Jonathan Pink — Entertainment, Internet and New Media Partner at Lewis Brisbois, LLP Rotating Header Image

There Aint No Free Lunch

It’s tough to be an artist these days.  If your stuff is any good, it’s bound to end up pirated, either on the Web or — for musicians — on your neighbor’s IPod.

 

According to a report bound for the Christian Science Monitor, the majority of all music stored on the typical IPod was not legally obtained.  Rather, it was downloaded illegally.  This means that the creator of that illegally obtained tune didn’t receive a nickel for the copy. 

 

This dilemma highlights the real economic underbelly of copyright infringement:  while the consumer gets something for free as a result of the infringement, the copyright owner gets stiffed.

 

So (according to my sources), film composer Richard Gibbs (formerly a keyboardist with Oingo Boingo) is proposing a national day of unity with these riped-off copyright owners.  In order to publicize the plight of the creator, Mr. Gibbs has suggested a day where everybody goes to their favorite restaurant, orders a fine meal and then walks off without paying.

 

Side note here:  you might not want to try this at your favorite restaurant.  After skipping out on your bill, you’d probably have a tough time ever going back.  And even if you slink back, days later, and explain the whole fiasco — maybe pay you past bill — you’d never enjoy another meal there again.  So my advice is chose another restaurant; one you’ve never been to before.  Then hope it doesn’t become your new favorite restaurant. 

 

One more side note:  what’s with the idea of sticking it to restaurants anyway?  Aren’t they having a tough enough time in this economic climate as it is.  I mean, come on.  I’m getting discount offers from Mortons (a sure sign of their imminent demise).  Why not stiff the gardener?  Or the dry cleaner?  Or the dentist?  Why pick on the restaurant-owner of all people?   

 

In any event, Gibb’s idea of skipping out in order to symbolize the plight of the cheated creator ultimately misses the point (although, it is a fine bit of theater, and has already succeeded in getting us talking about this issue — without even shorting the wait staff on the tip). 

 

Neither Gibbs no anyone else can protect an old business model artificially.  Content creators (and media companies) no longer have much of a choice.  If they don’t put their content online, someone else will.  So, the best way to combat digital piracy is to make the content available for free . . . or pretty close to it. 

 

“What?!  That’s ridiculous.  That’s like saying, ‘I think someone might break into my house, so I’ll take all my valuables and put them out in the driveway for anyone to take!’”  That is what my wife — a far more brilliant lawyer than I – had this to say about this suggestion.  Then she added “Besides, under the Lockean Theory of economics,when the creator is not paid for his or her labor, ultimately he or she will stop creating.”  Yep, things get pretty darn heated in our house! 

 

But I’m not saying the creator shouldn’t profit from the pilfered content — and as a creator myself, I’m all in favor of artists making what ever they can for their work.  I’m just saying that it is an undeniable fact of the Internet-Age that content willbe misappropriated, and that because of this a new business model is required if creators are to see a dime from their work.  For creators and publishers to financially benefit, knowing that the work will be pilfered, will show up on IPods without payment, requires a new paradigm. 

And that paradigm is?  Creators and copyright owners need to profit from that content indirectly, such as through ancillary revenue sources. 

 

This is precisely what Hulu has done.  Hulu is a website that legally permits one to view full-length movies and television episodes, all for free.  Not only that, the content posted on the site contains embed codes so users can post the same material to their own Web sites.  This in turn allows the content to go viral. 

In other words, Hulu (and by extension, the networks and studios that support it) have made their audience their most powerful marketing vehicle. 

 

Fox, NBC and Universal have found a way to capture an audience that might never have reached.  (Try it yourself and see if I’m mistaken about this.)  And in making this shift to their business models, they have found a way to get more eyeballs on their television programming (thus increasing the advertising revenue there), and a way to up-sell entire seasons’ worth of shows as well as single eposides as the Web provides for always-open, point of purchase spontaneity.

 

So, bringing this back to Gibb’s world of music, while an artist may not collect for every song transferred onto every IPod, he or she may actually find a wider audience as a result of the theft than he or she would otherwise have enjoyed.  That in turn means more concerts.  This means greater sales of concert tickets (e.g. more money), more sales of concert tee-shirts, posters, etc.  For an unknown whose work would never have come to light but for the ease with which his or her songs can be (and are) stolen, these ancillary sales never would have been made.  No concerts, no tee shirts, no sodas, hot dogs . . . .  It’s all there thanks to the infringers — the new market makers. 

 

So Locke’s theory survives because the infringers create the brand that sells the artist, which allows for the creation of ancillary markets, and ultimately permits the artist to profit from his or her creation.  Problem solved. 

 

Now, I admit:  this may not be a perfect business model, but it is far from the “stiffing” that Gibbs is so worked up about.  It is tough to deny that the technology that has allowed this infringement to occur has fueled the growth of the Internet.  Why wouldn’t the same technology also fuel the artist?

 

And, in a nutshell, this is my problem with Gibbs’ proposal; why the dine-n-dash scheme isn’t the right fit.  The better analogy would be a restaurant that gave away its hamburgers, knowing that there was a good chance that it would sell plenty of milkshakes, fries and sodas to make up the cost of its “loss leader.”  Maybe Gibbs should get together with his favorite restaurant and suggest that approach.

 

The bottom line is that while we don’t know for sure what impact giving away content is going to have on established businesses, we do know that digital media has turned the traditional business of content-generated profits completely upside down.  While Gibbs may find this reason to be glum (but not to go hungry), I find it very inspiring.  And you? 

Jonathan Pink is a business lawyer with a specialty in copyright, patent and trademark litigation. His clients include many of the biggest names in the automotive and motorcycle aftermarket parts industries, and one of world's largest media companies. He has extensive experience in a wide range of intellectual property and commercial disputes including breach of contract, fraud, and the misappropriation of trade secrets. He can be reached at 949.223.7173, or at jonathan.pink@bryancave.com, and his full profile can be viewed at www.bryancave.com.

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