Rogues, Pirates and Bandwidth Bandits
Yesterday was yet another day in which the struggle over copyright seemed to be going on at a feverish pitch.
In the U.S., hearings before the House of Representatives Committee on the Judiciary Subcommittee on Intellectual Property, Competition, and the Internet provocatively pitted Internet investment and commerce against pirates and parasites. Daniel Castro from the supposedly ‘non-partisan’ Information Technology and Innovation Foundation (ITIF) tried to set the tone by describing “the impact of parasitic websites” as “an economic leech on the Internet economy”.
Castro set out the costs to various industries, and they were, if he’s correct, staggering:
- the U.S. motion picture, sound recording, business software, and entertainment software/video game industries lost an estimated $20 billion dollars in 2005 due to piracy;
- the U.S. recording industry and related alone lost industries lost over $5 billion altogether and 12,000 jobs in the sound recording industry alone, according to estimates by the music industry trade group, the International Federation of the Phonographic Industry (IFPI);
- the U.S. motion picture industry, by one estimate, lost $6.1 billion to piracy, which resulted in either the elimination or prevention of 46,597 jobs in the film industry.
This is indeed dire stuff (if true). Dire stuff also requires drastic measures. Here’s some of the drastic measures Castro put on his wish-list:
- cooperation between the federal government and business to identify “rogue” sites around the world;
- require ISPs to combat piracy by blocking websites that offer pirated content;
- encourage bandwidth and usage caps that discourage online piracy;
- require search engines to remove links to websites that facilitate piracy;
- require advertisers and financial intermediariers (e.g. Paypal, Visa, Mastercard, etc.) to stop doing business with ‘illegal websites';
- further private/government cooperation around development, promotion and adoption of anti-piracy technology, including ‘deep packet inspection’ (DPI) by ISPs.
This is essentially a recipe to impose a lockdown on digitally networked media. It makes a mockery of the separation between state and media demanded by ‘free press’ traditions. But rather than government nefariously interfering with the media, in this scenario, the state is called on to act as the tool of the media industries. Proposals to seize the domain names of rogue sites, cut them off from ISPs and payments, and so on threatens to balkanize the Internet further as nation-States assert their ‘sovereign authority’ over whatever slice of cyberspace they deem necessary to pursue ‘rogue pirates’ (in the US and elsewhere) or to suppress dissident voices and the free access to information elsewhere (Egypt, China, Iran, etc.).
For Canadians, the emphasis of putting ISPs in the role of gate-keepers and promoting the use of UBB and bandwidth caps to thwart would be bandwidth bandits adds another layer to the ongoing debate over these issues in Canada.
But what about these claims about dire losses? They are mostly a product of cherry-picking data to support foregone conclusions. As my post earlier today showed, worldwide box office revenues for the movie industry are up, not down, from roughly $25 billion to $32 billion over the past five years. And that’s just the half of it, with total worldwide film revenues from all sources up from about $46.5 billion in 1998 to $87.4 billion last year.
Rather than being under assault, as Castro and others would like us to believe, the vast expansion of the film industry is not surprising. This is not surprising given the massive growth in global media markets generally, particularly in China, Brazil, Russia, and India.
This is also not surprising given the vast number of new media channels and distribution platforms. Note the huge difference between total revenues versus just box office revenues, i.e. $87.4 billion versus $32 billion. That $55 billion gap between the two is the space occupied by new media technologies. These are basically new media markets.
DVDs and the corner video shop may be going the way of the Dodo bird, but cable and satellite channels have doubled, according to the OECD, from 600 to 1200 channels worldwide over the past decade. Add to this pay-per view, video-on-demand, streaming internet video (Hulu, Daily Motion, YouTube, etc.) as well as digital download and subscription services (Apple iTunes, Netflix, BBC’s iPlayer, mobile smartphones, etc.), and the vast expansion of the global media economy comes clearly into view.
Let’s look at the music industry. Sure, if we take a tiny slice, say just the ‘recorded music industry revenues’, and let it stand for the whole, than things look bad indeed. Just how bad is shown in the Figure below:
Figure 1: Worldwide ‘Recorded Music Industry’ Revenues, 1998 – 2010 (US$ Mill.)
Source: PWC (2010; 2009; 2003), Global Entertainment and Media Outlook
Seen from just this angle, things are bad. the sale of “recorded music” (i.e. cds, vinyl, cassettes, etc.) has plunged by nearly half since 2004. These are the figures that Castro and his preferred source, the International Federation of the Phonographic Industry (IFPI), point to in order to paint their ‘sky is falling’ scenario. It is also the backbone of their efforts to push through an egregious revamping of digital media in the service of the ‘traditional media’, a set of efforts that would likely never see the light of day were it not for the superficial persuasiveness of the case made.
The problem with the case, however, is that it takes the worst part of the entire music business and lets it stand for the whole. A decidedly different view emerges once we take the blinkers off that Castro, the IFPI, MPAA, etc. would like us to where and look at the whole picture. The whole picture doesn’t just look at ‘recorded music’, but concerts, publishing and copyright revenues, Internet and mobile phones.
When we do that, here’s what things look like:
Figure 2: Worldwide ‘Total Music Industry’ Revenues, 1998 – 2010 (US$ Mill.)
Sources: PWC (2010; 2009; 2003), Global Entertainment and Media Outlook and IDATE (2009). DigiWorld Yearbook.
The fact of the matter is, these trends are similar across almost all of the media industries from television, film, music, radio, magazines, book publishing, Internet access and Internet advertising, except with a partial and heavily qualified exception for newspapers.
The media, as I have said repeatedly before, are not in crisis. Thinking otherwise only gives the likes of Castro and the lobbying groups of the traditional media a blank cheque to push an agenda that ought to be stopped dead in its tracks.
Thankfully, there are other sources who see things from a broader point of view. Thus, over and against Castro, take a look at the much more interesting presentation of David Sohn from the Centre for Technology and Democracy yesterday before the same committee in Washington. Or take a look at the paper published by the Research Institute of Economy, Trade and Industry in Japan that was released last month. Looking at the impact of files-haring and YouTube on the sale and rental of Japanese animated television programs, the author concluded that:
- Youtube “does not negatively affect DVD rentals” and appears to “help raise DVD sales,’
- “file sharing negatively affects DVD rentals, [but] it does not affect DVD sales.”
- Youtube’s effect of boosting DVD sales can be seen after the TV’s broadcasting of the series has concluded (the ‘electronic water-cooler’ effect);
- YouTube can be interpreted as a promotion tool for DVD sales.
Repeat after me: the sky is not falling; new media are not bad media; we must be careful because the doomsday sayers, more often than not, would like nothing more than to throttle the hell out of digital media. That would not just be dangerous for the media economy and technology, but for democracy, how we socialize and communicate with one another, and for an open and creative culture overall.