“Are copyright owners their own worst enemy?”

From ABC Australia:

Nowadays, copyright barely resembles what it was originally designed for i.e. to protect both parties: inventors and content creators on the one side and the public on the other. Corporate America and government compliance have written out public interests in many instances. The case of Mickey Mouse is illustrative.

Nonetheless, there’s an air of inevitability about it all. Historically, how often have incumbent, monopolistic industries shrugged their shoulders and written off their entire business model to embark on a journey along a crowded new highway, with rules set by customers, that leads who-knows-where?

On a personal note, I suspect that once the world’s internet infrastructure comes up to speed, we’ll all be using on-demand subscription models and the notion of buying content to keep will feel archaic. Even so, more needs to be done to protect the public from ham-fisted copyright industries demanding payment for everything.

It’s an interesting article and well worth the read. I think that sometimes when companies try to set up revenue streams they end up trying to dam up the whole river. From our own experiences with such construction, it’s safe to say that it can have a detrimental effect on the people downriver as well as the area surrounding the dam. If content shares the same evasive quality as water, it will find a way around any obstacle given enough time.

(h/t: Library Link of the Day)

Where’s the Logic?

From Teleread:

The Bookseller has some interesting coverage of the London Book Fair, but I don’t have time right now to go over all of it. I’ll focus on the one bit that just leaped out at me. A number of execs—David Shelley of Little, Brown, Richard Mollet of the Publishers Association, and Stephen Page from Faber—explained that fighting online piracy is costing publishers a bundle, and is one of the reasons publishers cannot afford to raise e-book royalty rates as some publishers have been requesting.

From the embedded link above that goes to TheBookseller.com:

[David] Shelley told delegates: "Money spent on print and paper will be spent on specialists to fight piracy. The costs of this are only getting more expensive, and could spiral way out of control. There are also legal costs, when sites refuse to take down content." Shelley claimed the "unknown costs", as well as other new digital costs, would replace the cost savings made on digital.

Huh. So, the cost of printing is going to be shifted to fighting piracy. Those costs can only go up with the possibility that they could become unsustainable (that is what spiral out of control means, right?) Then you add in legal expenses on top of this money equation (unless that’s part of the spiral). And then when you add it all, it would replace (read: equal) the cost savings on digital.

Wait, what?

I’m not sure I get it. But in looking at the publisher margins for ebooks: (as I wrote about in a post about two weeks ago)

How much better for the publisher and how much worse for the author? Here are examples of author’s royalties compared to publisher’s gross profit (income per copy minus expenses per copy), calculated using industry-standard contract terms:

The Help, by Kathryn Stockett

Author’s Standard Royalty:
$3.75 hardcover; $2.28 e-book.
Author’s E-Loss = -39%

Publisher’s Margin:
$4.75 hardcover; $6.32 e-book.
Publisher’s E-Gain = +33%

Hell’s Corner, by David Baldacci

Author’s Standard Royalty:
$4.20 hardcover; $2.63 e-book.
Author’s E-Loss = -37%

Publisher’s Margin:
$5.80 hardcover; $7.37 e-book.
Publisher’s E-Gain = +27%

Unbroken, by Laura Hillenbrand

Author’s Standard Royalty:
$4.05 hardcover; $3.38 e-book.
Author’s E-Loss = -17%

Publisher’s Margin:
$5.45 hardcover; $9.62 e-book.
Publisher’s E-Gain = +77%

They would be taking the money made from this new greater margin and using it to fight online piracy. Which they may or may not be able to do based on the impossible-to-calculate-but-possibly-unsustainable sum of money. But since they have a better margin from eBooks, they have more money to fight piracy.

And that’s why they can’t pay authors a larger royalty.

It’s that kind of logic that makes me think of Eli Neiberger’s idea of going directly to the content makers to purchase the rights. Why deal with a middleman who is hell bent on a Sisyphean task of financially dubious results?? The cost of that madness would be added to the cover price; we (libraries and regular consumers) would be paying to support these ill reasoned expenditures. I’m all for rights holders pursuing actions t defend their intellectual property, but not under the “we must burn down the village to save the village” kind of approach. There has to be a better way.

It’s odd, as I close this post, to think that some publishers actually have issues with their digital content being at libraries. I would think we’d be a lot easier to deal with than your average pirate website.

Third World Piracy, First World IP Headaches

piracy-handy-guide

The Social Science Research Council recently released a report entitled “Media Piracy in Emerging Economies”. This three year study focused on music, movie, and software privacy in countries like Russia, South Africa, and Brazil. You can get the report here, depending on which part of the Consumer’s Dilemma you qualify for in terms of price. The major findings of the report are as follows (I’ve summed up their bullet points):

  • Prices are too high. [Prices are 5-10 times higher relative to income.]
  • Competition is good. [No competition means no lower prices.]
  • Antipiracy education has failed. [Self-explanatory.]
  • Changing the law is easy. Changing the practice is hard. [Same.] 
  • Criminals can’t compete with free. [Same issue as legit companies.]
  • Enforcement hasn’t worked.

I wouldn’t immediately move to lump eBooks into this pile, but as it is a digital file, it can’t be far off from these findings. Especially the point about “criminals can’t compete with free”, which feels like a remote overture towards libraries; why would people buy the book if they can just borrow it for free?

Felix Salmon at Reuters writes:

For starters, Mike Masnick is absolutely right that the report debunks the entire foundation of US foreign IP policy. That policy has essentially been written by the owners of US intellectual property, who jealously protect it and think that the best thing they can possibly do is be as aggressive as possible towards any sign of international IP piracy. As the report shows, this makes a tiny amount of profit-maximizing sense for the companies concerned. But it actually encourages, rather than reduces, piracy in the aggregate. (Emphasis in original)

And (as quoted by Andrew Sullivan in part, attributed at the bottom of this post):

The big forces driving media piracy in developing countries are real and powerful and will not be changed, no matter how many western politicians get on their moral high horses and insist that countries like India and China build a “culture of intellectual property.” But the irony is that if governments and corporations really wanted to build such a culture, then they would encourage companies to set their prices low enough that the populations of those countries could actually afford to buy music, movies, and software at the full legal retail price. It turns out that domestic companies are quite good at distributing media at low prices, and can build profitable businesses by doing that. But foreign companies have different incentives in the short term, and don’t do that.

It’s worth reading his whole take on the report. The quotes he pulls out are stunning. For as much puffery that is placed on the ills of piracy and how much it costs those three industries, the documentation to this claim is either suspect or non-existent. Considering the robustness of these industries, it’s hard to see where the financial suffering begins.

Reihan Salam at the National Review Online has his take:

High prices for media goods create what the report’s authors call “the consumer’s dilemma”: you can pay the high legal price, you can find a pirated copy, or you can skip consuming the good in question. Technology has been diffusing faster than incomes have been converging. That is, there are now millions of people living around the world who have the devices and the broadband they need to consume media goods produced in the rich world, but without the incomes they’d need to pay the prices to which people in the rich world have grown accustomed.

In viewing these reports and reactions through the librarian kaleidoscope, the steps taken to prevent piracy in the third world make for a difficult product and limiting conditions in the first world. As the people who can afford eBooks under their current pricing structures, we (both libraries and consumers in the first world) are seen as the best way to recover expenses and generate revenues. We pay the DRM and monetary price for the actions of others well beyond the long reach of intellectual property law.

Now I’m off to wonder where libraries fall into this picture. As an entity that lends content at no additional cost to the community member, I can see why libraries are held as suspect in the publisher eBook lending idea. You can’t compete with free; but you also can’t compete if the obstacles to content make the pirate alternative a viable (albeit illegal) option. It’s something to consider as we move forward with eBook collections.

(h/t: Daily Dish, twice)