Peer-to-Peer Networks OR Music + Microfinance = Microfundo

Posted in Uncategorized by coda on October 14, 2009

Today I want to blog about a topic that is central to the whole issue of how we regulate digital content – Copyright Law and Peer to Peer Copying. It is a topic that cuts across the spectrum of law, technology, markets and society. It is a topic which has echoes of well-documented historical antecedents – dislocation, disruption and destruction. It is also a topic that interests Jeff and folks here and here.

Demonising copyright is easy and there are good reasons why many are angry about the way copyright law continues to frame issues reflectingindustry’s expectations as to the way digital content is to be exploited, accessed and used. Others think that it is not alright to infringe copyright – unless the individual’s name is Lily Allen. Notwithstanding the frustration one feels about the evolving role of copyright law in the age of the Internet, reasonable people will agree that we still need a system for innovation, creativity and reward.

Is there an alternative way of approaching and thinking about copyright law in the age of interconnected systems? This is difficult, if not challenging. Copyright rules and norms are well-embedded in business models and revenue generation streams depend on sound intellectual property systems.

There seems to be an impasse, it would appear. Not so, for Microsoft’s AG Counsel, Tom Rubin. This is what he had to say about his vision for preserving consumer access to online content without infringing on the rights of copyright holders:

Digitizing all of this content is important because it not only creates opportunities for publishers to reach new customers, but it exposes more people to a wider variety of content. However, there is a critical debate taking place about how to best realize the goal of broad online access to the world’s culture without undermining the incentives for creativity that are so essential to developing these works in the first place. There is one side that takes a unilateralist or “opt out” approach where the practice is to simply to “take” the works of others, without any regard for copyright or the impact of their actions on authors and publishers. Microsoft doesn’t believe that is the right approach. We firmly believe that expanding access to online content must be done in a way that respects intellectual property rights and fairly compensates the content creator for their work. It’s an approach that seeks to collaborate with publishers and copyright holders in developing technologies and business models that seek to build a competitive and varied marketplace of online book content. The challenge here – for all of us – is how best to balance the worthy goals of access, innovation, and creativity.

How we set in place a process which helps realise this optimal and fair balance is a challenge indeed. Jeff, throws me a “curve ball”:

How do we come up with new rules for downloading in the light of changing technology? What should they be? How do we organize a public debate on the topic? What are the issues?

I need your help here. Here is my two pence worth:
Maybe, we should begin by identifying a set of principles that will aid us in this task. Rubin, provides us with 3 principles which he sees as pivotal:

The first principle is that new services that expand online access to content should be encouraged. The second principle is that those new services must respect the legitimate interests of copyright holders; put conversely, we must forcefully reject any business model that is based on the systematic infringement of copyrights. The third principle is that, even as we adhere to these first two principles, we must all work together to find consumer friendly and cost-effective solutions to our shared goal of expanding online access to copyrighted and public-domain works.

The question of whether we need to modify or legislate new rules is a difficult one. Whatever we may think of Charles Nesson and his recent courtroom exploits, he has a point. Whatever laws we pass, we are not going to change behaviour unless copyright law is seen as having both moral and legal authority which can be enforced. This is where peer-to-peer technology fits in with the 3rd principle – and which I suggest cannot be underestimated in the context of the networked society.

But we still need to translate these principles onto a network that values peer production and exchange – the spaces of information and the potential benefits it offers us can only be imagined. Yochai Benkler has this to say.

The idea of peer production is not a mere whim. It has a profound, if not critical bearing on the way we can think and approach questions like those raised by Jeff. This brings me to an important question and issue: if context is creating problems of enforcement, issues of democratic consent and expectations of access can Peer to Peer (P2P)provide a way forward? How can the 3 principles Rubin identifies, be accommodated in a manner which leads to copyright law evolving in a fair and balanced manner? Perhaps, the real discourse we should be having is in what ways can we use P2P as an opportunity to address the actual or perceived shortcomings of copyright law – Music + Microfinance = Microfundo? Networks of contracts between copyright owners, creators, authors and users? Shift perceptions: content is free regardless of rights, P2P is disruptive, P2P file sharing of copyright is piracy.

Some Preliminaries

1. What is P2P?
They are systems which enable resources to be shared across the Internet.

2. What are the key values embodied by the architecture of the Internet and in particular P2P?
Cooperation is one of the aspects of P2P systems. P2P systems are underpinned by the notion of trust.

Is conflict between copyright law and P2P inevitable?
The Copyright Clause in the US Constitution:
“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 predecessor to the Copyright legislation in the UK:
“An Act for the Encouragement of Learning, by vesting the Copies of Printed Books in the Authors or purchasers of such Copies, during the Times therein mentioned”

There should not be any conflict or tensions, in principle. In practice, copyright rules and norms have increasingly defined the rules on how society interacts with digital media and content. P2P proceeds on a different set of “default” rules and norms. James Boyle terms this new wave of copyright lawmaking akin to the second enclosure of the public domain.

Much has been said about the impact of P2P on OECD economies.There is some dispute about the impact of P2P on music sales.

Discussion: What about the impact of P2P on developing countries? Is P2P a threat or does it provide opportunities and insights?
1. The Electronic Commerce Development Report 2004:

Information and communications technologies have considerable potential to promote development and economic growth. They can foster innovation and improve productivity. They can reduce transaction costs and make available, in mere seconds, the rich store of global knowledge. In the hands of developing countries, and especially small and medium-sized enterprises, the use of ICTs can bring impressive gains in employment, gender equality and standards of living.

2. Summary of Press Release:
Musicians in developing countries have much to gain and little to lose from the digital and Internet technologies that the major international recording and publishing industries view as the core enablers of piracy. But to realize those gains they need more control over the copyrights to their recordings and compositions, UNCTAD argues in the E-commerce and Development Report 2004 (1), released today.

Digital and Internet technologies and music are a near-perfect match. Earlier 20th century technologies brought music to growing audiences and helped boost artistic creativity. Those technologies have long since been superseded, and music has now run away from its guardians – the recording and publishing industries – to cavort with appreciative and distant audiences on the Internet´s peer-to-peer (p2p) networks. But do all these exciting new developments really offer any positive creative and financial propositions for musicians?

UNCTAD´s report explains that traditional sales of recorded music are often insufficient to cover production costs and leave musicians in financial peril. Artists are also left with little control over their work, having forfeited the rights to their compositions and recordings under standard industry contracts. According to industry sources, only 5-to-10% of all recordings recoup the advances paid to artists and become profitable. Thus, on top of losing their rights, many musicians also accumulate debt.

Going live

For most musicians, particularly those from the developing world, the fact that well-attended live performances, rather than CD sales, can provide their most reliable source of revenue must be a decisive consideration when they reflect on how to use digital and Internet technologies in managing their own businesses. Radio and television remain the most powerful means for creating mass interest in musical products and personalities. But these media can be tapped into by only a tiny minority of artists. The Internet, by contrast, enables anyone with a computer to make themselves and their music accessible to millions. Many musicians may be performing abroad, in remote markets, and thus it is doubly important that they maximize the use of technology back home to create the interest in their music that will attract the biggest possible (and most profitable) live audiences abroad.

Audience “discovery” has usually been promoted by the mainstream music industry as a marketing exercise to support CD sales, but those sales rarely generate net recording royalties for musicians, the Report notes: of an average 12% royalty paid on a $16 CD, the artist is left with about 4.10%, after deducting producer´s fees, “cost of packaging”, “free goods” (giveaways) and withholdings for unsold stock. The industry has been shy about using digital and Internet technologies due to concerns over piracy, and the development of these technologies outside the music industry has been subject to systematic litigation by the major companies. Sharing of copyrighted materials on the p2p networks (including innovators like Napster and and newer, more resilient players like Kazaa and Overnet) has been successfully prosecuted because it amounts to unlicensed redistribution beyond the scope of what can be considered “fair use”. Having invested significant time and money in legal proceedings and in lobbying and marketing against p2p, the mainstream industry is unlikely to embrace these technologies any time soon. Clever use of the diverse palette of digital technologies and the Internet will thus require an independent approach and greater, if not full, control by artists of their own creations, the Report warns.

Talent counts; but who benefits?

Digital technologies have had a great impact on the economies of music production. High-quality recording and production tools running on commodity PCs are widely available at prices that have become realistic for artists in many developing countries. A number of free and open source software tools for music creation and production are being continuously refined and provide advantages from an access, learning and cost perspective. Thus, the cost structure of music production is shifting towards paying for human ability and know-how, rather than for equipment and facilities. The history of the international recording industry shows that developing countries are full of talent and ambition and that technology has assisted in the globalization of country genres, such as the Brazilian and Jamaican varieties. The question remains as to who ultimately benefits, and how technology can tilt the odds in favour of artists and musicians in developing countries.

The total earning capacity of a musician will depend on optimizing the mix of revenues coming from recording royalties, composition royalties, merchandise sales and live performances. As the UNCTAD report points out, technology has effects that are perceived and real, as well as positive and negative, on each of these revenue sources. Actual physical piracy – the production and distribution of counterfeit CDs and tapes – is clearly damaging. But the “majors” in the international recording industry insist that Internet-based and p2p technologies damage sales of CDs as well, although recent research casts some doubts on these claims. But because the majority of CDs do not recover the advance paid to artists, musicians do not earn much either, and thus the issue of perceived losses due to Internet technologies and p2p-related piracy is a moot point.

Retaining copyrights is fundamental to exploring alternatives and embracing new technologies. Policy efforts, says the E-commerce and Development Report, should support the discovery of musicians and musical cultures using the Internet and digital technologies and avoid generating anxieties about losing out on possible but actually improbable stellar earnings from international CD sales. While modern systems for copyright protection and royalty collection are needed in developing countries to develop strong national markets and interact with the international entertainment industry, policy makers, music industry professionals and musicians should give careful thought as to the extent to which stronger copyright law and protection works in the interests of both creators and audiences.

Artists should also consider whether improved discovery and performance income are not in fact preferable to income from royalties, which frequently proves to be minimal. To that end, the use of Internet technologies, including p2p file-sharing, online distribution, and adopting open or public licences, such as those proposed by the Creative Commons initiative, warrant consideration.

3.A Case Study: Microfundo

4. Making Money via Twitter: The Story of an Indie Musician

5. Castells, You Tube and Twitter: The Future

6. Virtuous Torrenting
P2P for the developing world
Users in the developing world are typically forced to access the Internet at a fraction of the speed achievable by a standard v.90 modem. In this article, we present an architecture to enable offline access to the Internet at the maximum possible speed achievable by a standard modem. Our proposed architecture provides a mechanism for multiplexing the scarce and expensive international Internet bandwidth over higher bandwidth P2P (peer-to-peer) dialup connections within a developing country. Our system combines a number of architectural components, such as incentive-driven P2P data transfer, intelligent connection interleaving, and content-prefetching. This article presents a detailed design, implementation, and evaluation of our dialup P2P data transfer architecture inspired by BitTorrent.



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