Keeping politicians' hands off the Net & everything else related to technology

Over at Techdirt, Mike Masnick has a great post talking about my Cato Unbound essay on the future of copyright. He thinks I’m proposing a step in the right direction, but that I don’t go far enough:

I’m still not convinced that the restrictions are necessary even for commercial use. Part of the problem is that the distinction between “personal use” and “commercial use” is extremely blurry. Is my personal blog “personal” or “commercial” if I put Google ads on it? What if I don’t have ads, but use it to get a job or promote my company? Commercial use and personal use are not clear cut.

This is a good opportunity to illustrate the narrowness of what I’m suggesting: yes, if you put up a website with old Golden Girls episodes and you stuck ads alongside them, you’d be opening yourself up to a lawsuit. The non-commercial use exception would only apply in cases such as using a peer-to-peer file sharing program where there was clearly no commercial intent.

However, it’s important to emphasize that this would be an addition to, not a substitute for, fair use. If you used a copyrighted work in a way that would be fair use under current precedents, it would continue to be fair use under the regime I’m suggesting even if it were done for commercial use. The current law on fair use and contributory liability— Sony, Arriba Soft, Grokster, and the rest—would continue to apply. If your use was fair, or if your technology had a “substantial non-infringing use” under Sony, or if you qualified for the DMCA safe harbor, all of those defenses would remain available to you.

There is admittedly some fuzziness in the concept of commercial use, but I think it’s clearly a lot less fuzzy than the four-factor test that currently governs fair use. All I’m suggesting is adding an additional step: first the courts decide if a use is commercial or non-commercial. If non-commercial, that would be the end of the analysis and the defendant would be not guilty. If commercial, the courts would then proceed to consider other defenses, including fair use and the DMCA safe harbor.

Mike’s other substantive criticism is that I don’t go far enough:

if someone else is able to do something commercially valuable with my content, why should that be a problem? If anything, that should be encouraged — and the end result will often be that it makes the original content more valuable. Google uses fair use defenses to protect itself from copyright infringement charges, but it’s ridiculous to think that anyone is even complaining, since Google makes their content easier to find. And Google is most certainly a commercial entity. Having someone else do something commercial with content is a good way to help increase the value of that content, which is likely to flow back to the original creator anyway.

I’m sympathetic to this argument in many cases. He’s clearly right about most of the things Google does. Google News, Google Book Search, and the rest are pretty clearly not harming the market for the copyrighted works they use, and may even be enhancing their value. However, I don’t think this is the case across the board. Consider movie theaters. Mike correctly notes that going to the movies is as much about the experience as it is about the movie itself, which suggests that peer-to-peer file sharing won’t destroy the market for movie tickets. However, in a world with no copyright, I think you’d quickly see a network of digital movie theaters that would dramatically erode Hollywood’s ticket revenues by showing Hollywood movies without sending any ticket revenues back to the studio that made the movie. Revenues wouldn’t drop to zero—it would still be possible to generate some revenue the first few days, before the movie had leaked to the pirate theaters—but I can’t see how the legalization of pirate theaters would work to Hollywood’s benefit.

It’s true that the end result of unauthorized copying will often be to make the original content more valuable. But if that’s the case, then the use is likely to already fall under fair use. The question is what to do in those cases where unauthorized copying does harm the market for the original. I agree with Mike that this is a less common case than is commonly supposed. But it’s not a null set, and when it happens, I think it’s entirely legitimate for copyright law to intervene.

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I haven’t had a chance to interview Tim yet, but I assume he has ceased posting Bea Arthur porn on Usenet (as reported by PJ) because of several major ISPs’ capitulation to the New York Attorney General and agreement to cut off access to Usenet. Declan McCullagh has the most thought-through write-up.

I appeared on the BBC early yesterday morning (BBC-time) to discuss concerns with this. I didn’t know about Tim’s draconian action or I surely would have raised it as an example of the unfortunate fall-out from the preemptive censorship some ISPs have agreed to at the behest of the AG.

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Today I released a press statement about the Federal Communications Commission’s hearing today on early termination fees for customers who cancel their mobile phone, cable or Internet service contracts early. Quickly after the statement was released, I got reasoned response from Ken Werner, a Senior Analyst at Insight Media.

As reasoned as Ken’s response was, however, it just doesn’t make much sense. Ken argues that, ” bundling of phone and wireless services does not enhance competition; it suppresses it.” He goes on to say that “Unbundling of phone and service sales would create a far more varied and vibrant set of offerings.”

But this simply isn’t true. By forcing unbundling—that means banning subsidized phones—we’re taking away consumer choice. Being able to buy a phone outright and then purchase a plan on a month-to-month but if Ken is right and “Google, the Android open platform, the Open Handset Alliance, and (maybe) even Verizon are moving in that direction,” then there is no reason to force a no-contract model on the wireless industry.

The way to true offer a “more varied and vibrant set of offerings” is to allow the market to continue to operate as it is. Because of exceptional hardware like the iPhone, Ken is likely right that Verizon and other carriers will open up to selling plans separately from phones, but consumers should still be able to buy basic phones that are subsidized through long-term phone plan commitments. Banning the latter option decreases choice, rather than expanding it as Ken claims.

It may take times for American business models to shift, but ultimately it will result in more choice than markets like Europe, where choice is limited by contract negotiation. To say that banning contract options will increase the variety of options is simply a contradiction in terms.

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