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What new revenue sources do you see?

Peter Leung

Copyright holders, barring some setbacks, have been successful in securing stricter legal protections for their works, but one report argues that it hasn’t yielded any tangible results

Rampant infringement is understandably a concern of copyright-reliant industries, and for the most part, governments have generally been keen to help out, from new laws criminalising the provisioning of anti-circumventing technologies to legislation to block foreign infringing sites. Even China, long criticised for relatively lax enforcement of IP rights, has made efforts to step up protection, complete with bulldozers crushing piles of seized goods in dramatic (and very public) fashion.

But after over a decade of new laws designed to increase protection, what is the result? According to a report from the Social Science Research Council (SSRC) entitled “Media Piracy in Emerging Economies”, the answer seems to be “not much”. The authors note that “optical disc prices have plummeted in most countries, indicating expanded supply and—often—sharper competition in the pirate marketplace”. Similarly, even after highly publicised lawsuits against individual users and shutdowns of popular BitTorrent sites, the International Federation of the Phonographic Industry (IFPI) claims that there were still 40 billion songs available on P2P networks in 2008, up from 20 billion in 2006.

Psy's horse costs about $8 million

Meanwhile, securing stricter regulations has cost rights holders considerable resources and also caused a number of PR headaches. Stories about the RIAA suing grandmothers and printers are now part of internet lore, and accusations of “copyright maximalism” are now par for the course to paint rights holders as caring more about control than creating new opportunities.

For example, Nintendo tried to enforce its copyright against YouTube videos of fans playing through its games and last week threatened to shut down a tournament featuring its game Super Smash Brothers Melee as an unauthorised public performance. Though Nintendo relented on both counts, it is still unclear what it had stood to gain had it persisted. Nintendo appears to have negotiated for itself a share of the ad revenue for the playthrough videos, but it is arguable that was more valuable than the exposure and goodwill the video generated for its games (as some commenters have quipped, if watching someone play your game is a decent substitute for actually playing your game, you may have more serious problems). The second spat is even stranger, given that game tournaments are often integral in building the enthusiastic communities that form the core audience.

Of course, some rights holders understand the idea that maximum enforcement is not always the way to go. Psy and his horse dance (above) has been praised for allowing potentially infringing Gangnam Style-derived videos to propagate on YouTube, further expanding his popularity. He and his team is estimated to have earned more than $8 million last year, with roughly a third of that in actual music sales.

In fact, the Korean music industry seems to have built up around the idea of alternative revenue streams, stemming in part from being in the most-wired country in the world where even legal downloads yield as little as W30 ($.03) per song going to labels and artists. Tireless touring, countless appearances on television dramas and product endorsements seem to have become important income sources for Korean labels. One announced in May that one of its artists earned over W10 billion ($8.89 million) in advertising revenue over a 14-month period.

Is ceaseless product hawking the way to go for all copyright-reliant industries? Probably not. But the idea that there are revenue opportunities to explore obscured by dreams of maximum enforcement is worth remembering, even when expanding core markets. As one Russian record store owner argued in the SSRI report:

Yes. I understand that they are pirates. But I also understand that if I don’t take a step toward these pirates myself, the listener who is interested in electronica will never learn about the Frans label or the existence of the Violet project... And if one day someone wants to organize a concert by Violet, no one would come—or only those few people who either downloaded it from the Internet or bought it from me.

For more on the report, one of the lead authors will be guest blogging over at the China Law Blog for the next few weeks.


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