The Fake Digital Britain Report

From Write to Reply

Digital Content

The Economics of Digital Content

(I would love someone to write this section bearing in mind the following points.)

Since the industrial revolution, Britain has lived in an inflationary economy; governed by both the laws of supply and demand - and that of a finite level of resource.

In the past, someone would buy a product, and the more exclusive the product, the higher a price it would fetch. However, with digital content, that aspect of distribution is lost, as it becomes a non-zero-sum market. (Game Theory). The only way to stay on top of this market is to keep fluid and constantly release new material or new ideas from this material. Trying to apply rules from a zero-sum economy (that of industry and manufacturing) will only cause the non-zero-economy to grow as a black market, which is what was seen with digital music - and as bandwidth increases - digital films.

From an economic perspective, the copyright system was the traditional regulatory mechanism aiming to find the optimal balance between generating incentives for creators and facilitating subsequent widespread access to creative works.

Corrigan and Rogers (The Economics of Copyright, World Economics, Vol 6, No.3, 2005) note that:

"Awarding a copyright provides creators and their agents with monopoly power to exploit the work. The extent and duration of the monopoly will depend on the specifics of copyright law and the enforcement of this law. Monopoly power means that the price of the work will be higher, output (sales) will be lower, and profits higher than in a competitive market. From a basic economic viewpoint, it is these higher profits that provide the incentive to undertake creative activity. Thinking of profits as the sole incentive is somewhat crude. In particular, it is important to make the distinction between the creator per se (e.g. the writer) and the agents, or companies, that embed the creative work in a product available to consumers (e.g. a publisher). Creators may be less responsive to economic incentives than agents, although they may well be interested in the recognition that copyright fosters. The downside to awarding monopoly power is well known. The higher price, and the lower output (sales), of the copyright-protected work reduces access by consumers. Looked at in a static sense, the high price and low output set by the monopolist leads to a welfare loss to society (i.e. overall welfare, or net benefit, to society is lower than if the price were lower and output higher, as in a competitive market). Of course, the entire point of copyright is not to look at the situation in an isolated, static sense; but rather to balance the increased creative activity (a dynamic gain) against the static loss due to higher prices. There is, therefore, an unavoidable trade-off at the centre of copyright. If copyright protection is too strong, incentives to creators are likely to be high, but access to the work is low. In such a case, society may be worse off since many people cannot afford to access creative work. To be more precise, an economist would stress that ‘access’ to the work is suboptimal since the additional cost of allowing greater access to the (already created) work is very low. Some people refer to this as the social loss of creative work not being in the public domain. On the other hand, if there were too little copyright protection it is possible that very little creative work would be available, hence society suffers (even though the limited creative work available is accessible to all). Note that the absence of, or weakness in, copyright protection may have a large impact on the profits available to creators and agents since, in many cases, the ability of competitors to copy the existing work at low cost may dramatically reduce prices in the market. This trade-off between encouraging creative activity, and accessibility to the work that is created, is the basic problem facing the design of a copyright system."

They go on to explore the complexities underlying these basic incentive and distributive functions of copyright law and the three generic types of stakeholders whose interests need to be considered if the law is to provide appropriate economic balance. There are three main parties with a stake in the copyright pie:

• Creators

• Agents (the term is used in the economic sense here to cover all the commercial entities involved in the copyright arena e.g. music, film, software, media companies, publishers etc.)

• And the general public (or consumers)

We can take a theoretical stab at how the state of the copyright system – depending on, for example term, scope, penalties, case law, enforcement – will affect each of our stakeholder groups. And as Corrigan & Rogers further explain, the optimum system is different for each group but for it to work the interests of all three groups must be catered for. So immediately we see the need for compromise. Strong copyright might raise economic incentives to create and commercialise, for creators and agents, but it may restrict public access and the access of creators to build on the work of earlier creators. Weak copyright lowers economic incentives for creators and agents but consumers and second generation creators have greater access and freedoms. So there always have to be trade offs for the system to work, since theoretically

Optimal copyright for agents > Optimal copyright for Creators > Optimal copyright for consumers

(Possibly). And the “best” copyright system, at least from an economic perspective, is one where the weighted sum of the benefits to creators, agents and the public is maximised.

The problem is that there is very little empirical evidence available on copyright and intellectual property policymaking more generally and the coming of the Internet and the World Wide Web fundamentally changed the dynamics and the structure of the economics of creative content.

The copyright system very quickly became, as numerous scholars like Lawrence Lessig, James Boyle, Yochai Benkler, William Fisher, Lionel Bentley, Jessica Litman, Pamela Smauelson and David Post say, ill-suited for the digital age. (See for example The Public Domain by James Boyle, In Search of Jefferson's Moose: Notes on the State of Cyberspace by David Post, The Future of Ideas by Lawrence Lessig). The response has been largely to attempt to increase the scope and term and penalties associated with copyright infringement.

Yet the same old copyright just bigger and tougher really doesn't scale and to understand why it's worth considering a mashup video done by a teenager and posted on Youtube. Suppose the mythical teen has mixed an Obama speech with a Prince song and a variety of clips from Disney and Warner Brothers movies and run it all through Microsoft's Songsmith to generate a background track. It takes him 20 minutes. He's created a new work but almost certainly infringed the copyright in multiple other works. Yet if he had to consult a copyright lawyer to check whether what he had done was legit and who he should pay royalties to before posting to Youtube, the bill for the lawyer's time in genuinely untangling all the rights and issues and royalties and permissions would be astronomical; and the teenager would almost certainly be refused permission by one or more of the original rights owners to distribute his creative work. So in the new world,

20 minutes creative effort + search for lawyer + hours of intensive lawyerly work + big bill = zero

So where did the incentive to create function of copyright disappear to? Well for the teenager it's turned into a disincentive. For some existing rightsholders the economic protection for existing works theoretically increases (though in practice there is still widespread unauthorised copying on the net). And for consumers (a category which overlaps with creative re-users like our teenager) the cost of access to creative works theoretically increases. Ironically this gives our average honest consumer a theoretical economic incentive to engage in illicit file sharing - something they might not previously have considered.

looking at our three sets of stakeholders then,

• Creators

• Agents (the term is used in the economic sense here to cover all the commercial entities involved in the copyright arena e.g. music, film, software, media companies, publishers etc.)

• And the general public (or consumers)

we begin to undertand that not only do these groups overlap but they have complex ecoologies all of their own where different types of creators, for example, have different kinds of interests; and the 'more of the same just bigger, stronger and tougher approach' to copyright laws theoretically favour certain kinds of creators and certain kinds of agents; whilst (again theoretically) acting against some other kinds of creators, some other agents and the general public. The result is we get a few winners which comes at the expense of most [a majority] of the other stakeholders. The EU Commission, for example, has published a study suggesting that the main benficiaries of an extension of copyright term in sound recordings would be music labels (agents) and the top 20% of earners amongst creative artists.

So perhaps we need to look at new models for encouraging investment in digital content.

Investment in Content: Rights and Distribution

Investment in Content: Original UK Content

Universal Connectivity

It is essential that every home in the country should have a default amount of connectivity to access services and as much additional as they desire and choose to pay for. To accomplish this we are going to employ all the tradespeople currently on the dole, and we are gonna fibre this country. This will mean we will lead the world instead of being a spectator.

Driving Universal Connectivity: Take-up

Take up needn't be driven, if you build houses then people will come, so our philosophy is that we light fibre everywhere and people will use it and innovation will thrive once more. Then they will all vote for us online. We will Promise little and do much." ~Hebrew Proverb

Equipping Everyone to Benefit from Digital Britain

Online tutorials are great, and once you know how to google you can find out virtually anything you need to know. Give a person a decent connection and the world is their classroom. Currently rural connections are not good enough for even basic surfing most of the time, in some cases connection is non-existent. Therefore government priority will be given to making sure everyone has access to our digital britain fat pipe. Once they have that then we shall see they have no need for us to help them further, they will be able to find everything they need online, thus saving themselves time, effort and money, and reducing their carbon footprint whilst educating and enlightening them. We were thinking along the lines of telling them to get satellite (expensive to them) or settling for a mobile connection, but we realised if we want everyone to benefit then lighting fibre to them is the only sensible solution. It also happens to be cheaper than keep patching up our obsolete copper network which has served us well for so long. Without it we wouldn't have had first generation broadband.

Education and Skills

It is important to provide education opportunities for everyone in order for the country to benefit from the potential benefits of the available technology. Ideally, this should be free at point of service to anyone who wishes to improve their digital literacy.

In order to support continued growth in the available skill set, it is recommended that the Government support the creation of a federated ePortfolio system with a fine grained permissions system coupled with a competency framework. The competency framework should allow industry to create profiles of the skills they need from their employees, and the ePortfolio system should allow for individual's evidence of skills to be correlated with these profiles.

It is suggested that such a system should also produce a route-planner to help the individual plan which areas they need to work on improving to meet the needs of a profile for a job they would like to be able to take on. Whilst such a system can only supplement the informed choices made on the basis of experience and advice from tutors, it would provide additional guidance to the individual. Similarly, anonymised aggregate data on the ePortfolios of the population should then be available to course providers to help with the design of courses tailored to meet the needs of the learners.

It's important to stress that a federated system is not the same as a centralised system - ultimately the control over what is presented will be in the hands of the individual and possibly even hosted from their own hardware in their own home - however the federation aspect comes in to make assertions such as "I got a Masters in archaeology from the University of Polypoppleton" to which the University in question responds with a big YES or NO in the form of a digitally signed certificate. This in turn would have corresponding records regarding skills frameworks and so forth.

One of the magical things about Britain however is the fact that employment markets are more flexible than many other European member states as to what you can and can't do with a given qualification. Or what you can do with no qualifications but a whole bunch of experience. This must persist but really the ultimate goal is that we'd like to see people doing things that they enjoy as well as are capable of achieving.

The evidence based approach of an ePortfolio provides a trust based mechanism for providing this - not only can chartered institutions indicate that they have awarded a certificate for a certain level of achievement, but previous employers, colleagues and others can authenticate the individual's claims. If you trust an authenticating individual to provide an unbiased view, the authentication provides you, as a 'consumer' of the ePortfolio, with evidence of the ePortolio owner's ability.

It would be useful if this report considered alternative conceptions of the knowledge economy and then selected one or a mix of them and put that forward as an organizing conception. Much of rhetoric of the knowledge economy in the mainstream publications of the public media doesn't go deep enough. For example, using platitudes about change rather than describing specific changes that have happened and specifying anticipated future specific changes. In general this public discourse has been stuck at the stage of trying to communicate that change is occurring, but provides little guidance for individuals in how change is occurring. Specifically, there is insufficient guidance in this rhetoric for individuals to plan their education and life in line with the changing digital economy.

On-line employment and enterprise

No discussion of digital infrastructure would be complete without ensuring that it is fit for business use. Although as of 2009 there is only a theoretical model Treemsfor how to restructure enterprises for remote electronic working (rew) this is bound to change so that a significant number of people will be conducting business requiring team collaboration from home or as a small business unit performing specialist functions for a larger network. Email is not enough! Effective team working requires good human-to-human interfaces. In short, in this context, this means video conferencing for half a dozen people at a time. (This also applies to some styles of effective teaching.) To this end there should be:

(VC6) a minimum local-loop capacity of 1 out and 5 in video channels with spare for ancillary communications
(VC8) a preferred local-loop capacity of 2 out and 6 in video channels with spare for ancillary communications

Media Literacy

Of equal importance to the basic digital literacy skills is the awareness of Digital Identity. The HE and FE sectors are increasingly aware of this, and there are a number of projects actively engaged in improving the awareness of learners and staff in these sectors.

There are many issues which the individual should be aware of, including finding a balance between the need to promote ones own skills and abilities against the need to be able to retain a level of privacy and to be able to provide a view which shows how one fits in to a team. People occupy many roles in life, and whilst there is an overhead involved in maintaining multiple 'facets' of ones personality online, there appears to be an increasing trend to want to keep personal, educational and professional aspects separate from one another.

It is suggested that alongside basic digital literacy skills, material providing education on creating and maintaining personal profiles which will support the individual's growth and development over their lifetime be made available to all. The country will benefit by providing the population with the skills to both present themselves well and prevent themselves from damage to their online reputations. Not only will individuals in the population be more 'marketable' but the risks of cyber-crime against them will be diminished.

Online Safeguards

The Environment

With 100 million analogue radios being made redundant, there needs to be an initiative to assess the environmental impact of Digital Britain.

Conclusion

Glossary

Internet: A global "network of networks" which communicate with one another using a variety of protocols, but primarily IPv4 ("Internet Protocol, version 4"). The Internet is used to transport the information for a vast range of applications, the most well known of which are probably the World Wide Web and E-mail. The Internet started life in the 1960s, but commercial ISPs didn't exist until the late 1980s. Prior to its commercialisation, the Internet was mainly used by educational and military establishments to exchange research information with one another.
World Wide Web (or just "the Web"): Invented in 1992 by Sir Tim Berners-Lee, the World Wide Web the name given to servers connected to the Internet which communicate using HTTP or HyperText Transfer Protocol and HTTPS, the "secure" variant thereof. The Web generally operates in a straightforward client/server fashion, where a user agent (which may be a robot or a web browser) requests "resources"—often Web pages—from servers, and those servers respond with the requested resource if it is available. Web pages are usually written in some form of HTML, which was also initially created by Sir Tim Berners-Lee, but is now maintained by the W3C.
The Interweb: These two terms (Internet and Web) have become somewhat confused in popular parlance, verging on synonymous despite being technically distinct. This is in turn muddied in terms of user experience as for example video delivered over the BBC iPlayer through the web is not strictly web video as it employs other peer-to-peer technologies to deliver the data to the end user. While the web itself is a major component it's very very important to realise that the Internet is not just Port 80 and that applications exist and will continue to be developed that operate on the base infrastructure in other ways.

JFDI: Just Feckin Do It instead of talking about it we intend to get on with it ASAP ASAP: As Soon As Possible. ROFL: Rolling On Floor Laughing