Land of the "Free"

While rummaging through the National Public Radio (NPR) archives (yes I spend some of my free time listening to old NPR pieces -- don't judge), I ran across a three part series from August of 2009 focusing on the trend of free goods and services in the digital economy. No one sector of our economy is more acutely aware of this trend and the resulting outcomes than those of us who have made a living in the music industry. Well before the housing crises or the near-collapse of the banking system, the digitization of music content destroyed the music industry's longstanding business model.

Listening to the NPR coverage of the free-economy and thinking about my post from last week furthered my contemplation of the broader long-term legal, economic, and cultural ramifications of such an economy.

According to the first segment in the NPR series, many Internet businesses are attempting to follow the Google model of monetizing their service through add revenue. Yet, ask any journalist from any newspaper on the planet, this is not a viable solution for the vast number of online businesses. There are only so many advertising dollars available.

Others are offering many different levels of services or products. Usually a free basic service or product and a fee based premium service or product. Yet this business model has not been as successful as the free model. As many of my colleagues in the music industry like to ask: "How do you compete with Free?"

The difficulty of designing fee-based business models in the new digital online economy is redefining intellectual property law and maybe America. This developing "social norm" of free access to other persons' intellectual property is and will continue to influence how we view tangible property such as personal property and real property.

Could this developing social norm shift the culture of America? There have been many commentators who have examined whether, in the wake of our current economic crisis, the "rugged American individualism" has given way to a socialistic culture more identified with Europe. A while ago a Reuters columnist, Bernd Debusmann, had a very compelling blog entry on this topic, which can be found by clicking here.

I wonder, however, if the new social norm of the digital world's free economy set the stage for such a shift of the American culture well before the housing crash and the credit crunch? Could the communal view of intellectual property advocated by such corporate giants as Google be pushing America from a heavily individualistic ownership culture to a more communal "Europeanized" culture? 

The Shifting Social Norms of Creative Expression

Mike Masnick's techdirt article "No Copyright Intended: The Coming Generation Who Intrinsically Assumes Remix & Sharing Makes Sense" points directly at the tsunami that we have all been watching repeatedly crash on the shores of the creative industries and begs the question "o.k., so what are we going to do"? 

His article rightly concludes that the new normal (i.e., social norms) is the remix of content. He argues that "no amount of 'education' ... can fool people into believing that nonsense is reasonable." But what he fails to address is that no amount of ignorance can suspend the laws of economics. Indeed this is the storm that has created the Tsunami in the first place. 

For those who are not impacted by the economic realities of infringement, it is understandable to disregard the economic consequences (harm) of such behavior. Their behavior can be analyzed through the egalitarian social norms so recently created by the free content ideal (e.g., the democratization of knowledge). Are there benefits to the free flow of information, knowledge, and culture? Absolutely! This ideal may well be worth pursuing for the advancement of humanity. But human nature and economic realities must be understood and dealt with, least we go down the road of Utopian Marxism.  

Are these new social norms moving us toward alternative systems to copyright? What could those alternatives be? Is there enough advertising to support all of the creation digitization has catalyzed? Are we at the dawn of a new patronage system? After all, the patronage system was the system that copyright replaced -- wouldn't that be interesting? Or, more likely and reasonable, are we going to see the evolution of another system altogether? 

What this all boils down to is one simple question: How do we provide an incentive to create quality creative content without copyright? I'm not saying that copyright is the answer. It is becoming increasingly apparent that there are problems with the current state of technology and social norms when governed by copyright law. The friction and failures are undeniable. But necessity -- human nature and economics -- will demand a solution eventually. 

Don't agree? Malcolm Gladwell in his book Outliers explores the "10,000-Hour Rule," which is a theory based on the work of Dr. K. Anders Ericsson. Ericcson, one of the world's leading experts on the cognitive precursors of how expert performers acquire their superior performance in fields such as music and the arts, has found that it takes about 10,000 hours of extended deliberate practice to become an expert superior performer. Broken down to its simplest form, Ericsson's theory posits that what creates true greatness is extraordinary effort. In "Outliers" Gladwell gives many compelling examples and arguments in support of this theory. 

Will anyone have the time and resources to devote such effort toward an endeavor, if such efforts result in no rewards? I'm sure some will ... but how many? Will those willing to devote such time now require a patron? What are the costs of a patronage system on creativity and the common good? What system could save us from the costs of patronage or the failures of copyright?  

In essence I am asking: (1) what are the benefits of this shift in social norms, (2) what are the costs, and (3) are we as a society willing and able to pay such costs for such benefits? If the answer to number 3 is no, we need to start creatively exploring alternatives.

Click Lit

This weekend I was listening to "Weekend Edition Saturday" on National Public Radio (NPR). Scott Simon was interviewing Slate Magazine's Dahlia Lithwick (click here for the full transcript). Ms. Lithwick, a lawyer by trade, is taking time off of her day job covering the U.S. Supreme Court at Slate to co-author a fiction novel in the "mommy lit" genre.

Besides the fact that I have long admired Ms. Lithwick's writing and reporting, there is nothing particularly noteworthy about an attorney writing a fiction novel, even an attorney of Ms. Lithwick's considerable writing prowess. What makes this work of authorship newsworthy is that Ms. Lithwick's collaborators--her numerous "friends" on the social networking site Facebook. According to her interview, she sends out Facebook posts asking for help and her Facebook friends to chime in and collaborate on the story. Their input ranges from naming central characters to plot development. She also posts each chapter for review and comment.

This is such an interesting new way to write a novel. It is like having a focus group help you write every chapter, every plot twist, every detail. As intrigued as I was by this new model of writing, I was drawn in more by the potential conundrum of who might own the copyright to the work.

According to the U.S. Copyright Act, 17 U.S.C.A. Sec. 101, a joint work is “a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole.” When analyzing joint authorship, we typically apply the two-pronged joint authorship test where we look to (1) contribution and (2) intent.

Under the contribution prong of the joint authorship test each author claiming to be a co-author must have contributed sufficient independent original expression that could stand on its own as copyrightable subject matter. Therefore, those who helped name the protagonist's husband would not be considered a joint author.

The next prong of the joint authorship test is mutual intent: a joint author must intend that his or her contribution be a part of a joint work (i.e., they must be a willing collaborator with other joint authors). Because of the collaborative nature of asking for input, posting chapters for review and input, and editing based on these contributions it would seem that the application of this prong of the test favors joint authorship for those Facebook "friends" who are contributing some significant content that on its own would garner copyright protection.

Lastly, because the Facebook terms of use require each user to issue a license to all intellectual property posted, can Facebook publish this work?

This is a very interesting experiment indeed.

“Overlawyered” or Just Over Simplistic

There seems to be a trend with some commentators who, in their desire to push-back against copyright law, are distorting the truth in an attempt to influence the debate. These people are not necessarily wrong in the trepidation regarding copyright law--their arguments, however, are not well reasoned and lack a fair assessment of the legal system, federal litigation, or the Copyright statute. It is their tactics not their message for which I take umbrage.

One such example can be found on Walter Olson's blog Overlawyered. In a June 5, 2009 post, Mr. Olson quotes Kathleen Fasanella, a 27 year veteran of the apparel industry, as saying that the copyright legislation titled the Design Piracy Prohibition Act "will be enough to sink many small apparel and fabric firms that can’t afford lawyers to fight big firms' infringement claims." It is this type of quote that currently seem to be driving the debate on the scope of copyright law.

While I admit to enjoying Mr. Olson's blog from time to time, his post was irresponsible. His arguments against copyright protection are classic examples of the logical fallacy of the scare tactic--where a person reduces complicated issues to overly-simplistic undesirable outcomes and exaggerates possible dangers beyond their likelihood. To simply make such comments that individuals and small businesses of limited means are unable to protect themselves from overly litigious corporations is unsubstantiated and does not take into account economic realities of business or the legal procedures available to litigants.

For instance, if an individual or small business is sued for copyright infringement and they have not infringed, they have several protections available to them in the Federal Courts including summary judgment and Rule 11 sanctions for the filing of frivolous law suits. These procedural safeguards are useful in efficiently defending baseless lawsuits and can even result in the Defendant receiving an award of attorney fees and the other costs of their defense.

If the small business or individual did infringe (they should not expect to be allowed to violate a copyright with no consequences should they?) they can still limit their liability through a quick and reasonable Rule 68 Offer of Judgment. The Rule 68 Offer of Judgment has the attractive benefit of either settling the case quickly and in a reasonable fashion before much in the way of litigation expenses are incurred or shifting the burden of the costs of the litigation to the plaintiff for being unreasonable.

Furthermore, in the current business environment how many large corporations are looking to task resources (both time and money) litigating against small businesses and individuals unless they have a serious claim that pasts muster under the most strict cost/benefit analysis?

Copyright law is always trying to strike a fine balance between protecting authors rights in their works--thereby giving them an economic incentive to create--and protecting the public's' access to these works. While I agree we must stay vigilant to keep copyright law in a state of equilibrium between these often competing public policies, we must not fall victim to such unsubstantiated arguments like the ones described in the post cited above. Great harm is often the result of building public policy on a foundation of fear instead of reason.

The King of Pop, Inc.

Time author Adam Smith recently reported on the debt of the late King of Pop, Michael Jackson. This short, yet reveling, story can be found on Yahoo by clicking here. It is sad when a person of Michael Jackson's vast talent passes on with such staggering debt--reported to be between 300 million and close to 600 million dollars. While much of the reporting on Michael Jackson's debt at the time of his passing is speculation, we do know that he lost his Neverland Ranch to foreclosure as a result of defaulting on substantial loans and that the debt was huge.

Yet, much of the reporting only tells half of the financial story. Michael Jackson enjoyed two valuable commodities during his life that survived his death--(1) intellectual property in the form of music and song catalogs and (2) his name and likeness (i.e., publicity rights). The ability to monetize these assets is legally and financially more significant than the hefty debt his lifestyle created. His estate's earning power will play out in the next few months and years. The income-generating property of Michael Jackson's estate could rival or even surpass that of the other Music King, the King of Rock Elvis Presley.