The former landmark legislation in copyright law was the Digital Millennium Copyright Act which became effective in 1998. And as important as the DMCA has been for the development of the internet, the wheels are in motion for the passage of a new generation of copyright law.

What this means is that the time to have a conversation about what the future of American copyright law should look like is right now. There are powerful forces who want a more powerful regime of controlling information on the internet, such as creating a “notice and staydown” regime to replace the DMCA’s “notice and takedown” provisions. But in a world with internet, it is time to start thinking with a different set of tools than the old copyright adages which led to the development of the powerful industries of today.

Change is afoot, and it is vital that we adapt our legislation to take full advantage, rather than merely to safeguard old industries who may be displaced by that change.

 

Returning to the Roots of Copyright

In my opinion, it is important not to become mired in the details of an existing regime, which will tend to cause people to fight to resist change rather than embrace the opportunities of change. Specifically for copyright, this means that upon encountering an issue of widespread connectivity and sharing, it is important to return to the fundamental underlying purpose of copyright rather than to reflexively assume that it is a critical problem simply because it is different.

The central root of copyright in the United States is Article I, Section 8 of the Constitution, which reads:

“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.”

The pivotal point to make about this clause is that the purpose of copyright is to promote progress and not to hinder it. In the context of creative works, I interpret “progress” as meaning to facilitate the creation, distribution, and consumption of creative works.

In the context of the internet, content distribution and consumption are essentially solved problems. This is a source of much consternation for distributors like publishers and portals for content consumption- it is now so inexpensive to distribute content that consumers are actually paying for it themselves with their home internet.

However this raises a new problem, which is that historically content has been financed by purchasing distribution, and that some of that price is paid back to the original content creator. If you are a traditional distributor, the fact that the internet now does your job faster and for less cost than you can possibly compete against is a serious problem. And the problem that this creates is that all traditional artist/creator funding systems assume distribution is a serious cost.

 

Financing Content Creation

The new problem is actually much smaller and simpler than the old problem solved by traditional distributors. How do we compensate content creators and artists for their work in a world where the internet exists?

It seems to me that the obvious approach is to have consumers and fans simply pay creators directly.

I realize this sounds absolutely insane if you are a traditional distributor- both because it is contrary to everything your business must think and believe, and also because if such a model became ubiquitous, then creators and consumers no longer need you and you go out of business.

The leap of faith here is that creators need to trust that their fans will like their work enough to pay for it. Fortunately, several highly successful solutions have already been tested in the marketplace.

This system has been proven to work. For example, Louis CK conducted a famous and wildly successful experiment by hosting his own website and doing his own production, available on that website in an unrestricted format. He acknowledges in his letter to his fans that he is trusting them not to steal his content. However, the results of the experiment are clear- for a video he estimates a traditional distributor would have charged at least $20 to purchase, he charged only $5 for the video. As a result, he made over $1 million.

Another innovation in content creation is crowdfunding like Kickstarter. In the Kickstarter model, fans directly finance content creation prospectively rather than buying an already-completed product. This keeps fans involved and engaged on a much deeper level, including to the point of selecting what should get made, much like a traditional producer would make the decision whether to greenlight a second season or to make a movie.

Kickstarter is by no means the only new player in funding content creators. Patreon adopts a somewhat different model, where fans are “patrons” of a particular content creator and voluntarily support those content creators either monthly or by item produced. Again, content creators are trusting that their fans like their work enough to support them financially. And that model has also been quite successful.

The “pay what you want” model is also proving to be quite successful. Good examples of this approach in action include Humble Bundle for video games, a Radiohead album for music, and quite a few others. Pay what you want is a radically different approach from the traditional distribution model where a centralized distributor exclusively controls the supply and the price, trying to maximize revenue through high prices supported by exclusivity. Pay what you want, on the other hand, gives anyone at all the option to access the content for any price, and instead monetizes fans’ appreciation and desire to support the content creators by paying more.

Overall, the trend is overwhelmingly clear; the internet facilitates directly connecting content creators with consumers, cutting out the need for a middleman. Obviously if you are a middleman, such as a book publisher, this is tremendously concerning. But democratizing content creation has the effect of making access to consumers much more equal and widely available, without gatekeepers to decide by fiat whether anyone else will ever read your book or your script. It lowers prices for everyone, and gives content creators more rights and creative control which they might otherwise be forced to surrender to a distributor, publisher, or other entity.

 

The “Internet Problem”

Returning to the central point about copyrights in the United States, many traditional businesses in content industries want nothing more than for the “internet problem” to just go away. They want stronger controls over their content, more power to take down on the internet, more punishment of infringement, and otherwise just more power to counteract a perceived loss of control as a result of the internet.

My counterpoint to that is that the content industries are actually getting dramatically better as a result of recent sea changes in the power of centralized gatekeepers. We are, right now, in a bit of a “television golden age” in terms of diversity, quality, access, and price. Services like Netflix and HBO Now are allowing people to watch video more cheaply and with greater flexibility at any time of day. And online models allow for smarter and more effective content creation than using traditional broadcast or cable, as a result of better metrics about what people like and greater access for people to select what to watch.

Today there is unparalleled access for new authors and artists to distribute over the internet. For example, books like The Martian were originally self-published using the internet rather than a traditional book publishing deal. Opponents of self-publishing will not hesitate to point out that self publishing results in an enormous amount of content being available that is very low-quality- but in my opinion this is an incredibly weak criticism because the alternative is censorship on the basis of subjective quality. Reviewers and library curators have always been vital for people to find content they are going to like in a world that is inundated with more content than they can possibly consume. Having even more content is hardly a new problem, and actually grows the need for reviewers, critics, and other side industries like independent editors and marketers. The only difference is that all of these aren’t being bundled together under one publishing roof which extracts the lion’s share of the revenue from the content creator’s hard work.

The world of open content creation looks very different from the traditional distribution regime. For starters there are millions of participants instead of a select few big-ticket creators which become extremely wealthy household names. It seems likely that no individual will reach such heights of wealth and fame (unless perhaps their work is so exceptional it becomes a massive viral phenomenon). However the forgotten thousands or even millions of content creators who either get rejected, or who never actually get started because they have a day job, will have a seat at the table. A more modest seat than an internationally recognized celebrity would, of course, but the possibility to create content and make some money should not be underestimated.

 

Building a New Regime

Turning to the issue of what a new copyright regime should look like, the most important point is that the new system should get rid of barriers to innovations that are happening right now. Not, as the powerful gatekeepers would have you believe, to restore the world to its rightful order with them at the top and in control of the content industry.

To that end, I believe that virtually every item being considered by the Copyright Office must be totally rejected.

Their approach is fundamentally wrong in principle, and it doesn’t help that the dinosaur content industry businesses are the only ones with the money to lobby. Small self-published content creators, Patreon artists, and Kickstarter project creators naturally lack the cohesion and budget necessary to lobby anyone.

But what should a new regime look like, assuming carte blanche to do whatever was required?

First of all, we must recall that the fundamental underlying purpose of copyright law is to promote progress, which in the case of creative works, is to promote their creation and consumption. It seems apparent to me that the traditional distributors are now openly opposed to the reductions in costs, increases in efficiency, greater creative control for artists, and greater freedom of consumption which technological change has created. Traditional methods of extracting the most possible revenue such as “windowing” by controlling when content is available and how it may be consumed, among many other methods of revenue extraction, are now off the table. But the result is a much better, fairer, more available, more efficient market for content, with more content creators and wider availability for lower costs.

So we need to have new copyright legislation that embraces the new model. To do this, copyright law should embrace the concept of having content creators establish direct relationships with their fans. Crowdsourcing and crowdfunding are likely to be the future of creative content, even for larger studios. Increasingly powerful and sophisticated internet distribution systems will make more content available for less and less cost.

There are a lot of moving parts and a great deal of possible changes to discuss, but in this post I will close by focusing on one possible change which underscores this radical shift in approach.

Suppose instead of having an increasingly aggressive takedown regime to protect exclusivity, what if we instead completely rewrote the copyright law to openly allow unlimited distribution, with the caveat of compulsory licensing?

Under this approach, anyone and everyone may pay the compulsory license to acquire a particular license defined by the Copyright Office, which essentially allows private viewing, not for profit performance such as singing a song, and perhaps several other uses. Instead of taking content down, a copyright owner will demand that an infringer pay them (at most) the statutory value of the compulsory licenses necessary to legitimately use the content to the extent it has been infringed. In this regime, an infringer who shares a million copies without paying the content creator would be subject to a demand to pay the value of the compulsory license multiplied by one million instances.

However, handling out-and-out infringement isn’t the real value of this change. The real value comes from the change in incentives for distributors to use the best available distribution technology, rather than to use the most restrictive.

We can imagine a world where big content companies operate private torrent trackers, for example, and authorized users with accounts on this privately operated tracker will download content with credits. Because everyone in the swarm is helping to distribute, the system costs virtually nothing to operate and is fast for everyone regardless of how many people want a particular file. Now, for a tracker operated by a distributor or a content creator directly, infringement is obviously not an issue. But another tracker might also distribute the same copyrighted file- and this is where the compulsory license comes in. The number of instances of the file shared would be multiplied by the compulsory license and the result is the amount of damages to which the copyright holder is entitled, to be collected from the competing tracker.

What this means in the aggregate is that there will be competition to have the most efficient content distribution. The cost of licensing the content has a hard ceiling at the statutory compulsory license, although you could negotiate with the copyright holder for permission or for a reduced price. In the event that the copyright holder is charging too much for distribution, a competitive distribution system could pay the compulsory license and charge less for distribution.

In the big picture, the internet is a shared information distribution system. Because of this it is vastly cheaper and faster than a single exclusively controlled distribution platform. The copyright law should be actively encouraging distributors to use this type of distribution system, rather than encouraging being as restrictive as possible and encourage using antiquated distribution methods like cable to retain maximum control over the distribution process.