August 1, 2004  ·  Tim Wu

Here’s the hypothesis: Today’s telecom and copyright laws often regulate similar subjects, but with a big difference. The telecom laws slightly favor market entrants, while the copyright laws favor the incumbent disseminators. The result is a “copyright gap” that grows larger every day.

Imagine you’re a startup, a market entrant, with a new way of getting information to people. Would you want to enter a market regulated by copyright or the telecommunication laws?

Under U.S. telecommunications law, you’ll likely be unregulated as compared to the your incumbent competitors. That’s what made Vonage a success–it doesn’t face the rules that control Verizon. It also what made AOL a success in the 1990s and WiFi in the 2000s. The only thing you need to fear today is possible network discrimination, though the net neutrality movement and Michael Powell’s threats have helped keep that in check.

Yet if you happen to fall under the copyright laws — you have a better way of delivering material that’s copyrighted — the structure of copyright says you need the permission of the market incumbents to carry on a regular business. Think of the story of internet radio, or KaZaA, iTunes and so on.

The result: The Copyright Gap. We have great, competitive VoIP and email markets, but still don’t have much in the way of Internet TV, video-on-demand, or the giant internet libraries once promised. Now obviously there are some justifications for this regulatory disparity, but to my mind not particularly convincing ones.

  • Fred von Lohmann

    The special irony is that the most important hedge against copyright swallowing up technology innovation wholesale has been the Sony Betamax doctrine. Yet in fashioning the doctrine, the Supreme Court failed to articulate a deep theory to undergird it. As a result, copyright scholars have wrestled with it, finding it inconsistent with copyright goals (see, e.g., the recent testimony of Marybeth Peters, Register of Copyrights, on the INDUCE Act). The doctrine makes much more sense when viewed as a question of innovation policy, rather than simply “author” policy.

    I think “fair use” can be reconceived along these lines, as well, especially when viewed in conjunction with the Betamax doctrine.

  • Cory Doctorow

    Hey, Tim — I love this line of reasoning. It certainly plays well during the copyfight at WIPO (“keep broadcasters under the regime of the ITU, and away from WIPO, to safeguard ongoing investment!”).

    BTW, I think that there’s no reason not to post your whole messages on the front page. That whole “teaser/excerpt” dichotomy means that those of us who load a bunch of webpages while connected (say, at the cafe), but read them while disconnected (say, on the train) can’t follow through.

  • Anonymous

    Copyright is a complex issue, we are only at the tip of the iceberg.

    New business models will emerge

  • William McGeveran

    That is a very interesting and handy way of crystallizing some of the problems with copyright doctrine. One refinement, though: of course *patent* law may constrain a new entrant into a telecommunications market if the innovation is based on new technology that may overlap with broad blocking patents held by incumbent competitors. The division is not so much content regulation vs. market regulation, as it is IP law (focus on rights of control by individual IP owners) vs. communications law (focus on overall market structure).

  • David Noha

    Good point about patents, Bill. Another wrinkle in the patent picture is the business method patent; in some situations, they could perhaps block access to an entire new market (e.g., patenting essential elements of the contract structure, blocking competitors from participating in the same kind of customer or vendor relationships). The line between technology and business method can get blurry when it comes to new modes of telecommunications, especially with all the monopolies & oligopolies around. What looks novel in the scope of all existing and possible technologies or business methods may (and often does) look obvious when viewed in the much narrower scope of the technology and business methods employed by the incumbents, by today’s winners. At least this is true in the traditional pre-Internet view of telecommunications markets. The end-to-end architecture of the Internet reduces this effect; however, there is still a lot of terrain that can restrict or determine your course of innovation, including existing patents and copyright laws.

    This brings me to my real point about the “Copyright Gap” described above: the copyright incumbents would be much happier on the other side of the fence. Communications law has its focus on market structure because it is based on government-appointed monopolies (now oligopolies – Verizon, SBC, Comcast, ClearChannel, where there is little or no competition or markets unless the government mandates them. New entrants must ski the slalom course of the existing pipes, last miles, and customer relationships of the incumbents, but they couldn’t even get on the course without the government mandating their right of access.

    The media companies would love to be in a similar situation: to have complete end-to-end control of all media delivery, their dystopian ideal of the “trusted system”, and then grudgingly accept government-mandated competition via regulation by something as marginally effective and as pliant as the FCC (knowing that in the long run, if they don’t like how the regulation is going, they can buy some new laws from Congress). It’s arguable that this is what they’re shooting for. Certainly they’re trying to legislate this market architecture into existence with so-called copyright laws: DMCA, INDUCE, and more terrible things to come. And if they eventually succeed, in the long run public opinion and the democratic process may produce something like the Communications Act of 1934 for media companies, where the Disneys and Time-Warners become common carriers of a sort and are regulated to force them to allow some access to the trusted system to their competitors (on their own terms, of course, since they would probably write the law).

    We may already be in need of some regulation like this, e.g., the DVD FLLC; though I have no idea what their fees are or what kinds of potential licensors they reject, I would guess that the fees are very, very high, and that licensors have been rejected because one of the DVD Consortium companies didn’t like them. The media companies will of course argue that their consortiums and committees and whatnot allow enough access to competitors. I’m sure AT&T and RCA protested in 1934 as well. Today’s media companies are better at creating a veneer of competition; having more complete control of mass media probably helps. I don’t know enough of the history to know if AT&T or RCA created a veneer of competition in the early 20th century. Since trust-busting was big then, I imagine they tried.

  • Robert Young

    Tim, your analysis (and white paper) of telecom vs. copyright policies is brilliant, IMHO, as you successfully position the debate within the proper context. It also reminds me much of Mcluhan’s “the medium is the message” thesis (and the debate that ensued), which in your context would state that regulation over content should be subordinate to policies governing delivery platforms. The danger, of course, is that such an argument ultimately pits technological innovation squarely against artist/creative expression. No?

  • Rolo Timassie

    “We have great, competitive VoIP and email markets, but still don’t have much in the way of Internet TV, video-on-demand, or the giant internet libraries once promised.”

    This piece of evidence does not support your thesis. There’s a big difference between VoIP and email on the one hand and VOD and internet TV on the other (and also “giant internet libraries” but I’ll get back to that). VoIP and email are not bandwidth-intensive, but audiovisual content is. The reason there is not much audiovisual content is because it is hard to distribute in high enough quality to a large enough audience at this point to make it viable. Similarly, books and longer pieces are not yet as comfortable or easy to read given today’s monitors; but voice and short messages work just fine. The claimed “Copyright Gap” is superfluous in explaining this. (By the way, I’m having trouble making a business out of renting my neighbor’s car to third parties. I’d like for property laws to be modified to support my innovative business model and make it easier for me to enter the car rental market.)

  • Tim Wu

    Robert: I don’t think so. The right kind of copyright law is actually about authors and authorship. Much of our copyright laws are for disseminators and other owners of copyright, who are rarely authors or creators.

    One of the greatest reforms for copyright would be a ban on most assignment of copyrights. Why? Because artists and creators actually like new technologies, want to see their works carried on as many media as possible. And if they don’t, its usually for asethetic reasons (i.e., I don’t want my book ruined by a film).

    The Copyright Gap exists because disseminators control copyrights, and disseminators are incumbents who tend to control and slow down their technological challengers. If they didn’t control copyrights, they’d lose a way to slow down their competitors, and in all likelihood disapear sooner.

  • Tim Wu

    From Tim Wu.

    Rolo: I agree that bandwidth matters. Some other examples of the Copyright gap — areas slowed by barriers to market entry.
    Online music distribution
    Distribution of academic works (science in particular)
    Web Radio
    Low-bandwidth internet libraries
    And more importantly, who knows what people might think of with lower barriers to market entry? The essential fact of capitalism is “the process of industrial mutation … that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.�

  • Robert Young

    Tim, now I see what you’re saying… I think. So in effect, the root of the problem lies in the concentration of media ownership, not so much as it relates to audience caps (as Ted Turner and Barry Diller have been arguing recently) but more in terms of media giants owning a critical mass of both copyright *and* distribution. This would imply the solution lies in policies similar to the resolution decades ago when the movie studios were forced to divest their theatre chains. But if that’s the case, while clearly not a copyright law issue, is this an issue for the FCC? Or does it fall under DOJ?

  • Rolo Timassie

    Tim: You want to make copyrights inalienable? Like kidneys? I assume this would mean ruling out exclusive licenses containing all of the copyright owners’ rights as well (otherwise your plan is easily circumvented). It seems to me that the result would be to force authors to do all their own publication and distribution, and bring their own infringement actions. Basically, it’s a come-visit-my-home-page plan for content production. I do a lot of web surfing, but it’s still easier to find quality stuff in the book or record store (produced by the allegedly loathsome “disseminators”).

    Would you include the “work for hire” doctrine in this proposal? IN that case who exactly would be the “author” of a movie? Imagine the licensing difficulties if you have to get licenses from thousands of authors for one public performance! I don’t see why that would be an improvement.