Relax!

If the major players in the cultural industries – the “big four” record labels, the major film studios and the global publishing houses – are to be believed, then the ease with which digital content can now be copied, distributed and transformed constitutes an invitation to infringe on copyright on a gigantic scale. As such, so their argument goes, illegal copying is a direct threat to the livelihoods of the artists and authors who create these cultural works. Hence what is needed are stronger copyright laws and, more importantly still, more vigorous enforcement.

Embodied in this view is a simple assumption: copyright is the source of income for artists (and publishers). Weaker copyright means less income, therefore it is in the interests of cultural producers to extend and enforce copyright as far as possible. This assumption has driven much of the policy agenda, including the controversial HADOPI law in France (2009) that makes it possible to cut people’s Internet connections if they are suspected of infringing on copyright repeatedly,1 and the current package of copyright enforcement measures being prepared by the EU commission under the name of IPRED II (Second Intellectual Property Rights Enforcement Directive).2

This simple assumption, however, is incorrect. First, copyright as the basis of artists’ income is just one of many cultural economic models, namely that in which the “first copy” receives substantial investment that has then to be recouped (and more) through the sale of specific usage rights (licenses) to the users of further copies. This model is by no means applied across all domains of culture and, even where it is, it generates extremely unequal incomes. By and large, copyright-centered business models generate blockbuster economies, in which very few people earn very substantial incomes while the great majority of producers receive little to nothing for their work.3 Thus, the argument that copyright generated income works well only for a few, highly visible artists and their supporting industries.

Yet the economics of copyright are not only about income. Copyright and its enforcement must also be seen a source of costs: the costs of negotiation and licensing; the costs of research to determine who the rights holders are (usually not the artists themselves); the costs of operating in a legal grey zone because the system of copyright is extremely complex and, even for experts, highly contested; and the costs of not being able to create the works as they are intended, because the costs above turn out to be prohibitively high. Rights holders can abuse their monopoly position by charging any rate they please, or simply refuse to license at all. Rights holders cannot always be found and many works are effectively orphaned and therefore unusable beyond the private context. This applies to about 3 million book titles published in Europe alone, the oldest of which is dated to 1859.4 Artists or small publishers are often asked to assume all the legal risks involved in re-using material before a major publisher or distributor is willing to take on their work. An unknown number of projects are simply abandoned because the risks involved are judged to be too high, either by the artists themselves or, more often, by the institution working with the artists, be it a publishing house, a gallery or a film producer or distributor.

The point at which these costs become prohibitive depends on the budget available. Smaller, independent cultural producers, who usually derive very little income from copyright, reach this point earlier and more frequently. While it is impossible to quantify it precisely, it seems reasonable to say that, for a large majority of cultural producers, the ratio between income and copyright-related costs is negative and will become increasingly so with every extension of copyright and its increasing enforcement.

For many cultural producers, then, the response to the new digital environment is not to support the restoration of the strong copyright regime but to abandon the dream of copyright as income and to explore new models beyond investing in the first copy and selling (licensing) access to further copies.

This is less dramatic than it may sound. First, there are many well-established domains of cultural production that are not affected by the flood of digital copies, and even profit from it. These fall into three categories: material objects, performances, and context (or service) related works. What they have in common is that they cannot be copied without significant loss. A beautifully designed print edition does not stand in competition with a downloadable PDF version of the same title. There is a big difference between attending a live concert and listening to a bootleg of the same performance (as the Grateful Dead demonstrated decades ago). Works that are specific to a place or a personal interest may be copied, but lose much of their meaning/value in the process. None of this is new, but many of these practices are coming to be appreciated once again in reaction to the disembodied, depersonalized and de-localized experience of digital goods.

Last, but certainly not least, significant aspects of European culture are only partially dependent on the “free market” and the strong property rights required there. Across the board, almost all sectors are supported by substantial public funding, either directly through cultural funding, or indirectly through support for the local cultural economy (in the case of concert halls) or through the tax rebates on cultural production (particularly important in the film industry). Without this public money, much of what we value as particularly European culture would disappear.

Only a small slice of the cultural economy is, then, affected by the weakening of copyright, while whatever losses do exist need to be counted against the possibilities offered by the new digitally networked environment.

New opportunities

The strong copyright business model is simply not very relevant for many forms of cultural production, especially those in the “the long tail” (i.e. anything not successful in the mainstream market). For these forms, weak copyright regime would be positive, even if only because costs would be lowered. Yet also in terms of income, the web has brought new opportunities that do not require a strong copyright regime, or even depend on it being weakened. Roughly speaking, these opportunities fall into three categories: new global models, new general purpose platforms, and new project-centred models.

New global models

The most important proposal for a comprehensive new model is the “culture flat rate”.5 The basic idea is to impose a general levy on broadband Internet connections (similar to those that already exist on blank CDs, printers and copying machines) and then distribute the money to artists/rights holders whose works are being shared online. In exchange, a new global license would legalize non-commercial sharing over (p2p) networks. This model has gained some traction politically, through the support of the Greens at the European level as well at the national levels in Germany, Austria and elsewhere. Within the music industry the culture flat rate finds some support, since most people understand that it making enemies out of your customers by suing them for tens of thousands is bad business.6 Digital rights activists promote the culture flat rate, not the least because they see it as way to end the war on copying, which they fear will destroy the very foundation of freedom on the Internet.7

Even though the discussion about the culture flat rate is now more ten years old, there is still very significant disagreement, among those who support the basic idea, over the major elements of the scheme. Which works should be covered by the new global license (music only, or film and other digital content)? Who should collect the money (existing collecting societies or a newly created entity)? How should the money be distributed (according to the popularity of downloads, or some other measurement, and if so, what)?8 Finally, who should the money be distributed to (the right holders or the artists)?

While the supporters of a culture flat rate are divided across many lines, there is also substantial resistance to the approach per se. Besides the Green Party, no other major party supports the proposal, while most players in the music industry see it as a terminal threat to their core business model. Many digital rights activists are also sceptical: either they do not trust the collecting societies, or they fear that the flat rate would effectively re-affirm the division between producers and consumers and thus fail to reduce many of the costs of the strong copyright regime that fall disproportionately on small, independent cultural producers.9

Personally, I’m also highly sceptical of this proposal (in most of its forms), mainly because it addresses first and foremost the problem of the music industry – alleged loss of revenue through file sharing, in itself a highly dubious claim10 – yet does little to address the costs imposed by copyright systems on cultural producers.

Platform-centred models

Platform-centred models create new platforms that aggregate users in ways that can generate revenue for the cultural producers who use them, either through advertisements or by collecting small donations. The paradigmatic model of the former is YouTube, the most advanced of the latter is Flattr. Similar to the old copyright-based business model, income is generated only after the content is produced, but contrary to the traditional model, access to the material is free and unrestricted.

In December 2007, YouTube introduced its “Partner Program” which enabled its most prolific and popular contributors to earn a share of the revenue generated by advertisements placed next to their videos. This program was created alongside the deals negotiated with the major commercial content producers for revenue sharing. Initially, this was a semi-closed program only for select independent producers. In August 2009, a somewhat more limited “Revenue Sharing” program was opened to all. The two programs have some differences, but like all advertisement-based models, the basic requirement for it to work is popularity. Unless a video is popular, meaning several 100 000 views, there is no revenue to be shared either way.11 There are, of course, a few starlets that make significant amounts of money this way, but given the size of YouTube’s user-base, the odds are low and content needs to follow a specific format to even have a chance of becoming popular. This format is not, of course, for everyone.

Yet significant revenue is probably the wrong target to begin with. Given that most independent videos on YouTube would have received no revenue at all under the old copyright regime, the important thing to recognise is that it is possible to gain some revenue by providing free access to one’s material. A such, it represents a functioning, if limited, commercial opportunity enabled by a weak copyright environment.

A different approach is taken by flattr.com, which described itself as “social micropayment”. It is the brain child of Peter Sunde, one of the four public figures behind the controversial file sharing site piratebay.org. Flattr (the name plays on “flat rate” and “flatter”) was launched in 2010 and enables producers and users to receive and distribute money. It works as follows: users sign up and load a certain amount of money into their account for distribution – currently the range is between $2 and $100 a month. If they produce content, they can place a Flattr button on their content. A user can click on any Flattr button she sees online and at the end of the month the money she put into her account is divided by the number of clicks she made, with the resulting fraction donated to each site she clicked on. So, if she decided to donate $5 and clicked on 10 buttons that month, then each click was worth 50 cents; if she clicked on 100 buttons, then each click was worth 5 cents. At the end of the month, the producers receive the aggregate sum of all the clicks made by the users.

Flattr is the first micro-payment system that might work, since it does not force the user to make ridiculous calculations (is content X worth 5 cents or 15?).12 It also reduces the processing overheads by aggregating the sums internally before making any payments. Though “payment” might be the wrong term, since no prices exist. More accurate would be to call it a micro-donation system: all content is made available freely and Flattr allows users to express their appreciation of that content in a way that generates income for the producers (unlike the like button in Facebook, where potential profits flow to owners of Facebook). So far, Flattr has been popular in the German blogosphere, but is rapidly expanded to other circles. By the beginning of 2011, Flattr had attracted more then 70 000 registered users, of which 70 per cent only donate.13 This indicated that people are willing to give money to cultural producers whose works they like: perhaps a strange notion in a fully capitalist word, where we are told that people behave rationally by trying to get as much as they can for as little as possible. At least in some areas of culture, this appears not to be the case, tellingly among users more than producers. Flattr has reacted to this by introducing an option to Flattr content whose owners are not yet accepting donations.

First and foremost, Flattr is a way to express an emotional connection between the producer of content and the user who appreciates its value. Most cultural goods are what economist call “experience goods”, that is, we know their value only after we experience them. Flattr is able to give that experience a financial dimension without killing it by forcing it into a financial calculation. But there is more to it than that. The experience lies not just in the good itself but in the connection it creates between producer and user. This connection tends to be very weak in traditional cultural markets, since the product is standardized and mediated by impersonal money. Online, with all the social networking and immediate, two-way communication, there are many more ways to establish a real connection between the two sides, a connection that has value to each side. With the help of Flattr, some of this value can be expressed financially.

Again, this is not a model for everyone or all types of content. Even for those who use it well, it does not generate large amounts of money (though remember, neither would copyright-based models in these cases). Still, it is a model for a growing number of cultural producers and one that works only in an environment of free access to cultural works.

Project-based models

The connection between the creative producer and her audience is all the more relevant in models that aim at financing the first copy, in other words to raise money before the product actually becomes available. The most widely used approach to this is known as “crowd funding”. The basic idea was first formulated in 1998 as “street performer protocol”,14 a somewhat misleading name since it has nothing to do with the economics of street performances, which are more akin to the dynamics involved in Flattr. Anyway, the basic idea is the following: a creative producer promises to a create/release a work if, and only if, she receives a specified amount in donations in advance. People interested in the work donate money into a trusted account and if the necessary sum is reached, the money is transferred and the work produced/released. The original proposal was fairly radical insofar as it assumed that in the absence of copyright, releasing a work would mean, in effect, putting it into the public domain.

It took more than a decade for the idea to catch on, but in recent years it has been taking off. The most well-known platform in the cultural domain is kickstarter.com, while the platform sell-a-band.com more specifically for music. They enable people to post a plan, specify different ranges of donation and attach a time limit in which the proposal is valid – usually a few months. An example: in early 2011, Martin Fuchs and Peter Bichsel, two designers form Basel, Switzerland, posted a book project on kickstarter called “Written Images”. They described it thus: “Created in collaboration with more than 70 media artists and developers from across the world, Written Images is the first of its kind. A ‘programmed book’, continuously regenerated for the digital printing process, offering each reader a unique experience.”15

The funding goal was $10 000. For a donation of $15 or more, you would receive a “one-in-kind” post card set of the images. Twenty-four people donated in this category. For $200 or more, you would receive a unique copy of the Written Images book. This offer was limited to 200 copies: 111 people took it up. For $350 or more, you would receive to book and have your name printed in the credits: 17 donations fell into this category. For $1500 or more, you would receive all of the above, plus a special cover version of the book. That seemed a good proposition to one person. Donations totalled $33 221, far exceeding the funding goal.

This project is typical for these newly emerging platforms in that the donations range is highly graduated and precise specification exit about what one gets in return (if the project is actually realized, which is not assured, of course). It is also typical in that it is a highly networked project able to generate its own public. In this case, this was made all the more easy by the fact that there were lots of artists involved who had been selected by a international jury of experts, in a field that is highly technology-competent: media arts.

Such projects can be successful because of the visibility of individual people created by the Internet in general and social media in particular. From the point of view of the person willing to donate (or, as it is called on kickstarter, “back a project”), it is easy to gain sufficient information about a project and the person proposing it to evaluate the claims made. She can then choose, based on the level of trust and her desire to see the project come to life, how much she is willing to risk. And there is some risk since there is no way to get the money back once it has been released to the project owner. But this risk is small, since there is a strong incentive for the person proposing the project to deliver the goods. Not only for intrinsic reasons, but because her personal reputation is on the line in a very tangible way. After all, it was the public she created (usually involving people also known from other contexts) that will be disappointed is she fails to deliver.

Again, like all the others, this one is not a general purpose model, but functions only for specific works and specific people. Not all works can easily be pitched in this way, or have an audience that can be reached by such pitches. And, of course, a good pitch doesn’t make a good project. But it works well for some and can help bring projects to life that otherwise would never be realized. And it does not do so by relying on strong copyright.

Re-embedding culture

One way to understand copyright is as an abstracting mechanism. Copyright stabilizes a work so that it can be lifted out of concrete social relations – between the author and her cultural environment – and made to circulate as a commodity in abstract, impersonal markets. The more innovative alternative models re-embed cultural works in concrete, personal social relationships. This is made possible through social media of all sorts, which allow personal relationships to grow beyond the small and the immediate. Strong copyright is not helpful in this process. Indeed, it is detrimental to it, because of the strict separation between author and audience, where one is entirely active the entirely passive. Re-embedding cultural production into concrete social relationships requires that all parties actively contribute to creating the particular environment. Their contributions are highly differentiated – not all people are, or need to become, an artist. But in the same way that even outstanding professional artists are not only producers but also consumers/users of culture, so the mute readers of a text are not only consumers. The roles at the each end of the production/consumption scale simply do not exist, they are ideological constructions. However, there are infinite mixtures of positions between them. New economic models are emerging able to do justice to this infinite variety of ways which the two sides can be related, rather than separated. The de facto weak copyright that characterizes much of our daily practice makes the exploration of possible models much easier. We should be glad about this.

A word of caution, though

We live in a political system that is very keen to reduce public responsibilities for culture – particularly for minority, non-representational culture. Some of this desire speaks the language of rightwing populism. Some of it is masked by a seductive appeal to the new communitarian possibilities – such as those described here – as alternatives to public funding. In reality, this is a very dangerous and dishonest talk. What these new models are really doing is replacing one set of market-oriented mechanisms – those based on strong copyright protection – with other sets of market-oriented mechanisms – most based on weak copyright and strong(er) social relations. I don’t want to imply that this is a zero sum game since, on the whole, it is all about replacing a system that clearly doesn’t work for most non-mainstream cultural production with one that might work for a much context.

But this change in the structure of markets in no way implies a diminishment of public responsibilities to support culture in the many areas where neither the old nor, likely, the new markets are sufficient. If we accept the cynical conservative spin relating to the flowering of digital communities, we will end up in the worst of both worlds. No public funding for culture, and communities too impoverished to organize their financing autonomously.