in from the media companies, next time the levy is renegotiated... and *everybody's* internet access becomes more expensive, driven by the actions of a minority.

Finally, consider (say) the production of films - possibly a red herring if they make sufficient at the box office - but certainly of music and made-for-TV media. At present, production costs are limited based on the expected return. But how do you set an appropriate budget when either of the two following conditions are true:

a) You rely on flat-rate subscriptions that you are not allowed to renegotiate, and hence providing new content will not provide a new revenue stream;

b) You rely on flat-rate subscriptions that you *are* allowed to renegotiate, and hence the cost of any new content is spread equally across all users of the service, whether or not they would choose to consume the new content?

Peter: I take your point that there is a diversity of individuals to be considered, and also that flat-rate solutions don't lend themselves to the natural self-regulation that predominates in the usual marketplace. I still think there are merits to the approach, especially when compared with the "crackdown" alternative - which is all that is currently being mooted.

I have to say, from my occasional monitoring of torrent sites, I am always stuck by the degree that traffic is obsessed with the current and recent. Older material is very hard to get at, often impossible. I don't believe that an opening up of this distribution method would change this overall shape significantly - most traffic would be for the most recent content.

Because the flat rate would be divided up according to the volumes of traffic generated, I don't think there is the possibility of the media companies demanding higher billing because of excessive usage (your "tragedy of the commons" scenario) - rather, the media companies would be competing with each other for a larger share of the download traffic (just as they already do for a larger share of radio airplay allocations, TV ratings, box office etc.) in order to get (a) a bigger share of the license fee and (b) greater ad revenues.

This latter point is key: under this new scheme, media companies are making ad revenue from their access sites, so a boom in traffic can equate to a boom in ad revenues. There is no need to turn to the consumer for additional fees in such a scenario: the media companies can make extra revenue anyway.

Perhaps a more reasonable concern is the flat fee being a levy passed onto people who are not gaining the benefit, as in the case of your company's internet fees. My contention, however, is that the flat fee implied will be bearable for an individual consumer, and therefore it should not be problematic for companies to cover.

I think in the case of films, there is already a multi-tier cash flow situation - box office generates the lion's share of revenue, followed by boxed product, followed by licensing to TV stations (although in fact I may have these latter two back to front). No movie is going to be dependent upon share of the flat-rate subscription for its returns; rather, the share of these monies becomes a replacement (or supplement) to sale of boxed product and licensing to TV stations.

I don't think there's risk that providing new content will not generate new revenue - the situation here is equivalent to the way TV stations compete with their new shows for audience attention. They want the audience attention to get money from advertisers; if they don't get this, they axe the shows. In the set up I'm proposing, download share replaces audience share, and download ads replace in-show ads, but the mechanics remain fundamentally the same. The ad revenue is there for the taking by the most popular TV shows!

A possible objection concerns volumes of ads, however, since a TV show in the US embeds a vast quantity of commercials while in the download scenario this would be less viable. It's hard for me to know how these numbers would pan out.

Ultimately, the main alternatives to flat-rate are either per download fees (which imply considerable invasion of privacy) or continuing the embargo against file-sharing. I don't see the latter solution as particularly viable, personally, not without it too ultimately leading to the intrusion implied by per download fees. If we have no choice but to accept the intrusion, the per download fees make a lot more sense. But I'd like to avoid the implied invasion of privacy, and for this the flat-rate seems to me a more viable solution.

Cheers!

Thanks. The forgery analogy is, for me, close enough. For example, a forged bank note is still a forgery even if it's a perfect copy, as it devalues every other note in existence.


Personally think they should just sell distribution rights along with the actual media, as you gain the ability unavoidably anyway.

The greater cost to the buyer is offset by the downstream profits. Rather than dealing with licensing issues, graft paypal to the torrents.

Alrenous: what you're proposing is what I'm calling the per-transaction solution - each download becomes billable automatically. It implies considerable invasion of privacy, I believe - unless one accepts a black market of torrents and has a "white market" which is billable, and competes in terms of superior service etc. I feel the flat fee solution has the considerable merit of not involving invasion of privacy.

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