Communications of the Association of Computing Machinery (ACM) (forthcoming 2012)

Viewpoints
LAW AND TECHNOLOGY

Design for Symbiosis

Promoting more harmonious paths for technological innovators and expressive creators in the
Internet Age
Peter S. Menell1

Throughout history, technologies for instantiating, reproducing, and distributing

information have evolved in tandem with the creative industries that cultivate, fund, and
distribute literature, music, film, and art. Although the relationship between these technology
and content industries is often characterized in contemporary policy debates as deeply polarized
and antagonistic, the historical record reflects a more symbiotic and multi-faceted story.

Symbiosis in Historical Context

Technologists and technology companies have long played critical roles in the emergence
of the content industries and many eventually came to see protection and promotion of
expressive creativity as critical to the growth and development of their businesses. It is no
accident that the General Electric Corporation (GE), after acquiring rights to the Marconi
wireless patents in the United States, spearheaded the formation of the Radio Corporation of
America (RCA), which in turn launched the National Broadcasting Corporation (NBC), one of
GE’s many subsidiaries and a leading content company. GE profited from the manufacture and
sale of broadcasting equipment, selling advertising on NBC stations, and selling radio receivers
and other consumer electronics products.

The emergence of the American Society of Composers, Authors, and Publishers

(ASCAP) during this period posed a challenge for the early radio industry. Using litigation and
negotiation, ASCAP developed a licensing model that provided the foundation for a highly
symbiotic relationship between the radio and later television industries and composers. The
radio industry, composers, and American consumers prospered from the innovation, information
dissemination, and artistic creativity that this synergistic technology-content ecosystem spawned.
The availability, quality, and quantity of content increased demand for better broadcasting and
consumer electronics and vice versa.

In analogous ways, other content industries trace their development to early patentees and
the companies commercializing this technology. The Victor Talking Machine Company, so-
named according to some sources for having prevailed in a costly phonogram patent battle,

1
Herman Phleger Visiting Professor of Law (2011-12), Stanford Law School; Robert L.
Bridges Professor of Law and Director, Berkeley Center for Law & Technology, University of
California at Berkeley School of Law

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would emerge in the marketplace as much through cultivation of the most popular performing
artists as the quality of its technology. While Thomas Edison, the developer of the competing
cylinder recording technology, refused to promote “stars” on his medium, the Victor Company
paid Enrico Caruso and other leading performers of the day handsomely to work exclusively on
the Victor label. As a result, Victor’s Victrola players won the phonogram market (and related
format war) and its “His Master’s Voice” discs dominated the early content sector. In England,
EMI (Electric and Musical Industries) Ltd was formed in 1931 by the merger of the Columbia
Graphophone Company and the Gramophone Company (which controlled the “His Master’s
Voice” record label outside of the United States). This vertically integrated company produced
sound recordings as well as recording and playback equipment and became one of the most
important record labels of the 20th century.

Digital Symbiosis and a Widening New Digital Divide

These patterns continue today with new platforms. Apple (the computer company, not
the record label) leveraged the development of the first broadly licensed online music store
(iTunes) to great success in the markets for portable music devices (iPods, iPhones, iPads, and a
growing family of consumer electronics) as well as music and now television and film
programming. Google has used YouTube and Google Books to enhance and expand its
advertising platform. YouTube’s ContentID and Partner Program, under which many copyright
owners pre-clear and derive advertising revenue from use of their content, leverages professional
content to expand the attractiveness of Google’s family of services. Over 3,000 content owners
participate in Google’s revenue sharing model. Facebook leverages music streaming services –
such as Spotify – to enrich its social networking platform. Microsoft’s Xbox, Netflix, and a host
of other technology platforms develop and expand the symbiotic pathways that bind technology
innovators and content creators. Sony’s recent effort to enter the smartphone industry seeks to
integrate devices, music, video, and game content seamlessly.

Yet the principal technology and content sectors are deeply divided over how to address
the widespread availability of unauthorized copies of copyrighted works available on the
Internet. The vertical fragmentation of distribution platforms in the Internet Age has created a
wedge between platform innovators and creative industries that hinders esymbiosis. Whereas
broadcasters historically hosted content and hence bore direct responsibility for infringement,
Internet platforms attenuate responsibility. For example, Google profits from advertising
impressions and click-through monetization via its search engine and AdSense network that
derive from websites distributing copyrighted works without authorization. Although Google
might be insulated from liability so long as it complies with the Digital Millennium Copyright
Act’s (DMCA) takedown procedures, its bottom line benefits handsomely from delivering
advertisements to people searching for pirated content. The same can be said for payment
processors working for websites distributing copyrighted works without authority.

The major content industries – music, film, books, as well as some video game
manufacturers – have called upon Congress to enact strict new enforcement tools – such as
domain name blocking, expanded public enforcement powers, and broader private rights of

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action – to combat piracy of their works on foreign websites. The major Internet companies
have strongly opposed these measures on the grounds that they would undermine the Internet’s
functioning, compromise cybersecurity, and hamper free expression. They also contend that
these measures could be easily circumvented. At a minimum, such measures could substantially
increase the screening costs of advertising networks and payment processors.

Although such legislation is unlikely to pass in its current form or any time soon, the
pressure to enact such strict legislation will remain as long as the Internet affords easy access to
copyrighted works without authorization and successful Internet companies – from search
engines to advertising networks, ISPs, and payment processors – profit from illegal distribution.
As experience with the DMCA and other efforts to legislate in areas of rapid technological
advance have shown, however, Congress has limited ability to foresee and address technological
change. It failed to anticipate peer-to-peer technology, which emerged within a year of the
DMCA’s passage, and lacks the sustained attention span or proclivity to adapt legislation in a
transparent, broad-based, or systematic manner to deal with new piracy challenges. At the same
time, the DMCA’s ISP safe harbor is showing its age.

Collaborative Symbiotic Initiatives

Legislation is but one means for achieving collective action to address problems that cut
across multiple sectors of the society and the economy. Private concerted action offers another
and potentially more effective and sustainable pathway toward surmounting Internet governance
challenges. Relatedly, technological innovation in copyright enforcement systems can play a
critical role in improving the technology-content ecosystem.

A key part of the solution to the current challenges over Internet policy relates to the
perceived goals of the Internet community. For much of the past two decades, many technology
companies have been antagonistic toward or, at best, agnostic about addressing piracy concerns.

This reflects several factors. Cyberlibertarians have advocated the effective abolition of
copyright protection on the Internet. The emergence of the Creative Commons and open source
software blunt this extreme position. There is little standing in the way of creators pre-
committing to sharing their works. And although open source software has made substantial
inroads into several key software marketplaces (particularly those exhibiting network effects),
shared creative works have had a much more modest impact. Given the continuing popularity of
professionally produced and copyrighted works of authorship, the case for abolishing copyright
protection on the Internet seems doubtful.

A more serious concern relates to the fear that copyright protection may be chilling
technological innovation. Yet the picture is mixed. The DMCA’s safe harbors have
significantly limited platform innovators’ exposure to copyright liability. Furthermore, corporate
law’s limited liability regime provides substantial insurance against crushing liability. The
emergence of new technology platforms (including some that are highly parasitic) over the past
decade suggests that copyright liability is not significantly dampening innovation. In fact, the

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argument can be made that the equilibrium has tilted toward too much piracy.

As legitimate Internet content distribution models have emerged, many more technology
companies stand to gain from consumers accessing content from legal sources. Authorized
vendors – such as iTunes, Amazon, Vevo, Netflix, and Spotify – experience greater traffic and
commerce to the extent that illegal alternatives are harder to access. ISPs can better manage
their traffic when consumers access content from legitimate sources. As ISPs further integrate
cable and content businesses, they will see even greater direct benefits from reduced piracy.

Notwithstanding the recent impasse over rogue website legislation, a quieter and more
constructive pathway has been in the works. In July 2011, a group of major ISPs (SBC, AT&T,
Comcast, Verizon, CSC, and Time Warner Cable) and leading content industry organizations
(RIAA and MPAA) entered into a Memorandum of Understanding (MOU) to implement a
flexible Copyright Alert System to discourage unauthorized distribution of copyrighted works.2
The signatories to this MOU committed to implement an escalating system of alerts in response
to alleged infringing activities: (i) an Educational Step Copyright Alert; (ii) an Acknowledgment
Step Copyright Alert; and (iii) a Mitigation Measure Copyright Alert Step. The Mitigation Step
can include a reduction in upload/download transmission speeds, a step down to a lower tier
service, redirection to a landing page until the matter is resolved, and restrictions on Internet
access. The MOU provides for “warning bells” along the alert steps as well as an appeals
procedure.

This graduated response system provides a foundation for ISPs and copyright owners to
collaborate more constructively in pursuit of a free and less piracy-prone Internet ecosystem. It
builds a balanced enforcement system into ISP activities. As this experiment unfolds, the parties
will be able to learn more about the ecosystem and how to adapt these techniques to better
channel consumers into the legitimate marketplace.

A similar initiative produced the Principles for User Generated Content Services,3 which
encouraged the development and implementation of effective filtering technologies for user-
upload websites. Although Google did not formally join this initiative, the ContentID system
that it implemented for YouTube largely follows the UGC Principles model. In March 2011,
Youku.com, China’s leading Internet television company, joined the initiative. This is a
particularly encouraging development in light of concerns about piracy in China.

Analogous initiatives could potentially address the roles that search engines, advertising
networks, and payment processors play in enabling rogue foreign websites and piracy-prone
cyberlocker businesses. Although it is unlikely that such approaches will entirely bridge the

2
See Memorandum of Understanding (Jul. 26, 2011) <available at
http://www.copyrightinformation.org/sites/default/files/Momorandum%20of%20Understanding.
pdf>
3
See Principles for User Generated Content Services <available at
http://www.ugcprinciples.com/>

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divide between Internet companies and traditional content owners, such collaborations provide
the most promising foundation for incubating and testing designs for surmounting the dynamic
challenges of Internet governance and forging collaborative relationships that can address new
problems as they emerge.

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Electronic copy available at: https://ssrn.com/abstract=1995598