English, Chad

Copyright in Canada: A Balancing Act of Intellectual Improperty

Chad English, Ottawa, Ontario

• 1. Introduction
• 2. Background
• 2.1 Historical and Philosophical
• 2.2 Cultural and Social
• 2.3 Economics
• 2.4 Technology
• 3. Application to Questions
• 4. Closing Notes

1. Introduction

My response to the Copyright Consultation is presented in the form of a white paper. The goal of this white paper is to address reform to Canadian copyright in the context of finding and optimum solution that balances all factors and the needs of all stakeholders. In some cases, these factors align and in others a compromise position is needed. Specifically, the factors addressed include historical, philosophical, cultural, social, economic, and technological. Primary stakeholders include authours, publishers, performers, consumers, educators, and critics. In this paper I summarize these factors and propose solutions that balance these goals. Additionally, I apply these factors and solutions using personal examples and specifically to the questions posed by the Copyright Consultation process.

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2. Background

This section summarizes factors contributing to the discussion on copyright and intellectual property legislation.

2.1 Historical and Philosophical

Historically speaking, the primary struggle driving copyright can be ideologically described as being between the concept of fair compensation for content creators and the benefit to the public via progress and improvement of the human condition upon which they require some access. In more practical terms, the struggle is more realistically portrayed as between the continuing invention of copying and distribution technologies and the economic interests of publishers to seize control over the works of their creators.

The 1709 Statute of Anne provided the first recognition of the copyright concept and recognized the balance of needs by limiting the monopoly to 14 years "for the encouragement of learned men to compose and write useful books" ¹.

The 1787 U.S. Constitution also recognized this balance of needs by authorizing the U.S. Congress to legislate intellectual property "To promote the Progress of Science and the Useful Arts" ². This approach implicitly favours the rights of the public by limiting such legislation to only such cases that progress is promoted. It does not explicitly recognize economic or control rights of authours. However, such authour rights could be argued if they are demonstrated to contribute to such progress.

The philosophy behind the historical U.S. approach is most eloquently expressed in a letter by Thomas Jefferson ³:

"It has been pretended by some… that inventors have a natural and exclusive right to their inventions, and not merely for their own lives, but inheritable to their heirs.

…

If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.

That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation."

While Jefferson's letter was specifically responding to a patent issue, his sentiments apply equally to artistic ideas.

The 1886 international Berne Convention swung very much to the authour's side. Rather than a balanced approach or even recognition of the needs of the public, this convention was heavily influenced by the "right of the authour" and established that all creative works were automatically copyrighted property of their authour without the need for declaration or registration. (It is a noteworthy irony that the automatic copyright principle largely leads to the losing position of authours in the modern digital age, which is discussed in later sections.)

The principles of the Berne Convention, updated in 1971 ⁴, eventually took hold in the U.S. and Canada with legislation in the 1980's and 90's. Similarly, the limitations on duration of copyright monopoly have continually extended from the original fixed 14 years of the Statute of Anne to many decades after the death of the authour in most developed countries. This has had the effect of all but eliminating the public domain.

Limitations in scope have historically been covered by fair use and fair dealing doctrines that permit some uses depending on purpose, nature of the work, portion of work used, and affect on market value. Some countries have codified these doctrines while others established them through the courts. Canada legislated such doctrines in the Canada Copyright Act, and particularly included private copying of musical works for personal use in the 1997 amendment ⁵.

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2.2 Cultural and Social

The definition of culture varies widely by context. In the context of copyright, culture is best described as the set of shared attitudes, values, and goals as expressed in artistic works. They key word in any definition of culture is "shared". Culture is, by definition, not individualized originality. Rather, it evolves as local trends through the copying of ideas, sounds, themes, movements, and expressions. The very nature of culture requires a measure of copying.

Cultural evolution is largely driven by youth. A first step in this process is learning of the current culture. As described by American composer and conductor John Philip Sousa to the U.S. congress in 1906, "When I was a boy… in front of every house in the summer evenings, you would find young people together singing the songs of the day or the old songs." ⁶

Sousa was complaining about the emerging technology of the recording industry. Indeed, the recording industry has largely eliminated this prior phenomenon in teens and young adults, though it may still be found in young children. In its place, this cultural learning tendency evolved into the sharing of popular recorded songs, often loaned on vinyl albums or, later, recorded as mixed tapes or CD's in the 1980's and 1990's. Indeed, it is the recognition of this phenomenon that is largely responsible for the Private Copying provisions of the Canadian Copyright Act. A more advanced version of this learning phenomenon is young musicians learning and teaching popular songs to each other. These represent the early days of most young musicians who later become the future authours of music and culture.

The modern digital age is seeing another evolution of this behaviour. Digital media combined with software allow young people to express their creativity by editing, looping, mixing, and "mashing up" songs, voice, sounds, and video. Letting other people hear and see their abilities is a fundamental property of being young. It is even a core theory of evolutionary psychology that such creative demonstrations evolved solely for acquiring status and attracting the opposite sex in young people ⁷.

It is also a well-established phenomenon that creative output follows an age curve, rapidly increasing in teens and early 20's and peaking in the 30's. Analysis of these trends suggests that younger individuals provide output at a much higher rate than older individuals, but produce a much wider range of both good and bad material ⁸, a phenomenon sometimes described as "old masters" and "young geniuses" ⁹.

The modern digital editing age thus allows young persons the potential to generate an explosion of cultural creativity. Unfortunately, modern copyright law has effectively made this creativity illegal in many jurisdictions. To understand why, one needs only consider that such mixing of media is considered derivative works which are under the control of copyright owners. Since 85% of music distribution is controlled through five corporations, obtaining permission is difficult, expensive, and time consuming. For an average young citizen editing on a home computer, it is effectively impossible. The difficulty in accessing derivative rights to modern media results in either the creative work never being made or turning our young into outlaws. Punishment for the "crimes" of being creative has the corrosive effect of teaching our youths that the law is something to be disrespected and ignored.

In place of the creative culture of the young we are now face with a music culture controlled and dictated largely by the five major distribution companies, or more precisely by the media cartels that include the RIAA and MPAA in the U.S., the CRIA in Canada, and the IFPI internationally. Diverse culture by creative individuals has been outlawed and replaced by corporate management aimed at profitable culture.

Another important aspect of culture is the archiving of works. Public domain works can be archived independently, but the extension of copyrights decades beyond death has resulted in a large hole in the archive. For instance, it is estimated that only about 15% of all published books are in the public domain and only about 10% of all other books are still in print. The remaining 75% are under copyright and cannot be archived without the permission of the copyright owner ¹⁰. While many authours may wish for their works to be archived, the copyright owner is typically their publisher who has no economic interest in producing more books and expects compensation for archival rights, making such archives prohibitively expensive. In the end, many works may be lost or difficult to find decaying copies.

The degradation of existing copies is a particular problem for the many out of date movies on film. Films are particularly difficult to track down the copyright owners because there are so many associated copyrights with production, writing, music, and performance. Regardless of the medium, simply finding out who owns relevant copyrights can be prohibitively expensive and sometimes requires a legal lottery by violating the copyright and finding out who sues you.

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2.3 Economics

The economics of copyright is a highly controversial area. Copyright owners, particularly of the corporate kind, typically argue that economic interests lie with giving them control. That way, derivative works are monetized instead of let free for anybody to use. This argument relies on the economics of scarcity, that if the lack of freely available artistic works means that controlled works can be maximized for costs and hence economic growth. Where this argument falls flat is that it assumes a fixed need for such works. Rather, the tight control of such works means that derivative works are not monetized because they are not created in the first place due to the high cost of entry.

Instead, the economic potential for derivative works or originals to be repackaged in new ways is lost. Disney was built on public domain works. The erosion of the public domain due to lengthy copyright durations means that we have potentially lost thousands of Disneys.

A more economically viable model is the use of competition. The economic incentive for authours to create and publish works lies with the limited copyright. If the copyright is perpetual and unlimited in scope, there is little incentive for the owner to monetize it sooner rather than later. Limiting the duration of copyright to much shorter periods, even to the original 14 years, forces the authours to release them and acquire whatever fair compensation they require in this period. Once expired, everyone else is given a shot at monetizing the work which creates a flurry of economic activity. Under copyright control, the original owner — likely the publisher — may have long given up on the commercial usefulness of the work. A University of Cambridge study on optimum copyright length determined that about 15 years was likely the most ideal and a 95% confidence that it should be less that 30 years total ¹¹.

A prime example of economic spin-offs is describe in Lawrence Lessig's book Free Culture ¹². Alex Alben of the company Starwave was interested in creating a business based on film retrospectives on CD-ROM. Rather than full films, these CD-ROMs would provide a showcase of works by a selected actor, including interviews and film clips. The first selected actor was Clint Eastwood. Clearing the rights to the clips became economically infeasible. Every actor in every clip could have a claim and without explicit reference to CD-ROM formats in their contracts, there was no easy way to determine whose clearance was necessary. Music and production rights were also needed. Ultimately, after a year of effort they weren't sure that they cleared all rights but managed to release the work anyway.

This example shows that innovative economic spin-off ideas can be created even when original owners didn't plan on them or expect them. It also shows the massive cost of entry for derivative works, and massively inefficient transactional costs of requiring copyright clearances and lack of explicit copyright registration. Alben himself stated that "very few… have the time and resources, and the will to do this". In other words, such massive effort effectively stifles the innovation.

Shorter copyright periods have the added effect of fixing the archiving problem and allowing the public better access to the progress and improvement of human condition for which the copyright concept was first invented.

Another area of economic consideration is that of distribution. This is particularly noteworthy with respect to music sales in the digital age. Music producers and distributors tend to show how peer-to-peer (P2P) file sharing has been costing them CD sales and revenue. These arguments manipulate the data to a limited scope to demonstrate their point but fail to address the real change which is the economics of distribution. Take, for example, the CD sales reported  by the U.S.-based RIAA from 2003 to 2007 ¹³. They reported a drop in CD sales from 656 million albums in 2003 to 500 million albums in 2007. They also reported and increase of 844 million paid individual songs, something claimed as "hardly enough to make up the decline in album sales". This assertion does not hold up under scrutiny.

The assertion may be true in a gross revenue sense. Suppose an average album price of $16. This means the loss of about $2.5 billion from the reduction of 156 million albums. Individual songs sell online for about $1 each, so these only make up $844 million, leaving a net loss of $1.6 billion in revenue to the whole industry including distribution. The net loss to the record labels is much less. Taking out the packaging, shipping, and retail costs associated with a CD but not a download, CD sales only bring in $9.60 revenue for the music itself. This reduced the label revenue loss to $653 million. From the point of view of revenue, this does appear like a loss. But free market principles are based on the whole concept that competition is supposed to reduce costs to consumers and hence revenues should be dropping. This means we can't measure just by revenues. We need to see if consumers are consuming less legally purchased music.

Certainly the number of legal purchases increased. There were only 156 million fewer total sales in the form of albums, but an increase of 844 million sales in the form of legal online purchases. That's a net increase of 688 million legal purchases. Surely this is comparing apples and oranges though, because albums contain more songs than individual song sales. This is true, but the same comparison problem applies using revenue since the distribution methods are different. The proper unit of measure is the number of legally consumed songs. That's impossible to know exactly but we can bound the problem.

Suppose consumers had been purchasing full CDs but were only interested in 1 song on the CD. We have all done that. It makes economic sense. Before digital downloads we never had the option of buying them individually, and certainly not for $1. That is because distributing individual songs on CDs has high distribution costs similar to a full CD so the total price for a CD single is typically more than half of a full CD. If you are even interested in 2 songs on the CD it is cheaper to buy the whole CD than separate songs and you get another dozen or so songs that you did not want bundled for "free". The concept of an album always came with the economics of bundling due to distribution costs of the medium, whether vinyl, tape, CD, or DVD.

If consumers bought CDs for 1 song only and the rest were not of interst, then an album sale would represent only 1 consumed song. If that were true, the sales from 2003 to 2007 represented a net increase of 688 million legally consumed songs. In the other extreme, if every consumer was interested in purchasing all songs on every CD, say about 12–14 songs per album average, then consumers reduced legally consumed songs by about 1.2 billion songs from 2003 to 2007. The crossover occurs at 5.4 songs per album. (844 million increase / 156 million loss). If consumers bought CDs because they were interested in purchasing at least 5.4 songs per CD on average, there is no net change in legally consumed songs. If it is fewer than 5.4 songs per CD, legal consumption has actually increased.

So what is the reality? I can't say for sure, but I'm unaware of anybody who, on average, purchased a CD because they wanted at least 5–6 songs on it. Usually we were lucky to find 2–3 that we actually wanted to purchase, or would have at $1 per song individually. Perhaps compilations and "Best Of" albums might be different, but they must be averaged with the regular album sales. This explains why revenues are dropped. Consumers are no longer paying for the bundled songs they never wanted. The economics of bundling changed when the distribution method changed. It is highly likely that the number of legally consumed songs actually increased.

The economics of distribution play a major role in the need for proper copyright legislation. First, it shows why the media cartels are largely interested in maintaining the status quo. Labels make additional revenue and profit in the mechanical distribution of music from the inherent economics that entices consumers to purchase songs they do not want. In an electronic distribution system, labels only profit on songs that consumers actually want. Distribution market competition cannot effectively correct this protectionism due to the monopolistic structure of the media cartels containing few labels that have the conflict of interest of also being distributors.

Legislation is therefore necessary to either break up the near monopolies or, more easily, to implement compulsory licensing onto distribution and sales in a similar ways as to broadcasting is applied to radio and cable. Allowing new companies to find new ways of distributing material makes the system more efficient and better serves consumers. Furthermore, consumers can shift their purchases from unwanted songs, via albums, to a wider set of desired songs. This distributes consumer money over a wider range of artists and better supports diversity in the industry. (I might also add that electronic distribution generates about 80% less damage to the environment ¹⁴.)

Secondly, the economics of distribution demonstrate that the media industry's claims of P2P file sharing destroying their industry are unfounded and self-serving. Legal song consumption is actually likely up. There is no justification for the massive effort they have put towards suing up to 35,000 individuals in the U.S., distribution software, ad campaigns, harassment of universities, and foreign intervention policies. Such actions come at a cost to the legal consumers of music who must ultimately foot the bill.

Furthermore, penalties for the simple act of sharing music have ruined the lives of the innocent and over-penalized the guilty. A recent ruling has fine a single mother of four $1.92 million for downloading several songs that would cost only a few dollars commercially. Such a punishment exceeds the penalties for most harsh and violent crimes¹⁵.

Excessive punishments have not stopped illegal downloading. Rather, it has turned the act into a lottery for which one in a million loses. It further corrodes normal citizens' respect for the law and provides a rallying point to recruit even more activists to protest against the music and movie industries. The recent interference of the U.S. recording industry in Swedish law acting upon The Pirate Bay created enough backlash to get 7% of the vote and elect a member of the Pirate Party to the European Union. Such irrational activities in Canada would likely have a similar effect given the similarity in social consciousness between Canada and Sweden in comparison to the individualism predominant in the United States. The Pirate Party has already started up in Canada. Legislation is necessary to limit the penalties for sharing of digital media, or preferably eliminating it completely by clarifying and expanding the personal copying provisions of the Canada Copyright Act to include such activities.

Music and movie industries can and do compete with illegal downloading already. Consumers would be better served if these industries put their efforts towards providing high quality, cheap, and reliable legal downloads. The unnecessary legal actions that are demonstrably not harming legal song consumption add inefficient overhead costs that, combined with crippling Digital Rights Management (DRM) make legal music sales less attractive and push people towards more friendly illegal downloads.

This is not the first time content industries have made such Chicken Little claims. Every new technology generates a new claim that the sky is falling. P2P sharing is an obvious target but even looping and editing software and YouTube mash-ups have been fingered as the death of new content despite actually being the source of explosive new content. Ten years after Napster premiered the music industry is still quite healthy. Earlier analysis in this paper indicated that legally consumed songs were on the increase and a 2009 This is consistent with numerous studies that demonstrate P2P has, at worst, a negligible negative effect and at best, a positive effect on music sales ^16, 17, including Industry Canada's own funded analysis which showed "a strong positive relationship between P2P file-sharing on CD purchasing" among Canadian P2P users ¹⁸. Empirical evidence demonstrates that P2P users generally download music they already have (format shifting), try before they buy, or that is out of print and unavailable. The consuming public indeed appears to support inexpensive, high quality, DRM-free, reliable and legal downloads ^19, 20, 21. An IFPI industry report indicates that music sales are up 25% while simultaneously claiming that 95% of downloads are illegal ²². If true, they have proven that their critics who claimed that their business model was the problem — not distribution — were correct.

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2.4 Technology

Non-commercial Use

I started this paper off by describing the struggle behind copyright as being one of technology versus control. In the 21st century we have entered a new era of content technology. Old ideas of copyright and control must be updated to be practical in the new digital reality of the information age. I have already discussed some of these technologies. Digital editing technology provides outlets for fostering the creative potential of young people. These youths have grown up in a networked age of social media and constant connectedness via computers, mobile phones, and instant messaging. It is a natural extension of their creativity to share their works with their digital friends. From their perspective this is no different than Sousa's young people "singing the songs of the day" or of young musicians teaching each other how to play the popular songs.

Here lies the problem. The medium by which these young people communicate and share their experiences, which they have always done, is the same medium by which commercial distribution and commercial broadcasting is now performed. It is the medium, not the usage, which has caused the collision of formerly separate copyright issues.

But there is no reason to treat these separate issues as a single issue. Creative derivative works for personal use, even when shared publicly, do not commercially harm the interests of copyright holders. Nobody would change their decision to purchase a song simply because it was used in a mash-up video on Youtube or sampled and looped to allow someone to create a new beat or to express an opinion. In fact, the opposite effect is more likely as evidenced by the recent Youtube viral video "JK Wedding Entrance Dance" which (illegally) broadcast Chris Brown's year-old song "Forever" and sent it "skyrocketing to #4 on the iTunes chart and #3 on Amazon's MP3 store" ²³.

In Canada, personal use is protected for musical works. The same is not true for video, written, or other works, nor does it clearly cover media such as non-commercial derivative works. Since these do no harm to commercial interests the legislation needs to be extended to cover these types of non-commercial activities either as a private usage or as a fair dealing. This is consistent with the recommendation of the Creators' Copyright Coalition (CCC), a an alliance of the national associations, unions and collectives representing individual artists, who released the following platform policy:

"The CCC recommends the expansion of the private copying regime to include all categories of work covered by the Copyright Act." ²⁴

Commercial Interest Protection

Potential commercially harmful activities such as illegal copying, distribution, and broadcasting can be dealt with separately. These principles most directly map to file downloading, uploading, and streaming, respectively. Clarification for which activity is being referred to must be considered, as well as the level to which commercial interests are harmed. For example, format shifting provides no legitimate commercial harm since individuals are merely converting their purchased material to work on various media player technologies. Such format shifting must be guaranteed otherwise the additional cost of shifting will tend to slow adoption of new and improved technologies, and hence reduce the economic, progress, and human condition benefits.

A two-pronged approach can optimize the solution to the perceived problem of illegal distribution. The first and most effective barrier to illegal distribution is to make inexpensive, high quality, reliable, and conveniently accessible context. Illegal content is not actually free. It requires the cost of effort. (For some, guilt and risk are also considerations.) This implies the second prong, which is making illegal access more difficult. It is important that any efforts towards making access difficult are kept inexpensive and rational rather than attempting to shut the entire process down. Ultimately, an excessive effort is counter productive. It adds costs and punishes those who would not have paid for the works in the first place. However, there are convenient means to make illegal distributions more difficult that solve several other copyright problems at the same time.

If reducing illegal activity is the goal, the best approach is the use of mandatory copyright registration. Content creators metaphorically shot themselves in the foot by adopting the automatic copyright. File sharing technology today is a useful tool for efficiently distributing media. Sites that offer access to such legal media cannot easily discriminate between legal and illegal works because there is no reference database to compare to. As a result, illegal distributions via such technologies as BitTorrent will survive and grow.

The effort required for file sharing sites and software to identify copyrighted works is onerous and represents a high cost of entry for innovative technologies that are cheap, efficient, and effective at distributing legal media. A copyright registration system allows such sites and software to compare accessed works more easily and weed out illegal files. A registration system also solves the high cost of entry for derivative works that require tracking down all parties with copyright interests such as Alex Alben's CD-ROM retrospectives.

Finally, a registration system can help restore a public domain. The vast majority of automatically copyrighted works are unintentional, created by daily communications for non-commercial purposes. Referring back to the principles expressed by the Statute of Anne and Thomas Jefferson, the concept of copyright only has merit if the authour intends to protect the work. This fundamentally puts the onus on the authour to put effort into protecting it rather than the public to seek out the authour to permission. Historically the cost and effort for a registration system were high. This made it arguably justifiable that such a system acted as a disincentive to create. However, modern network and database technology make it inexpensive and simple. A national copyright registration and database system is simpler than most modern media websites.

The cost of the database could easily be covered by usage. For example, a nominal $1 annual registration and renewal fee could easily pay for the whole system and even possibly provide revenue for government operations such as the CRTC. This nominal fee also demonstrates the copyright holder's belief that the work is still commercially viable or, at least, that they still want to maintain control up to the maximum copyright period. Grace periods can also be allowed, such as a 1 year automatic copyright to allow time for the authour to register it or catch up on missed fees. Notification is easily automated via email, phone, or mail. The registration system could also be funded through a very small portion of the existing levy on recordable media, should such a levy continue.

Digital Rights Management

Recent efforts in Canada in Bill C-60 and Bill C-61 have attempted to escalate the technology fight to stop online downloading. Such efforts are generally unjustified, counter-productive, and futile. That they are unjustified is an inherent consequence of demonstrating that the media industries are not in peril. They are actually seeing growth despite the shift in the economics of distribution that should cause them legitimate reductions in revenue. Counter-productivity comes in two forms. First, the cost of escalating the technology fight adds inefficient overhead costs to media production and distribution. Secondly, the limitations that the technology place on consumers, in addition to the now inefficient cost, turn legitimate users off legal purchases and makes illegal downloading far more attractive.

Digital Rights Management (DRM) is a prime example. This family of technologies is aimed at limiting the consumer's use of the media to only that which the publisher wishes. In the digital age where people have players in their computers, stereos, cars, and portable players for travel and exercise, some which require format shifting, limiting such uses ultimately results in consumers defecting to more unrestricted means, either through illegal means or by reversing progress as in the bandwidth caps discussed above. In some cases, DRM has exposed consumers to harm. The Sony rootkit fiasco is a prime example of this tendency, one in which consumers were intentionally, but unknowingly, exposed to hacking by modifying their computers ²⁵. Meanwhile the illegitimate users make use of cracked versions and avoid both inconvenience and harm.

The publishing industry's response to complaints and workarounds has been to escalate the fight through legal means by outlawing DRM circumvention and technology that facilitates circumvention. In other words, they will lock you out and punish you for making a key, and shut down all key-making facilities whether used for legitimate purposes or not. In the case of DRM and anti-circumvention technology, it is the legal activities of fair dealings and private usage that suffer. This combination of lock and anti-key legislation effectively eliminates any exceptions to copyright regardless of legislation. If an educator or consumer must seek the key from the content producer in order to exercise their right, the content producer holds all of the power and can say no. Moreover, the effort to obtain the key and permission, and potentially sue the publisher for access, create a barrier for these rights that renders them moot.

What exactly is the justification for anti-circumvention legislation? Such draconian measures are baseless and redundant. If DRM circumvention technology is used to exercise a legal copyright exception such as fair dealings then no harm is done to the copyright owner's interests. If the technology is used to break DRM for illegal purposes then those activities are already illegal and the legislation becomes redundant. The harm upon legitimate users cannot possibly justify a redundant measure that simply acts to escalate a fight. DRM can and will always be broken even if driven into secrecy. Once again, the interests of authours and publishers are best met by making content inexpensive, high-quality, and reliable. The futility of the effort is a consequence of the nature of the digital information age. It is ultimately a losing battle because digital files are fundamentally just data. DRM cannot ultimately succeed. For every technology the publishers develop there is ultimately a workaround because the final step in playing such media must always present it in a consumable format.

Content Throttling and Net Neutrality

Distribution monitoring technology will always inevitably fail as well. It is logistically impossible to implement a technology to examine every packet of data traveling the internet and determine if it somehow related to a copyrighted work, totalitarian measures aside. Existing monitoring attempts include deep-packet inspection but this technology can only, at best, determine that the data relates to a file sharing technology. It cannot determine the content or the copyright status and thus harms legal file sharing. Generally speaking, such technology is used for selectively throttling bandwidth, and issue that has implications in net neutrality.

Allowing an Internet Service Providers (ISP) to selectively throttle internet bandwidth sets up a dangerous conflict of interest. Most ISP's tend to offer other communications and media services such as cable TV and telephone. The high-bandwidth content of the internet typically involves video, such as TV and movie, and communication services such as Voice over Internet Protocol (VoIP). This sets up ISP's to throttle online applications that compete with their other services, ultimately harming their consumers. It also sets up an opportunity for supply-side sponsorship in which content providers can pay ISP's to let their content through quickly while those who don't pay are slowed to a crawl. Such a business model is typically called a "protection racket" except that selective throttling legalizes the practise. The only solution is mandatory net neutrality.

Digital Entertainment Systems

Home entertainment systems have evolved in conjunction with the new media and distribution technologies. Wide-screen, flat-panel, high definition (HD) format capable televisions have become the norm. Over-the-air (OTA) digital HD is mandated in the U.S. for this year and in Canada in 2011. The days of the VCR, tape deck, CD player, DVD player, and AM/FM radio are gone or on the decline. Likewise, the stacks of CD and DVD media are disappearing from consumers' living rooms. In their place, home theatre PC's (HTPC's), digital personal video recorders (PVR), and digital media centers are the new paradigm for storage and playback. The focal point of these technologies is quickly moving towards internet streaming, from internet radio and podcasts to online TV and movies. Business models such as Hulu and Netflix in the U.S. are the future of entertainment broadcasting.

Adoption of all of the equipment and business models, and their economic impact, require a fair and level playing field for the consumer. Ripping CD, DVD, and now Blu-Ray and HD-DVD media to hard drives is a necessary step. The ability to format shift and stream the media throughout the house and various players is critical. ISP's must be neutral to the online content to avoid conflicts of interest with their other businesses. We already see the problems that conflict-of-interests generate. We are hitting monthly bandwidth caps after only a few weeks and all of the money and effort to build digital home theatre media centers has gone to waste. It is cheaper now to backtrack to the older, less efficient, less environmentally friendly technologies that, coincidentally, happen to be the other business of the major Internet Service Providers. This problem is expanding with content providers as well who try to force us to hang onto the old technology by forbidding use in the new technology by limiting access or usage to how they see fit, not how the consumers see fit.

If Canada is to enter the new millennium and benefit from the economics of a paradigm shift, copyright and telecommunication laws must be consistent with how consumers want to use it rather than allow protectionism of the old business models. Localized control must be relaxed while ensuring that the incentives for authours and content creators are met. For copyright, the most robust means to support this new paradigm is to allow consumers to pay for the content once and then use as they see fit, free of any rights management or restrictions on their personal use. Furthermore, new broadcast and distribution models must be allowed to flourish via compulsory licensing to media business start-up so that the large media corporations cannot effectively shut them out of the industry.

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3. Application to Questions

The Copyright Consultation asks for formal responses to key questions on copyright. My responses refer to the background material from previous sections to put their meaning in context. The questions are unfortunately quite redundant as far as asking what changes should be made because the same changes solve most of the identified problems.

Question 1: How do Canada's copyright laws affect you? How should existing laws be modernized?

This is actually two questions. I will address them separately.

I am a copyright holder and a copyright consumer. I have written, performed, and recorded music. I have written published papers. I have created artistic drawings and paintings. I have recorded short, independent videos. I am an aspiring authour. Indeed, every letter, email, blog, and written comment I have made, including this paper, are affected by copyright law. As an artist and authour, it is in my best interest for my work to be consumed. Certainly, I like to be compensated for my time and effort in creating these new works. But the commercial life for many works dissipates quickly and as an unknown artist nobody will be looking for my works.

It is content creators like me that suffer from overly restrictive copyright laws. Publishing companies and cartels typically take ownership of our copyrights as a part of the publishing agreement. Publishers only make efforts to market a small number of artists and writers. I cannot take my works elsewhere. I cannot reproduce them myself.

Furthermore, as an artist I benefit most by having the widest available public domain to work from. Whether I am using derivative storylines, characters, looping an old song segment, or mashing existing video and sounds to create a new social comment, I am inspired by the prior work to turn it into something different. I can neither afford the time and cost of tracking down a long lost copyright owner to get permission nor can I afford the licensing fees. In the end, my creation is either illegal or fails to be created. Likewise, I fail to have my human condition improved by the non-creations of thousands of others in the same boat because I will never experience them.

As a consumer I have upgraded my home entertainment system to meet the new digital age. I have ditched the cable, satellite, phone, radio, CD, and DVD and get all music, TV, movies, and telephone over the internet. Most of these are available through legal means online including internet radio, song purchasing sites like iTunes and Napster.ca, individual TV station websites, podcasts, all the way to full online delivery businesses such as Hulu and Netflix which are unfortunately not available in Canada. What is available, in what format, and what I can do with it are very important to me.

So what changes are necessary? I discussed these in detail the prior section. A summary is as follows:

• All non-commercial derivative works need to be free of copyright restrictions, even when shared via public forums. Artists, particularly the young, need to be free to experiment, learn, and create culture without the high-cost of permission. The same applies to cultural archives. This costs copyright owners nothing except control. This can be implemented through fair dealings or through extending the private usage provisions.
• Compulsory licensing should be implemented for all forms of broadcasting and distribution. This frees markets to explore various business models while maintaining the authours' compensation and incentive for creation.
• A copyright registration system should be created such that non-registered works are released into the public domain. This is necessary for the protection of copyrighted works as well as providing a public domain for authours to work from. Details are discussed in the Background section.
• Consumers need to be given the right to pay once for a copyrighted work have transform it for personal use however they see fit. This is necessary for the modern world of format shifting and home media streaming. Such a right means DRM should be discouraged and DRM circumvention must remain legal for both personal use and fair dealings.
• DRM should be penalized if not outlawed. If it is not then it needs to be well regulated such that advertisements and labelling clearly declare what the restrictions are before a consumer purchases the work.
• The duration of copyrights need to be significantly reduced. The social, economic, and cultural impacts of copyright all rely on a balance between individual incentive and access to the works. Authours should be given first rights to get paid for their work by commercializing it but only for a limited time after which the public should be given the right to access it freely and attempt to commercialize it from the public domain. The optimum time for beneficial impacts has been demonstrated to be about 15 years.

Question 2: Based on Canadian values and interests, how should copyright changes be made in order to withstand the test of time?

Canadian values and interests include many of those listed in the Background section: cultural, social, environmental, economic, and technological.

Canadians have an interest in protecting and spreading Canadian culture. This makes it imperative that we allow our artists, particularly the young, to experiment and learn using existing works and adapt and modify them to create variations on themes or make new comments, and to share their adaptations socially with others non-commercially without repercussion. As I discussed at length, culture requires copying by definition. Protecting it in a globalized environment means making it as widely and freely available as possible. Limiting duration to 15 years is also critical for this interest. Imagine the spread of Canadian culture if global artists are allowed to modify and adapt Canadian creations only 15 years old while other cultures force them to wait on the order of a century.

Canadian social interests focus on balancing the rights of the individuals with the beneficial impacts to everyone (from which individuals also benefit). The right mix performs better than focusing on individuals alone. This principle is engrained in our social structure and constitution with reference to "peace, order, and good government". This contrasts with the rampant individualism of the U.S. approach of "life, liberty, and the pursuit of happiness". We, as Canadians, are well aware that the right balance is a more optimum approach. This is particularly true economically, where our interests lie in limiting the scope and duration of copyright, and limiting individual's rights to artificially horde their works via technology such as DRM.

Environmentally and technologically speaking, the new digital distribution is far more efficient, cheaper, and environmentally friendly compared to older methods. Internet delivery of media to the home, and the right and ability to format shift the media are critical to the adoption of this superior technology. These considerations all result in the same changes proposed in my response to Question 1 and discussed throughout this paper.

Finally, Canadians value standing up and doing what is right. We have a heritage of peace-keeping and international leadership in creating and promoting a just society. We must therefore do what is right for our citizens, not what is more in line with global trends or what is pressured by corporate interests over control of culture. We are a nation of leaders and as such we must lead rather than simply fall in line. It is in our nature.

Question 3: What sorts of copyright changes do you believe would best foster innovation and creativity in Canada?

The changes proposed in my response to Question 1, and discussed throughout this paper, best foster innovation and creativity. Innovation comes from the ability to adapt and modify. It is critical for our artists to be allowed to access previous works, especially the young artists learning, adapting, and sharing their works non-commercially. Creativity comes from practise and inspiration from prior works, not from being forced to stay away from prior works.

Innovation can also apply to technology and economy. Innovative business models require the freedom to try distributing media through new methods and using new technology. We are in the internet age and have only begun to explore the possibilities. Compulsory licenses, a mandatory registration system, and a vibrant public domain would allow Canada's versions of Alex Alben and Walt Disney to generate new and exciting, and economically profitable, ways to make use of existing works without running into the barrier that currently comes from the high cost of entry.

Question 4: What sorts of copyright changes do you believe would best foster competition and investment in Canada?

The changes proposed in my response to Question 1, and discussed throughout this paper, best foster competition and investment in Canada.

Certainly forcing an authour to get on with it quickly or let someone else have a shot at it inherently fosters competition, and investments are highly attractive when new ideas to commercialize on prior works are allowed to flourish. Disney was built on the backs of public domain works. It is ironic that the influence of Disney in the U.S. has stiffled the creation of thousands of new Disneys. We can fix that in Canada by limiting copyright terms and requiring regular re-registration.

Competition and investment are also largely driven by market size and cost reductions. Ideas like DRM protections act counter to these goal. They punish legitimate consumers by handicapping their usage while illegal "pirates" do not suffer. Making them suffer could only come at massive totalitarian efforts and great expense. Competition and investment are much more likely by eliminating the barriers to public consumption like DRM, costs surrounding anti-piracy efforts, and the high cost of entry associated with finding and obtaining permissions due to a lack of a registration database.

These factors drive legal consumers, distributors, and derivative authours towards "piracy". When the effort is put on producing quality media for a cheap prices, convenient access, and restriction free, consumers consistently purchase through legal routes, making competition and investment much more attractive for distribution and delivery models. Legislation to keep production companies and content creators from excessive protectionism will foster much more competition and investment.

Question 5: What kinds of changes would best position Canada as a leader in the global, digital economy?

Once again, the same changes proposed in my response to Question 1 perform this function. The key to being an economic leader is recognizing what properties maximize economic flow: production capacity, distribution efficiency, and market adoption. Production capacity is maximized by reducing the cost of entry. That means allowing artists better access to existing material and having a healthy public domain to work from. This means limiting copyright times to a primary commercial exploitation period after which everyone else gets to use it. It also means a registration system so that everyone knows who to talk to access copyrights and what is not protected by copyright.

Distribution efficiency is maximized by removing inefficient cost overhead such as DRM, anti-circumvention, and an escalating war between production cartels and "pirates". Market adoption also means reducing these overhead costs as well as removing functional handicaps like DRM.

The vast potential economic spin-offs remain largely untapped due to the legal problems driven by media cartels attempting to hang on to, and increase, their private control of the media delivery system. Entrepreneurs cannot currently access works without great time and expense. Without a registration system there is no easy way to get permissions. Without compulsory licensing for distribution or a healthy public domain there is no easy way to provide comprehensive distribution that consumers want. Registration, compulsary licensing, and shorter terms create an environment that would make Canada a global leader economically and innovatively.

To repeat from Question 2, imagine the spread of Canadian culture if global artists are allowed to modify and adapt Canadian creations only 15 years old while other cultures force them to wait on the order of a century. That would truly make Canada is to be a global leader culturally and creatively.

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4. Closing Notes

In this paper I examined a variety of factors in designing good copyright legislation. Fundamentally they can be reduced to several key principles:

1. There is no inherently natural ownership of a creative idea, whether expressed in words on the written page, in musical notes, or in moving pictures. While tangible property can only be used by one individual at a time, intellectual property can multiply indefinitely without reducing the utility for any one individual. Rather, a copyright monopoly is a necessary evil we create socially and bestow upon creators for the sole purpose of progress and improvement of the human condition.
2. Progress and improvement are best achieved through maximizing the spread and adoption of useful ideas, whether practical or creative ideas, between humans.
3. Without the benefit of some form of monopolistic privilege, there is little incentive to create and publish works beyond instinctual fulfilment.
4. The first three principles conflict such that an optimum solution is a balance that provides just barely enough incentive for artists to create but allows everyone else as much access as possible.

Publishing companies and cartels rarely talk about these principles. Rather, they talk about inherent rights and economic principles of ownership. But the principles above are even economically speaking. Canada would be better to learn from the Chicken€Little's of the past. First it was the performers who complained that recording technology would ruin them. Then it was the recording industry who claimed it was the radio that would ruin them. Then broadcast TV complained cable would ruin them. Then the VCR was going to ruin the movie industry. Then it was tape-to-tape machines. Then CD-burners. Now it is peer-to-peer and digital technologies that is the villian of the day.

Do not be fooled by these tired, old, self-serving arguments. They are merely the roars of the dinosaurs caught in the tar pits, too stubborn and afraid to shed their huge lumbering bodies and evolve wings to fly. Artistic works will survive and flourish and artistic consumers will consume. Artistry is in our genes. It is part of us.

I want to close with a parable. Over the years I have attended and visited many universities. A common phenomenon I have noticed is how their beautiful, pristine lawns were often marred by worn footpaths cutting across from building to building. The students clearly refused to follow the grid of paved pathways set out by the planners. It didn't matter how many times the lawns were re-sodded, how many signs told them to keep off the grass, or how many fences and hedges were put up to cut them off. These worn footpaths became a standard part of university that I became used to. This is why it stood out to me, when visiting a friend at one school, that his university did not have this problem. While walking along a path towards the cafeteria I commented on the lack of worn footpaths through the grass and wondered why that was. "Oh, that's easy", my friend's professor chimed in, "We didn't design the paths until we found out where the students wanted to walk."

This story is a prime example of how to design good copyright legislation. Don't create artificial barriers because someone with money and power has interest in forcing a self-serving path. Find out how people want to use it. If your goal is to have a pristine lawn it is far better to have an attractive pathway cutting through it that people reliably use than to have an ugly, worn path with fences and guards when they refuse to follow your directions. Compromise and fair balance is basis for any good law.

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¹ UK Copyright Act 1709 8 Anne c.19. (Return to text.)

² Constitution of the United States of America, Article 1, Section 8, Clause 8, 1787. (Return to text.)

³ Jefferson, Thomas, Letter to Isaac McPherson, Aug. 13, 1813. (Return to text.)

⁴ Berne Convention for the Protection of Literary and Artistic Works, Paris Text 1971. (Return to text.)

⁵ An Act to amend the Copyright Act, S.C. 1997, c. 24 (Assented to 25 April 1997). (Return to text.)

⁶ Lawrence Lessig, Remix: making art and commerce thrive in the hybrid economy, London: Bloomsbury Academic. Chapter 1, 2008. (Return to text.)

⁷ Geoffrey Miller, The Mating Mind, Anchor, 2001. (Return to text.)

⁸ D.K. Simonton, "Artistic creativity and interpersonal relationships across and within generations", Journal of Personality and Social Psychology, 46, 1273 — 1286. 1984. (Return to text.)

⁹ David W. Galenson, Old Masters and Young Geniuses: The Two Life Cycles of Artistic Creativity, Princeton University Press, 2005. (Return to text.)

¹⁰ Kevin Kelly. "Scan this Book!", New York Times, 14 May 2006. (Return to text.)

¹¹ Rufus Pollack, Forever Minus a Day? Calculating Optimal Copyright Term, Cambridge University, June 15, 2009. (Return to text.)

¹² Lessig, Lawrence, Free Culture, The Penguin Press, 2004. (Return to text.)

¹³ Sarah McBride and Ethan Smith, "Music Industry to Abandon Mass Suits", The Wall Street Journal, Dec. 19, 2008. (Return to text.)

¹⁴ Christopher L. Weber, Jonathan G. Koomey, and H. Scott Matthews, The Energy and Climate Change Impacts of Different Music Delivery Methods, report to Microsoft and Intel, Aug. 17, 2009. (Return to text.)

¹⁵ Jesus Diaz, "Second Degree Murder and Six Other Crimes Cheaper than Pirating Music", Gizmodo, Aug. 24, 2009. (Return to text.)

¹⁶ Felix Oberholzer-Gee and Koleman Strumpf, "The Effect of File Sharing on Record Sales: An Empirical Analysis", Journal of Political Economy, vol. 115, 2004. (Return to text.)

¹⁷ NPD Group, Declining Music Sales: It's Not All Digital Downloading, market report, June 5, 2003. (Return to text.)

¹⁸ Brigitte Anderson and Marion Frenz, The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study for Industry Canada, Intellectual Property Policy Directorate, Industry Canada, 2007. (Return to text.)

¹⁹ NPD Group, Digital Music Increases Share of Overall Music Sales Volume in the U.S., market report, Aug. 18, 2009. (Return to text.)

²⁰ Norbert Michael, A theoretical and empirical analysis of the impact of the digital age on the music industry, PhD dissertation, Dept. of Economics and Finance, University of New Orleans, Dec. 2003. (Return to text.)

²¹ NPD Group, More CD Buyers Try Legal Digital Music Services, market report, May 19, 2004. (Return to text.)

²² IFPI, Digital Music Report 2009: New Business Models for a Changing Environment, market report, 2009. (Return to text.)

²³ Brad Stone, "YouTube Wedding Video Spurs Music Sales", New York Times, July 30, 2009. (Return to text.)

²⁴ Creators' Copyright Coalition, Platform on the Revision of Copyright, January 2008. (Return to text.)

²⁵ Bruce Schneier, "Real Story of the Rogue Rootkit", Wired, Nov. 17, 2005. (Return to text.)