Category: Marketing/Business

The Copyright Clause of the United States Constitution states that Congress shall have the authority to “promote the Progress of Science and useful Arts”, and it specifies how Congress shall do so: “by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” See my article on what an indie needs to know about copyright for a primer on the topic.

Copyright, trademark, and patent laws were created to provide the latter in the hopes that it encourages the former. While anecdotal claims have been around for some time which insist that patents are stifling innovation, especially in the realm of software development, the prevailing view is that patents are good for innovation. Of course, that claim is also anecdotal.

Dr. Andrew W. Torrance and Dr. Bill Tomlinson simulated different types of patent systems, using PatentSim, which sounds like an MMO based around owning and utilizing patents. Based on their simulations, using different patent models, they found that the data “suggest that a system combining patent and open source protection for inventions (that is, similar to modern patent systems) generates significantly lower rates of innovation (p<0.05), productivity (p<0.001), and societal utility (p<0.002) than does a commons system.”

Read about the study at Patents and the Regress of Useful Arts.

Changing the US Patent system is tough, especially since so many businesses exist with an interest in keeping the status quo, but if promoting the useful arts and sciences can be more effective by NOT continuing with current practices, it sounds like “securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries” was an erroneous assumption on the part of the Founding Fathers.

Thanks to Scott Macmillan of Macguffin Games, I learned about an article by Cory Doctorow called Digital Licensing: Do It Yourself.

Doctorow suggests a fascinating idea: self-service licensing. Let’s say you create a game, and someone wants to create plush toys of the characters and sell them online. Technically, it’s illegal unless they get your permission. Disney, for instance, would want you to negotiate an agreement with their expensive lawyers…which requires you to hire your own expensive lawyer. Unless you’re a huge manufacturer and intend to sell to hundreds of thousands of customers, it’s not worth the expense and effort.

But you’re an indie. You don’t have an army of lawyers on staff. Your staff might consist of just you, in fact. So if someone wanted to make a plush toy out of your video game characters, and you had no problem with people doing so, even for commercial gain, but wanted to make sure you were protected, what could you do?

Your options used to be sticking your head in the sand, risking the dilution of your trademark, giving permission but worrying about what legal rights you might accidentally give away, or preventing people from making what are essentially derivative works without your consent. But why not just give them consent? After all, it isn’t your core business, and they’re taking all the risk. Wouldn’t it be nice if you could make an agreement with them without having to negotiate over the course of weeks or months?

Doctorow suggests some general wording that covers your obligations to your own trademarks and rights while also allowing others to understand what they can and cannot do and how you expect to be paid from their profiting off of your works.

The key part is simplicity:

Complexity is your enemy here. Two or three sentences are all you want, so that the idea can be absorbed in 10 seconds by a maker at three in the morning just as she embarks on an inspired quest to sculpt a 3D version from your logo using flattened pop-cans.

The secret to simplicity here is in the license fee, the payment schedule, and the enforcement regime.

What’s exciting is that such simplified, self-service licensing opens up potentially multiple market research opportunities! Someone can make plush toys and determine if they sell well WITHOUT you needing to invest in it. They carry the risk, and you can earn royalties if it works out for them. Someone else can do paper-craft, or craft some earrings, or create a movie, or make a painting, or any number of possible derivative works, carrying all the risk of seeing if there is a market for these things, and if it turns out that there is, you always have the option of doing something bigger with them.

Without self-service licensing, you have to dictate everything yourself. You need to prevent everyone from doing fun crafty things based on your work, but you also only have so much time to dedicate to your own business, which means less time to do anything that could potentially create new markets based on your work.

When I was younger, I drew pictures of Super Mario Bros characters. I tried to sell them at a garage sale and also at a shopping center. Now, keep in mind, I was a child trying to sell pictures I drew, and I had no idea that I was infringing on Nintendo’s copyrights and trademarks. Nintendo wasn’t going to do anything to me because they didn’t even know I existed. But if I had done it today, you could imagine that I would be using eBay or some website, which means the entire world could find me. Suddenly, my personal little craft is just that much more dangerous. Nintendo could shut me down if they wanted to. A lot of the creators of Nintendo-themed woodwork and art are only getting away with it because Nintendo hasn’t pointed their legal team at them. But if Nintendo had a self-service license, it would simultaneously protect their trademark while also allowing fans to create and sell crafts on a small scale. My Nintendo-themed drawings could be sold, legally and without harm, and Nintendo gets a small cut of any revenues I get.

Now, Nintendo might not care too much about the relatively small amount of money that would come their way through such a system, but what about you? Do you have fans that would love to create works based on your game? Wouldn’t it be nice if they were given a simple, safe way to do so? One that would give them peace of mind that they wouldn’t get sued by your company on a whim, and that also lets them kick back some extra money towards you?

And even if self-service licensing doesn’t appeal to you (although I would strongly suggest reading Cory Doctorow’s article to see a much better explanation since it might change your mind), the idea of simplifying your licenses in a Creative Commons way would only help. Copyright is confusing, and most people don’t know what it is, let alone why they should pay attention to your EULA. Why provide 37 sections of legalese when you could tell them what you expect in 4 plain-language sentences?

The Business Software Alliance, which is made up of mainly larger software companies and claims to be the “voice of the world’s software industry and its hardware partners on a wide range of business and policy affairs”, sponsored research by IDC. Their findings were released in the 2008 Global Software Piracy Study.

I take issue with a few parts of the 25 page report. For one thing, there is still a claim that every illegally downloaded piece of software corresponds to a “loss” for a software vendor. The report itself uses quotes around the word “loss”, which indicates to me that even the IDC can’t just outright claim they are real losses. A simple mental exercise will demonstrate how false it is. Do you know someone who downloads software illegally? If not, pretend you know someone who has downloaded hundreds of games, productivity software, and office software illegally. Now, tell me, if this person had to pay for each and every piece of software, would he or she have the money to do so? Most likely, the answer is no. Software isn’t like a physical product that can be returned, such as a car, so if this person were to be caught, I have a hard time believing that uninstalling the illegal software would restore these supposed “losses” to the software vendor.

The way they legitimize the claim that each pirated copy is a loss? By showing a strong correlation between piracy rates and the strength of the software industry in a country. Except I don’t think anyone doubts that losses occur overall, which is all that correlation shows. You could look at it as each pirated copy of software contributes to the whole, and the whole correlates with a weak software industry, but it is hardly a 1:1 causation.

But what’s even more bizarre is how software piracy “losses” seem to go up or down depending on currency exchange rates! Yes, the BSA claims that because the USD went down, piracy “losses” went up. Can we use triple quotes on that word?

It is fascinating to see how Russia, China, and even Brazil are lowering their piracy rates by a large margin, which corresponds with job increases, although it isn’t clear if there is a causation one way or another in those cases. It seems that developing countries are the ones where the largest increase in software piracy is occurring.

There is a section in which the study lists factors that help to lower piracy. A couple of these factors are described using words like “have been paying off” to indicate that we should expect that such factors were being used and were measured in their effectiveness. Most, however, use words like “will lower piracy” or “can have an impact”, which indicates to me that these are more wishful thinking and not necessarily based in any numbers. Most telling: one of those latter factors is Technical Advances, specifically Digital Rights Management (DRM).

At the end, the BSA lists their blueprint for reducing piracy. Most of the items are about stronger copyright laws and better and heavier enforcement of the laws. I’m not so sure I like a group of the larger, multinational software companies dictating how copyright laws should work better for them and less for smaller indie shops and micro software vendors, or for citizens at large. We live in a world where thousands of unique videos are created and uploaded to YouTube every minute. People create and have the protections of copyright, and haven’t had to worry about stricter enforcement, and I fear that stricter enforcement will be like trying to hold onto water more tightly. The bigger companies will survive if people are pushed to pirate software and other media more often, but the smaller companies and individuals might not. The BSA doesn’t have as much to lose, or “lose”, as the smaller companies do, yet they act as everyone’s voice. It worries me.

The one item I agree with and would love to push for: increase public education and awareness. Except I don’t like where the BSA’s focus lies. They seem to want to focus on educating the public about how valuable software is so that they won’t pirate it. They want to inform people that they should only obtain software legally. Basically, let’s teach the “consumers” how to consume the right way.

I want to see more people understand what copyright law is and how it helps them as creators. Again, more people create more new copyrighted works per minute today than they did decades ago. And most probably don’t even realize they own the copyright! Why? Because copyright law isn’t set in a single statute. It’s distributed through court case decisions, and only larger companies that can afford expensive lawyers can even hope to wield copyright effectively. It’s way too confusing for the average person, even though the average person is holding more copyrights than they know what to do with. THAT’s why there is a perception that copyright is a tool used by big business. Because only big business can hope to understand it well enough to use it! I think if more people understood how THEY can wield copyright to their advantage, they’ll respect the copyrights of others. If the BSA wants to treat smaller copyright holders as if they don’t count as anything but the general public of years ago, they shouldn’t be surprised when there is some grumbling from public’s ranks. We’re creators, too. You don’t hold a monopoly on copyright law. It’s ours, too, and it is not there to protect you or your business models.

Efforts by the Creative Commons to simplify copyright licenses is more of what I would like to see software developers do. I’d also like to see more focus on smaller companies and the effect of illegal downloads on THEIR bottom lines. Most people don’t care about the “billions” of “losses” that they can’t comprehend. They care about Joe Software Developer, who they see shopping with them at the grocery store. Let’s see his face in interviews, rather than some guy in a suit representing Microsoft, Apple, and Adobe.

If you would like to learn more about what copyright is and how it affects you, please see my article on What an Indie Needs to Know about Copyright