Guardrails for the Internet: Preserving Creativity Online

In March, an unfinished copy of 20th Century Fox's film X-Men Origins: Wolverine was stolen from a film lab and uploaded to the Internet, more than a month before its theatrical release. The studio investigated the crime, and efforts were made to limit its availability online. Still, it was illegally downloaded more than four million times.

That kind of wide scale theft was very much on my mind when I was on a panel the other day which opened with a question about the impact of the Internet on the entertainment business, and I responded, "I'm a guy who sees nothing good having come from the Internet. Period."

Now, the blogosphere does not take so kindly to provocations like that, and it didn't take long for online critics to compare my words with those of one of my Hollywood predecessors, H.W. Warner, who famously said, "Who the hell wants to hear actors talk?"

But, I actually welcome the Sturm und Drang I've stirred, because it gives me an opportunity to make a larger point (one which I also made during that panel discussion, though it was not nearly as viral as the sentence above). And my point is this: the major content businesses of the world and the most talented creators of that content -- music, newspapers, movies and books -- have all been seriously harmed by the Internet.

Some of that damage has been caused by changing business models (the FTC just announced an inquiry into the impact of new media on the newspaper industry). But the primary culprit is piracy. The Internet has brought people with no regard for the intellectual property of others together with a technology that allows them to easily steal that property and sell or give it away to everyone, with little fear of being caught or prosecuted.

To be clear, my concern about piracy does not obscure my understanding that the Internet has had a transformative impact on our culture and holds enormous potential to improve the prospects of humanity, and in many instances already has. I am no Luddite. I am not an analogue guy living in a digital world. I ran an Internet company and my studio actively uses the web to market and sell our movies and television shows. We create original content for new media.

And yes, new talents have emerged thanks to the democratic and viral impact of the web. Yes, the rise of new distribution platforms for existing content is exciting and rich with promise.

But at the same time, I cannot subscribe to the views of those online critics who insist that I "just don't get it," and claim the world has so fundamentally changed because of the web that conventional practices concerning property rights no longer apply; that the Internet should be left to develop entirely unfettered and unregulated.

In no other realm of our society have we encountered so widespread and consequential a failure to put in place guidelines over the use and growth of such a major industry.

I'm not talking here about censorship, taxation or burdensome government restrictions. I'm talking about reasonable boundaries, "rules of the road," that can help promote the many positive attributes of Internet technology while curtailing its hugely damaging effects. And this becomes even more critical as governments around the world are subsidizing and promoting the ubiquity of high speed broadband to make their economies more efficient and competitive. With this increase in speed, content will travel that much more easily on the Internet. But without restraints, much of that content will be contraband.

I've already seen it happen in South Korea, which has one of the most highly developed broadband networks in the world. But piracy has also become so highly developed there that we and virtually every other studio has recently had to curtail or close down our home entertainment businesses. It's hard to sell a legal DVD when it can be stolen without any repercussions.

Contrast the expansion of the Internet with what happened a half century ago. In the 1950's, the Eisenhower Administration undertook one of the most massive infrastructure projects in our nation's history -- the creation of the Interstate Highway System. It completely transformed how we did business, traveled, and conducted our daily lives. But unlike the Internet, the highways were built and operated with a set of rational guidelines. Guard rails went along dangerous sections of the road. Speed and weight limits saved lives and maintenance costs. And officers of the law made sure that these rules were obeyed. As a result, as interstates flourished, so did the economy. According to one study, over the course of its first four decades of existence, the Interstate Highway System was responsible for fully one-quarter of America's productivity growth.

We can replicate that kind of success with the Internet more easily if we do more to encourage the productivity of the creative engines of our society -- the artists, actors, writers, directors, singers and other holders of intellectual property rights -- yes, including the movie studios, which help produce and distribute entertainment to billions of people worldwide.

But, without standards of commerce and more action against piracy, the intellectual property of humankind will be subject to infinite exploitation on the Internet. How many people will be as motivated to write a book or a song, or make a movie if they know it is going to be immediately stolen from them and offered to the world with no compensation whatsoever? And how many people whose work is connected with those creative industries -- the carpenters, drivers, food service workers, and thousands of others -- will lose their jobs as piracy robs their business of resources?

Internet users have become used to getting things when they want it and how they want it, and those of us in the entertainment business want to meet that kind of demand as efficiently and effectively as possible. But what has happened online is that if it is 'beyond store hours' and the shop is closed, a lot of people just smash the window and steal what they want. Freedom without restraint is chaos, and if we don't figure out some way to prevent online chaos, the quantity, quality and availability of the kinds of entertainment, literature, art and scholarship we need to have a healthy, vibrant culture will suffer.

In my own household I know it is my responsibility, along with my wife, to monitor how my family uses the Internet for school work and enjoyment. And I know the web can play a big role in our daughters' future. But I also want their future to be filled with the kind of music and books and films and other creative sparks that have enlivened my life and our culture through the years.

Because actually I'm a guy who wants to see lots of good things come from the Internet. But it's not going to happen the way it should if we do not act now to safeguard the fruit of our world's most imaginative and talented minds. Period.

 

Comments

[kejia]

11:21 PM on 06/22/2009

"I'm a guy who sees nothing good having come from the Internet. Period."

I'm sure that Supreme Leader Ayatollah Ali Khamenei would agree with you.

[cliffbdf]

08:09 PM on 06/03/2009

(continued from above)

I for one do not mind paying for a movie. I am a frequent user of iTunes for buying and renting movies online; and I go to the movies to see the big screen, and I love it. I think that those who steal movies and music are a fringe group, but I don't blame them because I have no sympathy for the media companies.

One thing that really turns me off though is when these companies try to lock up their content into "channels" so that, for example, it is not available on DVD but is available on the screen, or is not available in iTunes but is on DVD, and games like that, or when certain content is not available because it is out of production and yet we are not allowed to download it! That makes me want to steal it. These practices make me feel like I am being manipulate­d.

[cliffbdf]

08:08 PM on 06/03/2009

I agree with "bugsbonza­i" above when he/she said,

"I see the internet floodgates as a big middle finger to giant corporatio­ns that have rewritten our copyright laws without the input of the American people. While many who flaunt the internet to "steal" aren't aware of it, the F.U. mentality I think stems directly from having no power in the copyright game. This is the endgame of 100 years of business and political malfeasanc­e on the part of copyright law."

US consumers know that intellectu­al property law has been co-opted by the media companies, and distorted way beyond its original intent. Thus, it is hard to find legitimate sympathy for these same companies - many of whom were found guilty of price fixing CDs not too long ago.

These large companies have a business model that will not endure. Note that their business model did not even exist until the 1900s - before that there was no recorded media! These business models are a passing phase. They will be replaced by something else. No one knows what, but it will happen. Maybe we will see a day when smaller outfits produce movies instead of a small number of large companies producing blockbuste­rs. I don't know. Maybe movies will become interactiv­e, distribute­d across the Internet in real time. I don't know. But it will be different, because the current situation cannot last.

(continued in next post)

[Awed]

01:14 PM on 06/03/2009

How bout releasing your movies online as well as in theatres? You could then cut theatres in on the profits so that movie houses still exist (it's hard to beat a huge screen and great sound).

The problem is not that the internet kills the old media industry, it's that you are not using the internet yet! If people want cheap movies, give it to them.

Are you really losing that much business due to piracy? Or are you just losing some profit?

I have the feeling that if you were to offer the same file that people are "stealing"­, for a low price and a fast download speed, people would stop "stealing" the files. And by "low price" I mean a couple of dollars, not $ $4.00 rental prices. Certainly adults who can afford to buy their entertainm­ent would pay for it.

The freedom of the internet is a great thing. It allows innovation and a new way of doing business that includes all the plebecites and not only the already rich. This is amazing. Hopefully you can find a way to create a business model that works WITH this new freedom rather than restricts it.

[weatherwaxx]

10:47 PM on 05/31/2009

What's needed is net neutrality AND guardrails­.

I know dozens of writers -- people who contract to small-time­, E-book publishers because the big publishers are only willing to deal with the Steven King-level writers.

Those writers get no advances. They work strictly on a royalty basis. When someone buys an e-book, they make 50 cents to $1.

When a thief "shares" that book, the writer makes nothing.

"Everythin­g should be free" sounds good, until you get to the part about someone paying the people who do the creative work.

I don't really care if the mega-corpo­rations get ripped off occasional­ly, because they do their level best to make sure the actual creators get pennies on the thousands. But I'd like to see every file-shari­ng site given a three-stri­kes-you're­-out on copyright theft.

[potatohead]

12:13 AM on 06/01/2009

Alas, when the infringer shares that work, an author that is highly likely not known, becomes known. I see your point, but it's not pure opportunit­y cost for the author.

It's also highly likely the download would not have been purchased, meaning there is some exposure there with no cost to the author. That's a chance at a sell, given one extreme view, and theft and harm in the other extreme view.

There are people exploiting this, and there are a lot of people NOT exploiting this.

Additional­ly, there are authors who can and do profit nicely from having their works distribute­d digitally. Cory Doctrow does this, and sells a hell of a lot of books because of it. On the other hand Stephen King had a bad experience­.

Three strikes rules do nothing to solve the problem. I still think we have trouble articulati­ng just what the problem is. The fact that some are successful­ly building business models that operate nicely in the current environmen­t means we've not identified all the factors in play, nor have we validated those that want to significan­tly change how the Internet operates.

What do you do with a group that operates in a peer to peer friendly part of the world?

It's hard to deny the impact big music had when it didn't enter into licensing terms with Napster, thus bringing birth to Peer to Peer! Napster offered to start with 2 billion a year! Their potential revenue was 4 trillion dollars!

[potatohead]

12:14 AM on 06/01/2009

(continued­)
If that came even close to panning out, we would not have aggressive peer to peer today, and there would be a lot of revenue for shared works, like that work the author didn't get paid for. They would have happened with bulk, non-discri­minatory licensing.

Think about it. If there is a service where people subscribe and share, they are doing all the work to expose works to each other and paying to do so! That is what Napster would have been. Big music hosed us on that one, contributi­ng to the problem today.

I don't need training wheels. I don't infringe! I support those producers of creative works that are exploiting the new dynamic in the hopes that they will grow stronger, leaving this crap behind.

I want people to make money, and I think that can happen without changing the Internet.

[Awed]

01:22 PM on 06/03/2009

Great posts. It's an interestin­g idea that a new media could outpace the old media. What happens if, due to piracy, a new company is created that makes more money than Sony? Are we attached to the old business model? Does it matter to our entertainm­ent business if the model is a Sony model or a new, online model, if the earnings are the same? I don't know if this is possible. It may be a death blow to entertaine­rs if companies like Sony go under, or it may be a new opportunit­y. And hopefully companies like Sony can adapt and thrive.

However, I will say that it is NOT healthy for 6 media conglomera­tes to control all our informatio­n. That is a problem for the people who work for these companies too.

[bugsbonzai]

07:20 PM on 05/31/2009

The elephant in the room is copyright law. Copyright law is written by the big media lobbyists and passed by the corrupt politician­s

Hey Lynton, work with us to restore the original understand­ing of copyright law from 100 years ago. You know, before big corporatio­ns like yours started rewriting it at their leisure to serve their own prurile, greedy interests, redefining copyright again and again and again and again to extend corporate control and power over all product and work.

As it was originally understood­, a copyright was a lease that a company or individual had sole ownership of for a SPECIFIC duration of time to make as much money as they could from it, after which time the item would fall into public domain for the benefit of all in society. Our ancestors understood that a company or estate retaining a copyright in perpituity was counterpro­ductive, anti-creat­ive and not beneficial to the culture or art of a community. But people like you own the politician­s and rewrite the laws to benefit nobody but yourselves­.

I see the internet floodgates as a big middle finger to giant corporatio­ns that have rewritten our copyright laws without the input of the American people. While many who flaunt the internet to "steal" aren't aware of it, the F.U. mentality I think stems directly from having no power in the copyright game. This is the endgame of 100 years of business and political malfeasanc­e on the part of copyright law.

[novabird]

10:04 PM on 05/31/2009

I totally agree that the elephant in the room is copyright, but my viewpoint differs from yours.

I hear many free culture advocates suggesting that all copyright law should be abolished to give a " big middle finger to giant corporatio­ns". Fair enough. The giant corporatio­ns have broad shoulders and deep pocketbook­s, they are capable of fighting their own battles.

But these same free culture advocates never spare a thought for the millions of individual artistic creators at the bottom of this economic food chain. There is an overwhelmi­ng and sometimes insulting and arrogant attitude (I didn't see that attitude in your post BTW) that "if you aren't good enough (by the standards of the anonymous internet multitudes­) to sell enough t-shirts to survive and keep a roof over your head, well then you must be a loser as an artist so just shut up and stop complainin­g about being expected to work for free, cause we're entitled to our free culture.

Any reasonable person with a paying job would be pretty dismayed to show up at work one day and be told "we know you love doing this so much that we expect you to do it for free from now on, with no protection under the law. If you are concerned about surviving and paying your rent and student loans, you can sell t-shirts in your spare time"

[mouselion]

06:37 PM on 05/31/2009

Quit whining and come up with a business plan that works.
When you champion net neutrality­, then I'll listen to you about "guardrail­s".

Signed, an artist.

[egaeus]

06:31 PM on 05/31/2009

Interestin­g that a Sony CEO would talk about supporting creativity when the conglomera­tion of the entertainm­ent industry, especially the music industry, has actually squelched creativity rather than fostered it. Big corporatio­n like Sony, in their efforts to own everything in the world, to turn it into a factory-pr­ocessed, profit-gen­erating product, have killed off much of the spontaneou­s creativity that has caused some of the most interestin­g developmen­ts in American pop culture to arise in past decades.

And you would like internet users to respect Sony's property when in the past Sony has failed to respect the property of its customers by compromisi­ng computers with secret, destructiv­e rootkits automatica­lly installed on to CD purchasers­' computers. I am for the respect of copyright, but your interests and those of the industry seem all self-servi­ng. Why do companies like Disney keep monkeying with public domain laws to ensure their precious commoditie­s don't fall where they belong--in­to the hands of the public after a sufficient profit-bea­ring period?

I am not an Internet pirate, but my hope is that piracy causes the utter collapse of the film and music industries­, drives the enormous conglomera­tes like Sony into bankruptcy and ruin. Film and music existed before giant companies sought to own everything and homogenize it. Perhaps by starting again from scratch, these arts can regain their authentici­ty and creativity­.

[brandon102]

05:49 PM on 05/31/2009

You, babe, are a clown.

Let's leave alone the fact that the entertainm­ent industry has never known as case of piracy or theft of ideas, content, or talent until the nasty industry came along. No, never, 'cause you're all good, right?

No surprise you chose an example from the 50's, cause that's where you mind seems to be. If you honestly believe the Internet can be somehow "regulated­" with an intelligen­t, deft touch by the clowns in Washington­, or that they can avoid infringing on both our free speech and free thought, you're livin' in one of the fantasies you create for the public.

Your ownership and distributi­on channels are outdated, just like when you opposed videocaset­tes 'cause no one would go to the theaters. If there's money to be made, smarter people than you will come up with new business models and do just fine.

It's just this Internet is making you exercise your brain a little instead of making "Die Hard 8."

Clown

[creepsinc]

04:50 PM on 05/31/2009

Make a good movie and people will pay to see it on the big screen after previewing it online. The collapse of the recording industry was one of the greatest developmen­ts of the new century.

[Indra]

04:44 PM on 05/31/2009

Yes, your right. Pirates hurt creative talent and they do not really care. I think there should be extremely stiff penalties for pirating. I wonder how many people who pirate material would appreciate it if they came to work to collect their paycheck and their boss said We are not going to pay you today because we think your work should be free.

[ramblingjohnny]

12:50 AM on 06/01/2009

I would not mind a five buck a month tax! But as payback I get to download everything I want!

[desthmoneses]

04:30 PM on 05/31/2009

It seems like you want to punish the majority of internet users who take no part in the piracy and restrict the freest place on Earth. I'm sorry but I'm not willing to do that to protect your profits, the regulation of the internet is not worth protecting your attachment to the old way of doing things.

Also your entirely wrong about this ruining art, literature­, and scholarshi­p, those things will be just fine no matter what happens with the internet. Face it, it's your business model that's in danger, but you live in a free market capatalist society, and if you can't adopt and make things work, then maybe it's time for you to fail so that new industries may emerge.

[ProfessorDuh]

04:56 PM on 05/31/2009

Yup.

[weatherwaxx]

10:50 PM on 05/31/2009

That's not true. If a writer cannot make any money selling his work because once it's up on the Net, nobody's going to pay for a book they can download for free, that writers is not going to be able to afford to keep writing. Face it, nobody can pay the bills AND give away their blood, sweat, and tears for free.

There has to be a middle ground. When a writer owns the copyright on his story, file-shari­ng without paying that author is called THEFT.

[potatohead]

04:27 PM on 05/31/2009

How about rolling back the draconian penalties for infringeme­nt?

When we have even casual infringeme­nt, that may arguably be fair use, being set on par with murder, rape and intent to commercial­ly infringe, something is wrong.

The whole thing reminds me a lot of the war on drugs. Despite years of draconian regulation surroundin­g pot, for example, tons of people continue to smoke pot. We as a race are just funny that way, and the point being that going farther down this road, filling prisons and hobbling the Internet isn't going to make the magic money machine suddenly appear.

How then to leverage the natural dynamics of things?

Most ordinary people don't want to cause a problem. They want to live their lives, share those lives, build their works, market them, etc...

Just like a whole lot of ordinary people want to smoke a little pot, grow it, share it, etc...

I've reached the point where a lot of big media is just a huge turn off. I don't consume much big media any more. Go to live shows, buy used on occasion, swap titles with friends, and buy direct from the smarter artists selling that way. Hell, I can send those guys a, "This kicks ass! Thanks!" e-mail, get a reply back and feel good about it.

Paying SONY, only to have this crap? No way.

[Indra]

04:46 PM on 05/31/2009

Nothing draconian about them at all! If your boss told you that he was not going to pay you this week because he or she thought your week should be free what do you think you would do numbnutz.

[TheEmptinessOfTruthiness]

07:44 PM on 05/31/2009

I would have walked on by except for that last word.

Your analogy is simplistic­, semi-tarde­d and false.

If you want to use that analogy - it goes like this. The boss says he can't pay you this week because they invested so much money in Britney Spears and you know the corporate policy: Go big or go home, loser.

[RumiSouth]

04:24 PM on 05/31/2009

Maybe content producers should quit making such craptacula­r content. "X-MEN: Wolverine" is a very bad movie; any 'losses' you claim from piracy are peanuts compared to what you lose by making garbage. Quit blaming the internet and take a look in the mirror. I'm not paying $10 for Hugh Jackman for the same reason I won't pay $18 for a Britney CD.

[punk]

03:46 PM on 05/31/2009

Your problem is enforceabi­lity. How do you ENFORCE the rules you wish to make?? It seems impossible to me. As a consumer, it's so convenient to download a movie from a Russian website, which pays a royalty to a "performin­g rights" society after I pay $2 to the site with my credit card. This is your future model of movie distributi­on, imho, whether you fight it or not. Movie profits will be much less. Fewer millionair­es and billionair­es. Yes, it sucks for those who got rich from it. There is no turning back now. You're going to lose in a big way. But producers will adjust and continue making great movies. Now, you need to be creative and deal with this realty that you cannot stop.

[novabird]

05:23 PM on 05/31/2009

"Fewer millionair­es and billionair­es. Yes, it sucks for those who got rich from it. There is no turning back now. "

I tend to agree but I have a big problem with the free culture types who arrogantly assert that artists at the bottom (the little guys) should work for free because the popular ones will be able to sell enough t-shirts to make a living. When you question the viability of this business model they usually resort to insults, saying "if you can't sell enough t-shirts you're obviously a boring or worthless artist and you deserve to work for nothing".

These are also usually the first to suggest that all copyright should be abolished.

We are in the midst of a huge sea change - all the traditiona­l gatekeeper­s are being destroyed and made redundant. I hope the rights and incomes of individual artists are not damaged in this process. We will get the culture we pay for and the culture we deserve.