wallis & eriksson 10 may 2010presentation eu parliament mep christian engström, pirate...

10 May 2010 Presentation EU Parliament Wallis & Eriksson

MEP Christian Engström, Pirate Party/Greens-EFA andMEP Lidia Geringer de Oedenberg, SLD-UP/Socialists & Democrats

welcomes you to the seminar:

How can EuropeanCreators get a Fair Deal

in the Digital World?

Politicians responsibilities regarding creativity and remunerationin a rather confused legal/regulatory environment

WithProfessor Roger WallisDr. Lars-Erik Eriksson


Time to ensure European Creatorsget a Fair Deal

in the Digital World?

Politicians responsibilities regarding creativity and remuneration in a rather confused legal/regulatory

environment.

Professor Roger Wallis. Ph.D. Lars-Erik Eriksson [email protected] [email protected]


A question from a non-lawyer

What should the primary purpose of IPR & Patent law be?

a) to provide an economic incentive for creativity,

or

b) to help a few rights holders control what happens in the market (protection)

more jobs

less or status quo on jobs


Does any innovation occur in a vacuum?

How many innovations are not based on Improvements of existing ideas?

Can IPR (Intellectual Property Rights) orPatent law hinder improvements of existing ideas?

Are protection periods too long?Patents: 3 - 20 years

Copyrights (software, art, music, film etc) 70 years after death of inventor.Sounds recordings (a product?) 50 - 70 years


Negative effects of IPR laws(copyright/patents) on innovation

Many studies point to innovation hinders, which canseriously damage the legitimate role of IPR in theInformation Society.e.g. Boyle, Lessig, Litman, Cohen, Benkler,Zittrain Posner et alor Boldrin & Levin (2008)

IP Law expert’s response:Dismissed in a public document signed Prof JanRosén (Swden’s leading IPR guru)as “discarded bits of old food”.


Disruptive Technologiescausing turmoil

Electric light bulb - candle makers (today: artistic candles and for comfort)

General Electric’s Refrigerator – Ice from the great lakes (USA)(today: statues and even a hotel)


Historical overview - new disruptive media technology

It has all happened before!- The pianola industry and the gramophone cylinder- Radio and music (music publishers rhetorical response)- The cassette (Supreme Court USA/UK)- File sharing/Napster

Common pattern: Same arguments:- try to stop the technology - same small group of lawyers- sue technology companies/users - IPR gurus making a mint- gain time to adjust business models demanding tougher IPR laws- find ways to control the market “or there will be no more creativity”


Digital technology & IPR

Constant strengthening of rights holders protection inLaw - weakining of other related legal regimes(privacy, e-commerce, consumers - balance issues)

Analogue: buy a physical product, OK to lend to friends and copy for personal use.

Digital: control over how consumers use materials,with whom, on which device, how long, how man times etc(compare use of medicine)


Societal advantages

•Lower production costs for digital materials•(films, music, computer games, books etc)•Access for individuals to more materials/experiences•More individuals can access materials/experiences•Long tail•More stimulus for creativity.•Interactivity enhanced (sharing/ re-mixing culture)•New marketing channels•New business models (donations (U. Drougge))•More jobs around concerts


A few examples on the number of jobs related to concerts

•Big concert tour 50 persons working for 45 days

•Smaller concert 30 persons working for 30 days

•An open-air concert 550-560 persons during 2 day

•An ordinary concert at Stockholm Globe 150-170 persons during 1 day Arena


Rhetoric from vested interests

•PIRACY - comparing file sharer to drug barons’ illegal CD factories.

•FREE - nothing is free (computer/broadband access)

•Moral panic in society “There will be NO more creativity”

BUT

•Same actors very SLOW to offer “legal alternatives” or providing lists on who owns what


Internet traffic driving broadband

http://stats.autonomica.se/mrtg/sums_max/All.html


What happened in 0905?

View 1 (media industry - large rights holders)

•Jubilation - internet traffic down 20%•People are buying physical plastic products again (CDs, DVDs)•IPRED a success - moral depravation halted in society•Poor artists can at last expect to get fair remuneration•Fight against piracy and “free” entertainment is being won


View 2:•Broadband expansion an overall societal goal (knowledge society, competitiveness, inclusion)•P2P a) driving broadband traffic, b) far more efficient than centralized “client-server” solutions.•Selling bits of plastic in retail stores contributes to carbon emissions (far more than P2P)•File sharing allows curious creative persons to find new experiences (not always available in legal alternatives)•Creators RARELY getting fairly paid in the new legal digital world (iTunes, Spotify, YouTube equity deal etc.)

What happened in 0905?


Road map forward?

A critical point in time:Either we find ways of adapting IPR legislation to current technological realities, to the goals of encouraging interactivity, citizens’ creativity

OR

The copyright regime could implode through lack ofsocietal support.


Normal or not.

A crime/offence is something that is irregular behaviour that does not conform to what is “normal”.

Judging if something is “normal” needs a measure.

The question is if file-sharing is a “normal” behaviour or not remembering that most of the big media players consider even the shortest part of their content within a short video ascopyright infringement.

When earlier irregular behaviour becomes “normal” it should not be considered illegal.

Compare with strikes that a 100 years ago were illegal and trade unions did not have legal right to represent the workers. This is generally cherished today in the industrial world.


The changing IPR balancing act

mid-late 1990s (Bangemann report)mid-late 1990s (Bangemann report). IPRs must be protected but not so stringently thatimpede the development of new business models

mid 2000mid 2000The rights of content owners must balance reasonableinterests of consumers (protection versus “fair use”).

Content Owners New Business Models

Content ownersIPRs

Consumersrights


Where are we now?Where are we now?

Large ContentOwners

Some creators

Many consumers

Many creators& SMEs

The legal regime is supporting large content owners.Technology is allowing many consumers to circum-navigate the regime. New business models reflectingnew technology at odds with the legal regime.Innovation couldbe a victim - improving existing ideas is the basis of creativity!improving existing ideas is the basis of creativity!


Are stronger laws the solution?

• IPRED• Pirate Bay case • E-Phone (IP number Ids to book publishers)• Data Inspection Board- out of the loop,

“Antipiratbyrån” needs no permit to spy!• The worst “haven for pirates” has become

a great example of lawful behaviour.


Casualties along the route

How many good ideas have died as a result of IPR uncertainties?

Napster, Kazaa…….

Student Bay - book chapters for students“Disabled -This website has been disabled! The reason may include failure to pay for the service or usage beyond the agreed limits.”

Simple file sharing networks for teaching/research material exchange - an IPR minefield! Note: Internet was originally designed for sharing files with research results and e-mail messages to avoid travelling.


Macro-economic perspectives

1) Dutch government-sponsored study 2008, P2P provides Dutch society with a net revenue of 1 billion € / annum

2) Harvard Business School (Oberholzer/Strumpf 2009) File sharing has not led to decreased production of creative works (films and music)

3) Avid file sharers (UK) spend 77 GBP/year on Music Industry products/experiences. Non file sharers - 44 GBP/annum


4) Illegal film down-loaders in Sweden in all age groups buy more cinema tickets than “legal” non-down loaders. (SOM Institute, Gothenburg University)

5) Recording industry down – Concerts up > more jobs

6) Archives not available

Macro-economic perspectivescont.


KTH research 2009.KTH research 2009.IFPI claims to politicians: “music sector has lost60% due to file sharing”

FACTS: MI industry overall revenue in Sweden:Year 2000 3.600 M SEKYear 2008 3.700 M SEK

Recording company income down 1,000 M SEKConcerts, private copying, public performance+ 1000M SEK (not including surrounding jobs).

Huge transfer to artists (50% of concert tickets,5 - 6 % of record company incomes)


More “hidden” incomesPrivate Copying Levies (PKE)1 SEK per blank CD via Copyswede• 2002 35 MSEK• 2007 220 MSEK 0f which around 70M goes to the music industry 3.5 billion mobile phones - a small levy?

Performance fees (radio plays) - to IFPI/SAMIDisc played regularly on National Radio) = 40,000 SEK/record companies.Incomes from performances outside Sweden increasing.


And how much goes to the creators?

The new major media company business model:

Use huge “thickets” of copyrights to control what doesOR does not happen in the market.

Use power to generate more “un-allocable” revenues i.e. income which does not have to be paid to creators.


Power of large rights holders - examples

My MP3.com. Settlement with Universal. Owned by Universaland then closed down. No litigation income to creators

Napster 1. Berthelsmann /Universal. Universal receives sumto settle litigation as condition for selection to buy BNGPublishing

YouTube. Universal, WEA and Sony-BMG threaten litigation.Shortly before Google purchase they take stake in YouTube.Gives windfall of 150m Dollars - nothing to artists.

Kazaa (Sharman) settlement with RIAA 130m Dollars-nothing to artists/composers

Nokia - “comes with music” 50m US??

Pirate Bay. Costs? Damages? How much to artists?


MORE CURRENT EXAMPLES

Equity, down payments, fees per transaction.

SPOTIFY 4 major record companies 18% for 10,000€Probably an annual “advance”Payments (believed to be 0,0003 € cents/listening)deducted from Advance.

HEADWEB (Swedish film service)Large down-payments (up to 1 million US fro Sweden)

Conclusion 1) more transparency must be demanded by legislators.2) demands on fair remuneration to creators


Competing legal regimes 1- IPR law - constantly stronger (Infosoc, IPRED)

Rights holders can control when, how, how often,on which device, with whom, where etc usage can occur.

Circumnavigating DRM/encryption a criminal offence

An economist’s view:“Contemporary legal measures to provide increased protection for virtual products represents the use of the law to heighten excludability, but in doing so they run the risk of destroying the recognized social benefits of the development and spread of information, knowledge and cultural products previously recognized in all copyright law ” (R.Picard)


Competing legal regimes 2

-E Commerce law. “Lack of Conduit responsibility” conditions weakened. Pirate Bay, Black Internet.

- Privacy / integrity weaker. Anti Pirate Bureau & Data Inspection Board. Private police forces without control. Proxy IP numbers for thousands.

-Competition law not managed to hinder growth of a few mega global rights holders (controlling different rights).


So what should be done 1

- A holistic view of legislation, less “drainpipe” thinking.

- Adapt laws to overall societal benefits, not just to certain business interests with strong lobbying power.

- Strengthen rights of creators who transfer rights to producers. Demand “active exploitation”, otherwise a return of rights to original creators / public domain.

-introduce the concept of “fair reward” to creators, even if they have transferred rights to 3rd parties (50% ??).


-encourage UGC in social media via more generous“fair use” rules, and protection against legal actions.(Donald Duck’s “beak” in a home made video shouldnot necessarily lead to a successful take-down notice)

- introduce “orphan rights” legislation in the EU

- wave the “compulsory license” stick, and hopefully seemore “extended collective licensing” (open archives e.g.)

So what should be done 2


The new IPR balancing act

New Business Models

Large ContentOwners

Some creators Active exploitation

Fair reward

Compulsory license

Fair rules for UGC


Judges in court actions should be capable of weighing different legal regimes together, rather than merely implementing stricter IPR laws.

Judges in the Swedish administrative court of appealhave all taken a 2 day course in basic telecommunications.


Relevance for a current major EU FP7 project

P2P Next - allowing the distribution of HD audio-visual materials over broadband networks at minimumcost.

BUT - which content?Archives obvious, but the IPR minefield??

Something must be done ASAP!


Finally, Once again, remember history!

How was the radio problem solved in the 1920s?A blanket license system - pay a fee and use anything.

2009? Make file sharing legal via fair payment.How?Use the money paid for proxy IP #, + the millions legalactions are costing, + possibly a share of broadbandfees to give a) the creators fair reward, and b) moreinvestment in new cultural products


John Perry Barlow

Good news

Bad news

and some more good news!


Q&A

Professor Roger WallisDr. Lars-Erik Eriksson

Moderator:MEP Christian Engström

wallis & eriksson 10 may 2010presentation eu parliament mep christian engström, pirate...

Documents

wallis eriksson

creativity slide

larserik eriksson slide

jobs slide

professor roger wallis

tougher ipr laws

legitimate role of ipr

rights holders protection