The 401st Blow :: Thoughts On Media

The Economy Of Content Without Valuing IP

Posted in Distribution, Law, Theory by Noah Harlan on June 6, 2009

I just listened to Lance Weiler’s most recent podcast of This Conference Is Being Recorded. It was an interview with Nina Paley, the creator (I use creator since she is the writer, director, animator and producer) of the remarkable film SITA SINGS THE BLUES. In the interview Nina provides a protracted explanation of why she has released the film under a Creative Commons Attribution Share-Alike License and her opinions about copyright, IP ownership and revenue. I strongly recommend listening to the conversation.

Sita Sings The Blues

Sita Sings The Blues

I have generally held the belief that content creators should have the right to control the means and methods of the distribution of their content, should they so choose. That being said, I have had a challenging time resolving, in my own mind, the parallel ideas of content being shareable and creators profiting from their work. I get concerned about a lot of these conversations ignoring the legitimate right of creators to define certain terms of the engagement with their work and also that somehow, as “artists”, we should forego compensation for our work. Nina helped me clarify some of these ideas in her framing her reasoning behind the release of SITA.

I think before going too much further I should explain a little bit about Creative Commons licenses for those that are unfamiliar. Creative Commons licenses are the middle ground between no rights reserved (public domain) and all rights reserved (copyright); they are, for all intents and purposes, “some rights reserved”. The licenses come in a variety of flavors, including ones which require attribution or that prohibit commercial reuse of the work covered (this blog is covered by a creative commons attribution license).

Often, in the argument for a redefinition (or elimination) of copyright, there is the assertion that all content should be free and many proponents of this view have embraced the Creative Commons however, the creative commons license system is a control of rights and the CC licenses are built on the foundation of copyright. You must have control of the content in order to assert the restrictions that a CC license entails. The requirements for attribution, or the refusal to allow me to make money off of my remix of your work (if under a non-commercial CC license) is as much of a restriction as a record label’s control of synch rights to music. I will cede that the intentions of CC licenses are perceived as more altruistic (and they generally are) but they require copyright to function.

This is not to say that the copyright system is not in need of some fundamental rethinking. The idea of copyrights extending for decades beyond the life of the creators seems deeply antiquated and overly restrictive. However, if an artist chooses to make a single print of their work that will be valued far beyond on the nominal value of a single print in the context of many prints (ie: a limited run of 1 versus an unlimited run) then that artist has that right (in my opinion), for a period of time.

As an aside, the Creative Commons notion also assaults the concept of the ‘original’. Is there any value to the original Adele Bloch Bauer I that Klimt painted by his own hand? The aspiration of the CC movement seems, if unintentionally, to destroy any notion of the original. Somewhere Baudrillard is laughing.

That all being said, I think that Nina makes a very interesting, if self-conflicting, point about how content creators can be compensated for the intellectual property they create. On her website, Nina’s justification for making the content free (something she interestingly chose to do only after discovering she could not afford to keep the rights herself) is as follows:

I hereby give Sita Sings the Blues to you. Like all culture, it belongs to you already, but I am making it explicit with a Creative Commons Attribution-Share Alike License. Please distribute, copy, share, archive, and show Sita Sings the Blues. From the shared culture it came, and back into the shared culture it goes.

Nina goes further in her conversation with Lance, asserting that everything belongs to everyone since all ideas stand on the shoulders of other ideas. Because of this, it is not reasonable to charge for content since it is the property of all mankind. Taking this as as supposition, the case is then made by Nina that it is reasonable to charge for materials (like prints and DVDs) that have empirical costs of their own and it is acceptable to mark up those costs for profit. Here, I think, is a slight error of omission in the logic.

IP should be free:

It is reasonable to charge for materials and therefore the materials containing IP are things one can charge for.

The omission is the justification for marking up the costs of those materials. That markup does not represent any intrinsic value of the materials but, rather, it represents the value of labor. In fact, the ability to charge a “profit” on material containing IP is due to the valuation of labor.

The argument could be drawn that the variable net charge in all economies is, in fact, labor.

  1. We are willing to pay someone for labor on it’s own (labor): eg someone hanging wallpaper in your home.
  2. We are willing to pay someone for materials that were laborious to create (labor + materials): eg glue and brushes used to hang the wallpaper.
  3. We are willing to pay someone for materials that were created by someone’s creativity (materials + labor + IP): eg the wallpaper itself with some sort of designed pattern.**

Why then would we not be willing to pay for labor + IP?

It seems to be the only component of labor we are claiming should be free. Artists should be able to charge for the labor that went into creating the content that they are sharing. By framing the argument this way we can create a reasonable argument for artists to ask for compensation for their work by those who consume it.

** Wallpaper is an interesting example in this case. For decades the British film industry was based on a financing system called the sale & leaseback that owes its origin to, of all things, wallpaper. After WWII the British government allowed companies to depreciate 100% of the value of new machinery in a single year as a method of encouraging the rebuilding of the British manufacturing sector. Film distributors saw this and made the argument that reels of films were machinery and thus eligible for the accelerated depreciation. They won and for a number of years did just that. Then, one day, the inland revenue service went after a wallpaper manufacturer in the midlands for writing off not only the equipment but the die casts (the prints) as well. The company fought back in court, arguing that without the die casts the equipment was useless. Ultimately they won and a few smart producers, led by John Heyman (father of David Heyman, producer of Harry Potter), saw this and argued that the film reels being depreciated by distributors were useless without the film on the reel and thus the entire cost of the film should be depreciable. They won and that system lasted for over a quarter century.


9 Responses

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  1. Nina Paley said, on June 7, 2009 at 8:12 am

    Thanks for listening to that long interview! One correction:

    she interestingly chose to do only after discovering she could not afford to keep the rights herself

    Actually I could totally keep the rights myself, I’m sorry that wasn’t clear in the interview. I paid for all the licenses, and could have legally sold the film conventionally. For more on why I chose not to, see

    Your argument regarding labor makes sense until you consider how much labor we engage in and value in spite of – or more likely because of – its being unpaid. Consider:
    time with family

    I personally consider watching films labor: it requires time and effort, and adds value to the work. Yet the audience doesn’t get paid:

    Professional film reviewers get paid to watch films and write about them. Thousands of others do the same labor for free, or even pay for the privilege. Prostitutes get paid to have sex; their clients pay for the same thing. Billions of others do the same labor for free. Why is the same labor free in most cases, but paid in only a few? Is the paid labor more valuable? Is the professional you hire to take care of your ailing parent in the nursing home performing more valuable labor than the adult who cares for their ailing parent directly?

    Perhaps the Market determines which labor is more valuable. If there’s market demand for paid sex, then that sex is worth whatever it’s paid for, according to the Market. That would imply that labor that isn’t paid for, isn’t valuable. Here’s my take on commodifying value:

    Thanks again!

  2. Noah said, on June 7, 2009 at 7:57 pm

    Thanks for your note Nina. I’m sorry if I misstated anything.

    As to the bulk of your response about valuation of labor, I’m not sure I fully follow all of your points. I suppose the question remains for me: in your system of valuation why is it permissible to value a created material good above it’s cost while it is not reasonable to value IP at all (let alone at or above the cost of creating that IP).

    You also acknowledge that you’ll offer a limited edition of your work for more money (and I think you absolutely should) but isn’t the implication that there is value in the scarcity of that? You also state that you will engage in agreements to uniquely endorse editions of your work and that, too, creates a value in scarcity & ‘authenticity’. People are valuing the scarcity of your labor of endorsement, in effect.

    The Adele Bloch-Bauer I Klimt I referenced is an example of valuing scarcity. I can buy a cheap poster of it for $20 or I can buy the original for $125 million because that is what the market will bear. The original is non-replicable and thus has a perceived value distinct from a highly replicable impression. So if we go somewhere in the middle ground between ubiquitous free content and an edition of one original then we have a sliding scale of scarcity and value.

    Again, I really like your film, I strongly recommend everyone check it out and support you and your work and I think these are issues that it’s good we’re all working through today.

  3. Tony Comstock said, on June 8, 2009 at 9:07 am

    Nina, maybe look up the words vocation, avocation, recreation, and obligation. I’m sure that will help clear up the confusion.

  4. Nina Paley said, on June 10, 2009 at 8:09 pm

    Yep, I totally acknowledge the value in genuine scarcity. My signature is a limited resource. My film is not. The free-er the sharing of the content – the unlimited resource – the greater the value of my signature – the limited resource. So I’m charging for my signature. And other distributors of “Sita” DVDs are charging for packaging.
    There’s a huge difference between real things that can be limited, and virtual things that cannot. What’s making “the industry” and the laws they write crazy is their attempt to limit the unlimited.

    The money I’m getting from sales isn’t for my labor, however. It’s for my Endorsement:
    Fans want their money to benefit me. My Endorsement shows them it will. That adds to the value of the item sold.
    This is quite different from labor. It’s a channel for gifts. I made the film as a gift, just as the audience views it as a gift. And to explain THAT, I can only recommend reading “The Gift” by Lewis Hyde:
    It sorts out the difference between gifts and commodities better than I can here.

  5. Noah said, on June 10, 2009 at 8:30 pm

    Interesting points. If you are charging for your “signature” – isn’t that really charging for IP? A signature is not a limited resource (to whit, see the White House Holiday Card!) but, rather, something that is a a set of symbols, built on the shoulders of other people’s ideas and attributed, possibly non-uniquely, to you. You choose to limit it as a resource but the argument that IP should be free could easily include signatures.

    So too isn’t your endorsement a form of labor? If we view labor as unique effort by a single individual then certainly an endorsement is a form of labor, and a form of labor that is unique to you. In fact you have done nothing other than to declare “I endorse” which an action solely consisting of labor. I suppose the response is that you have created an idea (that something has a validity not previously associated with it) but again, it’s subject to your action.

    Again, it’s interesting things to wrestle with and I’ll have to check out the reading.

  6. Twitted by loopmovie said, on June 11, 2009 at 12:56 pm

    […] This post was Twitted by loopmovie – […]

  7. ffelix said, on June 16, 2009 at 7:16 pm

    Good podcast.

    I’ve bumped up against music clearance myself & feel like it’s a surreal scam. Why should these random companies control rights to music which has deep cultural meaning, which they didn’t create, whose makers are long dead, while refusing to make this work widely available at a reasonable cost? It’s insane & far beyond any original intent to protect artists. Nina’s approach is a fascinating take that offers an alternative to piracy.

    The idea that cultural material is a collective–rather than an individual–asset is interesting & contains a lot of truth. Here’s a blog post I wrote related to this topic:

    Re: labor. While I would argue that monetary systems are nothing but an abstraction of surplus labor, simply saying that IP involves labor is not enough to justify payment. There are all kinds of legal examples where labor is co-opted without fair compensation to the laborer: Wall Street, for instance.

  8. Glenn Donovan said, on October 25, 2009 at 12:05 pm

    First, let me say that I think the economic discussion about labor is one that has a long history and lots of different views by economists, and it must be said that it has strong ideological implications. I come at this from a perspective of property rights alone. I’m a writer and singer/songwriter, so I have some real skin in this game. While Nina is of course free to distribute and license her content as she sees fit, I don’t see a legitimate case for asserting that this IP is not mine and mine alone to distribute and license as I see fit, or that there is some new means of defining exchanges and property rights that isn’t better explained by classic free market economics. I mean, this is the ultimate impact of all of these arguments, correct? To me, the arguments presented seem somewhat illogical. My view follows.

    1. IP – How does it differ from any other property in the sense of ownership? Just because it is built on the “shoulders of other’s ideas” – how does that make it different than virtually anything else in our economy? A house, car, birdhouse – anything is built on the canon of knowledge that is considered “public”, which is to say we all have rights to use it equally. This argument, taken to it’s ultimate conclusion obviates property rights completely. How then would we engage in free exchanges with each other, if the property isn’t mine to exchange? I suggest anyone interested in a primer on how wealth is created for both parties should go to my website and visit the Libertarian Education section on Mutual Benefit My conclusion is that the argument presented above about property shows a lack of knowledge about property rights in general from an economic standpoint, rather than some new theory about property having validity.

    2. The “Gift Economy” – It doesn’t work, period. Talk to any plug-in developer for WordPress who has a gift paypal button on their download site. The stats I’ve heard quoted by people actually participating in this ecosystem are around 1 gift for 500 downloads. Nina’s own case shows that she has to charge for DVD’s and other scarce items to generate revenue (it matters not why the exchange is made, only that this exchange is where she receives value). She incorrectly classifies this exchange as a gift — when in fact she will not give the DVDs away and wait for someone to feel like “giving” here money. It’s an exchange and proof that value is realized when the free exchange of property occurs. Frankly, this point is just sloppy logic.

    3. Consumption as labor – This is just spurious. The consumption of a non-tangible good does not add value to it. The perception of value one obtains from watching the movie is an exchange separate from the resultant word of mouth (WOM) promotion of the movie. It’s the WOM that adds the value to Nina, and yes people are generating value for Nina consequently, but not implicitly. When one makes a recommendation to someone there are a complex set of factors at play – read Malcolm Gladwell’s Tipping Point for more on this, but the short version is that the recommender receives value (prestige) and the recipient may receive value if the recommendation seems useful to them. To prove my point, get 200 people to watch two hours of blank film. If in all cases the viewing of something adds value to it, please demonstrate the value added in this case? Btw, it must add value in all cases in and of itself to considered true. It doesn’t, and in fact, Nina’s reliance on WOM to generate value ultimately through the promotion of her as a “brand” is based on the comparative advantage she possesses in creating art.

    I won’t go on further, but I think I’ve demonstrated that the dynamics of Nina’s activities and resultant outcomes are well explained by classic free market economics. There is nothing wrong with it. She’s simply using the virtually free (not actually free, btw) medium of the internet to promote herself. This is nothing knew – it’s just that in the past you’d have to buy airtime to publicize yourself in this way. Think about it, you didn’t pay for broadcast TV, but it was still monetized in a free market.

    Enough from me. I hope this is at least thought provoking.

  9. Noah said, on October 25, 2009 at 4:03 pm

    Glenn – All three of your points are spot on and well stated. I think it’s important to also underline that most of the systems of the copy-left movement (creative commons chief among them) are dependent on a very thorough system of intellectual property ownership. If you do not control a set of rights completely then you cannot choose which rights you would like to cede to the commons and under what conditions.

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