File-sharing and the War on the Internet

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Yesterday I attended the Counter Conference:

The COUNTER Project (www.counter2010.org), funded under Framework 7 of the EU SSHRC Programme, is a two year multidisciplinary project exploring the economic, legal, consumer and cultural dynamics of counterfeiting, piracy and filesharing. It aims to generate new knowledge which will contribute towards the development of evidence-based policy making at the European, national and international level. The project emphasises that effectively addressing this complex area requires a variety of strategic multistakeholder actions which recognise the importance of understanding and engaging with the psychological, social and cultural dynamics of consumer behaviour.

I took part in a session entitled “‘Three Strikes’: Regulatory Obligations on ISPs”:

This session will focus on current legal and regulatory attempts in different European countries to reduce levels of filesharing. A panel of representatives of a variety of stakeholder groups will discuss the ‘three strikes’ or graduated response strategies currently under implementation in France and the UK, and the associated regulatory obligations placed on ISPs to take action on filesharing. Participants will outline their perspective on such strategies, their efficacy and potential impacts on consumer behaviour, as well as the challenges associated with implementation.

What was striking about the contributions from the other members on the panel was that they were all trying to address the same question: how to reduce filesharing; the only thing that differed were the views on how that should be done, and what was fair and proportionate.

When I came to speak, I pointed out that there was a massive underlying assumption here: that we do indeed want to reduce filesharing. Suppose, on the contrary, we ought be to trying to *increase* filesharing?

Why might we want to do that? Well, everyone, I think, agrees that we want content creators such as musicians to be rewarded for their work and encouraged to produce more. Indeed, that's the whole point of copyright: not to reward *past* work, but to encourage *future* creations – something that most people forget. The question then becomes: what's the best way of doing that?

What research we have – and it's still rather patchy – suggests that people who share files online actually buy more stuff. Why might that be? Well, because the ones who share are the ones who are most passionate about the stuff – and hence spend more. Suspending their accounts is manifestly counterproductive, as well as being deeply unjust. Instead, we should be encouraging people to spread the word about what's good out there.

The issue is then, how can artists and the music industry make money from this situation? This is something that I and many others (particularly Mike Masnick on Techdirt.com) have been writing about for some time. There are now many business models emerging that allow people and companies to make money while giving away the basic content for free. After all, that's precisely how the entire open source industry works, and that seems to be thriving.

So, how does the Digital Economy Bill fit into this, given that its key provisions will cause people to have their accounts “suspended” (as if that were different from “disconnected”) upon accusations of unauthorised file-sharing of copyrighted materials – something that we might actually want to encourage?

Well, as I pointed out yesterday, the reason for this cognitive dissonance is that the Digital Economy Bill should really be called the *Analogue* Economy Bill: it seeks to preserve the old way of doing business in the world of music and films, where people bought CDs and DVDs - physical objects that cost money to make. Today, by contrast, the marginal cost of producing an MP3 file, say, is as near zero as to make no difference.

Basic economics tells us that the price will therefore tend to that same near-zero amount. But instead of embracing that shift, the Digital Economy Bill tries to fight it, by bringing in ever-more Draconian measures for people who are accused of swapping these digital files, even though their price is effectively zero. As I suggested, the tragedy is that the Digital Economy Bill does nothing to encourage the creation of new business models based around the realities of the digital world of abundance, but seeks to lock us into the old analogue scarcity, even where no such scarcity of goods exists.

Richard Mollet: Director of Public Affairs, BPI (yes, that Richard Mollet) pointed out that the creativity of artists is not abundant, but remains the central scarcity. And he is absolutely right – and it's precisely because of that fact that artists and their supporting companies can still make money, by building on the real scarcity that remains. But what he and the music industry have not yet realised is that they can't do that by trying to make abundant digital goods scarce through legislation.

Sadly, the media industries' blindness to this fact has led to them pushing for laws that amount to a declaration of war on the essential nature of the Internet: that it is a perfect, cost-free global copying machine for bits. In fact, therein lies its amazing power. Legislation like HADOPI in France, the Digital Economy Bill in the UK, and the Anti-Counterfeiting Trade Agreement – now leaked in its full awfulness - are all based on the fallacious assumption that we must stop file-sharing at all costs, even if it means neutering the Internet and riding roughshod over hard-won civil liberties the world over. The war on the Internet has only just begun, but it's one we can't afford to lose.

Follow me @glynmoody on Twitter or identi.ca.

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