Copyright Industry Resurrecting “Piracy is Killing the Industry” to Push SMART Act

The debunked a decade ago myth of ‘piracy is killing the music industry’ is back and it’s pushing the SMART Act.

It seems that the copyright industry is going to try and party like it’s 2005. More than a decade ago, major record labels were pushing the debunked claim that piracy is killing the music industry. The purpose was to try to build and maintain a whole industry of file-sharing lawsuits. This involved mass suing unwitting users who were either not knowledgeable in how copyright works or what exactly they were doing. The lawsuits only served to line the pockets of the digital lawsuit industrial complex and never did anything to slow piracy or compensate artists – both long running justifications for major record labels suing. What’s more is that the methods to target alleged copyright infringers were anything but accurate – seeing countless individuals accused of “crimes” they never committed.

While the major record labels and movie industry never really bothered lifting a finger to innovate for the modern age, other companies eventually sprung up to fill the void only filled by file-sharing. This includes Apple iTunes, Hulu, Spotify, and many others. YouTube also played a roll, inking deals with the major record labels and movie studios as well. The video game industry, on the other hand, did more or less move forward on their own thanks to the advent of GOG, Steam, and now, the countless other online store fronts that seem to be cropping up. It was only a recent phenomenon, but streaming services are now becoming a thing for television shows.

The advent of such services have actually been the only thing that really made a major dent in piracy. While piracy was never going to fully go away, it’s popularity has waned over the last decade. What’s more is that, thanks to the legal services, the complaints from the major record labels and movie studios have also seemingly slipped away from the headlines. It seemed like there would be some semblance of peace finally.

Naturally, the claims about how piracy is killing the music industry never held any water. The numbers pushed were all part of what is known as “Hollywood accounting”. A chunk of it stemmed from the long debunked myth of “one download means one lost sale”. Some went so far as to say that if one were to download a track, like it, and legally buy it later, the initial download still means one lost sale regardless of how it, well, resulted in a sale. That, of course, was only the beginning of how senseless it all was. Eventually, the numbers grew to absurd levels, going as far as to claim that piracy costs more than the GDP of Australia or one month of piracy costing more than the GDP of France. I, personally, helped put the final nail in the coffin when I published a meta-analysis of 19 studies, further burying the myth.

Apart from one idiotic journalist, we haven’t really seen the baseless theory really advanced in any serious manner. That is, until recently that is. What’s more is the recent push is even more asinine than before.

Earlier this year, we covered how there is a proposed bill known as the SMART Act in the US. The legislation would effectively give the copyright industry a blank check in how copyright law must be enforced. In short, it would require websites comply with “standard technical measures”. Those measures would be what is set in stone by the Copyright Office as demanded by the copyright industry. It ultimately could mean anything, but the most prominent thing being pushed is upload filters.

Critics have called the bill unfixable and a threat to the internet at large. It’s unsurprising because you are basically requiring websites to comply with what amounts to a moving target. Smaller players wouldn’t have a hope in keeping up and could get sued into oblivion if they don’t shut down on their own. An upload filter, for instance, could end up costing thousands to implement. That alone could be a deterrent to numerous websites that are simply scraping by, scraping up pennies on Google Adsense or hanging on to every dollar that comes in from PayPal donation drives.

Of course, Hollywood doesn’t care about such things. They, along with the music industry and other parts of the copyright industry, have been engaged in a long protracted war with the internet almost since its inception. For them, this bill could be their ticket to finally killing the internet so people will finally go back to the record store and buy vinyl records (WHAT YEAR IS IT???) So, astonishingly, they have begun rolling out the tired line of how piracy is killing the industry. From The Hill:

As the leaders of the Artist Rights Alliance, Copyright Alliance, and CreativeFuture, we believe in the right of creative people to make a living through their creativity, ingenuity, and hard work. But that work is being undermined by the existential threat of digital piracy.

Technology and widespread digital piracy have outpaced the notice and takedown system Congress established in 1998 with the Digital Millennium Copyright Act (DMCA). Piracy is destroying livelihoods and careers and harming innovation and the U.S. economy — to the tune of at least $47.5 billion and 230,000–560,000 jobs lost every year. Too many American creatives face the impossible task of policing the global internet for tens of thousands —many times, millions —of infringements of their copyrighted works.

They have directed these talking points not at random file-sharers, but at the platforms that… have been handing them large sums of money every year.

In other words, under the current legal framework, a few tech giants have profited — to a degree that retired Harvard Business School professor Shoshana Zuboff has called “world-historical.” They have done so at the expense of those who make so much of the original content that draws users to internet platforms in the first place.

As leaders of three different creative coalitions, we think that’s a sure sign of a broken system, but you don’t have to take our word for it.

After an extensive, multi-year study, the U.S. Copyright Office concluded that the “balance” the DMCA sought to achieve “has been tilted askew.” Recently, over 17,000 Americans signed a petition calling for commonsense copyright law reforms. They aren’t stars or celebrities. Rather, they are independent creatives fighting to defend their rights and livelihoods online, as well as supporters of the creative industries.

Commendably, the Senate is currently considering the Strengthening Measures to Advance Rights Technologies (SMART) Copyright Act, a bill that proposes a new approach to the implementation of technical measures to prevent infringement. Congress expected tech companies to work with copyright owners to adopt such measures when it enacted the DMCA a quarter century ago, but as the U.S. Copyright Office observed, not a single automated tool has achieved official recognition as a Standard Technical Measure under the DMCA in nearly three decades. If enacted, the SMART Copyright Act would help achieve the balance Congress intended by establishing stronger incentives for tech companies to fulfill their responsibility to prevent abuse on their platforms and services.

You can’t help but look at this and say, “Wow, just… wow”. You can’t help but look at the platforms and ask, how much money have they paid out? In 2020, YouTube paid out $4 billion:

YouTube’s global head of music Lyor Cohen today said the platform put more than $4 billion in the pockets of artists, songwriters, and rights-holders during the past 12 months.

In a June 2 letter shared with the music industry, Cohen said the money fueling YouTube’s payout came through the dual channels of YouTube ads, and YouTube Music and YouTube Premium subscriptions. The company generated $19.78 billion from advertising during 2020, so its payment to the music industry is about 20 percent its advertising revenue.

Separately, Spotify has apparently paid out $4 billion to major record labels:

Spotify said it paid out $7 billion in royalties last year to rights holders, in a transparency report released Thursday, following critiques from within the music industry that the streaming service pays artists minuscule amounts.

Spotify’s royalty payments increased by $2 billion in 2021, up from $5 billion in 2020.

Instead of paying artists directly, Spotify pays rights holders—record labels, distributors or others—who artists allow to put their music on the platform, and who in turn pay the artists with the money earned on the streaming service.

The streaming service said that for the first time, over 1,000 artists made more than $1 million through royalties on its platform.

Spotify said it paid out over $1 billion to publishing rights holders and $4 billion to major record labels.

Likewise, Hulu is also generating significant revenue for the TV and movie industry:

  • Hulu generated approximately $9.6 billion revenue in 2021, most came from its streaming platform
  • Over 39 million people subscribe to Hulu, 4.1 million of those subscribe to Hulu’s Live TV services
  • Disney valued the app at $15.8 billion in 2019, when it agreed to acquire the rest of it from Comcast

This is only the tip of the iceberg. This isn’t even going into iTunes and several other online legal services that exist today. At any rate, major record labels are making money hand over fist – sometimes to do nothing but sign a contract and let the royalties roll in. Yet, after all of that, they are still making these claims that piracy is somehow killing the industry. It’s astonishing.

The Electronic Frontier Foundation (EFF) has responded to the industries wild claims by pointing out how the industry does everything to avoid paying creatives:

Illegal downloading and streaming are not the cause of Hollywood’s woes. They’re a symptom of a system that is broken for everyone except the few megacorporations and the billionaires at the top of them. Infringement went down when the industry adapted and gave people what they wanted: convenient, affordable, and legal alternatives. But recently, corporations have given up on affordability and convenience.

The point is that Hollywood isn’t in the art business. It’s in the business business. It is never trying to pay artists, it’s always trying to find a way to keep money out of artists’ hands and in the corporate coffers. There’s a reason “Hollywood accounting” has a Wikipedia entry. It’s an industry infamous for arguing that a movie that made a billion dollars at the box office actually made no money, all to keep from paying the artists involved.

There’s a saying that, in various forms, prevails within the creative industry. It goes something like “Art isn’t made in Hollywood. Occasionally, if you get very lucky, it escapes.”

Going back to Warner Bros. and HBO Max: another decision made by the new management was to cancel projects that were largely finished. This included a Batgirl movie, which had a budget of $90 million. The decision was made so that the studio could take a tax write-off, against the wishes of its star and directors, who said, “As directors, it is critical that our work be shown to audiences, and while the film was far from finished, we wish that fans all over the world would have the opportunity to see and embrace the final film themselves. Maybe one day they will insha’Allah.”

The new streaming landscape also allowed studios to mistreat their below-the-line workers; everyone who is not an actor, producer, writer, or director. So, most people. IATSE, the union that represented most of those workers, overwhelmingly authorized a strike over working conditions. They particularly called out how streaming projects paid them less, even if they had budgets larger than that of traditional media.

Streaming has ruined the ability of writers to make a livable wage off of a job, and has all but eliminated mentoring and on-set experience, contrary to the desires of the actual people who make the shows. Instead of investing in writers, studios push for more “efficient” models that make writing jobs harder to get and producing experience nearly impossible.

So when Hollywood lobbyists argue for draconian copyright laws “for artists,” it should ring especially hollow.

In a nutshell, the tired comment that piracy is killing the industry has been debunked countless ways even when file-sharing was the sole way to get digital content online. With legal alternatives out there today, there is even less of a case to trot out this tired debunked line. There is absolutely no justification for the SMART Act and crying “piracy” isn’t even close to being convincing that it is any more needed.

Drew Wilson on Twitter: @icecube85 and Facebook.

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