Can unfit copyright laws favour businesses' growth and emergence of new services?

Surely thinking about (bad)
copyright and innovation:
Katfriend, photographer and copyright owner
Douglas McCarthy's Pushkina

After a week in Shanghai, this Kat is back on the blogosphere with a question which has been haunting her for the past few days, even more than jet-lag or the conclusion of season 5 of Mad Men (which she could enjoy in its entirety while on the plane back to London).

The obsessive (well, sort of) question has arisen following a bit of reflection on the (quite trite) universally acknowledged wisdom that good copyright laws might favour innovation and growth. But can the contrary also be true? In other words, can there be innovative (and lawful) services which develop or even emerge thanks to unsatisfactory legal solutions?

Surely this question has been addressed already, but two recent examples might be also employed to respond 'yes' to this Hamlet dilemma.

 

Netlifx as producer and provider

The first example might be that of Netflix, the popular provider of on-demand internet streaming media currently available to North and South America, the Caribbean  UK, Ireland, and Scandinavian countries.

It is estimated that on a normal week night, Netflix accounts for almost a third of all internet traffic entering North American homes [the remaining two-thirds being directed to IP blogs].

As both Kevin Spacey's fans and Bloomberg Businessweek readers will know, Netflix has recently decided to act not just as a provider of third parties' licensed contents, but also as a provider of self-produced contents, the first being the political thriller House of Cards, starring American Beauty's lead actor.

According to The Hollywood Reporter, House of Cards has bowed to near-unanimous praise, with many heralding the streaming service as a legitimate rival to premium cable outlets HBO and Showtime.  

Netflix's plan is to continue producing original works and stream them directly. Besides considerations as to the progressively and rapidly dissolving identity of providers as ... well ... just providers, it was particularly interesting to read Bloomberg Businessweek's analysis on the future relationship between Hollywood studios and Netflix (and similar services). According to the magazine, 

 

"[There is] concern ... that the studios will stop licensing content now that Netflix is in the originals business. Hollywood is right to remain wary of letting any single entity get too powerful. As Netflix expands overseas, it intends to strike worldwide licensing deals instead of hammering them out country-by-country. From a studio perspective, that could give Netflix the ability to come up with lucrative terms that no regional competitor could match."

 

From an EU perspective, it has become quite common - and sometimes even rather un-original - to say that copyright licensing should be made easier across the EU, possibly by establishing an EU-wide licensing system which could (to some extent) adjust the territoriality principle to the digital age. Last year the Commission issued a proposal for a directive on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online uses in the internal market, and a few months ago the "Licences for Europe" initiative was launched.

 

However, while some private actors have entered partnerships to create a de facto system of multi-territory licensing (eg online music licensing hub Armonia, on which see Katpost here), at the EU level there is still no system of multi-territory or pan-European licensing in place.

 

So, if the concerns raised by Bloomberg Businessweek translated to reality, in Europe at least this could be also because of the lack of a default legislative framework allowing pan-European licensing.

There is no need to say, suggests Merpel, that in any case quality, availability and price of an entertainment product remain the most important things to determine its commercial success.

Amazon's Kindle Worlds

 

The second example comes from Amazon and its new publishing model Kindle Worlds.

 

This is basically intended to boost and make money from fan fiction. It is well known that the relationship between copyright and works which build upon previous original ones has not always been idyllic.

 

As explained by Forbes, Kindle Worlds will let "would-be writers publish, and profit from, fan-fictional e-books with the blessing of the original characters’ creators, who will receive royalties from every sale."

 

The revenue split is considerably less generous than that enjoyed by authors who use their own characters.

 

Kindle Worlds  has already signed licences with franchises owned by Warner Bros and plans to get new ones soon. It is apparent that Kindle Worlds has the potential to be quite a lucrative business (at least for Amazon), in that fan-fiction has become increasingly popular and, in some cases, hugely successful (eg Fifty Shades trilogy, even if the terms of Kindle Worlds prohibit pornographic or extremely sexual fan fiction).

Overall, the examples above might serve to highlight that sometimes innovative services are provided and have the potential to develop also because competitors might be left behind struggling with the constraints of outdated copyright laws, or the law itself and its application are so uncear and unpredictable (eg fan fiction and copyright exceptions) that specific contractual arrangements might appear the most sensible (if not only) form of clarification.