Everything in Its Right Place: Social Cooperation and Artist Compensation Leah Belsky Yale Law School Information Society Project
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Michigan Telecommunications and Technology Law Review Volume 17 | Issue 1 2010 Everything in Its Right Place: Social Cooperation and Artist Compensation Leah Belsky Yale Law School Information Society Project Byron Kahr Max Berkelhammer University of Colorado Cooperative Institute for Research in Environmental Studies Yochai Benkler Harvard Law School Follow this and additional works at: http://repository.law.umich.edu/mttlr Part of the Commercial Law Commons, Entertainment, Arts, and Sports Law Commons, and the Internet Law Commons Recommended Citation Leah Belsky, Byron Kahr, Max Berkelhammer & Yochai Benkler, Everything in Its Right Place: Social Cooperation and Artist Compensation, 17 Mich. Telecomm. & Tech. L. Rev. 1 (2010). Available at: http://repository.law.umich.edu/mttlr/vol17/iss1/1 This Article is brought to you for free and open access by the Journals at University of Michigan Law School Scholarship Repository. It has been accepted for inclusion in Michigan Telecommunications and Technology Law Review by an authorized editor of University of Michigan Law School Scholarship Repository. For more information, please contact [email protected]. EVERYTHING IN ITS RIGHT PLACEt: SOCIAL COOPERATION AND ARTIST COMPENSATION Leah Belsky* Byron Kahr** Max Berkelhammer*** Yochai Benkler**** Cite as: Leah Belsky, Byron Kahr, Max Berkelhammer and Yochai Benkler, Everything in Its Right Place: Social Cooperationand Artist Compensation, 17 MICH. TELECOMM. TECH. L. REV. 1 (2010), available at http://www.mttlr.org/volseventeen/belsky.pdf The music industry's crisis response to the Internet has been the primary driver of U.S. copyright policy for over a decade. The core institutional response has been to increase the scope of copyright and the use of litigation, prosecution, and techni- cal control mechanisms for its enforcement. The assumption driving these efforts has been that without heavily-enforced copyright, artists will not be able to make a living from their art. Throughout this period artists have been experimenting with approaches that do not rely on technological or legal en- forcement, but on constructing web-based business models that engage fans and rely on voluntary compliance and payment mechanisms. Anecdotal reports of such efforts have occasion- ally surfaced in the media. Here we present the first extensive sales-data evidence, gleaned from hundreds of thousands of t 'Everything in its Right Place' is the title of a Radiohead song. It can be found on Kid A, the group's 2000 album. * Leah Belsky is a Visiting Fellow at Yale Law School's Information Society Project and a VP of Strategic Development at Kaltura, the world's first open source video platform. She has a J.D. from Yale Law School and an A.B. from Brown University. ** Byron Kahr is an associate at Strumwasser & Woocher LLP, a public interest law firm in Los Angeles, California. He has a J.D. from Yale Law School and a B.A. from North- western University. His band, City of Progress, released a full length album called RIVIER in May 2010. *** Max Berkelhammer has a B.A. from Pomona College and PhD in Earth Sciences from the University of Southern California. He is currently a research fellow at the Coopera- tive Institute for Research in Environmental Sciences at the University of Colorado in Boulder. He is a multi-instrumentalist for City of Progress and a founding member of the band. **** Yochai Benkler is the Jack N. and Lillian R. Berkman Professor of Entrepreneurial Legal Studies at Harvard Law School, and Faculty Co-Director of the Berkman Center for Internet and Society at Harvard University. I 2 Michigan Telecommunications and Technology Law Review [Vol.17:1 online voluntary transactions,from three web-based efforts over a period of several years. This Article examines the effectiveness of these voluntary models as compared to the baseline-forcing system advocated by the industry and adopted and enforced by Congress and successive U.S. administrationsover the past fif- teen years. Platforms for artist-fan cooperation are complex and dynamic systems, sensitive to a variety of design factors that can either increase participation and prosocial behavior or dampen participation and enable anti-social behavior In addition to providing substantial evidence for copyright policy, our study reports field observations of the design characteristics that support cooperation. A growing literature experimentally and theoretically explores prosocial behavior that signtifcantly and systematically refutes the self-interest hypothesis characterizing most rational actor modeling. This literature has not yet been translated into a design approach aimed specifically at designing systems of cooperation. Building on experimental and theoretical literature in diverse fields of behavioral sciences, we synthesize a series of design levers that should improve the degree to which individuals coop- erate. We then specify how these design levers might be translatedinto specific user interfacefeatures, describe the ways in which these design levers have been utilized in the sites under study, and present hypotheses about additional features that could improve cooperative outcomes. The Article contributes to the Internet copyright policy debates by offering empirical evidence showing that well-designed vol- untary cooperation models compare favorably to more aggressive and widely criticized enforcement policies based on copyright law and the Digital Millennium CopyrightAct. It pro- vides an empirical foundation for challenging the guiding assumptions of those policies. Fall 2010] Everything in Its Right Place 3 INTRODUCTION ........................................................ 3 1. THE EMERGENCE OF VOLUNTARY PAYMENT AS A MODE OF ARTIST COMPENSATION..................6...............6 II. MUSIC INDUSTRY BASELINES ................................. 12 III. RESULTS FROM THE THREE STUDY SITES...... ................ 15 A. Jane Siberry's Online Music Store.......................... 16 1. Stable Cooperative System .................... 21 2. Norm-Driven Cooperators, Focal Points, and Asymmetric Contribution .................. 24 B. Magnatune-InternetLabel with Flexible Pricing Scheme........................... 26 1. Stable Cooperative System-Over 90% of Revenue Generated from People Paying More than the Minimum Required .................... 31 2. Coordination Around Focal Points and Norm-Driven Behavior ................. ..... 33 3. Asymmetrical Payments ........... .......... 34 C. Jonathan Coulton-IndividualArtist Developing Cooperative Relationship with Fans .................. 35 IV. DESIGNING FOR COOPERATION ............................... 38 V. USE OF DESIGN LEVERS IN INTERFACE DESIGN IN STUDY SITES...................................52 CONCLUSION ......................................................... 61 INTRODUCTION Making a living as a musician has never been more complicated. The Internet's near total eclipse of the media environment, along with ad- vances in recording technologies, have drastically reduced the cost of recording and distributing music. As a result, more musicians than ever are able to realize their vision without relying on the mainstream music industry's traditional filtering role. Meanwhile, the major record labels continue their long decline amidst falling CD sales and only modest suc- cess with alternative models. Music fans are increasingly accustomed to consuming music without paying for it, via streaming content, downloading from file-sharing networks, or copying from friends.' In short, long-standing structures for artist compensation are collapsing at 1. See Jon Pareles, 1,700 Bands, Rocking as the CD Industry Reels, N.Y. TIMES, March 15, 2008, at Al ("In an era of plummeting CD sales and short shelf lives even for cur- rent hit makers, the [South by Southwest Music Festival] is full of people seeking ways to route their careers around what's left of the major recording companies."). 4 Michigan Telecommunications and Technology Law Review [Vol. 17:1 just the moment when new possibilities for production and distribution have emerged. 2 In the face of all this change, both media companies and musicians themselves are cultivating new models for distributing recorded music, often bypassing established intermediaries to engage directly with con- sumers. A variety of models have emerged, each seeking to monetize the dissemination of digital music, and in so doing, provide artists with a stable stream of revenue. Cooperative models-approaches to the sale and distribution of mu- sic that rely on voluntary contributions and other forms of prosocial fan behavior-are beginning to appear in many different forms.' World fa- mous bands and relative unknowns alike have experimented with cooperative models, authorizing fans to download music without paying for it, but appealing to fans' sense of generosity, community or obliga- tion in asking for voluntary contributions. Some artists are appealing directly to fans to raise the funds necessary for recording and distributing new material. Entrepreneurs have launched new business models de- signed to harness the power of cooperative fan behavior, providing artists with platforms for engaging their fans' goodwill. Indeed, the basic logic of the tip jar is emerging in many forms, with models evincing a range of sophistication and ambition. This Article analyzes three such models-Magnatune.com, Jonathan- Coulton.com, and Sheeba.ca-. All three enable artist-fan cooperation. Their approaches range from allowing