Why do smart companies do stupid things?

I'm here in Cannes for MIDEM, the big European music conference/market, and can't help but reflect on how, in 2007, the music industry still treats consumers not just like criminals but also idiots.

Take the news that Universal, despite extorting Microsoft into paying a reported $1 per Zune sold (I've heard this described as a "hostage situation"), still won't let you share much of the music you own with another Zune, which was the whole point of Microsoft's otherwise pretty pointless music player. As Engadget puts it:

It appears Sony Music and Universal Music Group are marking certain artists of theirs as "prohibited" for sharing, meaning that just because you've paid for a song, and even managed to find another Zune user on the planet Earth, doesn't mean you'll necessarily get to beam that JoJo track to another Zune via WiFi magics. In a non-scientific sampling of popular artists, it looks like it's roughly 40-50 percent of artist that fall under this prohibited banner, and the worst news is that there's no warning that a song might be unsharable until you actually try to send it and fail.

I look forward to the session starting in an hour called "Music 2.0: Consumers Take Center Stage", which features Larry Kenswil, president of Universal Music Group. From the program description:

"The balance of power is increasingly shifting from media owners to the people. Consumers are fundamentally changing the rules of communication and distribution and building a medium where participation, interaction and sharing are key."

No argument there. I can't wait for Mr Kenswil to reconcile his company's actions with this truism.

Comments

[ralphg]

Corporations want it both ways: to appear open and friendly to customers, yet maintain tight control over what they sell, and how it is sold.

[Ken Chan]

The record companies probably still associate music "sharing" with piracy. For their own good, they should loosen up the strings a bit because limited sharing represents another medium for introducing their music to new potential customers. Just compare how many new songs you can hear listening to the radio with how many you can hear by browsing someone else's tracks on iTunes. No comparison.

[Francis Hamit]

Whether you are a mega media congolmerate or an individual content provider like myself, the basic question remains "If no one pays for what I make, how am I to live?". And that is at the heart of all of these arguments for overriding copyright and the grudges against copyright enforcement -- the desire to get something for nothing.

As you may recall, I have been experimenting the last few years with repurposing some of my old non-fiction as e-books and e-documents. In addition I publish fiction (and soon, travel articles) with Amazon.com on their Amazon Shorts program. Amazon charges the very reasonable price of 49 cents a title for these and pays a very generous royalty. Their set-up does allow sharing, but the hope is that people will have enough of a sense of pride that they won't stoop to stealing something that costs less than a can of soda.

On the other hand, many big media firms have no such reluctance. A new vendor of my titles,Blish.com,prices them all at $4.99.
That includes the titles I recently reduced prices on, to 49 cents to see if the lower price would translate into a higher volume of sales. It didn't. Which is instructive. Blish.com buys them wholesale, but prices to their market.

Most of this material is very specialized and the kind of thing that, if you don't want it, you wouldn't take the time to download it for free. The controlling factor here is Zipf's Principle of Least Effort. People buy the product they are looking for the first place they find it and seldom comparison shop, especially if the price is small anyway. It's not worth their time. According to my distributor, Blish.com can charge any price they want. Blish.com offered to buy the material directly from me, and split the proceeds 50-50. My distributor offered to block them from my distribution list, so I can continue my old pricing.

Instead, I am going to stay with my present distributor , which has gotten me into lots of channels, and raise my prices. None of this material sells very much anyway and the time and effort of making a separate deal is not worth it. That's the same reason you can no longer buy these titles on Amazon.com. They bought MobiPocket and recently decreed that they would sell no other format. I had already rejected it as a e-publishing format for a lot of reasons. Yeah, I'm selling less, but I'm still selling. If Blish.com thinks we can get five bucks a copy, fine. I just want my cut. There is a lot of time and effort required to publish in these formats. There are ongoing costs to keep them in the market. So far, that investment has not been rewarded.

But this was always an experiment. The result of Blish.com's greed is that everyone will now pay more for those titles.
If you want to accuse me of being greedy too, go to it. This is a business and I am supposed to make a profit. The fact that I have not put up new, additional titles this way is a direct result of not making one.

Amazon Shorts pays me. My time and energy is going there. I have one novel in serial so far and some other work. I also have lots of company. Over 400 authors, and as of this morning, 995 titles.

Ironically, the only way that novel gets reviews in the conventional media is if we provide printed , bound galleys that look like a regular trade paperback. That's also Zipf's Principle at work. There is a lot of competition for reviews because they have a great impact on sales. You have to make it easy for the reviewers if you have any hope of getting one.

The Washington Post announced a serialized novel on their web site by one of their reporters. You can read it for free in serial, a bit at a time, or buy a trade paperback of the whole thing for $18.95. They sell ads on those pages.

This is also an interesting model. I tried the ad route myself with the Google Books program. They didn't put up many ads and only put up 19 of the 66 titles we provided for online sampling. The rewards were few. What they seemed to be pushing for is the right to sell my titles directly -- additional time and effort to reformat them would have been required--so I dropped them. They never paid me the few pennies I earned from the ads.

Given the difficulties in getting new fiction published, Amazon.com may be on to something. Serialized novels were how Charles Dickens made himself a best selling author. The Washington Post may also be on to something with the split of ad revenues and the sales of a paperback copy of the whole.

The future of literature may depend upon patronage and sponsorship. Online text will follow a very traditional model. Free, but you have to endure the ads, like most other media, including print magazines and television.

You will note, in neither case above, does anyone propose to just take the author's creation and give it away because that's the cool thing to do. Writing is a business, not a hobby.
Copyright needs to be stronger to protect that business, not weaker. No one rides for free.

[Quo Vadis]

“Render unto Caesar the things which are Caesar’s".

The Open Source software model avoids copyright restrictions by releasing original software under a copyright that encourages sharing.

I look forward to the successful implementation of an effective copyright enforcement mechanism for protected content. As long as consumers continue to be successful at violating copyright restrictions, no new distribution model will ever catch on.

[DensityDuck]

We can also look at Stephen King's "The Plant". He offered it as a $2-per-installment serial, but you could also just read it for free. He said that if nobody paid for it then he would stop writing it.

He stopped writing it.

[TallDave]

Patents expire. Why shouldn't music copyrights?

Power to the public!

[Francis Hamit]

Music copyrights do expire. This is governed by international treaties as well as U.S. Law, so it takes a long time for them to expire and even longer to effect changes in the law. Software used to be protected under patent law. Then it was changed to copyright, because that lasts a lot longer. 75 years versus 20 years.

Stephen King stopped writing that online because only 75 percent of those downloading it paid. He got a tremendous response, compared with most authors because Stephen King is a powerful brand. I find the Washington Post model very attractive. Download it for free, read it for free, but if you want to read the entire book, now, then BUY the printed edition. Oh, and the free version is provided by paying advertisers.

In many respects, copyright law and real estate law are alike. Each contemplates a bundle of rights rather than a single unified right and those rights can normally only be transferred by written contract. Copyright covers copying, distribution,display, perfomance and derivative rights. All you buy when your purchase a book is the right to read the story, or with a recording, the right to listen to it. You can sell your copy, but you cannot make one for someone else as long as other copies are available from the creator and authorised distributors. That it has become easy to do does not change that. It first became easy to when printing prsses became widely available. That was the technological change that was behind the first copyright law; The Statute of Anne, in 1710. Immanual Kant was still complaining about the evils of unauthorised copying almost a hundred years later, in "The Science of Right". He devoted an entire chapter to it.

If you value the work of the artist who created it, then you will pay for it. We keep trying to find models that will make that easy and painless to do. If you don't want to lay out cold hard cash for it, then be prepared to suffer through the ads that support it. Or declare yourself a thief, but don't try to rationalize some sort of moral imperative to cover your crime.

[Earnest Iconoclast]

Copyrights do not expire. Theoretically, they expire, but the term is so long that nothing created during my lifetime will come out of copyright before I die. Effectively, they do not expire. This doesn't even mention the fact that copyright terms have been increasing so that no terms actually expire. I'll be pleasantly surprised when the terms stop increasing fast enough to keep everything in copyright forever.

One the one hand, I agree that one should support artists by buying their work. On the other hand, the copyright regime and the behavior of the distributors in many cases are essentially legal thuggery holding parts of our culture (and technology) hostage for decades.

Why is it that patents, which are probably more useful and important, expire faster than copyrights?

EI

[Francis Hamit]

A literary work or other creative expressions is unique. If it is not, copyright protection does not apply. You cannot, for instance, copyright a form or a telephone book. Putting notices to that effect has no effect. The purpose of copyrights is to provide incentives for people to create new work for the culture at large. Admittedly the bar here is very low and most of it can rightly be considered "junk". One man's trash is another man's treasure and all that. Copyright only works if a work attains value in the marketplace, now or later. Some work takes awhile to find a market. The tricky part is "derivative rights". If you want to make a film based on a novel published 30 years ago, why should you make all the money and the original creator or her heirs none? Why should you be able to twist the work against her intentions?

Copyright is a Constitutional right. This week, the 9th Circuit Court turned away another attempt to make an end run around the law in Kahle v. Gonzales. "Orphans Works" sounds like a noble cause, but it is just another attempt to undermine copyright law and get something for nothing. It literally takes an act of Congress to change the Copyright Act. Case law is rare because cases are settled before trial, because no one really wants to litigate these issues over and over.

Copyright is also property. If you don't protect yours, you can't be surprised when others abuse it and rip you off.
There are plenty of provisions in the law to protect ordinary citizens and institutions. But the law is strict in its application. You cannot stretch a provision like "Fair Use" to avoid your own obligations. Congress, not the Courts , is the proper place to change the law.

But, good luck with that. Most of the changes to the law have come because we are trying to comply with international treaties like Geneva and WIPO. Copyright is a global, rather than a national law.

[Earnest Iconoclast]

The Constitution says this:

"To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;"

Copyright terms are effectively unlimited. Copyrights are not intended to protect the rights of Authors. The limitation on the copyright is intended to encourage more works. Patents expire so that they can be more widely used and improved upon by others. Copyrights should expire for the same reason. There is no reason for copyright terms to be 100+ years when patents expire after 20 or so.

Also, distributors (not authors) use the DMCA and other such laws as a way around Fair Use. No one stops them from preventing Fair Use.

Copyright should be set to the length of time it takes an average work to gain most of its income. Current term lengths garauntee that many long out of print works will still be copyright and will thus be lost rather than spread around and shared by those who care regardless of whether a media distribution company thinks it can make a profit off the work. Even worse, works can be deliberately buried by the current copyright owner.

EI

[Francis Hamit]

I hate to burst your bubble, but I am an author who uses copyrights to protect his work. I settled two copyright cases in my favor last year against former publishers who had sold rights they did not own. The "author" of a work is not necessarily the actual creator. That's what the "work for hire" provision of the law is all about.

As for works being lost, you really need to read the law. Section 108 of the Copyright Act allows libraries and archieves to make up to three copies of any work that is not commercially available. You can make one copy of anything yourself for personal or research use, as long as you don't sell it to someone. The orphan works issues is about people who want to make money from someone else's copyrighted works, but don't want to take the time and trouble to find them and get permission. That costs money, but any competent PI can do it for you. Companies that have gone out of business and people who have died leave a paper trail. They can be found, but it costs.

The income model varies from work to work. The Long Tail is not an absolute. Other patterns do happen. For instance, an obscure novel doesn't make it's numbers and goes out of print. 20 years later a screenwriter adapts it, the film becomes a big hit and the novel is reprinted and also becomes a best seller.

As for things being lost, I do a lot of Civil War research for my novels. There are records available that have never been examined because they are in archives. They have yet to be dug out and read but they are there. Again, it's not easy, but there's no reason to violate a copyright. And, as for works being buried by copyright owners, well that's perfectly legal. It's theirs. They own it and they control it. That's the moral right at work. You know something, if you really care, you will respect the artist's decision and you will pay their fees. Why is that so hard?

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