The War Between Old Media Empires and the Internet

It is now clear that the true enemy of traditional media, still unbloodied, is the Internet itself. The remarkable ability of digital technology to reduce the transaction costs of information exchanges of all kinds has destroyed the business models, if not the businesses, on which content providers have operated successfully since at least the 18th century. That’s when the first copyright law was passed in England.

The focus on “media” in the very name of the industry belies its reliance on the limited life of physical copies as the key control mechanism. But as physical copies are replaced by faster, better, and cheaper digital alternatives, control becomes more illusory. The entrenched providers are growing desperate.

- Larry Downes, in his recent, and somewhat lengthy, column Leahy’s Protect IP Act: Why Internet content wars will never end

The author of The Laws of Disruption, what Downes is mainly concerned with in his article is the proposed Protect IP Act, most recently stalled in the Senate, which was designed to “prevent online threats to economic creativity and theft of intellectual property.” If passed into law, it would give the U.S. government the right to shut down any “Internet site dedicated to infringing activities”, like Pirate Bay etc., especially those registered outside the U.S., giving government officials greater power to confiscate domains of such sites.

Downes is essentially arguing that recent attempts to change copyright laws in America to favour traditional content industries are actually responses to the fact that old industries are being disrupted, so they are seeking to break the internet in order to protect their traditional business models. At the same time, however, because America also believe in free speech, conspicuously distinguishing themselves from China in that respect, they can’t completely stop the spread of online content.  So these industry-backed, proposed laws are merely convoluted paths to reduce the internet’s openness, while pretending to only be concerned with stopping digital “criminals”. But in an effort to disrupt illegal uses of technology, these laws may succeed only when they unintentionally disrupt all uses, legal and illegal.

One could say similar battles rage in Canada.

Our controversial Copyright Reform bill, C-32, with its digital lock provisions, is easily a case in point. Criminalizing the act of circumventing digital media locks, while it would hamper peer-to-peer file sharing, it would also infringes an owner’s right to transfer content they own to another medium.

Along a similar vein, the introduction of Netflix in Canada has got Canadian broadcasters on edge. While Netflix is entirely legal, the fact that it is a streaming, internet-based service means it can be provided, faster, more efficiently and cheaper than traditional television subscriptions. Astral Media, Bell, Rogers and Shaw called on the CRTC last month to regulate Netflix and other over-the-top video distributors (OVDs), like Amazon, Apple and Google, under Canada’s Broadcasting Act.

Along with this coordinated push for government regulation, Dwayne Winseck, Communications professor at Carleton University in Ottawa and columnist for the Globe and Mail, outlined five other defensive tactics broadcasters have used to defend their existing markets. Among these include bandwidth throttling by Bell and Rogers, and bandwidth caps and Usage-Based Billing by major ISPs to deter online video use. (In response, Netflix deliberately downgraded the quality of its movies and TV shows to help customers avoid the consequences of these restrictive measures.) It also seems that broadcasters carry a double standard in this matter, that while there ought to be greater OVD regulation, Bell’s own TV service for instance, is not a ‘true’ Internet-based service, while Netflix is.

And on top of legislative change is litigation. The SCC granted leave, in March, to appeal last summer’s Federal Court of Appeal’s decision, which found that Internet Service Providers (ISPs) do not qualify as “broadcasting undertakings” within the meaning of the Broadcasting Act when they provide access to broadcasting material through the Internet as requested by users.

There is no denying that the easy access and proliferation of both legal and illegal media facilitated by the Internet sounds a distant death knell to old business models of traditional media empires. While some will argue that they are fighting the inevitable internet tide, as there are plenty of new, better and more efficient operations able to take their place, these empires have both the clout and the coin to fuel this war for very long time.

Afterall, as Downes points out, “Law is often the last refuge of an industry in transition.  Rather than change, or change as quickly as innovation makes possible, industry incumbents sue, first to slow the pace of progress and then, ultimately, simply to survive.”