Whither Copyright in a Digital World?

Readers browsing the eBookTaiwan and Hami bookstores all wonder why there are so few bestsellers and works by big-name authors. They are especially disappointed to find that foreign titles at the top of the bestseller lists-books like The Secret, The Girl with the Dragon Tattoo, and The Lost Symbol-are completely absent.

About 40,000 titles are published in Taiwan each year, with most mainstream bestsellers coming from the 5,000 or so translations of foreign titles released annually. Though Taiwanese publishers have been actively negotiating digital rights with foreign publishers, the Chinese-language e-book market remains immature, lacking a reliable business model and clear-cut "rules of the game." Consequently, foreign publishers have been very cautious about licensing the digital rights to Chinese-language editions.

In the digital age, the hard-won fruits of writers' efforts need to be protected, but they also need to find their readership. It therefore follows that rather than locking up their e-books, authors should be using the Internet to promote their work and expand their influence.

Bardon Chinese Media Agency, the largest agency arranging licensing of Chinese-language editions of non-Chinese works, reveals that it has succeeded in securing the digital rights to only three foreign works since late last year. Publishers have also run into problems securing the digital rights to the work of authors whose print editions they publish.

"No writer wants to be the first," says Ho Fei-peng, CEO of Cite Media Holding Group. "Their worries stem from unfamiliarity and lack of understanding." Ho therefore took the first step himself, releasing digital versions of his own Zi Man series of books.

In other words, even though Taiwan's publishing industry wants to go digital, it lacks the rights to sufficient titles to really do so.

In September 2009, Dan Brown's The Lost Symbol was released simultaneously in print and digital editions, the latter tightly encrypted to deter piracy. During its first few days on Amazon, the digital version outsold the print, causing the US publishing industry to think that it had found its new business model. Then, just 24 hours later, a pirated copy turned up on Rapidshare, a filesharing site, and was downloaded more than 100,000 times over the next few days. Fortunately, the rampant digital piracy did little to impact the appeal of the print edition. Publishers Weekly reported that The Lost Symbol was the top-selling book of 2009 with sales of 5.5 million volumes.

But this experiment, which pitted licensed and pirated e-books against one another, is still much discussed and points to the difficulties inherent in preventing piracy on the Internet.

Many people worry about the tremendous capacity of e-book exchange platforms to replicate books. After all, it's easy to imagine each e-book sold being distributed to thousands of people. The challenge facing publishers is how to protect their authors' work.

Take Taiwan's music industry, for example. It has spent the last decade doing everything in its power to stop piracy and illegal downloading of its products. This has included shutting down websites offering legal downloads, encrypting digital music, and even bringing out the big guns to sue online music platforms that haven't secured the rights to songs. What valuable lessons can the publishing industry learn from the music industry's failed efforts?

In 2000, a Taiwanese digital music platform called Ezpeer developed a peer-to-peer filesharing program. The program's rapid uploads and downloads made it very popular with online music traders. In fact, the service amassed 3.5 million registered members and 400,000 fee-paying members. But Ezpeer's success also kicked off a four-year legal battle with the record companies.

Ezpeer and the International Federation of the Phonographic Industry (IFPI), which represented 10 local record companies including Rock Records and Sony, Taiwan, went on to settle their suit and become digital-music partners in 2005.

"After we began working with the record companies, we started getting five times as many attest letters per month," says Zhuang Weiliang, who founded Ezpeer and currently works as vice president of HiAchieve Digital Technology, an educational website for children. "We had thought that once we signed an agreement, we'd be able to use anything. We didn't realize we'd overlooked so many little details."

As an example, he notes that there are at least seven kinds of rights associated with a given song-recording, songwriting (words and music), broadcast, performance, music video, and karaoke-which are often held by different people and organizations. Someone wishing to offer a song on a digital platform has to secure at least two of the recording, lyrics, and music rights. But Ezpeer discovered that the rights agencies were rarely able to provide a complete list of rights holders, and didn't actively notify service platforms when rights were transferred to another party. Worse, when rights holders got into disputes over ownership of the rights, the service platforms (including portals such as Yahoo! and Hinet) would invariably end up being sued.

Lawsuits are a last resort for dealing with new technologies. From the file sharers' perspective, none of them wanted to have to live in fear of legal jeopardy and all were hoping that the digital music platforms and the record companies would reach some kind of accord.

From the record labels' standpoint, halting or cutting back on the release of their product offered a less-than-optimal solution to the risks they faced. After all, in both books and records, maintaining a market presence requires the release of new titles.

Chuang explains: "Jay Chou used to release two records a year. Now he's busy performing and releases only one every two years. That has a big impact on both digital and physical music sales." Ezpeer saw an explosion in the number of registered users every time Chou and Jolin Tsai released new records. "If rights are hard to get, you end up with less content and fewer sales. Then output declines, and a kind of vicious cycle results."

Artists and their management are also frightened by the ease with which their products can be copied and illegally distributed. They don't trust consumers to listen to their consciences and have instead put their faith in encryption and digital rights management (DRM) regimes.

Take the US, for example. When the iTunes Store first began selling music, it did so in a proprietary format that only iPods could play. If you had a Zune or Sony MP3 player, you were out of luck. Apple also prevented you from copying your files to more than five computers.

The music industry's various restrictions on use were intended to facilitate management of its properties, but left music buyers feeling like they were being penalized. When contrasted with the ease and convenience of obtaining illegal downloads, the excessive DRM protections gave consumers still more reason to abandon the legal offerings, creating another vicious cycle.

Apple CEO Steve Jobs even wrote a piece entitled "Thoughts on Music" in February 2007, urging the "big four" record labels-Universal, Sony BMG, EMI, and Warner-to abandon DRM, arguing that it failed to account for the way consumers actually behave.

Jobs supported his argument by noting that as of the end of 2006, Apple had sold some 90 million iPods and 2 billion songs via the iTunes store. That is, it had sold an average of 22 songs per iPod. But surveys showed that, on average, users had about 1,000 songs on their iPods. That is, typical iPod users acquired roughly 97% of their music from DRM-free platforms or other paid platforms. This implies that efforts to add layer upon layer of encryption are not only in vain, but misdirected.

Jobs offered a radical proposal near the end of his piece: "Imagine a world where every online store sells DRM-free music.... This is clearly the best alternative for consumers...." Two months later, Jobs and EMI announced that they would begin selling DRM-free music playable on any device and without any limitations on duplication for US$1.29 per song. Soon afterward, following Amazon's example, this price was reduced to US$0.99.

At the end of 2008, the Recording Industry Association of America (RIAA) announced that it would cease to sue individuals who illegally shared music online because the facts on the ground had demonstrated that unlicensed sharing of music had increased in spite of the RIAA's legal campaign. In fact, the campaign hadn't just failed, it had actively annoyed the public. By early 2009, Apple reported that 80% of the music on iTunes was now DRM-free, much to the delight and benefit of consumers.

With downloading eroding profits, the record industry has had to find other means of attracting consumers. Live performances, which can't be duplicated, have become its new profit driver. In fact, live music generated revenues of US$4 billion globally in 2008. The Taiwanese band Mayday tried something a little more innovative in the first half of 2009: it bundled a concert ticket with each of its CDs. The promotion succeeded in selling 190,000 CDs while also giving fans a taste of the joys of a live performance.

Now the e-publishing industry is facing its own DRM headaches, and is in many instances rehashing the same debates that the recording industry struggled with. Should texts be open or protected? If openness and sharing are fundamental to the Internet, how can publishers persuade authors to license the very problematic digital rights to their work?

With e-publishing still evolving, products are likely to be replicated across multiple platforms, from computers, cellphones, flash drives, and optical disks to e-readers and devices that have yet to be created. Sales models are also likely to be varied and will include individual sales, subscriptions, membership arrangements, and tie-ins. To avoid having to keep signing new contracts to cover each new future development, publishers are naturally eager to conclude single, comprehensive agreements.

However, "Publishers can't simply say, 'trust us, we won't harm you,' and expect to acquire broad rights to their writers' work," says Dick W. C. Lai, a lawyer specializing in copyright. "Not when they can't offer solid answers to any of the questions authors raise." Speaking at a conference on digital publishing rights, Lai recommended that until formats are unified and the commercial market really takes shape, publishers "shouldn't raise authors' expectations. Otherwise, authors are going to be very disappointed by the miniscule royalty payments they start receiving down the road."

On the other hand, authors suffer more when they are ignored than when they are pirated.

In 1996, the Brazilian author Paulo Coelho took the bold step of making the Russian translation of his The Alchemist available for free online. Within a year, sales of the book, which had previously languished at just 1,000 volumes, had grown tenfold.

Coelho's experience suggests that while e-books are convenient, they aren't all that amenable to collecting and owning. As long as people want to own things for themselves, good works will continue to sell. Surely there are better approaches than DRM to obtaining value from copyrights in the digital era.