The Slippery Slope from Voluntary to Mandatory
By Ed FeltenI’m sympathetic to Fred’s view that if we’re going to have a collective licensing system, it should be voluntary on all sides. But I worry that if we adopt a voluntary system, pressure will build to make it mandatory.
Consider the consumer’s plight in a voluntary system. I want to listen to some track. I don’t know (or care) which label it comes from, or whether that label has opted in to the collective license. In short, I don’t know whether I can legally download the track I want. This problem is easily fixed by making the license mandatory for copyright owners.
Now consider the plight of a label that has opted in to a voluntary system. To preserve consumers’ incentive to pay for music, the label wants to enforce its copyright against downloaders who haven’t joined the voluntary license system. But how is the label to tell which downloads are from paying consumers? It’s not so easy to tell, in practice, which consumer is at which computer — nor will consumers be eager to identify themselves to every peer or service they connect to — so the the label will have trouble enforcing its copyright effectively. This problem is easily fixed by making the license mandatory for consumers, especially if a majority of consumers have already bought in.
We already see a step in this direction, in the proposal to have ISPs buy in on behalf of their customers. (In principle, an ISP could let each customer make his or her own decision about whether to join. I’m talking here about proposals that ask ISPs to buy in all customers en masse.) If the ISP market were highly competitive, the market would protect the interests of customers who don’t want to buy in. But in practice there is limited ISP competition — in most places, just the phone company and the cable TV company — so we can’t put too much faith in ISP competition to protect the interests of a minority of customers.
Worse yet, ISPs will become a focal point for political and business pressure to opt in. ISPs often take political heat over their customers’ infringement. Giving an ISP a way to buy out of this political pressure — and pass on the cost to customers — will add to the incentive to opt in to a license. And each ISP who opts in will make this pressure stronger. In the limit, a law might be passed to make ISP participation mandatory. But even short of that, ISPs who want to please Congress and the FCC — the bodies that create the regulatory sea in which ISPs swim — may find it expedient to buy in, even if their customers would rather they didn’t. Centralizing the opt-in decision in the ISP changes the political equation in a way that makes a mandatory system more likely.
To be clear, I’m not advocating a move to a mandatory system. I’m just arguing that there will be pressure to move in that direction, once a voluntary system is adopted or seriously proposed.
What can we do to fight this slippery slope, and make a voluntary system more stable? I don’t know. I’m hoping some of you have good ideas.
April 9th, 2008 at 11:57 am
This is why I’ve always understood VCL to be voluntary only from the licensor’s perspective - not from the public’s perspective.
Even if it’s theoretically voluntary for the public, the non-licensed and non-infringing individual has to look forward to effective harrassment from licensing authorities and mistaken lawsuits, that make it unavoidable.
The ‘voluntary/voluntary collective licensing’ scheme is inevitably a stalking horse for the ‘voluntary/compulsory collective licensing scheme.
I think copyright was a failure of the imagination 300 years ago. VCL as a remedy to copyright’s complete incompatibility with the digital domain is a failure of the imagination that should have stayed buried 5 years ago.
Every licensing scheme we’ve had is due to a limitation of copyright, a limitation entirely due to the fact that this is a wholly unnatural privilege.
Let’s simply recognise that copyright is a dead horse that died a hundred years ago with the advent of the camera and phonogram, but due to our enthusiastic flogging have managed to keep zombified for another hundred years. Today, with the instantaneous diffusion of the digital domain (aka The Internet), copyright reveals itself to be a pile of stinking bones held together by nylon sinew and manipulated by its puppetmasters (the publishing cartel that rides upon its back).
We can’t pay for copies, and it’s silly to tax the population to compensate those in the business of selling copies for the loss of their business.
It’s time to go back to first principles and start paying for art. We need a free market for art. A place where audience and artist can meet, haggle, and make a simple bargain like any other business: art for money, money for art.
April 9th, 2008 at 12:13 pm
The slope is not quite so slippery (otherwise we wouldn’t have PROs like ASCAP, BMI, and SESAC).
First, on the consumer’s side, so long as there is a critical mass of copyrights in the bundle you buy, you won’t have to worry about outliers. After all, it’s unlikely that smaller rightsholders are going to fire up the expensive litigation machine that the RIAA has. It makes much more sense to join a collective and get paid without having to spin up your own private enforcement enterprise.
Second, on the rightsholder side, if you’re in the collective, you won’t be enforcing your own copyrights — that’s what the collective will do on behalf of all of its members. That’s one of the chief benefits to joining a collective — spreading enforcement costs to avoid the problem you’ve identified. That’s what ASCAP and BMI do, for example.
Third, on the ISP front, I share your concerns about the lack of competition in the ISP market. But that’s a separate issue, and I’m hopeful that there may be more competition there than people think. An unwillingness by a monopolist to offer a “music-free” bundle will increase incentives for a new entrant.
And, Crosbie, while I have some sympathy for your views, I’m pretty certain copyright is here to stay in the short term. We have to accept it (along with the Internet, P2P, etc) as a given for near-term policy solutions.
April 9th, 2008 at 12:30 pm
Copyright is a crime - do not accept it.
It is an unethical suspension of our natural right to liberty and cultural freedom.
Hi Fred, glad to see the climate warming enough that it’s safe for pariahs like me to be given a modicum of sympathy.
Don’t worry about me and my fruitless pursuit of ideas with no short-term viability, I’m here for the ’slightly longer than short’ term when my ideas become eminently viable.
April 9th, 2008 at 12:33 pm
We can debate the value of copyright in a separate thread, ’cause that’s an issue unto itself.
Professor Felten, one answer to your questions is to approach all-you-can-eat plans as an incremental revenue stream as opposed to a silver bullet for all that ails the industry. Enable the PlayLouder MSP approach - a premier tier on a broadband service that gives customers unlimited access to music from a celestial jukebox and other customers. It’s voluntary-voluntary, to borrow Crosbie’s construct. ISPs wouldn’t be forced to do it, and their customers wouldn’t be forced to sign up. It could be set up like iMeem, so the sharing would be Web-based instead of client-based. That would make it easier to filter out shares from artists who’d opted out of the license. The advantage is simplicity, both in terms of who’s eligible to participate, the catalog that’s available and the royalties accounting. Among the disadvantages, customers would have to abandon the file-sharing networks they’re used to using in favor of the ISP’s music-sharing system. The bigger shortcoming, though, is that it’s not likely to make much of a dent in the unauthorized downloading that’s rampant today. It also strays from the core mission of the collective-licensing idea, which is to legalize and monetize what music fans are already doing online.
April 9th, 2008 at 2:26 pm
No, Jon, we shouldn’t talk about the elephant in the room just yet. After all, it might jeopardise the revenues of those who make recordings of others’ tinklings upon its ivories.
Like blind men you can ignore or skirt around it all you want, but one thing even the one eyed man can tell you that you’ll never discern by touch is the fact that the elephant in your midst is white.
So, in its recent tantrums it’s trampled a few kids and a grandmother to death? This isn’t a sign that it needs richer food and a higher tithe, and for you to worry whether that higher tithe should be optional. It’s a sign that it’s liability has become lethal and it needs tipping over the edge of the volcano.
“But, it’s sacred!” you say.
“Human rights come before supernatural white elephant rights!” I say.
April 9th, 2008 at 2:57 pm
Dude, now you’re just being a troll. I understand you have a point of view and a product to promote, but please — if you’re not interested in the topic at hand, don’t keep trying to change it to the one you want to debate.
April 9th, 2008 at 7:42 pm
It’s unfortunate that none of the speakers in this symposium represents artists or record companies. As a consequence, the debate is going to be somewhat superficial and conjectural.
It seems to me that a system of voluntary collective licensing would have so many holes as to be essentially useless. Dedicated pirates aren’t going to opt-in to the system, so it would only collect money from people who are already paying iTunes (or the equivalent) or who stumbled into the opt-in by accident.
So the proposition is best understood as an experiment that would yield data about the prevalence of illegal downloads, which data would naturally provide grist for a law imposing a mandatory download tax. In the first instance, it would only apply to music downloaders.
With this download tax in place it would be a violation to cloak identifying information in music files, and there would be extensive examination of user data to find evidence of cloaking. That would lead to all sorts of problems with VPNs and even with SSL transactions on web sites, and god only knows what else.
These problems will only be alleviated with a universal download tax, so the grannies and granpas who never download would be subsidizing the teenagers who do.
When discussing the effect of the camel’s nose under the tent, let’s take it all the way.
April 9th, 2008 at 9:26 pm
RB, you presuppose that folks are either buying all their music or are “dedicated pirates.” I think the vast majority of the folks on p2p networks fall into a middle ground — people who don’t pay not for religious reasons, but because they don’t think they’d get value for their money. Put another way, they’re willing to pay for their current set-up, but no one lets them (or even asks them to). So I think the first data produced by such an experiment would be a measurement of how big that middle group is — the ones that want to download and keep more tracks per month than $5 or $10 would buy on iTunes. (Those who spend less that that amount at iTunes, which is most of the people who use the service, might not be persuaded to opt in.)
April 9th, 2008 at 9:42 pm
Thanks, Jon, for illustrating my point about the players in the discussion. The record companies have data on the proportions of people who always pay, never pay, and sometimes pay. If they were included in the discussion we could put that question on an empirical basis move on, but as it is we can’t.
There really is no barrier today to people sampling music from Limewire and then paying iTunes for the privilege of owning a legal copy; they just don’t see the point.
It’s not a matter of “no one lets them.” The record companies will gladly cash any check you send them.
April 9th, 2008 at 9:50 pm
Richard,
Samantha Murphy is an artist who sells her own music. We did try to get a panelist affiliated with a major record company, but our invitations were not accepted. Don’t jump to the conclusion that we didn’t try.
Do you have data to back up your assertion that people who use LimeWire don’t also buy from iTunes? I know plenty of people who use P2P and also buy music. Don’t you?
April 9th, 2008 at 10:20 pm
Who said you didn’t try? I wimply said you it’s unfortunate that you didn’t succeed.
In the absence of hard data about downloads, all we have is anecdote and that’s not a good foundation for policy, even if you have a lot of anecdotes and universal agreement.
April 9th, 2008 at 10:21 pm
Or perhaps “simply” said you didn’t succeed.
April 10th, 2008 at 2:30 am
Richard,
What is it that you feel Ed hasn’t succeeded at exactly? I’m an artist who has a collective of artists on my website/show. I represent artists and I’ve spent a great deal of time listening to their concerns. I’m honored to have been invited to share my thoughts here and feel your attack is not only unwarranted, but false. I also feel there’s nothing superficial being discussed here and if you feel that way then why are you wasting your time?
Ed,
I believe at the end of the day there can be nothing voluntary about a collective licensing plan instigated by a major record label. They wield too much power and conjure up too much fear within the organizations being supposedly asked to volunteer.
There’s a reason why the major labels don’t want the government in on this one. Images of the Gestapo come to mind.
April 10th, 2008 at 6:54 am
Samantha, when responding to a comment on a blog, it’s a good idea to get the context of the comment by backtracing a bit. The subject Ed and I were discussing that confuses you is his lack of success in getting participation from a record company. I’m sure you’re a very fine musician and head of an admirable collective, but you’re not exactly Warner Music, and it was an idea of their that stimulated this entire symposium. So the symposiants are discussing Warner’s idea in the absence of Warner, and that’s less than ideal.
It’s not necessary to get all prickly about other people’s comments. The world is a rich and diverse place, and we don’t all think, feel, or express ourselves in the same ways. I’ve debated Ed and Fred in public fora before, and I know they’re intelligent enough to know the difference between a critique and an attack.
April 10th, 2008 at 7:14 am
Richard, you might want to re-read the context yourself. You wrote, “It’s unfortunate that none of the speakers in this symposium represents artists or record companies.” Samantha makes the same point I did, that she is an artist who works with other artists to sell music.
Warner isn’t the originator of the VCL idea — far from it. See, for example, Fred’s old paper, Neil Netanel’s paper, and Terry Fisher’s book, all of which discussed the idea years ago. What triggered this symposium was Warner making noises about adopting the idea.
Major record companies and major-label artists are the not only people with a legitimate interest in copyright policy. Nor are they the only people with interesting and worthwhile things to say about copyright policy. Experience shows, to the contrary, that they often avoid substantive policy discussions, preferring to engage in influence politics behind the scenes.
April 10th, 2008 at 3:18 pm
Thanks for the clarification, Ed, I see the problem. I neglected to say “major” in connection with my remark about artists and record companies. While I’m sure Ms. Murphy is a fine artist, she doesn’t represent the point of view of the alternative to a voluntary mass licensing scheme, which would be a mandatory scheme.
Actually, I’m having a hard time distinguishing voluntary mass licensing from the status quo. Consumers are free to subscribe to “all you can eat” plans today, so Fred’s idea simply expands the catalog and lowers the price. I don’t see the incentive for major labels to participate, given they can already offer all-you-can-eat plans through company stores today if they wish.
Mass licensing is only an interesting policy if it’s mandatory, in other words, and a mandatory plan raises interesting issues about privacy, Deep Packet Inspection, and that sort of thing.
The blog format is a little cumbersome for this kind of discussion, BTW. It might be more interesting for you as the moderator to ask some questions of the panelists as a whole in separate posts and let them answer in the comments, along with reader reactions. The comment threads to each panelist’s remarks are drifting off-topic pretty dramatically.
April 10th, 2008 at 4:29 pm
As I mentioned in my other post just now, the system does not have to be conceived as something that would only satisfy the major labels. As Fisher originally proposed it five years ago, in called for a new roll for the copyright board to track digital works and issue ID numbers to allow tracking. I’m not sure this is the best way to go, but it was certainly theorized as a way that ANYONE could join at a very low transactional cost. With or without major label, or even indie label support.
Now, I’m not such a fool as to think VCL can be implemented without the support (probably too much of it) of the majors, and in order to convince them we would need to grapple with existing business models. But the merits of the system can be debated independently of whether the majors buy in. And hopefully in that, independent artists or collectives of them that have something to gain from the collecting societies will stand in favor of Fred’s two points above.
In turn, that should move VCL closer to it’s ultimate goal … a system design so good that no one would WANT to opt out of because they have nothing to loose. (This, of course, predicated on the idea that File-sharing will always only be one part of any musicians income, which I fully believe. My mom ain’t downloading limewire any time soon, no matter how legal it is… although imagine a world where P2P is so legal that companies invest the time to make software accessible and understandable to the over 70 set.)
April 10th, 2008 at 6:34 pm
It SHOULD be mandatory. Information is, by nature, infinitely replicable. The fact that Bach is still performed is proof enough that the “information” Bach generated, being desirable, continues to be replicated, and probably will for the rest of human existence.
The TECHNOLOGY required for replication is NOT infinite. It must be manufactured and distributed, and purchased by the consumer in some form or other. There is virtually NO reason to purchase the technology if the information it replicates has no appeal. Likewise, the greater the appeal of the information, the greater the sales of technology with which to replicate it.
There must be at least a two-tiered system of monetary collection for desirable information that drives the sales of technology. There should be a transmission fee, i.e. a mandatory license collected by the deliverer of the information (the ISP provider at this point, similar to cable tv’s service model) AND a “per minute of recordable audio” fee collected at the time of purchase of portable hardware used to replicate desirable information. The unit is worthless without the information it can contain, and that value must be reflected in the cost of the technology.
Both fees should be what the market will bear, but must be mandatory.
The consumer who purchases a 1 gigabyte mp3 player will fill it, then delete older files as newer desirable information is generated by artists. They should pay less for the copy/storage device because they are consuming greater data through the delivery system.
The purchaser of a 120 gigabyte iPod can and will posses every information packet (song) they can get their hand on, otherwise they would have no desire for such a huge capacity. They can possess more information than they could possibly consume in their lifetime, hence they are as interested in becoming a storage/copy mechanism for friends and associates. They must pay for this capacity.
Don’t think in terms of gigabytes, though, as technology changes. High-quality information storage capacity is more scalable.
For illustrative purposes only, think of a $5 per gigabyte fee on portable hardware and $5 a month ISP fee. A 4 gig mp3 player would have an additional $20 up-front fee, similar to Apple’s current proposal, while a 60 gig unit would cost an additional $300, which is VERY expensive for many people, but accurately reflects the true value of the unit purchased, giving the consumer a choice of just how MUCH consumption they desire.
Without describing a doctoral thesis here, the end result is a market-driven, consumer-chosen system of proportional compensation for information consumed while eliminating the very concept of “piracy” as the consumer has full rights to download and store as much as they have purchased to do so. Copying from friend to friend and peer-to-peer is encouraged by artists as they will still be compensated. Networks are drastically more efficient as a result of P2P and offline duplication, and funds are distributed equitably through an ASCAP/BMI model made more efficient through consumer polling, with consumers happily “voting” for their favorite artists through online mechanisms as virtually all the songs in their possession are “legal.”
It’s so simple. It’s not easy, but it’s so simple. This is much too abbreviated a description, but if you’ve read this far, you can figure out the rest of the math.
April 11th, 2008 at 3:53 pm
It’s simple because it’s based on the wrong prerequisites. Assuming that people are not smart enough to defeat schemes like the above per-unit-fee is somewhat naive, as everyone can build a tiny USB mp3 device that gets its data from a connected USB harddrive or flash card which the consumer buys separately. So you want to put the price tag on hard drives too? What about the petabytes of HD storage that are used by companies and consumers that never deal with mp3s? Do you really think the public would accept a 5000$ fee on each new PC, or a 20$ fee on a flash card they will use only in their camera? I don’t see anything market driven in this fee approach either.
April 11th, 2008 at 7:27 pm
I’d note two other problems with Richard Campbell’s argument. First, it would lead to compensating twice (or more times) for the information that fills iPods and other devices. Perhaps that’s the point — by taxing transmission *and* storage, you could keep the fees lower. Second, and more significantly, it assumes that devices such as iPods will be used only for the information that’s collectively licensed. That’s a huge barrier to innovation, IMHO, in devices and applications. Someone might want a video-enabled MP3 player just for video podcasts — why should that person pay into the royalties pool? And if the tax deterred people from buying portables with a large amount of storage, what storage-intensive applications would never see the light of day?
April 11th, 2008 at 11:16 pm
Imposing levies on storage is undesirable principally because it would inject serious distortions into a highly innovative and dynamic market, most of which has nothing to do with music. For example, you put a levy on hard drives, and you’ve just made flash RAM artificially more attractive. Levy flash RAM, and you’ve created artificial incentives for network storage, the return of back-up tapes, Zip drives, eBay sales of floppy disks, you name it.
Currently, there are few ready substitutes for Internet access for those who want to engage in file sharing (and I’m skeptical that a low voluntary fee would suddenly bring the utopian center-less meshing wireless network into existence). Hence, those who engage in file-sharing should be given an opportunity to pay for the privilege at that point (whether through an ISP, a software vendor, or direct), rather than larding fees on every technology that happens to be able to store bits.
April 12th, 2008 at 12:03 pm
@Richard:
Your proposition is not market driven and this is fairly easy to demonstrate.
Consider for example two musicians. “A” plays better than “B”. However, “B” is willing to sell his product at a lower price than “A”. In a normal market, price can be expected to be an indicator of the quality of directly competing products and a price/quality tradeoff is perfectly normal.
However, using your system, it is completely impossible for either “A” or “B” to make a decision about how much their audience should pay, nor can they set a price for the goods they create. On the presumption that the audience download both “A” and “B” then enter into some sort of online voting system (and further presuming that the votes are fair and the voting system actually works), all the votes will go to “A” and nothing to “B”. It seems like this is a winner take all system with the price being set by some external committee.