Copyright and Innovation: The Untold Story (new academic paper)

For decades,The corporate music industry, AKA  Big Music,  in the shape of  huge,   obscenely rich multinational conglomerates has been ripping off and persecuting  the very people  who’ve been keeping  it alive,  suing innocent mothers, fathers  and  young children  and even dead grandmothers,  in the name of copyright.

They  assert  sharing music  by downloading files  is exactly the same  as stealing it off  store shelves  and they make the claim even though  no money changes hands,  and nothing  has  actually been  physically removed  to the detriment  of former owners,  or anyone else.

If theft has been  going on,  it’s been perpetrated  by the  labels and in fact  the argument has been made  that sharing online  is an invaluable fom  of viral marketing.

Examples of  the harm done  by  Organized Music  in its quest  for more profits at any cost  are legion and one of the first I came across  as the former  owner/editor/publisher of  freedom of speech  advocacy site p2pnet centered on Tammy Lafky, a single mother, who according to the major record labels, owed them more than half a million dollars. But  they  said they’d ‘settle’ for  a mere $4,000.

Tammy told the lawyer who approached her she didn’t have any money. But, continued a Pioneer Press story, “She told me to go talk to a lawyer and I told her I don’t have no money to talk to a lawyer.”

Lafky cleared  a paltry $21,000 a year from her job and  received no child support, said Leslie Brooks Suzukamo in her report.

Record label  statements they’re being “devastated” their word) by file sharing  have repeatedly  been shown  to be specious  and one of the first  academic papers to give the lie  to the claims  was The Effect of File Sharing on Record Sales An Empirical Analysis, Felix Oberholzer and Koleman Strumpf.

They wrote:

“Downloads have an effect on sales which is statistically indistinguishable from zero, despite rather precise estimates. Moreover, these estimates are of moderate economic significance and are inconsistent with claims that file sharing is the primary reason for the recent decline in music sales.”


“Copyright has an innovation problem. Judicial decisions, private enforcement, and public dialogue ignore innovation and overemphasize the harms of copyright infringement,” writes professor Michael A. Carrier of the Rutgers School of Law, Camden, New Jersey in the abstract to his July 3 63 page, 2012 paper Copyright and Innovation, the Untold Story Wisconsin Law Review, forthcoming .

He continues:

“Just to pick one example, ‘piracy,” “theft,’ and ‘rogue websites’ were the focus of debate in connection with the PROTECT IP Act (PIPA) and Stop Online Piracy Act (SOPA),”  But such a debate ignores the effect of copyright law and enforcement on innovation, . Even though innovation is the most important factor in economic growth, it is difficult to observe, especially in comparison to copyright infringement.

 “This article addresses this problem. It presents the results of a groundbreaking study of 31 CEOs, company founders, and vice-presidents from technology companies, the recording industry, and venture capital firms. Based on in-depth interviews, the article offers original insights on the relationship between copyright law and innovation. It also analyzes the behavior of the record labels when confronted with the digital music revolution. And it traces innovators’ and investors’ reactions to the district court’s injunction in the case involving peer-to-peer (p2p) service Napster.

“The Napster ruling presents an ideal setting for a natural experiment. As the first decision to enjoin a p2p service, it presents a crucial data point from which we can trace effects on innovation and investment. This article concludes that the Napster decision reduced innovation and that it led to a venture capital “wasteland.” The article also explains why the record labels reacted so sluggishly to the distribution of digital music. It points to retailers, lawyers, bonuses, and (consistent with the “Innovator’s Dilemma”) an emphasis on the short term and preservation of existing business models.

“The article also steps back to look at copyright litigation more generally. It demonstrates the debilitating effects of lawsuits and statutory damages. It gives numerous examples, in the innovators’ own words, of the effects of personal liability. It traces the possibilities of what we have lost from the Napster decision and from copyright litigation generally. And it points to losses to innovation, venture capital, markets, licensing, and the “magic” of music.

“The story of innovation in digital music is a fascinating one that has been ignored for too long. This article aims to fill this gap, ensuring that innovation plays a role in today’s copyright debates.”

 Jon Newton –

Stay tuned …