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On Copyright/IP Controversy

If you talk to me for long enough, you’re almost certain to come across a number of rather stark assertions I make concerning copyright and intellectual property law. I wanted to take a moment and lay out a number of arguments and opinions for the sake of clarifying and arguing points that generally don’t come up in conversation. To begin, I want to be immensely clear that this analysis is not contingent on either law or judicial ruling, and that the focus is not upon the red herring of current policy insomuch as it is a critique of policy and, most importantly, a frank look at what is really going on within this contentious field of conceptual law. In addition, I use the term “Freedom of Information” as a kaleidoscopic means of addressing various forms of post-scarcity information. This is a crucial concept which necessitates a touch of explanation: within the United States there exist a number of entities whose revenue streams relied upon scarcity as a means of economic leverage pre-internet. As the internet became more and more efficient at the transfer of data, the monopoly on production of media and information shifted from the finite and scarce physical object to the infinite and post-scarce digital representation. This is a discourse of economic control, and has only tangential relationships with actual content providers. As digital, post-scarcity information becomes more available, the very nature of supply and demand becomes skewed. Demand and supply in a post-scarcity economic environment necessitates a different means of monitization than the same systems as existed under a model of scarcity of information. At the core, intellectual property and copyright law also change when dealing with post-scarcity. They no longer govern the creation of physical objects, but instead guard a concept of forced and artificial scarcity which simply does not actually exist. Publishers and content controllers no longer concern themselves with their ability to create information, as a single digital object is infinite in supply. Instead, we see a system in which control of the ability to make copies is at stake.

To be clear on methodology, this is about the framework of the discourse and not about the framework of legal systems. An immensely skewed discourse is at the center of this argument, and while arguments both for and against “freedom of information” tend to focus on the misleading relationship between a content creator and the creation, the true discourse concerns itself with the control of the transmission of information. As pre-internet models of supply and demand within the information sectors shift, the legal framework of the relationship between content and distribution has focused on a backward strategy of enforcing scarcity where there is no scarcity.

The crowning example of this concept is a perfect example illustrating the issue between scarcity and post-scarcity information: Netflix. To understand the actual conditions of the argument, one must understand the various centers of power (to employ a Foucaultian model) which push and pull to create the conversation of the discourse. At the beginning, you have content creators who pore their heart and soul into their work. Second we have publishers and other content providers who package the product for consumers and provide lanes of distribution. Third we have the actual pipes, cable and internet, which distribute the content “last mile” to consumers. It is the publishers/providers and “last mile” connectors which both hold the greatest power and thus the loudest voice in the debate. In the case of Netflix, specifically, we have, for the sake of argument, Netflix as a distribution service, Comcast as a “last mile” provider, the MPAA as the content publisher and the consumer. Now, to step back to economics, what we really have here is an alternate monitization model based off concepts of post-scarcity. One can boot up their PC or other delivery hardware and watch thousands of pieces of media on-demand and without scarcity (it is worthwhile to note, as well, that services like Hulu, Pandora, OnLive, etc. also utilize a post-scarcity model). Now, the general cost for downloading a single episode of a television show from iTunes is $0.99, which means that the price-point for a scarcity-model season of a 22-episode television program would be $22. On Netflix, there are many, many television shows for a flate rate of $15 each month. For someone like myself, the value is immense: I can gain access to a huge catalog of information for a fraction of the cost of scarcity-model pricing-schemes. It is not uncommon for me, being the television junkie I am, to go through 3-6 seasons of various television shows each month. Now, even being conservative with estimates, under a scarcity-model the information consumed would be valued at $66. Under the post-scarcity model the cost is a mere 23%, or lower, of the scarcity model.

Now, the various powers which hold an interest in this debate are very important and the battle-lines are clearly drawn. In every case, the goal remains the same: create profits. The MPAA and “last mile” providers are in a state of crisis which has created this entire debate. Under the guise of protecting content creators and consumers, the efforts of those who control distribution are transparent: they wish to enforce a scarcity-model economic system of supply and demand on an wide-reaching industry which exists firmly in a post-scarcity economic system. Recently in Canada a lawsuit has brought to light the practice of four large media companies in publishing unclearly owned music without approval and then paying artists royalty later on (http://arstechnica.com/tech-policy/news/2011/01/exploit-now-pay-later-music-labels-finally-pay-artists.ars). In reality this generally didn’t happen. In effect, while the music industry speaks of the sanctity of copyright and the necessity of ownership of non-physical, post-scarcity information, they engage in the very sort of behavior they speak out so loudly against. The media companies show that they are comfortable with creating digital copies of works for which they do not have the rights to distribute or replicate, not paying royalty to the actual rightsholders, and finally selling said work for a profit. The ludicrousness of the hypocritical action is amazing. Not only are they content to create restrictive copyright law through immense stranglehold over legislation, but they also engage in piracy-bordering-on-large-scale-counterfeiting (according to the laws they seek for the United States) when it pads their profits.

So why does Netflix scare the media companies so much? Because of that 22% cost. They know their business model only works when conditions of post-scarcity are artificially and legally limited and transformed into a scarcity economy. Who is going to pay $22 for a season of Lost (or, for further example, $132 for the whole run) when one can download it absolutely free or even watch the vast majority on a service like Netflix for a fraction of the cost: in fact, taking a show like Buffy: The Vampire Slayer into account (which ran 7 seasons all of which are available on Netflix), the cost is literally 0.097% of purchasing under a scarcity-model.

The revenue streams of media companies and “last mile” providers are threatened by the post-scarcity economic model, which has proven to be immensely successful. More to the point, alternate means of post-scarcity distribution shift the revenue stream of physical/scarcity sales and create a competitor to distribution systems which once existed in a standard-American Keynesian monopoly.

In the end, none of this should make much sense. This is not about copyright or intellectual law, but instead a matter of corporations and interest groups seeking the most beneficial means of salvaging a business model which simply no longer exists by any accepted form of economic construct. The media companies could easily shift their model to a post-scarcity economic system, yet they insist upon creating an artificial economic construct which supports their now-outdated business model.