Prof. Korth noted that Benenson started the Free Culture chapter at NYU. After college and an ITP masters degree, Benenson joined Creative Commons.

“Copyright law is a balancing act,” Benenson said. “It balances fair use and the rights of the public with the private rights granted to copyright holders.”

Fair use

Fair use, enshrined in the 1976 copyright act, is a “fuzzy test,” Benenson said. Fair use is allowed when users of a work transform it.

Fair use consists of four tests: whether the use transforms the work, whether the work was published or not, the depth of the use, and its effect on potential markets for the original work.

“Judges have to make aesthetic decisions,” Benenson said. When Andy Warhol painted Campbell’s soup cans, the company was thrilled. Had he been working today, he might have been sued, and then a judge would have had to decide whether or not his paintings of soup cans were art. He might not win such a case today.

For citations, you’re allowed to cite a newspaper article but not to reprint it.

As for the potential market of a copyrighted work, Benenson cited the case of the Harry Potter Lexicon. As a fan website, it was legal. In fact, it still exists. However, when the site tried to print a book, J.K Rowling sued and won on the basis that the lexicon was a market that Rowling could wish to enter in the future.

Copying

College students are keenly aware of the content industry’s fight against copying, as it often involves suing college students and even colleges. They also know that the content industry routinely lies.

Many don’t know, however, that these legal fights date back to the invention of the VCR in the 1980s. Sony fought a long battle for fair use when it produced the Betamax device. Jack Valenti (another liar) of the RIAA claimed, “I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone.”

“Mister Rogers argued in favor of the VCR and for time shifting,” noted Joly MacFie, who was recording the session. Expect to be able to view it on YouTube soon.

Ten years later, Beneson noted, the movie industry depended on videotape sales for its very survival. The irony of many of these copyright fights is that those that embrace new technology — instead of fighting it — often profit.

For example, the band Nine Inch Nails offered a recent album consisting of unpublished work under a creative commons license. “Reznor uploaded it himself to Pirate Bay,” said Benenson.

Perhaps because it was so widely available so fast, the album sold $1.6 million in its first week and topped the list of best selling mp3 files on Amazon.com — even though it was widely available for free.

DRM and the DMCA

But music companies chose to fight technology instead of embracing it. They invented DRM, for digital rights management. In many cases, DRM takes away a right that customers have in the analog world. Used book stores exist because a customer has the right, under the first sale doctrine, to resell what they have bought, Benenson said.

Purchasers of software, however, do not have such a right. They sign it away when the agreement they click on in order to use the software. “I believe that it will eventually all be on the web and will be tied to your e-mail account,” said Benenson.

Meanwhile, however, there’s DRM, which imposes real costs on users. DRM is protected by the 1998 Digital Millenium Copyright Act. This Clinton adminstration law contains Section 1201, which prohibits not only the making of DMCA circumvention but even prohibits speech: it forbids people from discussing how to get around DMCA.

Benenson said that as an early Linux user, he wanted to play movies on his PC, and was pleased when the 2600 Magazine printed code that would enable people to watch movies on their Linux PCs. The Motion Picture Association of America (MPAA), however, saw this as a copying device, rather than an attempt to consume content. They sued 2600 magazine and the teenager who had written the code and they won.

Although he loathes that decision, both because it inhibits free speech and because it prevents the development of DRM that works (most DRM is deeply flawed) and that does not have significant externalities (some DRM installs viruses), Beneson said that the DMCA is not all bad.

He pointed to the story of how it saved YouTube from Viacom.

Viacom sued YouTube but YouTube was complying with the DMCA. Every time that YouTube received a notice from Viacom saying that content on YouTube violated Viacom’s copyright, YouTube took it down. Viacom’s case was hurt by the fact that Viacom’s content arm valued YouTube so much that they were uploading some of the content that Viacom’s lawyers were then complaining about. The business arm understood that the new technology was a valuable marketing tool; the lawyers were fighting the new technology.

Today, there is the top secret ACTA treaty, largely written by lobbyists. The fear is: “ACTA is being worked on behind closed doors, in a totally undemocratic fashion. What we’ve seen so far is very worrying though. It’s clearly been put together by people who don’t know or care how the internet works. Not only that, but it means that you can be punished for a newly created crime without any evidence that you’ve committed it. Just an accusation from an industry lawyer is enough.”

The Creative Commons solution

Benenson said that the lighter copyright regime developed by Creative Commons can deliver the solution to many of the problems with existing copyright law. CC allows people to grant specific rights to the content they create in four licenses that can be mixed together: Attribution, Share Alike, Non Commercial, and (the most restrictive) No Derivative Works.

Benenson said that these licenses were upheld in court this year in the long (over 400 filing) case called Jacobsen v. Katzer. An appeals court upheld the creative commons license, reversing the decision of a lower court that had said that creative commons licenses had no standing.

The Kickstarter solution

Benenson is still extremely enthusiastic about Creative Commons, to the point where he sometimes forgets he no longer works there (“I, um, they, I no longer work there …”). Benenson now works for Kickstarter. He says that he would not have recognized what Kickstarter was doing had he not read an important paper by Bruce Schneier and John Kelsey called The Street Performer Protocol.

“We introduce the Street Performer Protocol, an electronic-commerce mechanism to facilitate the private financing of public works. Using this protocol, people would place donations in escrow, to be released to an author in the event that the promised work be put in the public domain. This protocol has the potential to fund alternative or marginal works,” the authors of the paper write.

“At Kickstarter, we believe that good ideads, communicated well, will travel,” Beneson said.

Those with the ideas have to give the funders something in return for the cash. For example, a project called Musopen, which is recording classical music and releasing it on a creative commons license, will send music CDs to anyone who gives $25.

This delivers clear benefits. There is no longer a large corporation recouping a massive investment through copyright monopolies and lawsuits. Instead, the public is pre-paying for the projects and nobody except the creator of the work and the public benefit from the work itself.

Copyright laws were promulgated at the foundation of the United States of America in order to encourage the publication of information. Today, they are too often used to prevent speech, publication, and innovation. In fact, Benenson says, most uses of content in the digital world are potentially infringing. You may want to watch a DVD on your Linux PC, but if you can do that, you can also copy the DVD.

Today, innovators who care about the dissemination of information are finding new ways to limit and change copyright laws — for the public good.

“Policy makers bow to the entertainment companies without listening to academic concerns.”

One such academic paper is “Digital rights management: Desirable, inevitable, and almost irrelevant,” (available here in .pdf format), a three page screed published in 2007.

Digital Rights Management (DRM) software is designed to make it impossible to copy and share songs, movies, software, and other products which, because they are digital, can be distributed virtually for free.

Not all academic research opposes DRM, Odlyzko said, precisely because DRM is complex. “There are all these nobs to turn, so you can produce lots of PhD theses and conference papers,” he wrote to me in an e-mail.

Why DRM Fails Business

Odlyzko wrote that content companies believe that they can extract more value from systems that include DRM even though such systems have never worked. “A rising chorus of voices (including Steve Jobs of Apple) is urging the content industry to give up or at least relax its insistence on DRM.”

The software is a method of forcing an old business model on new technologies that break that business model. In the past, it was easy to charge for songs and movies and even software because it was difficult to copy them or to share them. Today, it is easy to do so.

But users of content prefer flat rate pricing. They use more of the service when it is offered at a flat rate, and more people sign up for it. Odlyzko has the data to show that this is true of a variety of services dating back at least two centuries.

DRM slows downloads and in some cases blocks legitimate users. It is therefore a barrier to smooth commerce.

Content providers may like DRM precisely because it makes it more difficult to use the internet to consume content.

“Let us not forget the long history of content providers opposing new technologies and businesses models, from libraries to the VCR (which was likened by Jack Valenti, the main Hollywood spokesman, to the Boston Strangler) yet learning to live with and love them as time went on. (And indeed, the VCR became one of the main money makers for the movie studios soon after Valenti’s infamous claim),” Odlyzko wrote.

DRM vs. Open Source

Seltzer pointed out that no open source system can ever include DRM, because a system that controls what a user can view is by definition incompatible with one that can be altered by its user. Thus, there are no open source DVD systems, home entertainment systems, or stereos, but the open source voice system Asterisk, along with its for-profit services arm Digium, moves from strength to strength.

DRM therefore obstructs the sharing and co-creating that is a fundamental strength of the internet. “I’ve been focusing recently on what Yochai Benkler calls peer production, independent and sometimes coordinated creativity at the edges. I’m concerned that we not use IP law to bolster old-style centralized production againt decentralized end user creativity.”

Benkler, who spoke two years ago at the Freedom To Connect conference, provides numerous examples of peer production.

Organizations as large as NASA have taken advantage of crowdsourcing to get work done, and open source projects are great examples of how groups can work together outside the corporate structure to build valuable things. Open source projects’ for-profit services arms, such as sendmail.com, show how companies can make money after giving away key aspects of their intellectual property, and can provide a better product when they open it up.

As the entertainment industry and its middlemen try to protect the old business models and gatekeepers, a new method of doing business is growing and succeeding. Cable and phone companies need to change or they will face the fate of those car companies that refused to build greener and smaller vehicles because they could not figure out how to make a profit from them.

In this context, it is the height of irony to see change-denier Ed Whitacre, former CEO of AT&T, in ads as the CEO of GM telling Americans that if they just try GM’s cars, they’ll buy them.

I had a conversation recently with a cabletelco strategy guy and I asked him how he’d compete with hulu and skype and he said that he just had to get the pricing of the bundle right.

The internet breaks that kind of cross-subsidy. Newspapers are falling apart because they used to make money on classified ads and earn status on loss-making investigative reporting.

The phone companies still make most of their money from voice services, and the content industry will never be big enough to replace the revenue that they are about to lose, in both wired and cellular networks, to VoIP.

The cable companies have an interesting phone service — Comcast is now the number three phone provider in the U.S. — but they risk ending up being a provider of basic dialtone unless they open their systems to providers of advanced services.

These companies could survive as providers of basic internet connectivity, but they would have to cut thousands of jobs. While the lobbyists won’t be missed, the union workers will never find another job that pays as well. There will be real pain.

Without action, without change, the cable and phone companies will end up like the record stores — bankrupt.

“I think that there’s a lot of short term thinking in the entertainment industry, and in so many other places in the economy,” Seltzer said. “People think they just have to get through their watch of a few years. They’ll continue the backwards looking policies of the past so that there’s nothing they can be blamed for.”