In Serving Big Company Interests, Copyright Is in Crisis

We’re taking part in Copyright Week, a series of actions and discussions supporting key principles that should guide copyright policy. Every day this week, various groups are taking on different elements of copyright law and policy, addressing what’s at stake and what we need to do to make sure that copyright promotes creativity and innovation.

Copyright rules are made with the needs of the entertainment industry in mind, designed to provide the legal framework for creators, investors, distributors, production houses, and other parts of the industry to navigate their disputes and assert their interests.

A good copyright policy would be one that encouraged diverse forms of expression from diverse creators who were fairly compensated for their role in a profitable industry. But copyright has signally failed to accomplish this end, largely because of the role it plays in the monopolization of the entertainment industry (and, in the digital era, every industry where copyrighted software plays a role). Copyright’s primary approach is to give creators monopolies over their works, in the hopes that they can use these as leverage in overmatched battles with corporate interests. But monopolies have a tendency to accumulate, piling up in the vaults of big companies, who use these government-backed exclusive rights to dominate the industry so that anyone hoping to enter it must first surrender their little monopolies to the hoards of the big gatekeepers.

Creators get a raw deal in a concentrated marketplace, selling their work into a buyer’s market. Giving them more monopolies – longer copyright terms, copyright over the “feel” of music, copyright over samples – just gives the industry more monopolies to confiscate in one-sided negotiations and add to their arsenals. Expecting more copyright to help artists beat a concentrated industry is like expecting more lunch money to help your kid defeat the bullies who beat him up on the playground every day. No matter how much lunch money you give that kid, all you’ll ever do is make the bullies richer.

One of the biggest problems with copyright in the digital era is that we expect people who aren’t in the entertainment industry to understand and abide by its rules: it’s no more realistic to expect a casual reader to understand and abide by a long, technical copyright license in order to enjoy a novel than it is to expect a parent to understand securities law before they pay their kid’s allowance. Copyright law can either be technical and nuanced enough to serve as a rulebook for a vast, complex industry…or it can be simple and intuitive enough for that industry’s customers to grasp and follow without years of specialized training. Decades of trying to make copyright into a system for both industrial actors and their audiences has demonstrated that the result is always a system that serves the former while bewildering and confounding the latter.

But even considered as a rulebook for the entertainment industry, copyright is in crisis. A system that is often promoted as protecting the interests of artists has increasingly sidelined creators’ interests even as big media companies merge with one another, and with other kinds of companies (like ISPs) to form vertical monopolies that lock up the production, distribution and commercialization of creative work, leaving creators selling their work into a buyer’s market locked up by a handful of companies.

2019 was not a good year for competition in the entertainment sector. Mergers like the $71.3B Disney-Fox deal reduced the number of big movie studios from five (already a farcical number) to four (impossibly, even worse). The Hollywood screenwriters have been locked in a record-breaking strike with the talent agencies—there are only three major agencies, all dominated by private equity investors, and the lack of competition means that they increasingly are negotiating deals on behalf of writers in which they agree to accept less money for writers in exchange for large fees for themselves.

On top of that, the big entertainment companies are increasingly diversifying and becoming distribution channels. The Trump administration approved the AT&T/Time-Warner merger just as the Obama administration approved the Universal/Comcast merger a decade earlier. Meanwhile, Disney has launched a streaming service and is pulling the catalogs of all its subsidiaries from rival services. That means that the creators behind those works will no longer receive residual payments from Disney for the licensing fees it receives from the likes of Netflix—instead, their work will stream exclusively on Disney Plus, and Disney will no longer have to pay the creators any more money for the use of their work.

To top it all off, the DOJ is working to end the antitrust rule that bans movie studios from owning movie theater chains, 70 years after it was put in place to end a suite of nakedly anti-competitive tactics that had especially grave consequences for actors and other creative people in the film industry. Right on cue, the already massively concentrated movie theater industry got even more concentrated.

The most visible impact of the steady concentration of the entertainment industry is on big stars: think of Taylor Swift’s battle to perform her own music at an awards show where she was being named “Artist of the Decade” shortly after rights to her back catalog were sold to a “tycoon” whom she has a longstanding feud with.

But perhaps the most important impact is on independent creators, those who either cannot or will not join forces with the entertainment giants. These artists, more than any other, depend on a free, fair and open Internet to connect with audiences, promoted and distribute their works and receive payments. The tech sector has undergone market concentration that makes it every bit as troubled as the entertainment industry: as the New Zealand technologist Tom Eastman wrote in 2018, “I’m old enough to remember when the Internet wasn’t a group of five websites, each consisting of screenshots of text from the other four.”

The monopolization of the online world means that all artists are vulnerable to changes in Big Tech policy, which can see their livings confiscated, their artistic works disappeared, and their online presences erased due to error, caprice, or as collateral damage in other fights. Here, too, independent artists are especially vulnerable: when YouTube’s Content ID copyright filter incorrectly blocks a video from a major studio or label, executives at the company can get prompt action from Google — but when an independent artist is incorrectly labeled a pirate, their only hope of getting their work sprung from content jail is to make a huge public stink and hope it’s enough to shame a tech giant into action.

As online platforms become ever-more-central to our employment, family, culture, education, romance and personal lives, the tech giants are increasingly wielding the censor’s pen to strike out our words and images and sounds and videos in the name of public safety, copyright enforcement, and a host of other rubrics. Even considering that it’s impossible to do a good job of this at massive scale, the tech companies do a particularly bad job.

This is about to get much worse. In March 2019, the European Union passed the most controversial copyright rules in its history by a razor-thin margin of only five votes—and later, ten Members of the European Parliament stated that they were confused and had pressed the wrong button, though the damage had already been done.

One of the most controversial parts of the new European Copyright Directive was Article 17 (formerly Article 13), which will require all online platforms to implement copyright filters similar to Google’s Content ID. The Directive does not contain punishments for those who falsely claim copyright over works that don’t belong to them (this is a major problem today, with fraudsters using fake copyright claims to threaten the livelihoods of creators in order to extort money from working artists).

Article 17 represents a bonanza for crooks who victimize creators by claiming copyright over their works—without offering any protections for the artists targeted by scammers. Artists who are under the protective wing of big entertainment companies can probably shield themselves from harm, meaning that the heavily concentrated entertainment sector will have even more leverage to use in its dealings with creators.

But that’s not all: Article 17 may have snuffed out any possibility of launching a competing platform to discipline the Big Tech firms, at least in Europe. Startups might be able to offer a better product and lure customers to it (especially with the help of Adversarial Interoperability) but they won’t be able to afford the massive capital expenditures needed to develop and operate the filters required by Article 17 until they’ve grown to giant size—something they won’t get a chance to do because, without filters, they won’t be able to operate at all.

That means that the Big Tech giants will likely get bigger, and, where possible, they will use their control over access to markets and customers to force both independent creators and big media companies to sell on terms that benefit them, at the expense of creators and entertainment companies.

To see what this looks like, just consider Amazon, especially its Audible division, which controls virtually the entire audiobook market. Once a minor sideline for publishing, audiobooks are now a major component of any author’s living, generating nearly as much revenue as hardcovers and growing much faster.

Amazon has abused its near-total dominance over the audiobook market to force creators and publishers to consent to its terms, which include an absolute requirement that all audiobooks sold on Audible be wrapped in Amazon’s proprietary “Digital Rights Management” code. This code nominally protects Audible products from unauthorized duplication, but this is a mere pretense.

It’s pretty straightforward to remove this DRM, but providing tools to do so is a potential felony under Section 1201 of the Digital Millennium Copyright Act, carrying a penalty of a five-year prison sentence and a $500,000 fine for a first offense (EFF is suing the US government to overturn this law). This means that potential Audible rivals can’t offer tools to import Audible purchases to run on their systems or to permit access to all your audiobooks from a single menu.

As Amazon grows in scale and ambition, it can, at its discretion, terminate authors’ or publishers’ access to the audience it controls (something the company has done before). Audiences that object to this will be left with a difficult choice: abandon the purchases they’ve made to follow the artists they love to smaller, peripheral platforms, or fragment their expensive audiobook libraries across a confusion of apps and screens. 

Copyright was historically called “the author’s monopoly,” but increasingly those small-scale monopolies are being expropriated by giant corporations—some tech, some entertainment, some a weird chimera of both—and wielded to corner entire markets or sectors. In 2017, EFF lost a long, bitter fight to ensure that a poorly considered project to add DRM to the standards for Web browsers didn’t result in further monopolization of the browser market. Two years later, our worst fears have been realized and it is effectively impossible to launch a competitive browser without permission from Google or Microsoft or Apple (Apple won’t answer licensing queries, Microsoft wants $10,000 just to consider a licensing application, and Google has turned down all requests to license for new free/open-source browsers).

Copyright has also become a key weapon in the anticompetitive arsenal wielded against the independent repair sector. More than 20 state-level Right to Repair bills have been killed by industry coalitions who cite a self-serving, incoherent mix of concerns over their copyrights and “cybersecurity” as reasons why you shouldn’t be able to get your phone or car fixed in the shop of your choice.

All this is why EFF expanded its competition-related projects in 2019 and will do even more in 2020. We, too, are old enough to remember when the Internet wasn’t a group of five websites, each consisting of screenshots of text from the other four. We know that, in 2020, it’s foolish to expect tech companies to have their users’ back unless there’s a meaningful chance those users will go somewhere else (and not just to another division of the same tech company).