SOPA/PIPA: Try Innovation, Not Legislation

I have been away from blogging for too long.  I won’t go into the reasons why — suffice it to say, I’m no longer saving anything for future commercial opportunities — but it’s nice to be back.

What has spurred this posting is a response I received from an anti-SOPA/PIPA message I sent to one of my (Connecticut) Senators, Richard Blumenthal, who as the state’s Attorney General was a fierce advocate for the consumer.  He in fact had been favorably inclined towards these terrible pieces of legislation although, like many in Congress, was clearly swayed by the outpouring of rational arguments against these bills.

I’ll post here the Senator’s reply to my letter.  At the end, he asks a very interesting question, and I’ll also include my response here.  Bottom line, I don’t think we need legislation to combat piracy.  I think industry has all in its power to build solutions that the market will embrace.  However, to do so will shift the economic value from the label to the artist/performer…and the industry will fight that to the bitter end, relying on legislative efforts when its other efforts fail.

Here’s what the Senator replied to me:

Dear Mr. Yarmis,
     Thank you for your thoughtful message regarding the Protect IP Act. I appreciate hearing from you.
     Over recent weeks, I have listened closely to the concerns you and others have voiced regarding the Protect IP Act, as well as the Stop Online Piracy Act, which was being considered in the House of Representatives. My views have evolved as I have come to understand and share such concerns. While I remain committed to stopping online piracy, I will not vote for any legislation that could hinder innovation, freedom of expression, the right to free speech, or the architecture of the internet.
     I am grateful to you and others who have reached out to share insights and perspectives, which have been immensely valuable, and which have helped inform my thinking on this profoundly important issue. Many have cogently pointed to flaws and overreaching in the Protect IP Act.  As I have said, my best ideas come from listening to the people of Connecticut, and this matter is no exception.  
     The challenge for all of us — and I welcome your further views on this issue — is to protect American property and jobs, but also promote American creativity and innovation, safeguarding the rights of everyone who uses the internet in good faith, without intent to engage in illegal acts. If you think we can eliminate online piracy, what do you see as alternatives to the proposals in the Protect IP Act, and how can they best be implemented?
     I hope you will visit my website and share your thoughts and suggestions. I look forward to hearing from you. Thank you again for contacting me.


Richard Blumenthal 
United States Senate

I think the Senator unwittingly asked an important question, and I responded thusly:

“Thank you for your thoughtful response.  You ask, perhaps unintentionally, a key question:  “If you think we can eliminate online piracy…”  That, of course, is a fundamentally absurd notion.  We can not eliminate piracy.  More importantly, though, going forward the key question we must ask is “is this a matter for governmental regulation or is this a matter for markets to resolve?”  I would argue that those who are most strongly advocating for governmental involvement are those who have been unwilling, not unable, to pursue free market solutions.

Think back, if you will, to the “heyday” of illegal Napster.  Why is music piracy so much smaller of an issue today than it was then, when the digital landscape was dominated by pirated music?  It’s because Steve Jobs dragged the record labels, kicking and screaming, into this new world.  To this day, however, the labels retard every attempt to create rational markets for digital music with insane licensing agreements, byzantine partnerships and user-hostile approaches.  Industry has within its power the ability to create solutions that meet the goals of users, artists and other players in the value ecosystem.  They have resisted, however, in my opinion, because this new world marginalizes their role in the economic value chain.
What is the role of a label?  It identifies talent, creates awareness and secures distribution.  Well,in this new world, distribution is universal, awareness is best done by word of mouth and talent is identified via a crowd-sourcing model (up to and including approaches like American Idol).  The labels are clinging desperately to a world where they maintain primacy and if the market itself is not going to produce that outcome, they’ll rely on legislative approaches under the canard of piracy.
I think we have seen that the vast majority of consumers want to be law-abiding.  That industry continues to fail to produce products that meet that desire is a pox on their house.  Instead of taking the step of criminalizing rational behavior, let’s instead encourage industry to come up with innovative solutions that meet the market needs.  Have they truly done that?  I laugh at that notion.  There has been precious little innovation in the pricing, packaging and marketing of digital solutions.  Instead the industry moans about piracy and seeks legislative help.
If we strip away the windfall of a legislative “solution” that will assist in the maintenance of the status quo, industry will have no choice but to come forward with solutions that address the realities of today’s new marketplace.  Let’s not legislatively incent the maintenance of the status quo with legislation that so clearly is not just ill-founded but ultimately unnecessary and regressive.”
Around 15 years ago, I was on stage at the @d-tech conference with Strauss Zelnick, then CEO of BMG Music.  (Parenthetically, I was unable to find a Wikipedia page on Zelnick, which is almost unprecedented for someone of his stature in my experience.)We talked then about the real reasons for the industry fighting Napster and the like.  It wasn’t so much that there wasn’t money to be made.  In fact, we modeled a scenario where the industry actually grew significantly.  Rather, it shifted the economic power base away from the record labels and that’s why they continue to fight things so vehemently.  Of course, that’s not what Zelnick said…but anyone who was in the auditorium that day surely knows that’s what he really was conceding.  Here we are, 15 years later, and the most the industry has come up with is 0.99/song?  The only innovations in approach have come from startups who are subject to fierce legal action and only through perseverance have been able to bring their solutions, incomplete though they may be, to market.  Can you imagine how much better things would be if only the rights-holders would facilitate it?  But until they lose all hope of a legislative hail mary, we are left with this sorry status quo.
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