heute:pop:blog.  

This is an article I recently wrote for the transmitNOW blog.

Over the last year or so, I noticed a worrying trend among corporate decision makers – as well as legislators around the world – who are trying to monitor internet traffic in order to prohibit unlicensed usage of copyrighted material (also referred to as ‘piracy’).  The part that concerns me most is the fact that not more people are outraged about this potential threat to our freedom of information.

Needless to say, digital files and connected computers have changed the economy around creative content and continues to do so. Companies and individuals that monetize media and entertainment content are all affected by the changes of distribution, consumption and discovery that come with digital technologies. Many of those organisations have reacted defensively to those new developments and have not fully embraced new technologies to try and develop new business models.

File sharing is often seen as one of the biggest reasons for declining revenues and there have been various strategies to stop people from sharing digital content via the internet; legal action against music downloaders has been a widely popular method with disastrous PR consequences for the RIAA and its member labels. Threats of the legal repercussion are often used in the movie business, too (“Warning: the unauthorized reproduction or distribution of this copyrighted..”).

More recently (and potentially because of the ineffectiveness of the methods above) we have seen the trend where content owners, or their representatives, attempt to monitor internet traffic of individuals to see if any unlicensed content is being shared. One popular variation is that there should not be any legal action; instead, internet connection may be compromised after a certain amount of ‘offenses’. This variation has been discussed in Ireland (but was not blocked by the High Court) and was implemented in France. It has been widely discussed within the music industry.

In a letter to Google, various music industry organisations encouraged “ISPs and other intermediaries to take measures to deter unlawful activity”. While they have not been more specific what those measures could be, it is obvious that the industry is looking at the internet providers to take more responsibility in this matter. As a side note, the fact that those music industry organisations compared copyright infringement to child pornography in this letter is not only out of context in this discussion, but distasteful and misleading. I believe ‘disgusting’ was the term someone used in a conversation with me some weeks ago.

Unfortunately, there is a broad lack of understanding what monitoring internet traffic means for us: content accessed through the net is highly sensitive and personal, and privacy has to be guaranteed at all times in a society that praises freedom of information as one of the main pillars of democracy. While this sounds exaggerated, it is now that we all have to agree to a important principle: do we give digital communication and information the same status as we give towards more traditional counterparts?

Imagine a law, which would allow (or even force) your mailman to open all your letters and packages to see if there is any copyright infringing material sent to you, being passed. By the third time you received a pirated copy of ‘Brokeback Mountain’ you will not receive any more letters. Needless to say that this would be unconstitutional in most Western countries. Even opening a letter without the recipients permission is a crime in many countries.

In this context, Cory Doctorow has recently warned of “embedding control, surveillance and censorship into the very fabric of the information society’s infrastructure” and refers to the French HADOPI “three strikes” rule: “they’re sending out 10,000 legal threats a week now, and have promised 150,000 a week in short order. After three unsubstantiated accusations of infringement, your whole family is disconnected from the internet – from work, education, civic engagement, distant relatives, health information, community.”

There are two other big concerns I have with monitoring internet traffic to combat file sharing:

1. Often it is unclear to the consumer that files downloaded, or shared, are unlicensed. With the amount of free files on the net it’s easy to end up with content that has not been cleared with the rights-owners. Granted, common sense often helps navigation through those issues, especially for more popular content (eg. downloading all albums by ‘The Beatles’ for free on a Chinese website has probably not been signed off by EMI). But there are countless sources for amazing free independent music such as mp3 blogs and it’s often not clear what the rights situation is on those sites.

2. It seems that execution of any three-strikes policy is currently in the hand of the rights owner as well as the ISPs. I have not yet seen an independent agency that would set up a policy and deal with disputes. Giving the accusers the right to police themselves leaves far too much room for mistakes and even misuse.

To be clear: we need to deal with, and combat, illegal activity on the internet. And if this means having to wire-tap internet connections (of course with a court order) in order to prevent crimes then I’m fully supportive. The net should not be a law-free space; but a ‘guilty until innocent’ approach is not only limiting my civil liberties but also not practical in the process of building new business models for creative industries.

There are many voices (including mine) that claim Apple does not see the iTunes music store as one of their core products but just as a support tool for another product: the owners of the iPod needed a simple and convenient way to purchase new music to add to their device. Ironically, the store that is just seen as a side business for its owner has become the largest music retailer in the world.

The market dominance of Apple makes many people argue it worries about every new competitor entering the market. Google Music has been hailed as the latest service that will be able to compete with iTunes and even though details have not been announced the music industry is already preparing for a big fight between the two technology giants.

In truth, the launch of a new music service, such as Google Music, probably has little influence on Apple’s real business, which is selling hardware devices.

More recently we have seen a priority shift within Apple’s ‘portable’ product range with the iPhone and iPad become hugely successful. What does that mean for Apples music business?

Quite clearly apps are economically more successful than recorded music and potentially also easier to ‘acquire’ for Apple without the need to negotiate with struggling and demanding major labels. With apps being to the iPhone/iPad what music is to the iPod, I assume Apple is not very concerned with any new music services launching even if they were to take market share within the music space from Apple. We also have to keep in mind that Steve Job and his team have always been less protective in the music space than we give them credit for: there are many music apps for iOS that could be seen as a competitor to Apple.

Of course there have been rumors for a while that Apple wants to launch a ‘cloud based’ music service. I see this less as an action based of the fear of losing market share against someone like Google but just as an upgrade to their existing service – with most Apple devices already being able to connect to the internet is just makes sense not to store music on the local hard drives but in the cloud.

Whatever Google will do around music, it will probably be successful but Apple is not concerned. There will be a Google Music app.

Photo: Mengfei Sh

If you can get your hand on the latest copy of Billboard (10th January it says on the cover) make sure you read the Opinion piece on page 4. In addition to giving a good pitch, Lala.com‘s Bill Nguyen wrote a short and well formulated article on listening to music online and business behind it. My favourite quote:

“The web is home to more new music each year than was released in many previous decades. Critics say the music is mostly junk – but the same could have been said for the Web before Google made the knowledge there accessible.”

I couldn’t agree more.

When I read this this morning I thought this is an April Fools joke but my friends at EMI just confirmed it: Douglas Merrill will be the new president of EMI (once Guy Hands goes back to focus on Terra Firma business again). I don’t know much about Douglas but this surly sounds like a very clever move from Guy Hands and this really gives me hope for EMI. More soon.