Mark Twain once said that "facts are stubborn things, but statistics are pliable." Now, many believe that the London School of Economics applied their statistics a tad too flexibly this fall when its Media Policy Project Series Editors released a brief advocating that the United Kingdom not implement its expected Digital Economy Act 2010 (DEA).
The DEA, delayed until 2015, will create a graduated response to online copyright infringement in the UK, sending warning letters to alleged infringers and anonymous lists of those infringers to the holders of the copyrights. The brief, titled “Copyright & Creation: A Case for Promoting Inclusive Online Sharing,” drew criticism from various members of the music industry and academics, including Radiohead record producer Nigel Godrich, legal academic Barry Sookman and the President of the Institute for Policy and Innovation Tom Giovanetti.
The LSE brief argued three main points to support reconsidering the DEA’s implementation: creative industry revenues do not show a general pattern of decline, the world has seen a beneficial surge in “collaborative digital culture,” and case studies of current graduated response regimes do not suggest that the DEA will be particularly effective.
Has online copyright infringement hurt music industry revenues?
The brief argues that, despite stagnation in the music industry, the perilous decline in revenue projected by lobbyists has not come to fruition. Rather, it suggests that the music industry has sustained profits by gradually transforming its revenue streams. For instance, the decline in CD sales has been offset by the increase in revenues from streaming music and global record sales actually increased in 2012 for the first time since 1999.
The brief seems to fall in line with Michael Geist's previous claims that musicians are responding to copyright infringement by innovating the way they gain revenue. In his 2007 blog, Geist notes that many high profile artists have abandoned their copy-controls in search of alternative revenue streams, such as merchandise and concert tickets. Not the least of these artists is Radiohead, who released their CD that year on their website without retaining copy-controls.
Ironically, Radiohead producer Nigel Godrich came out as being very critical of the LSE brief. Godrich takes issue with the biases created by aggregating the data for entire industries, arguing that the brief ignores the reality that much of the revenue generated from concerts and merchandise can only be done from high-profile artists. In his words, “smaller artists who are not in the position to charge anything like the Rolling Stones or Madonna are not the ones benefit from these new incomes, and yet these are the very people who’s interest the report is claiming to serve.”
Barry Sookman takes issue with the brief’s logical reasoning. Among other points, Sookman argues that the LSE’s conclusion that the music industry’s stagnation implies no loss to the industry ignores the revenues that could have been realized in the absence of the copyright infringement. He also questions the LSE’s assumption that we should accept the status quo when it runs contrary to most country’s copyright infringement policies.
Should we embrace the benefits of the "Collaborative Digital Culture"?
The brief also argues that the surge of digital copyright infringement has fostered a beneficial culture of “inclusive collaboration.” The statistics show that the use of Creative Commons increased from 50 million in 2006 to 450 million in 2011 with the help of websites like Sound Cloud and Indaba Music. Marketing benefits and sales have derived from this growth of collaborative culture, as evidenced by the global branding of the “Gangnam Style” video following its thousands of YouTube parodies.
The benefits of this collaborative culture, however desirable, should be weighed against its possible human repercussions. Sookman argues that by looking only at the macro level, the brief does not consider the impact to individuals, families, and small/medium organizations. In doing so, it neglects distributive justice. What’s more, Sookman argues that the brief ignores the emotional impact that copyright infringement can have on artists. He uses the example of Kristen Henry, who “felt frustrated and violated when the database she spent five years compiling was slavishly copied and appropriated by the plaintiff’s using an online crawling tool and sold to others for a fee.”
Do current graduated response regimes suggest that the DEA will be ineffective?
The brief’s final argument is that the lessons from enforcement against individual infringers suggests that the DEA will not be as effective as predicted. Attention is given to France’s graduated response regime implemented in 2009 through HADOPI. It argues that while a study by Dr. Brett Danaher et al. revealed an increase in iTunes sales, the increase in sales had more to do with HADOPI’s education component than its enforcement component (For more information about the HADOPI study, click here to read about Dr. Danaher's discussion of the study at a 2012 IP Osgoode Speaker Series).
Tom Giovanetti takes issue with the conclusion on iTunes sales. He argues that the study merely shows that iTunes sales increased on average by 90,000 units per week due to HADOPI’s enforcement and educational components. The HADOPI study also indicated that more research is required to determine how the educational components of HADOPI affect user behaviour apart from its enforcement components.
Concluding Thoughts
The LSE brief is clearly not without critics. However, it seems that active criticism over the brief’s assumptions on revenue ignores its underlying message. The brief contends that the online world is transforming and that it is consequently improper to solely focus on the economic effects of the transformation. It concludes that an independent analysis of the DEA’s effects should be taken to include the political, social, and cultural impacts of the punitive measures for copyright infringement. This conclusion aligns with the 'Digital Rights' notion that humans possess the right to freedom of expression and that stricter enforcement of copyright laws will violate that right (For example, see the Open Rights Group's stance on copyright reform). In fact, an article by Nicola Lucchi discusses the constitutional concerns that the HADOPI law created and how its adoption led France's Conseil constitutionnel to tackle the issue of balancing freedom of expression with the property rights of copyright holders.
Where the brief errs is in its reliance on data to suggest that copyright infringement has not negatively impacted the revenue of creative industries without stating its assumptions. In my opinion, the brief should have clarified these assumptions so as to avoid data scrutiny from economists. Failing to do so let a brief with a solid message become overshadowed by procedural mistakes in its economic analysis.
Peter Neufeld is the Features Editor and a JD Candidate at Osgoode Hall Law School.