Week 5 – About “Free Ride” by Robert Levine

Before reading Robert Levine (2011), I was already seeing the controversy coming in the title: Free Ride. The character of the “free rider” is well known in economics  when it comes to study public goods and services (Screpanti & Zamagni, 2005): there are always people who consume or make use of a public good or service and not paying for it. It is not easy to deal with “free riders”. Basically, we can (a) cancel the supply, with the consequently prejudice to the majority of “non-free riders”; (b) do nothing about it, which usually encourages others to become “free riders” too; or (c) try to reduce or eliminate the number of “free riders”. It is obvious that the preferred solution should fall into the last category, but each possible strategy here (and there are many) presents its pros and cons. Otherwise, issues like the intellectual property copyright will not be a matter of discussion.

Levine carries out a documented analysis of the “free rider” problem in the media industries whose revenues and survival have been deeply affected by piracy (or “free riders”) since the Internet appeared in scene (Introduction p. 6.) In this post, I will comment first on his overview of the evolution of the media industry; secondly, and as a result of this evolution, I will refer to a very important point he makes regarding the technology titans that have emerged since then; and lastly, I will conclude highlighting the, in my opinion, unobserved consequences of his proposed solutions to fight against piracy or, in other words, measures lying on the last category mentioned in the previous paragraph.

The first class I took at the MSEd program was CSE 689 Emerging Information Technologies with Dr. Mary Bucy, where we had the opportunity to confirm how every dramatic change in technology has usually terrified the controllers of the “old” tech. Quite frequently, those who criticize the changes produced by the new technology are well established on the use of an earlier one, and the foundations of controversy are related to what social group benefits from the new technology –economically speaking in most of the cases– and what social group is menaced by it. All these ideas came to me when Levine goes over the changes media industries have suffered (Introduction, pp.1-3) and their loss of profits since Internet era arrived. Multitude of money figures from market values and potential losses are provided in the industries of music (Chapter 2, p.37), newspapers (Chapter 4, pp.111-112), TV series (Chapter 5, p.153), publishing (Chapter 6, p.161), and movie pictures (Chapter 7, p.173.) Levine is right to point out that piracy is hurting these businesses. In fact, the previous authors we have read in the previous weeks, Lessig (2008) and Boyle (2008), both favor the idea of copyright as a fair reward, ergo piracy should not be tolerated. I also believe a great deal of blame can be put on piracy; however, it is surprising for me to see how Levine acknowledges the change of paradigm in the delivery of content through the Internet (Chapter 2, pp. 49-51) but does not stress the lack of foresight in some of these business models to confront the mentioned change of paradigm. Today we are witnessing how traditional companies are still changing their business models to make money in this new online economy, which is the real issue Free Rider is about, in my opinion. For instance, The Washington Post joined last March the list of newspapers that charge for content:

http://articles.washingtonpost.com/2013-03-18/business/37806172_1_paywall-digital-products-web-site

The turmoil in the media industries and the evolution of content distribution turned into a breeding ground for many technology-related companies to emerge and profit from piracy and the free content available in the Web.

In fact, the second idea I would like to comment is precisely Levine’s analysis of the new legal and powerful technology-based companies that have appeared since the Internet arrived. I have to admit it is my favorite part from Free Ride. He cites Michael Wolf stating how companies like Google represent the free and open movement but at the same time “controls almost completely the openness” (Chapter 10, p. 244). Google, Facebook (Chapter 3, p. 104), and Amazon (Chapter 6, p. 169) and their subsidiaries (like Flickr or YouTube) are examples of companies that are concentrating enormous power in the sharing and distribution of free content (Chapter 10, p.253). Levine exposes his concerns which are shared with advocates of free speech and privacy, like The Electronic Frontier Foundation (Chapter 3, p.81). I do not blame these companies for their business models: we live in a capitalist economy which rewards those who offer goods and services demanded by the consumers. Nonetheless, I find really wise in Levine to point out that the concentration of power gathered by these companies are turning them in near-monopolies, like happened with Microsoft in the PC business (Chapter 10, p. 244). Therefore, an eye should be kept on them to prevent the potential abuses that can occur. As a matter of fact, there has been news that exemplifies well these concerns. An analysis by William F. Barker in The Nation newspaper from Jan. 23, 2013, about the algorithm used by Google to rank the news, can serve as an example:

http://www.thenation.com/article/172378/googles-monopoly-news

And last but not least, allow me to analyze briefly some of the consequences of a couple of Levine’s proposed solutions to fight against piracy: enforcement (Chapter 9, p.236) and establish a “blanket” license (Chapter 9, p.234). Both can be considered discouraging measures and both are double-edge solutions. The problem I see with enforcement is that requires to fuel funds to control and prevent piracy, and my guess is it will be publicly funded by a whole to benefit a fraction of for-profit industries. Besides, it will create a “police” state Web-like vs. “pro-piracy organized” groups, and some of the regulations will have the rest of users as hostages (see my last post about the CISPA law.) On the other hand, a “blanket” license, i.e. a fee added to the Internet service cost, will alter the nature of the public good or service (here, free culture) and, what is more important for many, can imply that a majority must pay again for the misconduct of a few. As I mentioned above, the solutions are not simple. My personal bet would be to educate, especially the youngest, in responsible online practices. As a teacher, I strongly believe in the power of education to embed values of respect in everything we share and enjoy as society. It will take longer to implement than the measures proposed by Levine but it will pay off in the long-term. Unfortunately, I know companies must respond to shareholders in the short-term.

I would like to end pointing out the difference of focus between Levine and the previous authors, Lessig and Boyle. While the former agrees with them in the coexistence of free and copyrighted content and the need of a more flexible copyright system (Chapter 10, p. 247), his analysis is centered on the economic losses of the traditional media industries due to piracy.  Lessig and Boyle placed their focus on the cultural losses instead. It is hard to find common ground if their priorities, although both legitimate, are different. It is easy to know what Levine is up to from his initial quotation in the book, the art. 27 of the Universal Declaration of Human Rights (1948):

“Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author”

True, but Levine (purposefully?) only quotes the second part of the art. 27. The first one states:

“Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits”

Nobody said this would be easy to fit together.

References:

Barker, W. F. (2013, January 23). Google’s Monopoly on the News. The Nation. Retrieved from: http://www.thenation.com/article/172378/googles-monopoly-news

Boyle, J. (2008). The Public Domain. New Haven & London: Yale University Press.

Lessig, L (2008). Remix. New York: The Penguin Press.

Levine, R. (2011). Free Ride. New York: Anchor Books.

Mufson, S. (2013, March 18). The Washington Post to Charge Frequent Users of its Web Site. The Washington Post. Retrieved from: http://articles.washingtonpost.com/2013-03-18/business/37806172_1_paywall-digital-products-web-site

Screpanti, E., & Zamagni, S. (2005). An Outline of the History of Economic Thought. New York: Oxford University Press.

Universal Declaration of Human Rights (1948). Art. 27. Retrieved from: http://www.un.org/en/documents/udhr/

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1 Comment

Filed under CSE 619

One response to “Week 5 – About “Free Ride” by Robert Levine

  1. Javier,
    Economics has never been my favorite so I can see why I had a difficult time with Free Ride. I am happy to read that you have a much clearer understanding of economics that I do. I enjoyed reading your reflection on Levine. I wonder if there is really a clear cut way to deal with “Free Riders” and you are right “there are always people who consume or make use of a public good or service and not paying for it.”

    You provided a great example based on what we learned in Emerging Information and Technologies (CSE 689). Yes, there is a dividing line between the old and the new. If there is a vested interest in keeping policy the same (old) then this would result in the underlying motivation to undermine advancement and change. If the old is not working then this could be why they are not profiting.

    As I was reading Levine, I kept feeling like there was more to the picture than what he was painting. Yes things are shifting but that does not mean that we will see the complete fall that has been predicted. We will adapt to the emerging technologies.

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