[p2p-research] Response To The White House's Request For Feedback On IP Enforcement

[Ryan]

  Sent to you by Ryan via Google Reader: Response To The White House's
Request For Feedback On IP Enforcement via Techdirt by Mike Masnick on
3/24/10
Last month, we noted that the White House's "Intellectual Property
Enforcement Coordinator," Victoria Espinel, better known as the IP Czar
-- a position just created by 2008's ProIP bill -- had reached out to
us and a bunch of other websites that discuss issues surrounding
intellectual property and alerted us to the request for public input on
the White House's IP enforcement strategy. Below is the email that I am
sending in response. If you would like to send your own email, please
note that they're due today, Wednesday, March 24th by 5pm (ET, I
assume). If you notice, there are some similarities between this letter
and the one I filed with the USTR on the Special 301 report. There
seemed like no reason to reinvent the wheel, when I was happy with how
parts of that first letter turned out: Re: Comments on the Joint
Strategic Plan

Victoria Espinel
Intellectual Property Enforcement Coordinator
Office of Management and Budget
Executive Office of the President
Filed via email

Dear Ms. Espinel:

I write to you today as a long-time content creator, who makes a living
off of my ability to continue to create content and receive
remuneration for that activity. And yet, I am concerned about the state
of US copyright law, and the fact that it does not serve my interests
or the interests of the vast majority of content creators today.
Despite being a professional content creator, I have purposely chosen
not to make use of copyright law, because the way it is structured
today actually hinders my own ability to profit from my content
creation.

Based on this, I would like to address three key points in response to
your request for comment on the strategic plan for IP enforcement:
- Any efforts at enforcement should be judged on the actual evidence,
rather than faith-based claims of "harm" where no harm may exist.
- The actual evidence suggests that less enforcement may actually
increase economic and cultural progress -- and thus, any government run
enforcement plan should tread carefully.
- There is an important difference between harm to certain companies
that don't want to adapt to a changing market, and harm to an overall
industry -- and we too often confuse the two. Promoting Progress

The central tenet of copyright law has been, "To promote the Progress
of Science and useful Arts," and the mechanism for this is both
copyright and patents, or more specifically, "securing for limited
Times to Authors and Inventors the exclusive Right to their respective
Writings and Discoveries." Unfortunately, over the years, all too often
we've lost sight of the beginning of that sentence, in the assumption
that any increase in those "exclusive rights" must surely "promote the
progress." And, yet, as we have expanded and stretched copyright law
time and time again -- and almost never contracted it -- no one ever
seems to ask for any actual evidence that stronger and lengthier
copyright law leads to promoting more progress.

This is not a new concern. Thomas Macaulay famously argued in 1841 that
we ought to be careful to only extend and expand copyright upon
evidence that such an extension or expansion would, in fact, lead to
greater incentives to create. Yet, to this day, our public policy has
been to take it on faith that stricter copyright laws lead to greater
incentives to create -- despite the lack of evidence to support this
position. In fact, the evidence has suggested that as technology has
decreased the ability of copyright holders to enforce copyright, the
incentives to create have only increased. And this is not just the
ability to create as an amateur, but the ability to create and earn
money as a professional.

A Look at the Evidence

A recent paper by economists Felix Oberholzer-Gee and Koleman Strumpf
demonstrated this in rather great detail, highlighting that even as new
technologies have undermined classical copyright law, there remains
little evidence that this change has undermined the incentives to
create. In fact, the research collected in that paper and other papers
(such as the research by economist Will Page of PRS for Music in the
UK) suggests that more people are creating new works of music today
than ever before in history. The same is true of movies, an industry
that has seen the number of annual releases double in the last five
years alone and box office results continue to increase to record
numbers.

Given this, it is unfortunate that your request for comment on
enforcement strategies focuses solely on one half of the equation: "the
harm." Looking at the actual evidence on the economics of intellectual
property, it suggests that there are also benefits to reduced
intellectual property enforcement -- and, in fact, those benefits may
outweigh the costs. A bigger concern should be that overly aggressive
expansion of intellectual property enforcement will actually cut off
important forms of expression along with cultural and economic
progress. The Oberholzer-Gee and Strumpf paper is quite detailed in
reviewing the facts, concluding that "weaker copyright protection, it
seems, has benefited society." They do this analysis both economically
and from the viewpoint of output. More content than ever before is
being produced and distributed, and the vast majority is being done
outside the boundaries of traditional copyright law. At the same time,
the amount of money being made by the various industries involved in
these endeavors has continued to rise.

Even the music industry -- often seen as being the most hard hit -- is
actually doing better than it has done in the past. This is because the
breakdown of traditional scarcities in the market has fueled important
and valuable new business models. The greater efficiencies of the
system mean that consumers are actually getting more value, and are
actually paying more than in the past. In economic terms, the shift in
the market, sometimes associated with intellectual property
infringement, has actually driven much greater complementary revenue
streams. This argument may seem counterintuitive at first, but it is
not as surprising when you recognize that modern technology, often by
enabling further infringement, has also made the creation,
distribution, promotion and consumption of such content significantly
more efficient. Trying to block the infringement through greater
enforcement via the law does not come without costs. It can serve to
significantly burden those other areas as well, leading to decreased
output and decreased economic activity.

The real issue is not harm to society or to the economy as a whole.
Oberholzer-Gee and Strumpf's report shows that the overall music market
has grown, such that in 2007 it was actually 66% larger than in 1997 in
terms of revenue. This is not an industry in trouble. The problem is
that one segment of the entertainment industry has seen harm: those
firms that have relied heavily on copyright protections for their
business models. However, as we have seen, the wider industry has
already successfully been putting in place alternative business models.

Given that, it would be a dangerous mistake to increase enforcement
policies, or to put in place new rules that may stifle these new
opportunities and new models, as they are growing. I recognize the
concerns of those in companies that have not been able to successfully
adapt, but we should not be setting policy to rescue or support
specific companies -- especially as the overall industry is thriving
and consumers are benefiting greatly.

For detailed methodology on how the music industry has been thriving,
you can read the Oberholzer-Gee and Strumpf report at the following URL
http://www.hbs.edu/research/pdf/09-132.pdf. Further support for similar
results in more focused areas comes from Will Page, the chief economist
for PRS for Music, looking at the UK market for music, which is also
growing: http://bit.ly/ukX9Y.

Policy Implications

These studies, along with numerous others, point to important facts
about how industries can adapt, even in the face of
technologically-weakened copyright, without the need for greater
enforcement. But they also raise an important point: before our policy
on copyright is made without actual evidence, it is important to allow
the market to function to see if it can adapt appropriately. This often
creates disruption, but we should not assume that a disruption within
some companies within an industry means that the entire industry is
imperiled.

Given all of this, it would be unfortunate to rush into any form of
greater enforcement without evidence that it is actually needed.

 From a specific policy perspective, then, the Joint Strategic Plan
should set out a process for actually judging the real economic impact
of stronger enforcement, rather than starting from the assumption that
greater enforcement is necessarily good. It should not only look at the
claimed "harm," but the flip side as well, the vast "benefits." It
should step back from the question of "how do we increase enforcement"
to ask whether stronger enforcement actually does serve to "promote the
progress." For 300 years, since the Statute of Anne in the UK,
copyright has been mostly a faith-based initiative. There is an
opportunity now to bring actual evidence into the decision making
process. I look forward to seeing how IPEC proceeds in making sure that
any efforts in enforcement are based on actual evidence and tied back
to that key requirement: "to promote the progress of science and the
useful arts."

Sincerely,

Michael Masnick

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