Did MiniMediaGuy put a false face on TechDirt’s pizza analogy?

(Editor’s note: The post below is from TechDirt founder Mike Masnick, writing to rebutt my critique of his essay on  copyright law. If you need more than Mike’s summary of the discussion to understand who-said-what, please read his original post and my retort. Let me note another comment briefly: Howard Owens told me Google News sells no ads around the content it scrapes, unlike Topix which is “trying to build (a) community around your content.” Hmnnn. Is Chris Tolles the evil-doer? Let me think about that. Meanwhile here is Mike Masnick, who wrote this as a comment to my posting. I will spotlight his thoughts here and now, and perhaps rely at a later date.) 

Thanks for the detailed response, though, I am (of course) going to disagree. First off, the analogy may not be perfect, but no analogy is perfect. And I have trouble believing it’s half-baked when I’ve been studying and researching these topics, both academically and professionally for over a decade. It is true that in the course of a single blog post I may simplify things, I don’t think that makes the concept half-baked. I apologize if I was unclear in making my point, however.

You wrote:

“That’s not what the piracy and copyright debates are all about. Copyright holders object when a consumer downloads their stuff without paying, just like the pizza maker would call the cops if the kids came by after school and grabbed some slices off the counter without paying. ”

But, I’m afraid your analogy is a lot more half-baked in that case than mine. In that case, the pizza shop is MISSING its pizzas. That’s quite different — and that’s the important point we’re making. Copying content is no different than copying a recipe or copying ideas. It’s copying. It’s not theft, because nothing is missing.

And, before you claim that the money that could be made selling the content is missing, that’s a red herring. It’s money that the seller failed to capture, which is a marketing problem, not a legal one. What happens when someone copies something is that the seller was unable to create the right conditions for the economic transaction to happen — but nothing is *lost*.

You wrote:

“It would be a felony if the new pizza maker went over to the first shop and stole cheese to lower his or her unit costs so as to put out the $7 pie.”

Again, that’s a case where a physical object is missing. Not so when content is copied.

You wrote:

“This would be analogous to using printed or multimedia material in a resale product without royalty or commission.”

Nope. That’s different. Again, there’s a very important distinction between scarce goods and infinite goods. I recognize that it’s not necessarily easy to think in those terms, but the more you look at the differences between scarce goods and infinite goods, the clearer this becomes. Using content without a license is copying, it’s not theft. Nothing is missing.

That’s why I was actually quite careful with my pizza example. Nothing physical is stolen, but my opportunity to make money is, on the face of it, decreased. That’s the same thing that happened with the photograph or with any kind of content. It appears that your ability to make money has decreased, which leads to the upset reaction. But the reality is that if you adapt, adjust your business model and innovate, your ability to make money can increase… greatly.

You wrote:

“Let me use Mike’s pizza metaphor to explain. Web 2.0 media firms like Google are slaughtering old media firms like the one I work for (Hearst Corp.) in an entirely legal way.”

This statement bothers me — though I understand the reasoning behind it. The problem, though, isn’t that Google is “slaughtering” Hearst. It’s that Hearst failed to adapt to the changing market. It’s not fair to blame Google for providing a product people want.

You wrote:

“These Web 2.0 guys are scraping all the pizzas in the world — or at least the headline and iconic representation of the pizza under the ‘fair use’ codicil of copyright law — and then selling advertisement around these fair use pages. That has turned out to be an enormously profitable and perfectly legal way to make a new information business because it accomplishes something that was never before possible in the world of pizza — the search engines, in particular, put all the pizzas in the world in one nice little row, so you can sniff ‘em, poke, em, filch a little cheese off the top or whatever, before you decide which one to read or view.”

You left out one important point. They’re also putting that big row of pizzas in front of a MUCH bigger audience. That’s the key point that you seem to have skipped over in your analogy here. So, they’ve set up a situation where you can capture many more visitors (pizza eaters) and make money from them in more ways than before. For that you should be THANKING them. Yes, they are putting you up next to your competitors, but they’re introducing you to an audience who might never have found your otherwise. Your job, then, is to learn how to embrace that audience by innovating and doing things to make more of those people want to buy your pizza.

You wrote:

“What Mike did when he cooked up his pizza metaphor was to confuse several conundrums in the copyright debate:”

I don’t see what I confused, after reading your post a few times… but let’s see… you wrote:

“what is a fair price for a digital copy of “Honky Tonk Women,” now that the Stones have fully amortized their upfront creative costs”

I don’t understand this statement. I don’t know what the concept of “fair price” means. There is no “fair price” there is simply the price that the market sets… and the economics on that are pretty clear. The marginal cost sets the price, as it does in all competitive environments. There’s no reason to worry about “fair” pricing when you let the market set the price. You wrote:

“should mashup folks be allowed to use video or audio in the making of new creative works that are derivative or include some ‘cheese’ made elsewhere and under what terms and conditions, because the system already knows how to let one artist re-perform another’s song and put it on an album, or remake a movie; but how do we extend those legal arrangements when thousands and ultimately millions of people wanna become part-time or full-time pizza makers;”

Why do you need a legal arrangement for this? You are again falling back on the crutch of copyright, assuming that there needs to be a legal framework for this. If you get rid of copyright altogether, you’d be amazed at how quickly this would actually work itself out.

For a good example of how this works, look at the music industry in Jamaica. Musicians there create “riddims” that are then used by singers throughout the island to record their own songs on top of the riddims. By your thinking, those singers (and the producers who record those albums) should need to pay the riddim writers each time they use their riddims. But that’s not how it works. If a riddim is popular, that riddim writer is suddenly in demand for future writing and can make more money for the *next* riddim he writes, because singers will want to get their hands on it first. They’ll pay him for the next riddim… but then once it’s out, the riddim writer is better off having more and more people using that riddim publicly, because it builds up his own reputation for future deals.

In other words, no legal requirement is needed. What people recognize is all of your past work acts as a portfolio to get people to pay you more for your next work — and in that case you WANT people to create derivative works based on your work, because it only helps you out. It acts as free advertising for you… just as the Google Pizza Search Engine acts as free advertising for your Pizza shop.

You wrote:

“finally the issue closest to my heart, which is the failure of current copyright law, as foolish and extreme as it is in some regards, to protect at all the work of paid newsgatherers”

Well, there’s your problem. You’re thinking in terms of “protecting.” Protectionism hurts markets. It shrinks markets. There’s no getting around that… and you’re asking for protectionism for newsgatherers who, you wrote: “can spend weeks and months and millions putting together stories”

Which is meaningless after the fact.. but useful for pricing the next assignment. Again, past works become advertising for future works. You do a great investigative piece, then it’s worth a lot more to send you to do another one, and more people will be interested in that new work as well.

You wrote:

“when then get legally scraped onto a website where attention, the most valuable good in a media-saturated world, is extracted by a search firm that paid nothing to acquire that information and, so far as I am aware, broke no law and followed fair use custom in the creation of this convenient new service called aggregation.”

… again you leave out the most important point: “AND sends lots of folks who never would have seen that news in the first place TO YOUR SITE WHERE YOU CAN MAKE MONEY OFF OF THEM.”

It’s hard for me to understand your complaint here. You have a company advertising for you, sending people who would never otherwise know about you to you… and you’re complaining that they’re not paying you. That baffles me, frankly.

– ends guest blog by Mike Masnick of TechDirt.

It ain’t kosher to steal and resell my pizza

TechDirt founder Mike Masnick had his heart in the right place when he wrote the blog post titled, “It’s time to wean ourselves off an unhealthy addiction to copyright.” (link)

But instead of using one of the many good arguments against the abuse and extension of copyright by corporate media, Mike makes a wrong-headed metaphor. To wit, he writes:

“If I opened up a restaurant selling pizzas for $10/pizza, that would be how I make my living. Now, let’s assume that someone else sees how successful my pizza place is and decides to ‘copy’ it and open his own pizza place down the street — selling identical pizzas for $7. Suddenly, I go out of business because ‘how I make my living’ is no longer sustainable.”

Wait a minute. That’s not what the piracy and copyright debates are all about. Copyright holders object when a consumer downloads their stuff without paying, just like the pizza maker would call the cops if the kids came by after school and grabbed some slices off the counter without paying. That would be a misdemeanor.

It would be a felony if the new pizza maker went over to the first shop and stole cheese to lower his or her unit costs so as to put out the $7 pie. This would be analogous to using printed or multimedia material in a resale product without royalty or commission.

But that is not, I think, the predominant problem facing print and broadcast information media. Let me use Mike’s pizza metaphor to explain. Web 2.0 media firms like Google are slaughtering old media firms like the one I work for (Hearst Corp.) in an entirely legal way. These Web 2.0 guys are scraping all the pizzas in the world — or at least the headline and iconic representation of the pizza under the “fair use” codicil of copyright law — and then selling advertisement around these fair use pages. That has turned out to be an enormously profitable and perfectly legal way to make a new information business because it accomplishes something that was never before possible in the world of pizza — the search engines, in particular, put all the pizzas in the world in one nice little row, so you can sniff ’em, poke, em, filch a little cheese off the top or whatever, before you decide which one to read or view. The advertising fee collected in this example is a legal and fair payment for the convenience of that comparison.

What Mike did when he cooked up his pizza metaphor was to confuse several conundrums in the copyright debate:

what is a fair price for a digital copy of “Honky Tonk Women,” now that the Stones have fully amortized their upfront creative costs (though I do worry about the recurring expense of silicone injections for Mick’s lips);

should mashup folks be allowed to use video or audio in the making of new creative works that are derivative or include some ‘cheese’ made elsewhere and under what terms and conditions, because the system already knows how to let one artist re-perform another’s song and put it on an album, or remake a movie; but how do we extend those legal arrangements when thousands and ultimately millions of people wanna become part-time or full-time pizza makers;

and finally the issue closest to my heart, which is the failure of current copyright law, as foolish and extreme as it is in some regards, to protect at all the work of paid newsgatherers, for instance, who can spend weeks and months and millions putting together stories — when then get legally scraped onto a website where attention, the most valuable good in a media-saturated world, is extracted by a search firm that paid nothing to acquire that information and, so far as I am aware, broke no law and followed fair use custom in the creation of this convenient new service called aggregation. (I have written about this before in the posting, Tin Cup.)

 

Martin rebuffed for violating FCC’s “un, deux, trois” rule

The Federal Communications Commission delayed then cancelled the public meeting that had been scheduled for yesterday because Chairman Kevin Martin  tried to force a vote on some mild form of cable table reregulation without getting the prior approval of two of his five fellow commissioners. Martin, a republican, may have figured he could guilt-trip two fellow republicans into supporting his attempt to exert some control over cable in return for lifting the media cross-ownership caps that prevent Rupert Murdoch from buying whatever TV stations he does not already own.

But apparently Marton violated the only rule that matters at the FCC — who has three of five votes.

If you have just parachuted into this blog and are unfamiliar with the “cross ownership” debate here’s the deal: in 1975 the FCC instituted a rule stop newspaper barons from acquiring TV stations in cities where they also owned dailies. (This Wikipedia entry says the FCC “grandfathered already-existing crossownerships, such as Tribune-WGN, New York Times-WQXR and the New York Daily News ownership of WPIX Television and Radio).

Fast forward two or three decades. Media companies, inspired by a new urge to merge, entreat the FCC to reverse that cross-ownership ban. This 2001 article in USA Today will talk about the first time Big Media tried and ultimately failed to lift the cross-ownership ban. In this 2007 article USA Today reporter David Lieberman explains the current rationale for lifting the ban. (Lieberman also wrote that 2001 article; but I do not see a more cross-ownership update in his recent archive.)

In a snarky posting yesterday I suggested that the FCC had a rule — no matter could be brought to a public vote on the five-member commission unless some faction had a three-person majority. I was being snotty. Turns out I was factually correct! Paid Content editor Staci Kramer summarized yesterday’s debacle thusly:

“FCC Chairman Kevin Martin has postponed the commission’s monthly public meeting . . .  he couldn’t convince the two colleagues needed to make a majority to go along . . . .  The 9:30 a.m. meeting was postponed first until 11 a.m., and then indefinitely (and after a late-night meeting — a curious thing for a public body! — Kramer added:) . . . Late-night meeting: After dropping plans to force arbitration and postponing—for months, this time,—a vote on the (cable) rule, Martin managed to get a couple of votes through in a two-hour meeting the NYT called “acrimonious.” “

Public officials in the state of California could never have behaved in such a shameless fashion. Our state imposes open meeting rules upon its officials. It does not allow them to gather whenever and wherever they please to decide matters affecting the public. They must follow rules. The five members of the FCC, by contrast, can meet whenever, wherever, and with whomever they please to do any godamn thing they choose — a complaint made more politely in this September 2007 audit that the General Accountability Office sent to Congress.

Which is why, of course, it is so noteworthy that Chairman Martin forgot the one rule that FCC does obey. Repete, s’il vous plait: un, deux, trois!

I use the French in honor of Balzac, the novelist who captured the simpering stupidity of Parisian bureaucracy circa 1824. I scanned a plot summary of his novel, “The Government Clerks,” or “Bureaucracy,” and it struck me that his characters would feel at home in Washington, D.C. Perhaps the French are right when they say: La plus ca change, la plus c’est le meme chose.”

 

Meeting today on cross-ownersip, cable regs; see agenda or click here for video feed

The Federal Communications Commission was created during the Depression. A holdover from before “govmint” became a dirty word, its five members are appointed by the president and confirmed by Congress under rules meant preserve a three-two balance between the political parties.

Today the five commissioners, two democrat and three republican, will perform the public ritual of ratifying policies crafted in private with the connivance of the entities it regulates. If that seems harsh, please scan the September 2007 report from the General Accountability Office, the audit bureau of the Congress. The title gives a hint as to the content. GAO says: “FCC Should Take Steps to Ensure Equal Access to Rulemaking Information.” Ya think?

Whatever the nattering nabobs may say about the FCC’s closed-door policy, it does have one advantage. Generally speaking understanding the agency is as easy as one, two, three — which is the number of votes needed to put an item on the agenda and get it ratified, without any of the danger or drama that comes with unpredictibility.

With this in mind, today’s agenda suggests three commissioners are ready to approve the item titled, “Promoting Diversity of Ownership in the Broadcasting Services.” Great! But what could it mean? Is the FCC ready to throw a bunch of broadcast licenses into a hat and let new folks take over, say, Channel 4 in San Francisco?

Alas, this not to be. Instead the FCC intends to promote “diversity of ownership” by lifting an anachronistic rule that currently prevents Rupert Murdoch from buying a more diverse portfolio of broadcast media properties.

Here’s the deal. Since 1975, no newspaper has been allowed to own a radio or television station in its own metropolitan area, and vice versa. This so-called media cross-ownership rule was intended to prevent any person or company from having newspaper and television power in the same town. Grassroots media activists want to preserve this cross-ownership ban. Fans of the Invisible Hand say that makes no sense in an age when every YouTuber with a copy machine already has cross-ownership powers. Free market thinkers say the FCC hasn’t gone far enough in the proposal to be ratified today.

Here’s what we do know: three commissioners believe that mass media face such intense competition from Internet media that it makes sense to lift the ban and let Old Media get bigger to better battle New Media – a strategy that has worked ever since the dinosaurs.

One other item on today’s FCC agenda rated a mention in the industry zine Paid Content, because it violates the agency’s due process — write the rule in private and put it on the agenda only when it gets three votes. Paid Content editor Staci Kramer writes:

“Chairman Kevin Martin is trying to push through . . . a last-minute piece of bureaucrat-ese that would escalate the commission’s ability to regulate the cable industry . . . At issue: the 70-70 rule, which gives the FCC more power over cable when cable penetration reaches 70 percent of U.S. households. Martin’s finding that the barrier has been broken is based on data gathered by one publisher who says the data is incomplete. In the meantime, at least three commissioners have challenged the findings . . . The plan has drawn heavy criticism from Republican legislators and from others who point to an increasingly more competitive video marketplace where cable loses basic subs while alternatives like satellite and telecoms are gaining.”

Chairman Martin, if you are listening please let me remind you that everything works more smoothly when we honor the FCC’s golden rule. So please, count after me: one, two, three.