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The 'Digital Economy' in 2012: A big noisy hole where money should be

No free lunches here - unless you're Zuck or Google

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Thank the Zuck! We should all remember Mark Zuckerberg as we sing Auld Lang Syne this year. Facebook's photographic landgrab via its freshly acquired Instagram service has helped put some vital perspective onto 2012 - bringing home issues that were abstract or buried by political posturing.

What Facebook is doing is merely what Google wants to enact in legislation, and which its "citizens groups" lobby for so hard behind the scenes: a massive value transfer from individuals to large internet companies. Care about your digital rights? Too bad - while you were fretting about the internet "breaking", your rights were disappearing.

The notion that the digital economy is a battleground between "Big Content" (large, overseas corporations) and a "Free Internet" (plucky, empowering, small internet startups like, er … Facebook and Google) dates from the dayglo WiReD magazine era of the early 1990s. Today, it looks very much like a cranky conspiracy theory. The facts point to a much less palatable truth.

It's actually individuals whose rights are being eroded, along with their freedom to take their creativity to a digital marketplace - and it's individuals who are being punished. In the Brave New World that Google, Facebook and some of our bureaucrats and academics envisage, value can only be accrued by internet companies - not by those who create the content the internet giants use to put their advertising by. All a creator can hope for is winning the Banana Republic lottery - a few Likes. And as the digital economy fails to replicate the wealth creation of the real economy, internet companies become ever more desperate. Which means the cost of participation for individuals gets higher each year, in terms of privacy and creator's rights.

The big digital economy stories of 2012 were the rejection of SOPA in the US and ACTA in Europe, and any working agreements at the ITU in December. ACTA had already been gutted of its digital copyright provisions - its rejection was symbolic, a piece of posturing by European MPs. SOPA was a clumsy piece of legislation that had sailed serenely through Congress over Christmas 2011, before exploding as a public issue in January.

The ACTA protests were undoubtedly sincere. Who wouldn't be alarmed if they thought the internet was about to close down? Wouldn't you want to take the streets, too?

A farm produce certification agency in Scotland called SOPA received dozens of furious emails - under the mistaken impression it must have something to do with the US copyright legislation.

Many of the arguments against SOPA were phoney scaremongering, as even Ars Technica had to point out. Anonymous produced a video claiming that a married couple couldn't share a chicken recipe over the internet. Out came the freaks.

Politicians were terrified by the response, and even Google and the tech lobby, which had spent as much in DC opposing the legislation as Hollywood and the creative industries had spent pushing SOPA, realised that the hysteria may ultimately be counter productive. Google has many agendas and it can't rely on the lynch mob every time it needs Congressional support for a piece of legislation.

"I don't see it as good against evil, either; I don't think Google is evil, it's just a big company trying to screw up other big companies - just like other big companies are trying to screw them," author Rob Levine summed up for us in an interview.

(The US voluntary agreement thrashed out between content industries and America's biggest ISPs - which saves legislators passing enforcement laws - is sure to get lots of attention in 2013. There may be false positives and appeals - but the world won't end.)

ACTA would criminalise telling your wife a chicken recipe - according to this Anonymous video

Levine's perspective - of thinking of copyright in three dimensions - is also a useful one. Copyright may be too long, and it may be too broad, and apply to too many things - these are valid arguments to have. But can't be called too strong. To all intents and purposes copyright enforcement doesn't really exist on the internet. There is no cheap, effective access to justice for the photographer dad whose picture of his kid has been copied and defaced, nor for a struggling indie label with no large legal department. And when rights are not enforced, they don't mean anything.

Yet the intellectual battle is over. Copyright is universally acknowledged as both an expression of the individual (the French idea) and a property right - it's your stuff. You have to be able to say how it's used - something everyone knows now, after the Facebook landgrab. As David Lowery pointed out in this interview, disallowing creators from exercising their rights over their work merely screws the smallest creatures in the food chain.

"Really only the biggest players benefit - the richest, most powerful players benefit. Small stakeholders can't really compete when the market's like that," he pointed out. There will be no replacement for copyright, so what we have has to work for everyone - technology companies as well as individuals.

The most interesting development of the year was how the value of the individual is being rediscovered. In Nick Harkaway's book, he points out that individual privacy rights - the ability to own your own data, or "habeas data" as it's been called - and individual property rights are one and the same. We need "an internet that forgets" and an internet where value is returned to the creator. Both require the same thing: individual ownership to be defended and asserted.

Just as a songwriter can assign the composition to a publisher, or sync rights to a movie, so you should be able to own all your data trails and assign them, for limited purposes, to the state or a corporation. The individual should be at the apex.

Yet both are being eroded by a soggy collectivism, taken away from us in the name of the "greater good". Only the upstream distributors (the Googles and BTs) benefit from such an arrangement. It was a significant development this year that privacy campaigners and creator's rights groups were reading off the same page.

The threat to the sovereignty of the individual now comes from academics and bureaucrats. Parliamentarians spent much of the year studying the radical, activist department of Whitehall called the IPO, the Intellectual Property Office - formerly the Patent Office, which has been behind a succession of moves to strip the individual of his or her rights. The MPs and Lords stopped short of calling for the IPO to be disbanded, but reminded the bureaucrats that copyright is a property right - not a regulatory impediment to some imaginary digital Utopia.

The IPO responded by placing a permanent extension of its powers onto the Coalition's Business and Enterprise Regulatory Reform Bill (BERR) and seeking, in effect, to "do a Zuckerberg" by statute. Millions of unidentified works, without metadata, would be swept into schemes where they could be commercially exploited without the knowledge of their owner. It's the only scheme in the world which proposes to allow third parties to rip off the creator for profit. The UK faces a "firestorm" of litigation from overseas, US creators have warned. And expect to see some real fireworks as the Bill moves into report stage.

(Note that China is beefing up its IP - the winner of the new economic wars will be the nation that can best protect and exploit its inventiveness).

Why has Britain been blessed with such a barmy bureaucratic class? They're undoubtedly sincere in thinking the public would benefit from removing rights from creators. But we could abolish copyright entirely overnight and have an orgy of consumption - only to wake up from the Remixing Party with a headache, discover the creative industries have upped sticks and moved abroad (easier to do than you might think), at a huge cost to future growth and economic opportunities.

Politicians don't really understand the potential damage, and won't really appreciate the dangers, until UK businesses decide they need to move outside the UK to protect their work.

"People who support stripping rights as a punishment for somebody's past sins need to come up with something that rewards people better, and so far they've completely failed to do that," pointed out Levine.

Facebook is quite right correct when it says it needs to monetize Instagram, and that services cost money. But Facebook, like Google, is a prisoner of its business ineptness. There simply isn't enough money coming into the system to reward everyone fairly. Much of the phoney "copyright war" - in which there's plenty of blame to go around - evades this reality. If more money came into the system, the incentives would drive greater innovation. Until the Internet loosens its users' wallets in the way a service like Sky can, it's a busted flush. A lot needs to change. I outlined a few ideas here - perhaps you can add a few more.

Whatever the motives for the landgrabs proposed by Zuckerberg and the UK's IPO - childishness, immaturity, cynicism - they're assaults on the rights of the individual, and feel very alien. The revulsion against both is best expressed in my particular pick for 'Quote of the Year', from way back in April.

"Privacy and copyright are two things nobody cares about," Mark Bide told us, "unless it's their own privacy, and their own copyright." How true. ®

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