FairPlay Canada is Propaganda

A friend emailed me a this:

Bell is petitioning the gov’t for anti piracy website censorship. Sounds like an issue with net neutrality. What do you think?

-friend

I started to reply, and figured it would make a decent blog post.
First and foremost. I have no idea what is going on. So this is my process:

Step 1) What is my reaction?

Net neutrality is good, because otherwise we don’t have freedom. The web will be pay-for-play, and powerful interest groups will control what I will see. If they can control the flow of information, it will bias me, and I’ll end up not being able to think for myself.

This is a little facetious, because I don’t actually believe this. It’s partially true, it’s just that…it’s poorly defined.

Step 2) What are my actual values here?

The golden rule, but aside from that, I worry about: Freedom, Fairness, and Truth (or at least Honesty)*.

There is also the goal of creating institutions that best allow people to reach their own potential. To me this is utopia. However, I don’t know how to get there, and won’t claim to know.

Step 3) Wait…but. What else sticks out from recent readings on net neutrality?

I read this a while ago.

John Cochrane’s blog post on net neutrality

The public and media discussion of “net neutrality” seems to have degenerated to “we want stuff for free.” In the end, it does cost something to deliver internet, and the bandwith is limited.
-John Cochrane

The key claim in the post is something like this: we might have had cell phones in the 1960’s if greater competition was allowed in the market for spectrum.

There’s also Tyler Cowen

Look, he framed it similarly:

Eliminating net neutrality is, in the best and worst case scenarios, either necessary to keep the internet up and running, or will lead to a dystopian future where a few major corporations control our thoughts.
-Tyler Cowen

I have trouble summarizing Cowen, because he is a very nuanced guy. Essentially he thinks it will be OK if net neutrality is lost, because there are enough ways, today, to go around throttled bandwidth. In other words, the net isn’t so easily controlled, other technologies are making it possible to access the net in the old way just fine.

Step 4) Figure out what’s up with the original question. I don’t really read the news, and I only hear of things from conversations, then I investigate.

I quickly googled it.

Lets acknowledge something: the private news companies did a pretty good job on this story, as far as I can tell. Both have a focus on different details, but the bare facts are substantially the same in the first two articles.

CBC, on the other hand, gets a fail. It is part of the coalition, Fairplay, and failed to mention that in their story. They also failed to provide much context beyond the intentions of the lobbying groups. It’s bare facts are correct, but the details are all missing. Makes me a little paranoid, especially considering that CBC is state owned.

As a note, I already have my guard up against CBC, after reading about state sponsored opinion columns recently.

So…I should state that my trust of the CBC is particularly low at this time.

I don’t feel the need to try and read more news, because there are some bare facts in all accounts so far. Here’s what I gather:

  • Some big media companies formed a group called FairPlay Canada.

First, before you do anything else, google FairPlay Canada. When I did it (Feb 3rd 2018) nothing came up. So the media companies absolutely do NOT want their brands associated with this lobbying. That is the first clue that there are less than “honorable” motives here. Ok. Crank up the bullshit detectors, people.

Turns out they do have a website! https://www.fairplaycanada.com/about-us/

But, the fact remains, these are professionals in public relations. They know how to do search engine optimisation (SEO). They specifically chose not to try. The absence of that level of promotion is a little sketchy. Like, try to find this website using google without typing in the url!

It looks like they want limit piracy, and they want the government to do it.

Let’s just take their claims at face value:

“We fully support net neutrality and the free flow of legal content on the internet. This balanced proposal is about stopping illegal acts of piracy to support Canadian programming and Canadian jobs,” Rogers said in an e-mailed statement.

Ok. Now I can start to form an opinion. I’ll outline it in step 6.

Step 5) Read an Op-Ed.

To be fully honest, I’m not going to waste all day on this. I’m just gonna read one opinion. I suspect I know enough about the story to form an opinion. Also, it doesn’t appear that there is so much attention on this story, as to attract a ton of op eds so far.

Michael Geist writes:

While that need not be the choice – Canada’s Copyright Act already features some of the world’s toughest anti-piracy laws – the government and the CRTC should not hesitate to firmly reject the website blocking plan as a disproportionate, unconstitutional proposal sorely lacking in due process that is inconsistent with the current communications law framework.

He has some more details, so if you are interested, go read the article.

Step 6) My opinion.

This is not about net neutrality at all. I view this story this way: these companies want taxpayer money rather than their own money to be spent on protecting a particular business model.

There is a much bigger trend here, and it has been going on for a long time. A lot of people call it disruption or creative destruction. I consider it a win for society, in the grander scheme of things.

These companies have a problem. They don’t know how to make money when people can so easily make counterfeit versions of their shows. There is a real challenge to traditional economics here, though, so this does get rather complicated.

In the econ 101 world, firms produce goods, and compete with other firms, to the point where marginal cost is equal to marginal revenue.

Well, here is the first wrinkle. Marginal cost is basically zero. Copy & Paste costs only the electricity of the computer and the 3 seconds it takes to duplicate a file. Maybe you can add the cost of electricity of downloading it off the network. We are talking about fractions of cents. In the world of econ 101, all of this media should distributed at nearly zero cost.

Of course. Econ 101 is a bizarro land, and we should probably ignore anyone who thinks they have anything important to say when they utter the phrase “Econ 101 says…!”**

The product that people are consuming is actually a copy of something that did have marginal costs to produce. So there is the master film reel or file that contains the content. It seems obvious that content creators have some costs. Yet the fact remains, the distribution is nearly zero marginal cost.

In order for content creation to occur, there needs to be some complete market. All we need are studios that can pay the content creators. So the studios are actually the consumers of the content creators. Not you or I. We consume the digital copies. That is the “good” or “commodity” here. Not the show itself. That is why this is confusing.

Let me just say: in a perfect world, in the world described by econ 101, content creators would be able to directly sell their products to the consumers. The quality of the content would be the deciding factor in who gets rich. You wouldn’t need a middle (wo)man.

Oddly enough, we already have that, too! You can go to live shows, or sponsor people directly on Patreon.com (I do, check out this guy’s channel). The problem is that most people simply don’t engage with content creators directly. If you actually care about artists, go support them. Directly. You! That is far more effective and meaningful than lamenting the loss of bottleneck pricing.

Nonetheless, if we are worried about content creators. We should be concerned if the new disruption has rendered all distribution channels unprofitable.

But wait. We have Netflix and Amazon, and HBO. In fact, TV from these new business models is generally higher quality, as well. It seems that business has found a way to bottleneck distribution and charge a gate fee.

In addition, there is Facebook, Youtube etc… providing platforms to distribute content, and earn ad revenue. You don’t need to be a studio. Just get out there. This is probably the most empowering moment in history to be a talented content creator. Just don’t expect to get filthy rich.

You have to ask. If you were investing in the stocks, would you choose Netflix or would you chose Corus? These companies have to compete with Netflix. They have to solve the problem of distribution in a world of zero marginal cost. It is not society’s problem. It is their problem.

In the past, companies could charge a premium on the medium. You bought a VHS (in the before time), or a DVD, or a blue-ray or whatever…and this was a bottleneck to receive content. A way to artificially make the product scarce. It closed up the transaction nicely. Zero marginal cost was easy to contain.

Now, it seems, there is still zero marginal cost, but the bottleneck is the ability to restrict access to a subscription service or the traffic through a distribution website.

The piracy today is odd too. The business model is advertisements. They exploit the zero marginal costs by using a different bottleneck, typically the bottleneck is the torrent site. You have to visit the torrent site to get the content. Which means you are going to see ads there. That’s essentially their business model. It’s illegal already. Just really expensive and difficult to enforce.

But look. Airlines have to solve a similar problem. Who gets on the plane? We do not make it the government’s problem to verify tickets. WestJet and Air Canada seem best able to do that.

In a market, an airline that could not verify tickets is a businesses that will fail in the long run. Or, more likely, adapt. That means figuring out how to track who pays and who doesn’t, and properly exclude free riders.

At any rate, these companies know that instead of investing in adaption, there is another option. If they can convince the government to use taxpayer money, it might be possible to make it easier to bottleneck content. It will be a lot cheaper to find a way to bottleneck the zero-marginal cost if the government gets involved. That’s what they want. It’s a subsidy. They also know that it is not what people want. So they didn’t broadcast this issue. If anything, these are the people most able to get a message out in society. Think about it.

The particular concern for me is that CBC is actively lobbying the government. In other words, A crown corporation is spending taxpayer money to promote an ideology, and worse: they are lobbying to spend even more taxpayer money so that we might be deprived of better service as it becomes available. That’s not okay.

You know who isn’t in this lobby group? Netflix. Amazon. YouTube. Spotify.

The government, in my mind, should tell these people to pound salt. Not because of net neutrality, but because it isn’t up to the government to secure outdated business models.

—-

*Clarification: Truth is too hard to verify unless you already know more about a given topic. So we want truth, but it requires a lot of us. Like openness, and acceptance of our own ignorance. Honesty, however, we have ways of making this more likely. There is another concept called transparency. We could ask that when people make claims, they “cite their sources”.

**Ps…the bottlenecks are special cases in economics. I don’t really know if they are good or bad. One of the issues I would take with them is that it seems odd to me that consumers don’t have much bargaining power. They get basically one price, which is the subscription. Think…the little guy, the solo content provider. They don’t get a chance to engage with you, the end consumer, and haggle over the price. That is where all of the good parts of perfect competition are derived. Division of labour and gains from trade. Instead, we have this massive, impersonal, distribution mechanism. So I implore you, never, ever, ever invoke “econ 101” in this issue. It’s idiotic.

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