Washington, DC — In Hollywood, if you say "producer" and "distributor" it's entirely possible you mean the same individual/organization. But at a panel hosted by the Institute for Policy Innovation this morning, it was meant in a broader sense, as in a producer of any creative digital good, and a distributor of that digital good, i.e., an ISP. The panel was part of IPI's annual conference coinciding with World Intellectual Property Day, and was ably moderated by my former Progress & Freedom Foundation colleague Solveig Singleton.

IPI lined up its usual strong panel, with three leading trade association heads, Dan Glickman of MPAA, Mitch Bainwol of RIAA, and Steve Largent of CTIA. (Disclosure note: MPAA and RIAA are both Copyright Alliance members, with MPAA serving on our board.)

It was an excellent mix of perspectives on the debate. The recorded music and motion picture industries have been among the hardest hit by piracy in the digital age, but they have also in recent years been among the most aggressive in terms of identifying new business models that satisfy consumers, as Glickman said it, "where they want it and how they want it." Largent's industry increasingly is carrying creative works, but network management is even more important to his members than to terrestrial ISPs. Why? Either a wireless or wireline provider can increase capacity through greater efficiency, but a landline network can also lay more cable or fiber; as Largent pointed out, his members' networks can only expand when spectrum is auctioned, and that process can take years.

All three were bullish on the growing cooperation between creative works producers and digital distributors. As someone who has watched this dynamic dating back to the 1990s, I can't tell you how refreshing it is to write that above sentence, because this relationship historically has been far from harmonious. But Bainwol made it clear that within ten years his entire industry's product will be traveling on these networks as a new generation grows up disdaining physical goods, and Glickman said even now that there are "millions of eyes and ears" that don't get their media from physical goods. "The marketplace will make the decision" regarding how works are distributed and sold, Glickman said, but there's no doubt ISPs will be a part of that process.

That isn't to say there isn't tension, as any observer knows. Bainwol pointed to a study stating that 98.8% of searches on LimeWire are for infringing works (I wonder what the other 1.2% is, an identity-theft search for people's tax returns?). We've seen study after study showing the majority of traffic on ISP networks is peer-to-peer, and this suggests the vast majority of that is infringing works. So an ISP that focuses solely on improving network efficiency is choosing to ignore the fact that the majority of its traffic is illegal.

Bainwol raised this point in the context of the recent agreement between Comcast and BitTorrent (the company, not the protocol) that Comcast would not block a specific protocol, even if the bulk of traffic on that protocol is infringing. That approach is basically aligned with the public position of FCC Chairman Kevin Martin, although Kevin Martin went out of his way at a Senate Commerce Committee hearing yesterday to point out that while he would object to an ISP blocking legal content, the FCC feels no such need to stop and ISP from blocking illegal content. (See our statement on the Chairman's testimony here.) 

Noting Comcast spoke of network efficiencies, Bainwol said "efficiency can mean a more efficient way to take… I get nervous when I hear of more efficiency of P2P." Glickman said he was concerned that the Comcast-BitTorrent agreement included no creators of copyrighted works. When not at the table, he said, agreements can be reached "that are harmful to us."

That said, Glickman, Largent and Bainwol all agreed that, as Glickman said, consumers "run the show." It is in the interest of both creators and distributors to please consumers, and cooperation is often proving to be the best way to do that.  As Glickman also noted, the future can be hard to see: "The players in one line of business may be in another line of business fifteen years from now." In other words, pursuit of a short-term gain by one party can be harmful in the long term.

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This entry was posted on Thursday, April 24th, 2008 at 11:43 am by Patrick Ross and is filed under market forces, piracy. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.