A recent chat with a client reminded us that copyright is no longer a reliable defence for protecting IP in the digital age – you will need multiple intangible assets to rise above the crowd.
The internet has completely changed the game for anything that can be presented with ones and zeros. All attempts to update copyright rules, and rights generally, to deal with the internet have failed or will be seen to have failed soon. Creative Commons, copyleft, open source, etc. are all basically dead ends. At best, they allow the creator to re-assert some control after their IP has already been stolen. But for these paths to work, creators must be willing to litigate and most lack the resources to fight back.
On the other side of the equation for why copyright is less effective today is the consumer. Anything on the internet that costs more than $0 is a tough sell. People see the internet as the “digital commons” because they believe content can be duplicated and distributed losslessly with no cost to either uploaders or downloaders in bandwidth or time. The problem with this assumption is that if the cost of something is free then people will naturally value it at $0.
Let’s use books as an example because that’s what our client was offering.
For an author to be compensated for their work, they must somehow capture its full value in the retail price. But in the digital world, normal price discovery mechanisms don’t work very well, which means the price of creative work – regardless of its true value – often drops to zero.
When someone downloads an eBook, rather than buying a physical copy, they do so to avoid incurring costs. Cost includes the price of the book, the opportunity cost of going to the bookstore, the costs of reading the book in a less convenient format (paper), etc. Because it is essentially free to download and store, the value of an eBook is not reflected in its price. The downloader does not consider the value of the eBook – they only consider its cost.
The fundamental problem is that the internet sets the value of creative work equal to the cost of the medium in which it exists. Because bits and bytes are nearly worthless, customers tend to value creative works at almost nothing. They are things to be plucked out of the air whenever it is convenient to do so entirely at the expense of creative people or companies.
It has been hard to make money from copyrighted digital works for a long time, and this will only get more difficult as artificial intelligence (AI) develops the ability for anyone to churn out new creative works on demand.
Yet it’s not all doom and gloom. IP holders can still generate decent revenue by doing other things, such as getting a patron or grants, licensing the IP or selling it to a distributor. In other words, a creative person or company must also get good at something other than content creation, like networking, grant-writing, schmoozing or consulting. That’s not ideal for most people who have a creative mind and personality.
But it’s worth pointing out that sometimes pricing IP extremely low can be a highly lucrative strategy. This is particularly true in the TV and movie business.
Consider that if the key to securing a film option is to demonstrate a readership of a certain size, the way to do that is to drop the price as low as possible – perhaps even to zero. For example, the movie and TV show options on Philip K. Dick’s stories currently generate more revenue for his estate than royalties from the stories themselves.
Yet even with these edge cases, copyright is turning out to be a woefully ineffective tool for protecting the value of creativity in the digital age. If copyright is to remain a viable defensive measure for creative works, it must evolve spectacularly.
We see only three serious ways to deal with IP theft while also financially compensating creative companies and people for their work:
- First is enforcement. Massive, widespread enforcement. Innovation needs an official entity large enough to target uploaders, downloaders, unauthorised derivative work creators and others for near-automatic copyright enforcement. This entity must be ruthless. The ISP of every peer to a torrent of copyrighted material should get a notice the instant it starts downloading, every time it starts downloading. Where names are available, litigation would ensue.
- Second, all electronic devices should have a gating mechanism for content viewing. For example, since Apple-approved content can only be loaded on iPhones with iTunes, this has rendered app piracy non-existent for Apple devices. If all creative content could be treated like apps, that might go a long way to minimising piracy.
- A third solution would be a surcharge or tax on internet connections, computers and internet-capable devices. This money would then go into a pool to be redistributed among content producers according to some proportionality formula.
But these are big, systemic fixes. They will require a passionate champion at the political (and policy) levels to guide them into legislation. Until solutions in this vein emerge, creators and innovative companies are stuck in the “digital commons” where IP theft and copyright infringement are daily occurrences on the internet.
Fortunately, our client understood that getting a copyright on his creative work was a nice-to-have but wouldn’t be the shield he hoped for. The client was also open to hearing about other ways to capitalise on the value of his content. He saw the wisdom of building his brand and using his IP tactically to channel clients into booking a consultancy session, or other interaction.
He also sought ways to leverage the specific mix of approvals and certifications he had accrued to prove value-add for those incoming clients. His deep industry expertise and relationships built over a long career could also easily become key intangible assets to strengthen the core IP.
Our client’s story will be familiar to all innovative people and companies. Copyright alone is no longer sufficient. Creative works must be wrapped into a constellation of other intangible assets. Each asset must enhance the other and magnify the worth of the underlying IP. That’s the only real way to ensure the price of creativity can come close to matching its true value.
If you don’t have a good mix of intangible assets, the internet won’t think twice about stealing your precious IP.
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