Copyright For Blockheads: Why Musicians Create in China’s High Piracy Environment

Following my recent blog posts on music copyright efforts in China, I have linked here an article published in July 2015 by  Prof. Jiarui Liu from Stanford University, on “Copyright for Blockheads: An Empirical Study of Market Incentive and Intrinsic Motivation” at the Columbia Journal of Law and the Arts.  A Chinese language summary of the statistics in that article (with English captions) is available here.

This Article presents a systematic study regarding copyright incentives, based on industrial statistics and extensive interviews from the music industry in China, which Prof. Liu states is “a virtually copyright-free environment featuring one of the highest piracy rates in the world.”  This has in turn has caused a dramatic transformation of the music business.

Prof. Liu seeks to answer the following questions:

–          How do musicians earn their living in the shadow of rampant copyright piracy?

–          Are copyright incentives still relevant if it turns out that most musicians create music for   music’s sake, not for money?

–          Can niche musicians benefit from effective copyright enforcement even though copyright piracy mostly targets mainstream music?

–          Why do musicians choose music careers over more lucrative jobs?

–          Why do musicians commonly become multiple-job holders?

–          Why do musicians often earn the majority of income from their second jobs but spend the majority of time on music?

From his abstract:

The empirical research indicates three seemingly paradoxical phenomena: (1) while 17.9% of all themusicians in the  sample  referred  to  economic  benefits  as  at  least part  of  their  motivations  for  music creation, 97.4%  specifically recognized money as being important and helpful for music creation; (2) while  56.4%  alleged  that  copyright  piracy  did  not  affect  their  creative  motivations,  72%  agreed  that copyright piracy does affect music creation and (3) while 53.8% explicitly admitted that they had little awareness or knowledge of copyright, 92.3% indicated that the current  level of copyright protection is insufficient and 71.8% suggested that copyright law should provide strong incentives for music creation.  The empirical evidence itself provides compelling explanations for such paradoxes: Even though musicians  seem to  primarily create music for music’s sake, copyright law could still supply powerful incentives  for  music  production  in  a  way  that  not  only  caters  to  market  demand, but  also  allows  for broader  artistic  freedom…

Copyright  incentives do not function as a reward that musicians consciously bargain for and chase  after,  but as a  mechanism  that  preserves  market  conditions  for  gifted  musicians  to  prosper, including a decent standard of living, sufficient income to cover production costs and maximum artistic autonomy during the creative process.

  

Legal Position Opens in Chief Counsel’s Office, USDOC

The Office of the Chief Counsel for International Commerce at the Department of Commerce has an opening or for an attorney with 1-3 years of legal experience (GS-12 or 13).  The application deadline is November 13, 2015.  The position covers legal aspects of competition law, international trade and intellectual property, amongst other areas.  Although this is strictly speaking neither a Chinese legal position or an intellectual property position,  both China experience and IP experience could be helpful to a candidate, amongst other issues in China and globally.  The position description is attached here.

A Porpourri of Autumn Copyright Developments

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Here’s a mix of copyright updates:

On October 13, Tencent and Netease signed a deal for Netease to takes licenses on 1.5 million songs.  Tencent, as I previously reported, has actively been promoting the legitimate use of music on-line.   The current “Sword Net” campaign was is focusing since mid-July on music, and these actions may be a reflection of the campaign’s efforts. Over the summer, NCA had specifically mandated that ISP’s should stop making unauthorized music available on line.  Anecdotally, I have heard that it is getting harder to find illegal music to download.  NCA’s crack-down, including an effort to remove two million songs from the on-line environment was also noted by the media.

Also on October 14, NCA issued new guidance for website service providers (关于规范网盘服务版权秩序的通知), which requires service providers to take proactive measures to screen copyrighted content being uploaded, including for works that have previously been removed, works that are the subject of a notice and takedown, and works specifically listed by NCA.  The rules also require service providers to not provide any support to users to illegally share unauthorized works, and requires users to make a reasonable explanation to service providers if there is abnormal logging-on activity. These rules require something more than responding to notice and take-down requests, and (laudably, in my opinion) appear responsive to the perspective that the late Prof. Guo Shoukang told me, that the obligations set forth in China’s DCMA-type laws and regulations should evolve as technology evolves.

Another important development of late is the formation in September of a sports IP committee under the China Intellectual Property Law Studies Association.  Hopefully, this committee can help spur better protection under China’s IP regime of live sports broadcasts, amongst other sports-related IP issues.

NYU Program on Due Process for Foreign Business in China

I was honored to be invited to moderate the opening session for the 21st annual Timothy A Gelatt Dialogue at NYU Law on “Due Process for Foreign Business in China?” on November 12, 2015.

Here’s a quick summary the program (November 14, 2015):

There were presentations on intellectual property (by me/Mark Cohen), antitrust, human rights, detention and release of foreigners, and cybersecurity.

As several speakers noted business people have human rights too, although these interests are often ignored by the human rights community in favor of non-commercial issues. Another speaker also suggested that the current division between human rights and commercial law made little sense, and that human rights advocacy should pick up commercial concerns, while commercial concerns should also not ignore human rights issues.

In listening to various anecdotes, it became apparent to many of us that no matter how cautious, expert or how much of a “China hand” one is, one (or one’s client) may not be immune from detention, arrest or arbitrary proceedings, and that these legal proceedings may be initiated out of spite and well distanced from any kind of legal accountability. One speaker suggested that in the current environment, China has neither rule of law nor rule by laws, but rule by agency in a range of fields.

I gave a presentation on due process concerns for foreigners, noting that there were increasing concerns about national treatment and differential procedures and remedies for foreigners in IP litigation, including detention during the pendency of a disputed legal matter, extended time periods for civil litigation, delays in evidence gathering and extra-territorial reach of the courts. I also briefly discussed how foreign courts were handling disputes that involved concerns over handling of matters by Chinese courts or enforcement agencies (notably Gucci and Vringo). Some speakers also expressed concern about an increasing extraterritorial reach of the Chinese courts.

Regarding antitrust and intellectual property, one expert in the field asked a question about whether Chinese practices were mercantilistic/outliers, or simply reflected the interests of “implementers” vs innovators.  I noted that I had heard these perspectives expressed previously, but I wondered if China was in fact proposing a different kind of question: whether antitrust law demanded any proportionality with IP protection as it seemed to me that imposing nearly one billion dollars in damages (in the Qualcomm case) is disproportionately high in a country where average patent damages are 20 to 30,000 dollars, and even injunctive relief can be difficult to enforce.

There appeared to be widespread support regarding the Xi/Obama outcome on establishing a dialogue on cybersecurity. Some speakers noted that cybersecurity had widely different concepts in the United States and China, with the Chinese focus on cybersecurity referring to the overall control by the state of the Internet and related infrastructure.  The Chinese government was also interested in direct regulation of the Internet with more government controls.

Several speakers saw an important relationship amongst cyberespionage, innovation policies and antitrust as calculated efforts by China to develop its technological edge. In addition, several speakers from a range of disciplines noted that China and Chinese officials were now increasingly engaged in efforts to advance its own perspectives in areas such as human rights, cybersecurity/internet governance and antitrust, which may increasingly challenge the United States’ role as a global norm setter.

Altogether, it was a great group of thought leaders with divergent backgrounds but convergent and deep interests in China. My congratulations to Jerome A. Cohen, Ira Belkin and NYU’s Asian law Institute.

ABA Section of International Law Comments on NDRC Questionnaire on IP Abuse Guidelines

The American Bar Association has once again made publicly available its response to the NDRC questionnaire on drafting IP abuse guidelines, attached here.  This is a useful and large bilingual download which contains useful background materials.

Some of my prior recent blogs on this questionnaire include a posting of George Mason University’s comments, and my comments on the questionnaire itself.

Thanks again to the ABA for the transparency of its efforts!