Category Archives: media

EU Digital Agenda moves ahead with collecting society harmonisation

On his blog, Christian Engström, MEP for the Swedish Pirate Party, discusses the upcoming Collective Rights Management Directive, which has just been presented by the European Commission. The directive aims at harmonisation of national royalty collecting societies, as a step to facilitate the Internal Market on the internet, an area where it at this time still has serious shortcomings, as I have commented before.

As Mr. Engström rightfully notes, this is an improvement over the status quo and might really shake up the intransparent structures and the monopoly of rights some national collecting societies currently have. It should be supported.

I also agree with his criticism of the directive. If the author of a work cannot be found within 5 years to be paid his royalties – the work is then considered “orphaned” – the collecting societies should not be allowed to simply keep the money. This would set the wrong incentives and probably weaken the effort to actually search for the rights-holder. The collecting societies have to lose the money in that case, and Mr. Engström’s proposal to donate it to cultural archives and museums in need of funding seems a good idea, though the details of who is eligible might be tricky. Mr. Engström proposes to leave this to the member states, but since the whole idea is to not only make a European Internal Market but a common “cultural zone”, maybe there should be a central European office where cultural institutions and maybe even new up-and-coming creative projects can apply for receiving some of those funds?

The draft directive mentions a due date for payouts of 12 months after the financial year, which is of course ridiculously long. As services like flattr show, flexible distribution of funds between consumers and creators is easily possible on a monthly basis. The distribution societies do of course have a few more transactions to process, but if a small start-up can handle millions of transactions a month, the big collecting societies should easily be able to put up a bigger server or rent some cloud resources to handle billions.

Still, this is definitely a step in the right direction. Though it should not stop here. Like the first draft which I discussed here before, the provisions of the directive do not state an obligation for multi-territorial licensing, it just compels member states to provide specific favourable conditions for this to happen. Should a national collecting society decide not to license multi-territorially, the option to do this falls back to the rights-holder. In many cases, the rights holder will not be the artist, but a record label. And as I explained in my earlier post, they have commercial reasons (regional price discrimination) to refrain from granting a Europe-wide license. In fact, the directive acknowledges that territorial licensing is also grounded in commercial choices in it’s first chapter (page 3). So for many pieces of media, the Digital Internal Market still won’t be realised through the directive.

The goal should be a Cassis-de-Dijon ruling for digital media. The analogy is of course not completely correct as it’s always difficult to compare tangible and digital goods. What I mean by it is that, I, as a consumer or possibly even reseller, should be able to import mp3 or other files that are legally sold in one member state into another via the internet. This is not possible due to nationally-centred licensing, but the button on my favourite mp3 website doesn’t say License. It says Buy. And if I buy something in one member state (the transaction takes place on their server), I own it and should be allowed to take it with me across borders.

However, even though the implementation of the current draft of the Collective Rights Management directive would not bring about this situation, it definitely improves the conditions for forming a true Digital Internal Market in the near future.

 

tl;dr

The criticism I put forth about the earlier draft of the Collective Rights Management Directive still holds true, but Christian Engström and all like-minded MEPs are right to generally support the Directive (notwithstanding the points he rightfully criticizes). It is a step in the right direction and should facilitate further steps toward a Digital Internal Market.

 

 

 

Our common popular culture – good job, interwebs.

I was recently shown this neat list on Buzzfeed titled 25 Ways To Tell You’re A Kid Of The ’90s. It is basically a collection of pop cultural references about kid’s stuff of that decade.

Chronologically speaking, I was a kid of the 1990s, which lasted from a few of my earliest memories into my teens. Yet, I didn’t get half of the references. The reason is quite simple – the list is based on American kid’s pop culture of the 90s, whereas I grew up on the other side of the pond. This made me think how unthinkable a national definition of the most marked pop cultural occurrences would be today, thanks to cheap and widespread Internet access.

Take the participation in exploitable Internet memes for example. The kids who make them (and many of them are kids, as evidenced by the frequent themes of interaction of teenagers with their parents, school situations etc.) will probably fondly remember that time well wasted for the rest of their lives. As an Internet phenomenon, however, these memories will be shared by everyone who’s a kid of the 00s, regardless of geographical origin.

This also holds true for more conventional subjects of popular culture, such as TV shows. I did get the Bel Air reference at the top of Buzzfeed’s list, but not because I actually watched the series in its original English language (or at all, not everyone had more than 3 channels after all) back in the 90s. “The Internet” told me. IIRC XKCD in particular deserves credit for my enlightenment in this matter. For current shows, pieces of music etc. such late explanations won’t be necessary. People can consume any piece of media they like whenever they like. This may be a new series that normally would only have aired here a lot later and in a terribly dubbed version (In non-English-speaking Europe, the Cosby Show was actually a typical part of mid- to late-90s TV… quite a bit of lag, I’d say).  Or think about otaku kids translating and subtitling the latest episode of their favourite anime and distributing it to their peers around the world just hours after the original Japanese airing – while there might never be an official translation.

This last example is also something to answer people who argue that geographical barriers still exist due to language barriers. It’s pop culture, which literally means that many people like it. So there is likely going to be someone who is able to and will translate, even in case of languages few people speak. But for the most part the world’s proficiency in English will correlate with the advent of more and more content on the Internet – simply because being restricted to websites in your mother tongue is boring.

Another restriction, which is more relevant, is the availability of Internet access. While the necessary equipment has become exceptionally cheap, it’s regrettably not yet available to anyone. I would however, argue that this is a socio-economic barrier, not a geographical one.

Obviously, even though much of it are media items, not all pop cultural products can be digitalized. For example, Buzzfeed’s list included some candy and toys I didn’t know. So some of these barriers will remain. However, I assume that since online discourse popularises products worldwide, chances that they might be marketed in other places rise. Another part of this issue might be solved with the mass production and proliferation of 3D-printers. (Which also scratches at another great benefit the world’s culture, pop and otherwise, gets from the net: the facilitation of creative work – which I won’t go into right now)

So, we see a worldwide pop cultural exchange. We like or hate the same stuff and we laugh at the same jokes, wherever we are. There are still considerable barriers for many people regarding access, but once you got it, you join something that is a genuinely global community. The majority of actual content might be trivial, and I do not expect education and socialization of children to be even close to identical all over the world any time soon.

But just the prospect of getting a cultural heritage that is, to a higher degree than ever before, genuinely common to all mankind  is incredibly futuristic and just plain awesome to the “regional 90s kid” that I used to be.

[Now, out with the cultural anthropology trolls to tell me how many books and articles you’ve already written on this trivial hunch of mine]

tl;dr

While “the 90s kids” don’t universally exist, there are and will be genuine “00s” and “10s”  kids, thanks to an internet-fuelled common global pop culture. I believe that’s a good thing.


A Digital Internal Market for Europe – within our reach?

[This post is a rewrite of an old post from about a month back, which entered data oblivion under the “care” of my less than competent old hosting provider. Upside: I can include a comment on the directive draft for royalty collecting societies]

When I still lived close to the border, I liked to get groceries from the Netherlands and Belgium. Some foodstuffs are quite a bit cheaper in NL, especially coffee, so a caffeine fuelled student like myself could save a considerable amount of money. Also, some great food was only available there (Dubbelvla ftw). And Belgian supermarkets tend to have a range of goods in their regular line that are hard to come by on my side of the border without resorting to delicacy-shops.

Also, whenever I’m in the UK, I like to browse CD, DVD and video game shops for some new gems for my collection. Not only do I prefer the original English audio for my movies and games, but especially the latter usually have a considerably better price.

I then take all these goods home with me, without anyone at the border or customs bothering me about it.

This is a typical example of a European citizen and consumer profiting from the European four freedoms. And many people, in regions close to the border or anywhere else in case of mail order goods, do this every day. But you might have noticed, that these freedoms seem to end when talking about digital goods. As a continental European you cannot, for example, buy an MP3 album from amazon.co.uk, even though it might be cheaper than from your local amazon branch or possibly hasn’t been released in your country yet.

This is what non-British customers see, when trying to buy digital goods from amazon.co.uk

This is done via a technique called Geo-IP, which more or less successfully determines from where in the world you’re going online.

Another aspect that’s even harsher is that you  couldn’t even buy these MP3s if you were in the UK! You need a British billing address and possibly a credit card issued by a British bank (I’m not sure if amazon implements the last part, but many shops do). This is nothing short of discrimination because of country of origin (actually country of residence, but the correlation is probably high). I can, after all, buy the same thing on CD if I just walked into the store. To take the analogy a step further, imagine the clerk refuses to sell you the CD, just because he recognized you as a foreigner.

So, why do and how can they do that? Don’t we have a single market? Sure, these practices can be seen all over the world, but can’t anything be done in the framework of the EU? The following are some different perspectives on this, though I will focus on the more common Geo-IP problem (getting a foreign download product while you are in your home country). Also, I will not go into detail on the actual artists. But I assume that an artists wants as much of a paying audience with as little bureaucratic effort as possible, so releasing once and selling to the whole of Europe should in principle be an attractive idea.

From an informed  consumer‘s viewpoint it is anachronistic to assume that popular culture is regional. Many people know when something they like has come out anywhere in the world and they want it. They are willing to pay for it, but sometimes they just can’t buy it. A prominent recent example was people asking to pay for streaming video content, that is currently only available with a physical cable TV subscription in the United States. They also know how much their neighbours in the global village are paying and are not willing to pay more than the best global market price. The technical and legal reasons why they can’t aren’t intuitively understandable and they also plainly don’t care. They want to watch a movie, they are willing to pay for it, and they know what’s the best price and where. If they can’t do that, they tend to feel ripped off or, in the case of complete unavailability, resort to piracy.

The publishers / labels / rights-holders like to make money, obviously. One aspect of how to optimize your income is clever pricing. Ideally, you take the maximum amount of money a customer is willing to pay from him/her. This would result in perfect price discrimination. This isn’t practical in mass retailing. But pricing differently for each country is a major step to get closer to this ideal: There are slightly different price levels in each country for different categories of goods. People who live in a given region are used to these prices and are therefore on average willing to pay more or less for a certain good. Not every consumer is informed in the way described above, so this still works reasonably well. Therefore, the publishers assign different prices to different countries and increase their profits. With immaterial goods such as digital downloads, this is even easier. They are distributed relatively centralized from a countable number of online stores, so managing prices becomes an easy task. There are surely more reasons for pricing the same immaterial good differently in every country, but I believe this is the heart of the matter.

From the perspective of the EU (or the European Commission to be precise, as they would be the ones to start legal proceedings against a breach of the Treaties or European legislation) the free movement of goods first of all means, that no member state of the Union may prevent you from getting the stuff you bought in another member state over the border. It does not force a publisher to sell their digital good directly to any place in the Union. Nationally organized rights-holder organizations and different sets of copyright law even effectively prohibit them from doing so. The Commission isn’t necessarily happy about the current situation.

In the early days of the iTunes store, there were legal proceedings under anti-trust law against Apple, who had different prices even between Eurozone countries. Apple blamed the multitude of national copyright laws and the consequent national licensing. And they were probably even genuinely angered by becoming targets for EU anti-trust negotiations because of this: Later, they even actively lobbied for provisions for single European licenses.

Also, there have been attempts at making the single market a reality for media. The Audiovisual Media Services Directive of 2010 however, mainly offers an explicit analogy to what the regular internal market means: States may not hinder the broadcasting or reception of media to or from another member state. Conflicting copyright rules are explicitly excempt.

There has been non-binding action, such as the Green Paper towards a digital single market. It recognizes the problems of the current national copyright landscape and aims to achieve “rights clearance”

Just recently, a draft directive was proposed, that seemingly build on this. It focuses on breaking the national royalty collecting societies’ monopoly over their territories. This is a good thing, for artists and consumers alike, because competition in this field will probably allow better payment for the former and possibly generate better tariffs for the latter. Collecting societies probably won’t be able to afford an overhead like the German GEMA has today. However, besides being only concerned with music (not software or video), the current draft only facilitates the process of multi-territorial licensing. It does not require it!

“A collecting society may decide not to grant multi-territorial licenses for online rights in musical works, but it could continue to grant national licences […].” (Page 10 of the Directive proposal COM(2012) 372/2)

The new structure tries to give incentives to actually license EU-wide has other provisions like disallows cherry picking by taking foreign licenses but not internationalising one’s own – so no reaping the benefits unless a collecting society joins in completely.

However, I doubt the full effectiveness of this. After all, the current copyright situation seemingly benefits publishers, as explained above. And in an open “collecting society market” they can decide whether or not they want to go one that acts nationally or multi-territorially. If there remains one purely national collecting society in each country, publishers might do the cherry picking, by keeping price discrimination up and licensing to individual national societies or to a multi-territorial society in cases where price discrimination would reap less benefits than the lower bureaucratic overhead. A pure single digital market might be profitable as well, especially if this nation-specific overhead is completely eliminated, but I am not convinced that every rights-holder is prepared to take this leap of faith.

A full digital internal market would mean an obligation to sell something that’s publicly available on the internet in one country within the whole Union. The buyer would have to bear the transport costs, as he does for mail order from other member states, but fortunately, they are zero in this case. Also, the fact that there’s zero additional effort on either side (in fact, less on the store’s side if it doesn’t check the buyer’s origin any more) makes this more reasonable than forcing the few mail order companies that don’t ship outside their member state to do something alike.

A first step toward this might be to forbid the requirement of a local billing address. I imagine this might be achievable via anti-discrimination law, which should outweigh copyright concerns. This is of course a more of a normative than an actual legal argument (I’m not a lawyer) and I have no clue whether there have been any attempts to legally pursue the right to buy digital goods from (physically) within a foreign country this way. (I’d be very interested to read about it though, if anybody knows something…).

In the meantime, let’s watch the draft directive unfold, and let’s hope I’m wrong about my hunch that it will be abused by rights-holders in a way that neither consumers nor the actual artists profit from this.

tl;dr

Copyright hinders a digital internal market for the EU. The Commission’s working on it (which is good), but focuses on collecting societies. Loopholes seem to exist, especially on the level of rights-holders, and will probably be used to keep up regional price discrimination.

 

This shouldn’t work…

… according to media industry advocates.

The Humble Indie Bundle is in it’s fifth iteration right now, and it’s doing pretty well. For those who don’t know it, it is a package several independent  games (i.e. not made and marketed by one of the big game studios who’s stuff you can get at Gamestop or similar mainstream-only retailers).

What’s so different about it?

First of all, the customer sets the price.

Media advocates: This shouldn’t work, because everyone on the Internet is used to getting everything for free and thus will never pay a decent amount for anything, if it can be gotten for free or almost for free (e.g. setting the price at $ 0.01).

Second, the Humble Bundle games do not use copy protection or DRM (Digital Rights Management)! In some jurisdictions, such as Germany, this would actually make it legal to give a few copies of those games to friends or family, because you don’t have to circumvent a digital lock to do it.

Media advocates: This should mess up sales, especially since the main promotional channel for the Bundle is social media. It is therefore likely, that a bunch of people who know each other are all interested in the offer, and could legally just buy one and share it.  [Actually, real media industry advocates would gladly deny your right to make a private copy for your friends, but right now the legal reality says otherwise]

Strangely enough, the Humble Bundle V is doing just fine, just like its predecessors.

Now, how is that possible?

I suggest a few important reasons, though there might be more.

The games are actually GOOD. And not “good” in the sense of hyped-and-heavily-advertised like the mediocre releases of the Call of Duty franchise or like some annual sports games, who’s only innovation is the renewed license to use the actual player names. These are high-quality, creative, clever and unique works of digital entertainment, who didn’t have much trouble getting sold at regular price points even before the Bundle.

They don’t punish their customers with DRM. Copy protection is often a painful affair. You have to make the 20th account with some game publisher and register your game or install some DRM software which might prove a serious privacy risk, slow down your system or just annoy you with problems that wouldn’t be there without it. The crazy part is: Only paying customers have to bear this. Someone who downloads a pirated copy (the existence of which has never been prevented by copy protection) can just install it and play. And that’s what you get with the games from the Humble Bundle – Install and play. It’s that simple.

Also, they give the right incentives to pay more. The cheapskates that used to give one cent in previous bundles are repelled by the fact, that codes for Steam (a popular distribution system for games that mostly stays out of your way, even for games who do not renounce DRM) are only given out at a minimum price of $ 1. This makes at least those few, who were planning on using Steam, work for their stinginess, by requiring manual downloads. So those people will think twice if their extra time isn’t worth more than 99 cents. Then, there is something else driving up the price. Simply put: The Bundle officially only contains four games, the fifth is a bonus for paying above average. Apart from setting a guideline for what’s an appropriate amount to pay, the average will obviously rise during the course of the offer, further providing an incentive to buy quickly and impulsively.

 

Learning from it

So much for the horrible situation media companies see themselves in. Why don’t more artists and publishers experiment with smart new business models like this one?

People are willing to pay for media. They are not willing to pay 60 bucks for 10 hours of not very original entertainment – a DVD box of your favourite series does a better job at that for a third of the price. And what youth or young adult (allegedly the target group) has that kind of money to spend  on a regular basis anyway?

Customers are not willing to be bullied and treated like criminals after they already paid for a product. Most copy protection systems nowadays make you feel like the supermarket was routinely checking your bags after check-out. This is especially true for games, since those customers tend to be geeky enough to know and notice these things (or their blissful absence). This issue was also relevant for music, but has since been resolved, with the expected results.

So, instead of making uncreative and lame games at outrageous fixed prices, that bully and annoy their buyers before they can actually play, and then blame discrepancy of sales and some fictional expected number on piracy, why not try something new? Not all releases by the main studios are dull affairs, they produce some real gems as well. How about getting more people to buy them at a fairer price and without restricting their rightful use of the product by annoying DRM systems?

 

The exact concept of the Humble Bundle might not work for all publications, or even all games. But it does prove that there are more ways to successfully sell media than the last-century concept of selling physical copies at fixed, dictated prices. And clinging to it by bullying customers with digital locks and prosecute those that are unwilling to accept these conditions seems a waste of time and resources and generates nothing but bad publicity. There should be alternative, more acceptable concepts, as to avoid dragging on a futile conflict for ages and only antagonises media creators and consumers.

 

tl;dr

Media creators, please look to the Humble Bundle for ideas on alternative business models. This might not be exactly the thing for your product, but might serve as inspiration how it could work, without antagonising your customers and fans.