Stop Stealing From Your Customers! Eroding non-creator copyright protections hurts us all

The past week, I’ve been caught up in philosophical meanderings related to the digital goods business and the notion of copyright law. I’ve read quite a bit here and there around the web on the subject and I see more than a few disturbing things.

1. Most people, including creators, don’t really understand copyright

I am continually bothered by the number of writers, musicians, etc who seem to believe copyright gives them some sort of all powerful right to totally control what happens with their work, even after it’s been sold and is out in the world. Copyright doesn’t do that. It grants you a limited monopoly right to use your work commercially, nothing more. One of the primary reasons there is so much consternation about copyright is that those limitations are slowly being eroded away. Life plus 70 years is a flat-out joke that totally spits in the face of what copyright is all about. Think about this for a second and tell me that copyright’s ends of protecting the public interest even still exist: Not one single American creative work entered the public domain statutorially this year. None. Nada. Zero.

Things like the upcoming Kirtsaeng decision in the Supreme Court, depending on how they rule, and the intricate licensing schemes pioneered by the software industry and dove into whole hog by the media industry purposely erode first sale rights, giving creators control of secondary markets (or the ability to prevent them altogether). That also undermines the idea of limited protections. The newspaper industry fighting against Google News and aggregation is an all-out assault on fair use, yet another attempt to wipe away or severely lessen copyright law’s limitations.

I can’t totally blame creators who behave as though they have some kind of all encompassing powers under copyright, media companies have been working very hard behind the scenes to make it that way for their own benefit. But those limitations exist for a reason. Take them away, and the entire purpose of copyright gets perverted away from a protection that gives creators a fair chance at exclusivity for a while to try and make a buck and allows the public to benefit from these works in a way that promotes future progress. Without those limits, the very progress copyright law is supposed to promote gets stunted.

Copyright law grants you the opportunity to make money, it doesn’t guarantee it, and the value to society on the whole is supposed to be balanced against creator’s interests, protected from the very exploitation the erosion of those limits is actively causing.

2. Very few on the creator side seem to give a damn about consumer rights

This, to me, is the most disturbing trend I see emerging, especially when it comes from Indie authors. You can’t talk out of one side of your mouth about appealing better to readers, then ignore or argue against the idea that readers also possess protections under copyright law that we’re actively taking away through the licensing scheme ebooks are sold under. The digital goods market is built upon a foundation of taking away consumer rights. What’s worse, is that we also have creators out there throwing around loaded terms like piracy and stealing that aren’t accurate. Many times, they’re used to demonize people bahaving in ways they always have with regards to sharing material. Every man, woman and child in this country commits an infringing act on par with downloading a torrent file every single day. Probably several. We just don’t see it and most probably don’t even realize we’re doing it. The internet has brought part of that behavior out into the light of day. That doesn’t mean it wasn’t happening on a major scale before the internet. It absolutely was. It didn’t destroy these industries, in fact, I believe it made them considerably stronger. File sharing won’t destroy these industries today, either. What will, however, is if we continue on a path that makes copyright effectively infinite, steals rights from consumers at every opportunity, and tries to force unprecedented controls onto people for works they’ve already bought. It also doesn’t help if creators act like entitled assholes, throwing accusations of theft around while totally ignoring the fact that their entire business model is based on gutting consumer rights. Take a deep breath, go read up on the history of copyright and try to grow a little perspective.

And remember, the perversions of copyright are being driven by giant media conglomerates for their own ends. They don’t care about your rights as a creator any more than they do the rights of consumers. Don’t confuse your interests with theirs. When they’re done wiping out consumer rights, they’re very likely to turn to undermining yours, if they haven’t already. And don’t expect what fans you have left to sympathize when that happens.

3. Everyone seems to believe digital goods are infinite despite the obvious reality that they’re not

I still don’t understand how otherwise intelligent people buy into this heaping load of bullshit. A big part of the argument justifying swiping consumer rights is that digital goods are infinitely perfect. Come on! Do you really believe that we’ll be reading these same epub or mobi files on these same devices five years from now? Or ten? Technological progress is just going to come to a grinding halt, is it? We’re not going to have better, more capable devices in the future with improved or even radically different formats for these works?

If consumers don’t have any ownership rights in these products, what’s to stop an entire generation of culture from being essentially erased on the whim of corporate interests the next time a shift in standards or new technology comes along? One of the key arguments I’ve seen against second hand goods is the idea that no one will ever buy new if the used versions are identical. To begin with, nothing gets sold second hand without it being bought first hand. And don’t give me the line about people wholesale copying the same file and selling it over and over again. That’s a tech problem no one has bothered to solve because the entire industry was built upon the notion that readers were never going to have these rights. More importantly, when we do have a media shift of sorts, these current files will no longer be identical or the best thing going. If we have resale rights, I could be buying today’s epub files cheaply used or choose to buy the newest holographic version that hits the market in 2025. The long tail may be somewhat infinite, but that doesn’t mean the specific containers we’re using today are. I’m not a big fan of the notion that corporate interests can remove a giant swath of our creative culture just by switching standards or technology. Show me where in copyright law that kind of thing is allowed. It runs directly counter to its stated intent of benefitting the culture.

My perusings through this issue, mostly because Amazon filed a patent they may never even use, have been pretty eye-opening. As much as I love ebooks, and the new digital frontier, there’s always been this nagging little voice in the back of my head and I finally figured out what it’s saying: “Hypocrite!” Despite the fact that I frequently argued against increasingly controlling software licenses during my years in the industry, I never really connected the fact that, when I sell an ebook to a reader, I’m engaging in the same activity that I felt was so exploitative from the other side. I’m starting to get a picture of the weaknesses in selling digital goods, and most all of them stem from the erosion of limits in copyright law. Economic karma, perhaps. It may seem odd that I, as a writer who earns money because of copyright, would argue against more power granted to me as a creator, but I take the long view. It’s simply bad business to rip off the people paying us, and that’s what we’ve been doing from day one. By advocating for or even turning a blind eye to the giant theft of customers’ rights we’ve all taken part in, we’ve created a system that is already doing damage to our culture. Copyright doesn’t just protect creators, it protects consumers and society on the whole in a fine balancing act. What it shouldn’t be doing is warping that balance in support of business models that wouldn’t function without the self serving perversions.

Say what you like about copyright, but its value is much more than simply protecting my rights as a creator. Our system has lurched away from any semblance of balance, and it’s getting more slanted every day.

Over the past few years, I’ve read many articles from creators containing a plea for people to “stop stealing” from artists through downloading. I’d like to end this by throwing that plea back at creators.

Stop stealing from your customers!

Here are the links to the other copyright related pieces I’ve written lately, for you reading pleasure.

The Benefits of Globalization Don’t Apply to the Little People

Second Hand Blues: First Sale Rights and Used eBooks

Amazon and the Mystery of the Great Used eBooks

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The Benefits of Globalization Don’t Apply to the Little People

The U.S. Supreme Court is set to rule on a case that has profound implications for the concept of ownership, (See SCOTUS blog here and read up. It’s fascinating) and could conceivably eliminate the last lingering vestiges of the notion that copyright law has any limits.  If the court rules the wrong way on this, copyright ceases to have any pretense of societal good. And why is it that we’re faced with the possibility from SCOTUS? To defend a publishers’ right to segment the world into territories.

In the past, I’ve argued that the idea of territoriality is already outdated and should be done away with. This case illustrates pretty clearly why that’s the case. Given the technological realities we have today, there is simply no easy way to defend this practice in statute that doesn’t have the unintended consequence of severely undermining first sale, fair use and ownership and resale rights for nearly everything we buy. The benefit to society for allowing territoriality to stand is negligible. In fact, it’s the consequences of doing so that are severe and destructive.

First, let’s look at the publisher, John Wiley & Sons. They are textbook publishers who, as many do, routinely use the concept of territoriality to both exploit poorer markets and maintain the ability to overcharge more affluent ones. The key issue in this case is that an individual, Thai national Supap Kirtsaeng, purchased textbooks sold by Wiley at lower prices in Thailand, brought them to the American market and sold them on eBay to help pay for his education at USC, where the exact same textbooks are priced much, much higher. My first response to this was, “good for him!” This guy identified a seam in the sales channels and exploited the price variance for the same product in different markets to make a buck. That’s market-based globalized free enterprise at its best.

But Wiley was having none of it, suing (in my opinion, inexplicably) for copyright infringement. The guy in question didn’t copy anything. He legally purchased said textbooks at full price offered by the publisher, then used his first sale rights to turn around and sell them for whatever the hell he wanted. There’s no copyright infringement here at all. (Note: I’m speaking in practical terms. Yes, I’m aware that there are portions of copyright law dealing with importation of foreign goods, but those parts were written long before globalization and free trade took hold, before the internet was even a thing and back when importation was a little more complicated than a few mouse clicks and a week’s wait for shipping. Those rules have about as much relevance to modern life as the use of grindstones to make bread). But the 2nd District Court disagreed, invalidating his defense through first sale, declaring his actions as infringing and fining him a substantial amount of money. The key problem lies not just in the decision, which I believe is catastrophically wrongheaded, but in the justification used. The court ruled that first sale rights don’t apply to any goods manufactured outside of the U.S.

Apparently, the judges of the 2nd District missed the memo about the new global economy we’re all supposed to be giddy about. They seem to have not noticed American corporations offshoring jobs and manufacturing at economy-gutting levels to save on labor costs and such. They’ve obviously never set foot in a Walmart or any other retail outlet and taken a few minutes to check the “made in” labels or they would have realized that a plurality of goods we buy every day aren’t manufactured in this country. If first sale doesn’t apply, then this court just swiped ownership rights to the majority of our possessions.

To make matters worse, how many foreign manufactured components do you think are present in our homes and cars? If I own a home that has a central heating system installed that was put together from any amount of foreign made components, do I even have the right to sell my home without first buying licenses for every non-U.S. element it contains? What if I want to sell my home complete with appliances, also made from foreign manufactured components? Do I need separate licenses for my refrigerator, washer, dryer, dish washer, etc? What will the costs of acquiring these licenses do to the overall value of my home. If you said “plummet” you hit the jackpot.

I can no longer legally even sell the smartphone I’m currently typing on. And what about the licenses HTC acquired for the plethora of foreign-made components that make up the phone itself? Does those licenses transfer? Is it enough to get resale permission from HTC or do I also have to get permission from every component manufacturer too? The same applies to cars. Can an ok from Toyota allow me to sell my car, or do I also need an okay from the stereo manufacturer, the maker of the chips in the car’s computer, and whoever made the tires, brake pads, oil filter and anything else in the vehicle that wasn’t American made. What does this do the value of your car? Again, “plummet” is the correct answer.

Yet, this value loss is totally on the consumer side. When the resale market gets gutshot in this way, there is no logical reason to expect car makers to do anything except up their prices. Really, all they have to do is refuse permission for resale and the used car market ends instantly. No more competition on that front.

There’s two key problems I see here. One, this kind of ruling creates a massive incentive for businesses to continue and actually speed up offshoring jobs and manufacturing. If first sale doesn’t apply to foreign goods, companies that trade in foreign made goods will control not only the primary market, but any secondary markets would only be allowed to exist on their terms at their discretion. The entire point of first sale was to prevent this very thing.

In a global economy where much if not most of what we buy isn’t made in America, how long would it be before companies still producing goods in the U.S. argue that first sale prevents them from competing and must be done away with here as well? I put the over/under on three hours.

Then there’s the legal illogic of somehow claiming one part of copyright doesn’t apply to foreign goods (first sale) yet other parts will (fair use). Supporters of Wiley have almost all claimed that the above concerns I’ve mentioned are scare tactics because consumers will retain fair use rights to defend their actions. But why should fair use be any more applicable to foreign goods than first sale? This is a flat-out lie by those who want Wiley to win. If the District Court decision on first sale stands, it’ll be roughly a half an hour before someone tries to invalidate fair use for foreign goods as well. And they’ll win because they’re right, logically and legally. If first sale doesn’t apply, then neither does fair use.

Get it yet? Think for a second, how many people in this country just bought, wrapped up and gave away foreign made goods as presents this past Christmas. If this ruling stands, every one of those gifts was an incident of infringement. I’m pretty sure we just rang up a $100 trillion worth of infringement penalities last month. Don’t think businesses will try to exploit this fully? Take a look at how publishers have been extorting exorbitant fees from libraries on ebooks. First sale doesn’t apply to digital goods (I believe strongly that it absolutely should, by the way) and fair use rights for the same have been willfully undermined as a consequence, resulting in absurdly, indefensibly high prices. And these are goods made in this country supposedly subject to the fullness of copyright law. Take away even those limited protections, and I think we can all see where this is heading.

All of these possibilities only exist because the courts are trying to carve a legal protection out of copyright that allows publishers to gouge rich markets while also simultaneously charging more reasonable prices in poorer ones. We could all effectively lose our right to resell virtually anything because a publisher wants the law to protect them from their own pricing strategies.

We’ve all had “the benefits of globalization” crammed down our throats the past few decades, and this case puts the lie to those notions. Corporations will readily tell you how great the global economy is as they ship manufacturing to third world countries with no worker protections, minimum wage laws or safety standards, but here, a regular guy finds a way to profit from globalization, and those same corporations are screaming that hellfire, brimstone and economic ruin will descend upon us all if its allowed to stand. If the District Court decision is held, that will be a clear sign that globalization belongs only to corporations and the wealthy. They get all the benefits and profits, while we get all the sacrifices and consequences.

There are two big societal problems made worse by an upholding of Wiley’s case: offshoring jobs and the cost of higher education. I’ve already mentioned how this decision creates a massive financial incentive for businesses to stop trading in American made goods, making a serious problem exponentially worse. The cost of education is, in part, too high thanks to textbook publishers. Territoriality is one way in which they keep textbook prices in the American market artificially high. This decision would also make that problem significantly worse as well. Textbook makers already undermine resale value by routinely producing new editions with little or no substantive changes specifically to prevent students from selling their books for any tangible return. This decision provides a clear path for them to further erode consumer rights; simply print the books overseas and now students lose all rights to resell (or give away) those books at any price.

The potential damage to the public and the overall economy from upholding the District Court decision outweighs the damage done to publishers by striking down the infringement claim defending territoriality by so many levels that even considering it scares the hell out of me.

What better case can be made that copyright is irretrievably broken than this one? The District Court ruling essentially makes copyright unlimited in scope, with manufacturers retaining not only primary sale rights, but also grabbing total control of any secondary markets as well. Considering that expansion of copyright terms has essentially made copyright length infinite (Life of creator plus 70 years. It is certainly infinite for the creator as my copyright wouldn’t expire until several generations after I’ve been dead and buried. And that’s only presuming it doesn’t get expanded again, which only an outright fool would believe won’t happen when Mickey Mouse next approaches public domain) where exactly are the statutory limits on copyright that were the principle element of the protection in the first place?

If the possible consequences weren’t so severe–as in instantly stealing at least half of the value of the goods we’ve paid for, eliminating secondary resale markets, and extorting copyright monopoly rents with additional licenses on products we’ve already paid for, not to mention possibly gutting fair use which could well have serious deleterious effects on free speech–I’d say maybe a decision this inordinately stupid needs to happen so regular people can see clearly how distorted and unfair copyright law has actually become and demand much needed change. But then, I’m opposed to further destroying what little productive economy we have left to make a point about copyright. Unfortunately, our corporate leaders and government don’t seem to agree.

The only logical choice here is to strike down the copyright infringement defense of territoriality. The alternatives do a hell of a lot more damage. I wish I was more confident that SCOTUS will get it right. We can all dream, can’t we? Unless, of course, your dream includes an infringing appearance by a copyrighted character, in which case that nap’ll cost you $150,000.

Un-Fair Use: Does Google News Actually Infringe?

“[They use] a doctrine called fair use, which we believe can be challenged in the courts and will bar it altogether.”   –Rupert Murdoch

This is a recent quote from the seemingly-really-annoyed Captain of the Publishing Industry on the subject of fair use, aggregators and search engines.  I’m not sure if Murdoch believes any of this, or if he’s just lobbing the threat of long and expensive legal action out there to try and compel a nice, fat licensing deal with Google and others.  If he does believe it, I have a hard time with a major newspaper publisher actively seeking to gut a staple of journalism.  After all, it’s kind of difficult to build stories when you can’t quote or reference anyone without having a licensing agreement.

So today, I thought I’d take a look at fair use as it relates to the internet, newspapers and whether Rupert actually may have a point.  (more…)

Published in: on November 16, 2009 at 8:21 pm  Leave a Comment  
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