How to fix the broken internet economy: START HERE
Tech and copyright – it's time to work together
It's like building a rocket to nowhere
Recently we've seen the first fruit of Google's investment in consumer electronics. But Google has decided not to challenge the stalwarts of the television industry with any new creative material or any new way of enjoying that content. The Google TV takes £300 out of your pocket but doesn't give you anything you can't find on your laptop... and you still need a television. The Nexus 7, a tablet computer, doesn't have anything worth watching either.
And if that's odd – meet the Google Nexus Q. It's a beautifully futuristic sphere-shaped media streamer that only plays Google media, through Google services, and what's kicking about on the "open web". Like YouTube! In essence, the Nexus is a kind of DRM dongle for content that doesn't have DRM, and will never need DRM, because it's worthless and will never need "protecting".
So Google has designed a range of products around a broken supply chain.
Google's Nexus Q
This is rather like Google designing an affordable household rocket that doesn't go any faster than a bike nor any further than your cornershop. What on Earth is the point of building a rocket to do that? Answer: there isn't one.
If the copyright industries are timid about using technology, and engineer themselves around it, then here's the most-lauded technology company on the planet just as timid about using creativity. Cosy entertainment arrangements are not being challenged here (the faddish buzzword is "disrupted") as they historically have been by waves of technology.
What tech companies ought to be doing is offering a helping hand to people who can better represent creative talent. Where, for example, is the internet's alternative to satellite and cable? There is nothing intrinsic to first-run movies and the world's most popular football offering, the English Premier League, that should make them a staple of Sky's schedules now and forever. The exclusive rights to broadcast these will go to whoever puts the most cash on the table. Verizon, with its fibre broadband network, looks like a bet and it has disrupted cable, but it's an exception rather than rule.
So while most people are familiar with "music business fails to innovate" headlines, the boot's now on the other foot. Google has the cash but not the desire to innovate, and instead designs for breakage.
The Unicorn enters the picture
I'd promised the Unicorn would make an appearance, and no attempt to describe the stand-off can give a faithful representation without it.
The Unicorn is the naive hope that something, somehow, will turn up. The Unicorn stamps its hoof on the Guardian's business strategy, and embosses hyper-local journalism business plans. The Unicorn does a little dance when someone insists you can have a market without property rights being enforced. And the Unicorn clops its hooves approvingly whenever people muse about "business models" but ignore the continental-scale misalignments between the industries we've seen in the preceding examples.
And whenever people ignore that vast gap between potential market value and the amount of money actually entering the internet economy – the Unicorn throws a party.
Needless to say, Unicorns are frequently seen flying over Shoreditch.
We bet the future on this creature – but it ran away
After 20 years of pretending the internet economy is some fragile newborn, let's be honest about the sheer size of the failure that's upon us. The markets are either sickly or don't exist, and an enormous amount of money that should be flowing both to innovative internet companies and creative industries isn't.
Essentially it's a world where cash doesn't willingly change hands in anything like the quantity it should. Piracy plays its part, but it surely can't be the entire picture: only a third of internet users infringe copyright.
While you have to sympathise with legitimate businesses operating in an environment where punters can wander into the illicit shop next door, without fear of sanction, what about the two-thirds of broadband users who simply aren't putting their hands in their pockets? Where's the strategy to extract our cash and leave us happy?
It's not as if the public propensity to pay for creative goods has suddenly ceased – but it's platforms such as Sky that are the beneficiaries, rather than hopeless klutzes of the internet economy. Apple has created content markets and demonstrated how much economic growth comes from making copyrightable stuff enjoyable. Apple certainly shows the way, in contrast to Google's advertising-based stagnation.
But Apple's markets aren't true competitive markets - they only work on Apple's gear and on Apple's terms.
The misalignments are now so great that the internet giants now see more gain from keeping the internet economy small, rather than growing it. Management consultancy McKinsey puts consumer surplus of internet services - the amount of money that we'd theoretically be happy to pay to use Flickr, GMail and the like - at €100bn a year. Google and Facebook see more short-term gain from being big fish in a small pond, rather than even bigger fish in a much bigger pond.
Quite simply, today, a Google (well, the Google) knows it can profit from other people's (expensive) stuff by flouting the old rules... and knows it can get away with it.
The Number 10-commissioned Hargreaves Independent Review of IP and Growth – aka the Google Review – was scornful of copyright industry "lobbynomics". But that's a partial picture. A technology company today can schmooze politicians and their advisors, create astroturf groups by the score, and even conjure up entirely phoney new industrial sectors (cf the nontrepreneur [n]). It has professors in its pocket. (A small note on Carrier's report acknowledges: "This project received funding from Google.")
Some of you may remember when The Victoria and Albert Museum marketed itself as "an ace caff [cafe] with nice museum attached". Well, Google today appears to be a sophisticated global lobbying network with a legacy advertising business attached. It has become obsessed with moving the goalposts rather than innovation. Its motto could be "Think Small!"
Google has, in fact, become a bizarre mirror of the music industry.
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