No real study yet

The DG for Internal Policies of the European Parliament has just released a study titled The “Content Flat-Rate”: A Solution to Illegal File-Sharing. This post aims at an answering the following questions: who has ordered the study? Who has conducted it? What is it about? What can we learn from it?

The first two questions seem easy: it was ordered by the Committee for Culture and Education of the European Parliament and conducted within an organization called MCG by a number of individuals listed on page 4 of the report. However, there is a longer story behind it. In the past years, a furor developed in the civil society circles supporting the legal recognition of file sharing against the fact that no independent study was ever conducted to evaluate the very many proposals that have been put on the table since 2003. A first effort was initiated in Germany where a study on the legal feasibility of schemes such as the Kulturflatrate was commissioned by the Green group of the German Bundestag and conducted by the Institute of European Media Law (EML). Plans were then made for 2 other studies, covering respectively the economic parameters and impact, and the institutional set-up and functioning of such a mechanism. These efforts did not materialize quickly due to lack of budget: it takes significant work to do serious economic modeling based on real empirical data and technical modeling of a usage-based reward system. Meanwhile, MEPs in the Education and Culture Committee of the European Parliament ordered the study which is now on the table.

Who has conducted it? A group called the Media Consulting Group. MCG was founded and directed by Gérard Eymery who died on 20 April 2011. Prior to founding MCG, Mr. Eymery was General Manager of Télé Monte-Carlo, CEO of France Télécom Multimédia/Wanadoo and Managing Director for Multimedia Development of France Télévisions. Other partners include Alain Modot (“After serving Canal Plus Group as Director of Public Affairs from 1997 to 1999, he joined IMCA as partner and head of European affairs until 2002″) and Paul-Hervé Vintrou, who occupied various higher management positions in Canal+ before founding the IMCA consultancy. The individual researchers who worked within MCG for the study have similar profiles, most of them being directly connected to movie production and distribution interests. This would not have been a problem if the study title had been : “what does the movie distribution industry think about the version of flat-rate mechanism it will choose to study?”

What is the study about? The scope of the study seems simple: it looks at music (marginally) and at the movie and audio-visual industry (more in-depth). The study radically ignores the general interest benefits of the existence of a non-market sphere of cultural sharing, for instance on access to culture, education, capability building, and derived income for authors, artists and contributors. It equally ignores the proposals for making flat-rate systems contribute to the production of new works. The study starts by picking a single model of flat-rate-based recognition of P2P sharing: a compensation system based on extended collective licensing model with a voluntary participation by users (the only recent support for this model is in a proposal in the Netherlands). The reason for picking this particular model which is considered as non-credible by most of the civil society proponents is clear: extended collective licensing require voluntary agreements, and it will enable the study authors to develop their core argument: the content industry will not support it under conditions that are acceptable by other stakeholders (ISPs and consumers). We have known this for many years, and I hope the European Parliament did not pay too much to hear it again. This “finding” is packaged in standard (meaning usual crap) micro-economic modeling of willingness to pay and discussed with the general hypothesis that a flat-rate will be considered a form of commercial access to be compared with existing revenue models. The key contents is in pages 65 to 79. The study applies -without any justification other than a reference model for the French movie industry- an hypothesis of substitution to other sources of revenues, and considers that industry revenues (and not creative workers revenues and ability to finance new production) are the key parameter. There is zero justification beyond “bavardage” for the substitution (to existing revenues) hypotheses, which is surprising as the study quotes in its annex (pages 115-118) quite a few more serious works who find limited, null or positive effects of sharing or other forms of free access on revenues. We have thus “learned” that a voluntary (for users) collective licensing mechanism for sharing is a non-flyer since the large film and audio-visual industry does not like it. Thanks.

Then, the study suddenly extends its scope to consider other forms of alternative compensation models in its section 4.2, with a coverage of Terry Fisher’s Promises to keep and a discussion of a number of other possible mechanisms. This is a somewhat valuable -if incomplete- panorama. But it is concluded simply by returning to an even narrower scope than the initial one: extended collective licensing for limited rights of sharing controlled by ISPs. The limitation of rights are to download rights and “some form of upload rights to allow access to P2P networks” for the user “own digital collection” and other forms of sharing being limited to a “private circle of friends and family” (again controlled by ISPs). The proposed system is suggested to apply only to cinema and audiovisual works (MCG does not forget who its real customers are). Well, thanks, but no thanks.

Want a true description of a system that recognizes the right to share as a fundamental right of individuals in digital culture and ensures a realistic financial contribution to authors, performers and contributors to digital works and to the production of new work? Read Sharing: Culture and the Economy in the Internet Age.

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