Tuesday, March 3, 2009

The real relationship between 'business models' and copyright litigation (yes, there is one)

It's amazing what one learns about oneself on the Internet. Today I read on Techdirt that I 
claim[ed] that the RIAA's legal maneuvering has nothing to do with business models.
There's even a link to a post of mine where I supposedly made such a "laughab[le]" pronouncement. Hmmm. I didn't remember ever writing that "the RIAA's legal maneuvering has nothing to do with business models." And I certainly don't think that. So I re-read my post, just to make sure. And I couldn't find that statement, or anything close to it.

It turns out that what I actually wrote (in response to this previous Techdirt post) was a post about the role of trade associations, with emphasis on limits antitrust law places on what they are permitted to do. I responded to Techdirt's earlier suggestion that the recording industry's trade association, the RIAA, should "wake up...and start focusing...on new business models" by pointing out that following such advice can lead to very serious antitrust problems -- and even to federal prison. Individual firms of course may (and should) focus on devising new business models, but when they discuss business models together at trade associations or elsewhere, they risk being accused of setting prices, dividing markets, excluding competitors, or other transgressions -- which is exactly why antitrust lawyers tell their clients not to discuss things like "business strategy" in the trade association setting.

But here's a dirty little secret that appears to have eluded Techdirt: virtually all litigation filed by businesses (whether individually or in concert) is in support of their "business models." Take a widget manufacturer, whose business model is to deliver widgets to its customers, and have its customers pay money in return. If a customer doesn't pay, the widget manufacturer will sue to recover -- all in support of -- gasp! -- its business model. And, yes, when copyright owners sue those who infringe (either directly or by assisting others in doing so), it is in support of a business model that says that when someone takes action that  implicates one of the exclusive rights found in Section 106 of the Copyright Act, they must get a license.

So when the record labels sue those who infringe over peer-to-peer networks, they do it so that people will  instead go to legitimate distributors like iTunes and Amazon.com (among many others). And when the studios send untold numbers of takedown notices to YouTube and Megavideo, they do in in part so that people will watch their works at legitimate sites like Hulu and NBC.com. Why else would copyright owners sue infringers and take other anti-piracy measures, if not to support their business models? They certainly don't do it for their amusement. (And yes, contra Techdirt, "educating the public" and "protecting artists' rights" through lawsuits are all in support of the business model that demands payment for exploitation of copyrighted works in ways that implicate Section 106. Copyright owners don't educate the public and protect artists' rights for their own amusement, either; they do it so they can make more money.)

So, yes, the RIAA's "legal maneuvering" in support of the labels' lawsuits against individual infringers has a lot to do with business models. And that's all perfectly appropriate, and perfectly legal. This is not news to anyone who knows the first thing about business litigation.


  1. Amazing how you miss the point. Stunning, actually.

    But, in doing so, you proved my point. So, thanks.

  2. Whatever your "point" is, you invented from whole cloth the fiction that I "claim[ed] that the RIAA's legal maneuvering has nothing to do with business models." I don't believe that, and I never wrote it. You simply made it up.

    If you want to quote things I actually write, and heap your usual over-the-top vitriol on them, fine. But if you're going to conjure up fictional "claim[s]," then put them in fictional characters' mouths -- not mine.


Comments here are moderated. I appreciate substantive comments, whether or not they agree with what I've written. Stay on topic, and be civil. Comments that contain name-calling, personal attacks, or the like will be rejected. If you want to rant about how evil the RIAA and MPAA are, and how entertainment companies' employees and attorneys are bad people, there are plenty of other places for you to go.