RECOMMENDATION 1: RESPECT CREATORS
We believe in respect for artists. Having a fair and flexible copyright system means that artists can make a living off their work, while users have the freedom to share, collaborate and create online. Copyright rules should therefore support platforms, business models, and alternative licensing systems – like Creative Commons – that give content creators greater control over distribution, while also encouraging citizens’ rights to share with others. Copyright law should balance fair compensation with ensuring that artists have access to the content they need to remix and build new works.
In order to fully unleash the possibilities of the open Internet, there are two things digital policy must foster: the potential for Internet users to share and remix knowledge and culture quickly and easily on a global scale; and the potential for creators to access livelihoods not controlled by gatekeepers, the Big Media companies that have traditionally monopolized financing and distribution. These gatekeepers have the ability to create “winner-take-all” economies dominated by a few big celebrities in the creative and knowledge production fields.
By contrast the Internet allows for a much greater range of amateur and emerging artists to reach larger audiences. While we are often led to believe that in the digital age, sharing and creativity are diametrically opposed, the right approach to copyright understands that these two things can be mutually reinforcing. Unfortunately, Big Media gatekeepers and their lobbying organizations, like the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA),1 have had a disproportionate influence over copyright policy in recent years, and have pushed forward the idea that Internet users pose an existential threat to creators and creative industries. But, as we explore here, evidence shows that as users share and connect more directly with creators, the possibility for grassroots financing and distribution of cultural and knowledge production grows. Similarly, as creative and intellectual works enter the public domain and can be freely shared, the field for cultural and knowledge production that builds on past experience and tradition gets infinitely richer.
At its best, the Internet helps us return to the experiences and values we were likely encouraged to have as children: sharing and creativity. Our first recommendation is that we continue to nurture these values and experiences by respecting creators, and fostering a sharing-first culture that creates an atmosphere that is conducive to creativity. We can do this through a copyright agenda with four components: ensuring creators have access to new platforms; promoting approaches to copyright that allow creators broad scope for sharing and fair dealing / fair use; ensuring reasonable penalties for copyright infringement that prioritize compensation for creators; and finally, creating a rich public domain.
CREATIVE INDUSTRIES, TECHNOLOGICAL INNOVATION, AND THE SHIFT TO ONLINE DISTRIBUTION
Past experience with technological innovation demonstrates the need to take industry claims about the harms caused by innovation with a grain of salt – one of the best examples comes from the 1980s, when there was a coordinated effort by the film industry to have the VCR prohibited. Then-head of the MPAA, Jack Valenti, told a House of Representatives Subcommittee: “I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone.”2 As Forbes magazine points out, “Of course, home video (and later DVD) went on to become a hugely profitable delivery channel for movie studios. Far from decimating the industry, it grew profits, especially for studios like Disney with valuable back catalogs. It just goes to show, disruptive technologies can have different effects than you expect.”3
Now that more than a decade has passed since the shift to online music, studies have emerged challenging industry claims about the threat of this shift: piracy does not “kill” the industry and the negative impacts reported are either unfounded or exaggerated. A ground-breaking study by the London School of Economics (LSE) discovered three important counter-points to the music industry’s reactions to the online shift: 1) that though lobbying organizations claimed otherwise, the music industry was doing reasonably well, and that much of their data was misleading; 2) that declining sales of recorded music should be explained not just by file-sharing but also by decreasing disposable household incomes for leisure products and other shifts in patterns of music consumption; and 3) that increasing revenue from live performances and growing digital revenue, including from streaming services, were offsetting the declining sales of recorded music (Figure 1).4
Not only do streaming services bring in increased income for the industry (suggesting that if the music industry had adapted to the digital environment earlier, rather than investing in lobbying to protect a dying business model, record companies could have enjoyed much earlier growth in the sector)5 these services also seem to help curb piracy quite dramatically.6 And the real effects of piracy are open to a very lively debate: a 2013 report by the European Commission showed that piracy did not displace legal music purchases in digital format, and that the majority of music consumed illegally would not have been consumed if it was not freely available.7
We also know that most creative industries are doing quite well: despite the MPAA’s claims about the devastation of online piracy, Hollywood achieved record-breaking global box office revenues of US$35 billion in 2012, a 6 percent increase over 2011. Though revenue from DVDs declined in the decade from 2001 to 2010, total global revenue increased by 5 percent.8
Similarly, in the publishing industry, though revenues from print book sales have declined, increased sales of eBooks have offset this, and despite the alarm about the “end of the book,” the rate of industry growth is not declining.9
The music industry, which has been hardest hit in terms of decline in traditional revenues (Figure 1) demonstrates not only growth in revenues from live performance, but also strong growth in digital revenues (Figure 2). These now account for more than a third of global music industry revenues and helped the music industry increase revenue year over year between 2011 and 2012, the first time since 1999 that industry revenue has grown.10 This growth has been predicated on innovations that deliver content to users in a format that is easy and desirable to them, something the older Big Media companies have neglected while instead focusing on efforts to suppress technological advances and protect their out-dated business models.11