We are pleased to release MPEE-Chinese Edition, free for download under a CC license.

We (Joe Karaganis and Jinying Li) will also  be giving public talks at CUHK in Hong Kong and Renmin U in Beijing in mid-June. Details as they become available.

• CUHK, Hong Kong, June 13
• Renmin U, Beijing, June 19

The translation was a major project, and we owe special thanks to Huijia Xie, South China University of Technology, Jinying Li, from Oregon State, and–on the production side–Lijin Zhou from Peking University.

Here’s an addition to my list of ‘paragraphs I wish I had written differently.’  From my National Review piece (mostly paywalled):

And so we face a dilemma. When we download a movie we infringe. But we can also infringe when we forward an e-mail or repost a funny picture to Facebook or upload a video of kids dancing to a pop song. We are safe as paying consumers of our rich audiovisual culture but not as active users of it — and we are all active users now. This mismatch between law and practice has persisted, more or less, because enforcement has been rare. The vast array of casual infringements passed below notice. But now, as the capacity for enforcement scales up, we need to be better at setting boundaries around the spheres of activity we value.

The paragraph gives short shrift to fair use (even after the editors at the National Review did me the favor of reinserting the conditional ‘can’).  A better paragraph would have been clearer about the reasons.  So let’s try it again.

And so we face a dilemma.  When we download a movie we infringe. But we can also infringe when we forward an e-mail or repost a funny picture to Facebook or upload a video of kids dancing to a pop song.  Some of these activities are protected by the ‘fair use’ provisions of copyright law.  But they have  depended more fundamentally on a wide zone of ‘uncontrolled use,’ which allows new practices to emerge, spread, and redefine free speech.  As the capacity for enforcement grows, this zone becomes a matter of choice rather than necessity.  And so we need to be better at setting boundaries around the spheres of activity we value.

This has been a pretty fundamental point in our critique of the current direction of IP enforcement.  Fair use is critical, but many our freedoms depend, in the last instance, on the inefficiency of control rather than on formal rights.  Because IP enforcement has always been inefficient, in many cases we just haven’t had clear determinations of which behaviors are prevalent because they should be, and which are prevalent simply because they can’t be efficiently controlled.   As enforcement becomes more efficient, we’ll have to formalize those freedoms more explicitly.  And this is the substance of an Internet freedom agenda.  From my perspective, some of it should be about expanding the accepted understanding of fair use.  Some should be about substantive reforms to copyright law (shorter terms, maybe registration) and the criminal code (lower, narrower penalties). Some will be about establishing stronger privacy protections.  Some will be about setting limits on the priority of contract over copyright (like restricting click through licenses that override rights.) Some will be about maintaining a strong ‘safe harbor’ for Internet intermediaries–while, conversely, going after infringement organized as a commercial activity.

This is what the end of the ‘wild west’ on the Internet really means: the formalization of freedoms and rules where we have had mostly informal ones.    But even if we win on the law, we lose something through this process of formalization.  A healthy public sphere is a leaky one in which unauthorized speech can circulate–not one in which our communication systems allow us free speech under prescribed circumstances.  This is why I’m generally a fan of “the imperfect control of the Internet that enables piracy and—yes—guarantees free speech.”  (NR editors changed that to “allows free speech.” Not quite the same thing.)  What we have now is an expanding set of  experiments in automated enforcement, in which robots increasingly determine speech rights.

The NR piece covers this ground in several different ways, but the main intent  is to discuss whether there is a good strategic basis for Republican support for an Internet freedom agenda–including copyright reform.  On that subject, the piece mostly replicates an argument I made earlier in Could Pirate Romney Win/Have Won?  The short answer is that I think one or the other parties will mainstream an Internet freedom/copyright reform politics, that the short-term obstacles to doing so are probably higher for the Democrats (Hollywood) than the Republicans (reflexive support for property claims and law enforcement), and that there’s potentially a large youth vote at stake.  The long run favors the Democrats because the young vote Democratic.  So it’s an opportunity for the Republicans.  Will they take advantage of it?  The NR editors were nice enough to let me ask the question.

Ted Striphas has a great account in The Late Age of Print of the legal battles surrounding unauthorized adaptations of the Harry Potter novels.  All the usual “Media Piracy” elements are in play here: “windowing” practices for massive global hits that make them unavailable for months or years in developing countries.  Extensive local adaptations and commercializations at lower prices.  The zero point of originality determined by who has the most lawyers.  Among the nice touches: a Dutch court splitting hairs over whether Harry Potter was itself a derivative work.

I thought this would be a Copy Culture week for me but it looks like it will also be a broadband regulation week.  So for those of you coming from this New York Times story about Comcast’s ‘Essentials’ program, which unexpectedly cast me as the main critic, here’s some background and  a few comments

I was part of a group asked by the FCC in 2009 to conduct a qualitative study of barriers to access to broadband in low-income communities.  This was intended to complement the FCC’s phone-survey-based study on access (phone surveys run into difficulties in reporting on low-income and minority populations, and the FCC was rightly concerned about this).  Both studies found that low-income communities were being consistently under served by broadband providers.  Our study also documented a wide array of ISP practices that made maintaining access particularly difficult in those communities, especially bait and switch tactics around pricing and hidden fees. 

The FCC’s National Broadband Plan was released in 2010.  It broadly endorsed  the conclusions of the two studies, identifying the lack of affordable access in low-income communities as a top priority.  It notably avoided the conclusion that this problem had anything to do with the lack of competition in broadband markets, where many communities are served by only one provider (if they are served at all).  Due to pressure from companies like Comcast, the competition question proved too controversial to take on.  So the FCC punted.  It proposed grants for infrastructure build-out, subsidies for providers, and a range of ‘voluntary’ measures to expand access, backed by hints of stronger regulation if the main players didn’t deliver.

In Comcast’s case, the regulatory threat was more concrete: serve more low-income people or we’ll block your merger with NBC.  The Internet Essentials program was the result.  It, in turn, provided the template for Connect2Compete–an FCC-incubated non-profit that enlists ISPs and other technology providers in furnishing cheap computers and broadband access to low-income students in public schools.

As I made clear to the NYT, these programs do good things.  According to the NYT (which appears to be citing Comcast) Comcast’s program has now provided $9.95/month access to over 100,000 families.  But these programs also have serious drawbacks as a national strategy for addressing low-income access.  Connect2Compete is a ‘voluntary’ initiative dependent on corporate cooperation and grants from sources such as the Knight Foundation and Carlos Slim.  Like Internet Essentials, it is limited to families of poor students enrolled in school lunch programs.  Participation by those families is capped at 2 years, after which all bets are off on keeping them online.  Participation is further limited to families with no current access, which doesn’t help those who have already identified broadband as a priority and made sacrifices to subscribe. Families that owe money on phone or cable bills cannot apply.

Some of this made it into the body of the NYT piece.  My speaking role ended up as:

“A company like Comcast doesn’t do it out of the goodness of their heart,”

and

“Broadband service is “a natural monopoly” controlled by a handful of private companies, said Mr. Karaganis, of the American Assembly, adding that Internet Essentials gave Comcast access to people in community settings where it could use the lure of low prices to tap into a new consumer base

I stand by the quotes, but the interview was a while ago and I’m fairly sure I didn’t talk about Comcast ‘luring’ consumers in this way, since I don’t think this is the problem or Comcast’s motivation.  The problem is that poor communities aren’t valuable markets for the ISPs, which is why they’ve done a very poor job of serving them.  The motivation is to avoid regulatory action.  I also didn’t speak to whether Comcast was overreaching in its marketing in schools–though that was implied in the quote placement.  I have no knowledge of that.  Most of the critics of the program appear to think that lack of outreach is the bigger problem.

As for whether broadband access is a natural monopoly, I think it meets the usual criteria, but views differ.  I was referring to wire-to-home, which has huge installation costs.  New 4G services complicate the picture but it’s not clear that spectrum and wireless infrastructure are any less subject to concentration in the hands of a couple companies.  And in fact they are concentrated in the hands of a couple companies, which keep trying to merge.

What to do about this?  If you think that broadband access is now a basic element of social and economic inclusion, then there’s a strong case for addressing these market failures through regulation–not temporary, charitable half-measures compelled by the threat of regulation.  There are lots of ways to do this.  The FCC could do more to protect and promote experiments in municipal broadband provision, which treat broadband like a public utility.  It could introduce line sharing provisions that encourage price competition on bandwidth provision.  It could expand Connect2Compete and make it compulsory for the major ISPs–maybe as part of a larger rethinking of the public interest obligations of companies that control large parts of the public sphere. Comcast can probably afford it. It made $62 billion last year.

So, yes, Connect2Compete is ok.  It’s a drop in the bucket, but it’s not nothing.  Let’s hope it’s around in 2 years.

More…. Here’s Wade Rathke, who is paying closer attention to Connect2Compete than I am, and who is not happy.

is this the same Comcast where the FCC in June 2012 agreed with the scores of complaints filed by our members that they were unable to access the cheaper program and while slapping the company with an $800,000 fine for not following through on the contingent commitment for the service also found that they in fact were bait-and-switching the poor to buy the bundled service?  The FCC found Comcast’s handling of this so bad that they added another year (2015) for them to have to do the program.

Still more… I’ve read the FCC statement on the consent decree.  It states pretty clearly that Comcast was violating its promise to market standalone Internet service as a condition of approval of the NBC merger.  But I don’t see anything related to Internet Essentials.

The core question seems to be whether Comcast (and Connect2Compete) have designed programs with such narrow eligibility that few families would qualify and those would be the hardest to enlist–leading to the numerous and hard to address complaints about outreach, even if they are trying.  Comcast puts eligibility at 2.3 million families.  It says 100,000 have signed up.  The total population without broadband access at home is around 100 million, of whom around 19 million have no service providers.  The FCC consent decree requires that the program run through 2015, after which.. what?  Clearly we’re in ‘drop in bucket’ territory.   It would be good to see some independent evaluation of all this.

Read/download the full report here.

Get a PDF of the US infographic or the German infographic.

Some core US findings:

And some German ones:

It was routine for [Canadian] booksellers to sell pirated editions of British titles, produced in and imported from the United States, rather than importing from Britain. Like European countries of the time, the United States did not recognize British copyright law. Nor did Britain recognize the copyright laws of other countries, the United States included. The importation of pirated works into the British Empire (i.e., Canada), where U.K. copyright law clearly did hold, was a problematic but prevailing reality. Responding to intense lobbying by booksellers, and wanting some revenue rather than none, in 1847 the British passed the Foreign Reprints Act, which allowed booksellers to import pirated editions of U.K. books for a 12.5 percent tax. This act not only officially sidelined Canadian printers, but also hijacked a significant part of the pre-Confederation market from Canadian distributors of British works. A U.S. company could print and publish U.K. copyright books to be sold in Canada, but a Canadian company, because it was within the British Empire, could not print and publish the same titles….

In an attempt to counter their disadvantageous political and legal position, Lovell and his fellow Canadian publishers John Ross Robertson and the Belford Brothers began pirating U.S. publications in the 1870s and 1880s, including those of Mark Twain. They sold them in Canada, and in some cases shipped them into the United States to be sold at a price that undercut the U.S. publisher. As might be expected, the Americans were unhappy, and Samuel Langhorne Clemens (Mark Twain) was personally outraged. In an attempt to claim royalties on the Canadian printings, Clemens established a Montreal residence, but the courts of the day ruled that he required a “domicile,” a permanent residence in Canada, to bring a successful case of copyright infringement. Clemens also lobbied hard, and eventually successfully, for the creation of a U.S. copyright act.
….

The Canadian Copyright Act of 1872 was an early attempt to carve out the market for Canadians. The 1872 act shut out both foreign reprints and original British editions, restricting the market to Canadian publishers. From the perspective of principle, the act had the disadvantage of condoning the reprinting of works without their authors’ permission. The British Parliament disallowed the act one year later….

In 1885, Britain signed the Berne Convention, the first international copyright convention, which printers in Canada resisted over the next two decades as it outlawed reprinting without permission of the author. After passage of the 1891 U.S. Copyright Act and an accompanying agreement, the Anglo-American Reciprocal Copyright Agreement, American pirated editions of British titles gradually disappeared from both the Canadian and U.S. markets…

(For those just joining us, the basic story is that Warner Bros extracted  $120 million in taxpayer subsidies plus support for a slew of bad labor and IP laws to keep production of The Hobbit in New Zealand.)

Returning to the matter at hand, the drawing raises some intriguing questions!

First, I confess I hadn’t fully thought through how to map the various heroes and villains of ‘Kill the Hobbit’ back onto ‘The Hobbit.’   But on reflection, this drawing seems a bit off.  In my version of the story, the hobbit is the villain, stealing gold from the people of New Zealand (I guess to take back to Hollywoodshire?)  This  would make Smaug the dragon the public, and Smaug’s giant pile of gold the commonwealth (that’s why it’s so large).  Smaug should be casting the Expecto Patronum (EP) spell to banish the Hobbit, not the other way around.

But hey, people may see it differently, and their right to publish those perspectives on our common culture is part of what’s at stake in ‘Kill the Hobbit to Save Regular Earth’ (pivoting  here to New Zealand’s support for the IP-enforcement-on-steroids Trans-Pacific Partnership Agreement).

So with that in mind, I am happy to announce the ‘Kill the Hobbit to Save Regular Earth’ Initiative– KH2SREI for short (pronounced Kisstory, after the ancient Elven admonition to beware Hobbits bringing gifts).

I invite you to flesh out the Kisstory allegory in whatever direction makes most sense to you.  If you send me pictures, I will publish them here (as long as they are not obscene or gratuitously nasty).  I will even try to talk the good people at Bloomberg View into running them.  And if we get enough submissions we will have a public vote to award copies of the “semi-epic” Media Piracy in Emerging Economies  to the two most worthy entries (plus whatever other awards we can accumulate in the meantime.)  With luck, we’ll assemble a panel of distinguished judges to make these additional awards.

Some suggested guidelines:

• Extra points for including other figures from the story, such as New Zealand PM John Key (gollum?) or Peter Jackson (Saruman?)
• Extra points for representing the Trans-Pacific Partnership Agreement.
• Extra points for contrasting a free and open Internet to some future, corrupted TPPA Internet.
• Extra points for adding more Harry Potter references or other WB properties into the mix.
• Extra points for combining this somehow with the Hawkeye Initiative.
• Special awards for multimedia (Downfall anyone?)
• Special award for the best pro-Hobbit, pro TPPA, pro Warner Bros art, if we get any.

Submissions will be accepted (and occasionally published) through Dec 31.  We’ll also set up some sort of public voting mechanism.

You can submit images or links to work to KilltheHobbit@yahoo.com

All images will be assumed to be available under a CC attribution non-commercial use license, so that we can keep public culture public.

Rim hennaid, people of Regular Earth.

Update: Sadly, we are canceling the ‘Kill the Hobbit Initiative’ due to a lack of submissions.  Yet the people of New Zealand fight on!

So how much taxpayer money, would you guess, did Warner Bros. Entertainment Inc. need to produce the films based on the J.R.R. Tolkien book? The answer is zero. The studios are investment companies, and the films are almost certain to be immensely profitable.

But now you aren’t thinking like a studio. The real question is: How much taxpayer money can Warner Bros. demand from the government of New Zealand to keep production there (rather than, say, in Australia or the Czech Republic)? That answer turns out to be about $120 million, plus the revision of New Zealand’s labor laws to forbid collective bargaining among film-production contractors, plus the passage of three-strikes Internet-disconnection laws for online copyright infringement, plus enthusiastic and, it turns out, illegal cooperation in the shutdown of the pirate-friendly digital storage site Megaupload and the arrest of its owner, Kim Dotcom.

For keeping Warner Bros. happy, Prime Minister John Key, a former Merrill Lynch currency trader, got a replica magic Hobbit sword from U.S. President Barack Obama and a chance to hang New Zealand’s fortunes on becoming the tourist destination for Middle Earth enthusiasts. What could go wrong?

For the KHS2SRE completists out there, we’ve assembled some outtakes and extras:

Regular readers may recall our series on the absurd growth of US state subsidies for Hollywood,  The War Between the States (to Subsidize Hollywood) Tetralogy–subsidies that went from near zero to $1.5 billion dollars in the past decade.  Or our equally epic series on international film subsidies, The European Strategy Trilogy: Send Money to the US, in which we charted the depressing European race to shower money on studios to attract (and once attracted, retain) highly mobile international productions.

We observed that this was one of the few terrible public policy innovations to come out of Canada (remember all those Toronto as New York movies from the late 1990s?)  And we suggested that a cultural-policy-friendly solution to this form of corporate welfare might be to treat public subsidies as conditional loans rather than gifts–subject to repayment within the typical horizon of commercial exploitation of the work (say 5 years) or, failing that, re-release under a Creative Commons license.

We noted that this would address the problem of subsidizing blockbusters while retaining support for less commercially-oriented productions, and that this might be just the thing to restore the competitiveness of European cinema in global markets, where European studios face byzantine licensing barriers and lack the economies of scale of Hollywood.

So now we come to The Hobbit Trilogy, which, if it tracks the performance of The Lord of the Rings Trilogy, will gross somewhere in the vicinity of $3 billion.

(The estimable VFX soldier has been on this story for a while.)

The New York times counts around $120 million in subsidies for the Hobbit trilogy.  More generally:

Taxpayers have reportedly shelled out more than NZ$500 million in the past decade subsidising Hollywood productions like Sir Peter Jackson’s Lord of the Rings trilogy. The Hobbit is expected to snare as much as $60 million [~US$50M] in subsidies.

Hollywood Studios have pressed the Government to raise the subsidies even higher – and Hobbit director Sir Peter Jackson reiterated that call yesterday.

Prime Minister John Key suggested that was unlikely, but said the Cabinet would be looking at extending them to television productions.

The Hobbit had created 3000 jobs, he said.

The Greens cite the total subsidy to the three films (not counting the marketing subsidy)…

But Dr Norman [Green Party c0-leader] said there needed to be a cap on the cost of producing those jobs. If 2000 jobs were created over a year at a cost of $100 million that was a cost of $50,000 a job.

“If the Government is willing to pay $50,000 a job for a Hobbit job, it does beg the question why they won’t give any support whatsoever to the manufacturing sector and are happy to see us lose tens of thousands of jobs there and do nothing about it.

It’s a reasonable point, since most of those jobs are short term and low end.  The high earners live elsewhere.

How are these types of deals sealed?  With toys, at the highest levels.

Prime Minister John Key proudly brandished an ornately engraved sword. It was used, he said, by Frodo Baggins, the protagonist of the “Lord of the Rings” trilogy, and in the films it possesses magical powers that cause it to glow blue in the presence of goblins.

“This was given to me by the president of the United States,” said Key, marveling that President Barack Obama’s official gift to New Zealand was, after all, a New Zealand product.

Sounds fun.  I wonder where Obama got the sword.  And was it the only part of the deal?

Not likely.  In 2011, New Zealand  passed the worlds second 3-strikes law for disconnecting copyright infringers (the only case to go to a tribunal, so far, was dropped in October.)  In early 2012, New Zealand special police forces raided Kim Dotcom’s mansion in the course of the US takedown of Megaupload–the well-known cyberlocker site.  In 2012, Key was later forced to apologize to Dotcom for the illegal government spying that preceded his arrest.

All of this is part of a not-so-secret effort to sell New Zealand to Hollywood, and to Peter Jackson in particular.

That’s the strategy Key’s government has pursued. The making of feature films and television shows generated only about $1.1 billion in revenue last year, well under 1 percent of a gross domestic product of roughly $160 billion. About 17 percent of movie and television revenue is directly subsidized by the national government, which spent nearly $200 million to support movies last year.

But tourism is an economic sector 20 times the size of the country’s movie and television production business. And as other countries, notably China, have moved into some of New Zealand’s core dairy industry, the Kiwis, a particularly inventive people, have focused more on the vacation market.

In an unusual arrangement, Key, a former currency trader with Merrill Lynch who did graduate work at Harvard, retains a portfolio as his government’s tourism minister. Scratching for solutions to the 2010 crisis with unions over “The Hobbit,” he settled on a policy that would, in effect, use much of the tourism budget to re-brand the country as Middle Earth, hoping to lure visitors to locations where Jackson has shot and is shooting his films.

A sketchy bet cooked up by a Merrill Lynch trader.  What could go wrong?

[Jackson] disagreed with the notion that New Zealand’s film industry rested squarely on his shoulders.

“If I started to think like that my head would explode,” he said. “I can’t take responsibility for everyone’s employment.”

Indeed.  And not all Kiwis are on board.  The deal earned Key and Warner Bros the coveted Roger Award For The Worst Transnational Corporation Operating in New Zealand:

Warner Bros, a first-time nominee for the inauspicious award, took out the top prize due to the “extraordinary example of transnational capital interfering in local politics, and overtly influencing the actions of the NZ Government”, the judges said.

“It was an overt display of bullying that humiliated every New Zealander,” they said, adding that such interference in New Zealand politics “sets a precedent for all future negotiations between the New Zealand Government and transnational corporations”.

The Government, and specifically Prime Minister John Key, were awarded the Accomplice Award for their “ignoble role in the whole Warner Brothers/Hobbit affair”, the judges said.

The judges announced a special Quisling Award for Sir Peter Jackson, for his role in the affair as the individual who did the most to facilitate foreign control of New Zealand.

Still, it’s not all slavish obedience to Hollywood down under.  NZ trade negotiators aren’t happy with the US-led effort to ramp up international IP enforcement standards in the new Trans-Pacific Partnership Agreement.   NZ judges aren’t happy with the US Department of Justice’s apparent railroading of Kim Dotcom.  The TPPA negotiations are underway in New Zealand and under fire from local critics.

No one doubts that New Zealand did very well from the Lord of the Rings and will probably do so again from The Hobbit.  And no one should doubt that the minute Warner Bros can cut a better deal elsewhere or just do it on green screen, the New Zealand film industry will be left high and dry.  So what to do about this?  For individual countries or states, it’s a race to the bottom.  Solutions need to be collective.  And as it happens, there is such a collective agreement under negotiation: the Trans-Pacific Partnership.  Brave Hobbits/NZ trade negotiators, even the smallest can change the world.  Roll up the agreement, stick a kiwi feather in it, and cast your Expecto Patronum!  Free Regular Earth from the tyranny of Middle Earth.

Well, it makes some.

Here is our sequence of questions about attitudes toward sharing music.

Hispanics respondents were more tolerant than other groups of sharing in all forms, including through personal networks (friends) and larger online networks (posting links and uploading files).  Black and white respondent attitudes are very similar–in all but one case within the margin of error.

What about acquisition practices–our core ‘copy culture’ metrics?

Black and Hispanic responses run pretty consistently–though not dramatically–ahead of white responses.  Copying and downloading for free are, by all appearances, more common in these two communities.

What about narrower practices of P2P use and sharing (which correlate with large collections of copied materials in our study)?  Black and Hispanic respondents show somewhat higher use of P2P services, but there are no differences with respect to more engaged practices (e.g., membership in private file sharing communities).

Income was not a significant differentiator within the groups.  High  and low income blacks, whites, and Hispanics have similar copy copying and downloading profiles.  But age did make a difference.  Here we found something unexpected:  age separation emerged among older respondents, not younger ones.

In other words, black, white, and Hispanic 18- to 29-year-olds have very similar rates of  participation in our broadest measure of copy culture—comprising 66%–69% of the Internet users in each group.

But overall, Black and Hispanic communities have higher levels of participation in copy culture (56% B; 56% H; 42% W) because these practices are more prevalent among older members of these communities, not younger ones.

Our data does not provide much insight into this divergence, but we think it probably reflects the longer-term role of informal media economies in these communities, rooted in the relatively higher cost and lower availability of legal services (such as the scarcity of movie theaters in minority-dominated neighborhoods).  Among Hispanics, these factors are likely strengthened by the importance of Spanish-language media, which has had still fewer legal means of distribution.

And that’s about as far as our data takes us.  These aren’t big differences, but they’re there. Sociologically-informed explanations welcome.

More…  Greg Sandoval explores the apparent race gap here, but doesn’t get very far.