Monday, April 6, 2009

House Foreign Affairs gathers in Van Nuys to bash pirates, foreign governments (except France)

Members of the House Foreign Affairs Committee gathered today in Van Nuys with top business and creative representatives from the entertainment industry to bash piracy, China, Russia, Canada, credit card companies, Al Qaeda, Hamas, Hezbollah,the WTO, Thailand, the Ukraine, China and Canada a few more times for good measure, and to praise...France? Yes, France!

The French plan to fight Internet piracy by establishing a government-run "three strikes" graduated response program may be getting little love in the blogosphere, but it was held up by several participants as an example of a potentially effective strategy for the US. Director Steven Soderbergh, testifying as National Vice President of the Directors Guild of America, told the committee that he supports "a graduated mechanism along the lines of the French model," including a suspension of ISP service for one year upon a third "strike." Committee Chairman Howard Berman (D-CA), in an interview with C&C after the hearing, declined to specifically endorse the French model, but said he is "open to legislation dealing with ISPs' obligations with regard to" infringement by their users.

This was no academic copyleft seminar, with "free culture" advocates lambasting studios and record labels for overly-harsh enforcement methods and alleged failure to adopt "new business models." From Rep. Sheila Jackson-Lee (D-TX) on the left to Rep. Dana Rohrabacher (R-CA) on the right, from suits like Disney studio chief Dick Cook and Universal Music Group President/COO Zach Horowitz to union official Michael Miller of IATSE, participants fell over themselves to call for stronger copyright enforcement by the US and foreign governments. Cook said of protecting IP, "No issue is more important to the Walt Disney Studios." Reps. Ilena Ros-Lehtinen (R-FL) and Ed Royce (R-CA) referred to reports that piracy funds terrorist groups, and noted Al Qaeda, Hamas, and Hezbollah as beneficiaries. Jackson-Lee quoted none other than Martin Luther King (and President Obama) in support of stronger IP enforcement, citing the "urgency of now" in addressing what she termed this "monumental problem." "We need to use a hammer along with some sugar," said the Houston Democrat. Forget the sugar, said Rohrabacher: "It's time to bring the hammer down on those who engage in this crime."

Our neighbors to the north came in for particularly harsh criticism. "Canada has still not modernized its copyright law for the digital age and is now a haven for those running unauthorized music websites," charged Horowitz. Cook blasted the "[l]ack of an effective Canadian legal framework" that allowed camcording to flourish, at least until Canada enacted anti-camcording legislation in 2007. Rep. Brad Sherman (D-CA) asked -- "just hypothetically" -- whether the US should deny IP protection to Canadian goods as a stick to force Canada to crack down on piracy itself. Rohrabacher was blunt: "I am calling on the US government to retaliate against Canada." Military action was suggested -- jokingly (I think).

Other solutions? Rohrabacher asked the witnesses about "technological solutions" to Internet piracy, suggesting that song and movie files could contain a "poison pill" to thwart illegal downloading, and hinted darkly that the US "intelligence community" may hold the solution. (Soderbergh suggested glumly that a "Dutch teenager" would figure out a way around the "poison pill," but that the studios should hire the clever teen: "It worked in Catch Me If You Can.") Berman said that he "
plans to introduce legislation shortly that will begin to elevate the attention given to intellectual property concerns abroad," but offered few specifics. He also wondered whether the Chinese site -- which copyright owners criticize for linking to infringing material -- should be listed on US-based NASDAQ, given its alleged encouragement of infringement. And he urged President Obama to quickly appoint an IP Czar, sounding a bit frustrated that the slot remains unfilled. "I am about to weigh in to find out what the hell is going on," Berman told C&C after the hearing. Berman said he doesn't favor a specific candidate, but wants "a person who is committed to the protection of intellectual property" and plans to call the Czar (or Czarina) to testify in May.

Candidate Obama complained back in 2008 that "
President Bush has failed to address the fact that...China fails to enforce U.S. copyrights and trademarks" and promised that "Barack Obama and Joe Biden will work to ensure intellectual property is protected in foreign markets, and promote greater cooperation on international standards that allow our technologies to compete everywhere." If President Obama intends to follow through on that promise, and if today's hearing is any indication, he can count on enthusiastic -- even militant -- support, from both sides of the aisle.

Additional coverage from CNET and the New York Times (including this supplemental Times report on Soderbergh's socks).


  1. I hate to say this, but this “hearing” smacks of the war on drugs. Let's see, the war was launched by President Nixon in 1969 and the results? The highest prison population per capita in the world, Columbia pitched into a decade long war with the FARC – only beginning to win by halting their war on drugs, our closer neighbor to the south having to put their army in the streets in a attempt to stem the incredible violence and corruption, no significant reduction in drug usage, police departments stopping southbound “money” vehicles not northbound drugs because they can keep the cash they seize, shall I go on? So once again Congress folk fall all over themselves bashing other nations for their “lax” copyright enforcement against “piracy.”*

    Enforcement has worked well here – not. After some 30,000 lawsuits the RIAA has given up and the record labels enshrined itself at as the enemy for their target demographic. Horrible “poison pill” efforts such as the “root kit” scandal exposing untold numbers of innocent CD purchasers to hackers. So what’s the answer? More enforcement, more poison pills? Move those failed efforts to the video industry? I suggest each person that appeared before the Congressman from Hollywood read Steve Kopper’s book Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age before urging more of the same to “save” the music and video industries. The irony is that the Internet is allowing artists to flourish in ways never before possible. The issue is how to harness the market power of the Internet rather than to continue to use it as a scapegoat for an industry that has been engaged in self-destruction and alienating its consumers.

    The market is messy (let me know when you come up with a better mechanism). While I’m recommending books, the next reading assignment should be Capitalism, Socialism, and Democracy, by Joseph A. Schumpeter (particularly Chapter VII, “The Process of Creative Destruction”) followed by Andy Grove’s Only the Paranoid Survive. Both books conclude: adapt to changing markets or die.

    Yes, computers and the Internet are in the process (or may have already) destroyed the CD model. But not because of so-called consumer “piracy.” Rather because no longer do a few VPs of A&R decide “which boy bands or singing barbies to cram down the throats” of the 12-24 year olds (to quote a 13 year old). Instead a wider number of artists are being exposed to their audience and actually making a living. Oh yes, it isn’t the living of the 2.5% of the artists with a label contract that hit double platinum. And yes, the model isn’t completely established (to ultimately be destroyed by other creative ideas you and I can’t even imagine). But that’s the messy nature of capitalism. Not the Soviet-style record industry where only a very, very few control the largest share of the income.

    But when your sales are down 23% in a year what do you tell your Board of Directors? It’s my fault? I didn’t anticipate a change in the market? No, my job as a record label executive is to keep my job. Therefore, it’s much safer to blame the “pirate” kids. So don’t fire me, I’m the Captain of the ship in the middle of the battle against these enemies. Piracy is a very convenient diversion for executives from the realities of a changing business model.

    Do I support violating copyright, absolutely not. Nor do I condone the use of illegal drugs. That is not the issue. The question is do we treat the first as a market failure and the second as a health problem? Or do we continue to treat the first and second as criminal matters in what has been a failed policy for over a decade for the first and four decades for the second?

    * I am not including commercial piracy – real piracy – in this discussion. While I am not opposed to fully sanctioning those who copy entertainment and sell it on the streets, we have been doing that for years without, apparently, little positive results. But de-focusing on what are clearly lost sales, to focus on consumer infringement doesn’t make sense. (We can debate the so-called studies on consumer piracy another time.)

  2. In case anyone is reading this, I highly recommend an article in yesterday's Washington Post By Mike Gray, We Tried A War Like This Once Before,, Sunday, April 12, 2009; Page B04


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