Creators, Innovators, and Appropriation Mechanisms

In Creators, Innovators, and Appropriation Mechanisms, CPIP Senior Scholar Sean O’Connor tackles the erroneous narrative in copyright debates that tech firms produce “the innovative technologies and digital platforms of the future” while content owners “thwart this progress to maintain the status quo of an analog content world that no longer exists.” The reality, O’Connor explains, is that “innovators are creators and creators are innovators,” and they both develop new technologies and content. Moreover, they each depend on their IP rights to monetize the goods and services that they produce. In other words, creators and innovators both utilize IP-based “appropriation mechanisms” to profit from their creative innovations.

IP rights take many shapes: patents, trade secrets, copyrights, trademarks, publicity rights, etc. The common denominator, O’Connor reasons, is that they “allow producers of creativity, innovation, goods, or services to monetize their productions” by providing the foundation for the investment of time and resources. Despite their common reliance on IP, some tech innovators are attempting to undermine the appropriation mechanisms of content creators as they downplay the importance of their own appropriation mechanisms. These innovators devalue the IP rights of creators in order to make their own IP rights more valuable.

O’Connor gives the examples of search and social media platforms, which “largely monetize their technology innovations through advertising models.” These tech innovators would prefer “content creators to exercise minimal appropriation rights so that maximal content is freely available” for their platforms. The stage was set for such innovators, O’Connor explains, when the Supreme Court injected transformative fair use into the case law in Campbell v. Acuff-Rose. This doctrine was further developed in the “appropriation art” cases, such as those involving artists Jeff Koons and Richard Prince.

The “hubris” of such appropriation artists, notes O’Connor, is that they think “their contributions are valuable” while the contributions of others are not. The emergence of social media platforms has exacerbated this situation by allowing creative works to be “distributed around the world with a click of a mouse.” While supporters of this user-generated content culture often condemn “the allegedly outdated artifact of copyright law,” O’Connor argues that the copyright system supports a professional class of creators that produces the best creative works. Destroying the appropriation mechanisms for content creators would lead to a world full of “amateur song selfies.”

According to O’Connor, the irony of the “content wants to be free” mentality is that “social media platforms are themselves monetizing” content “through advertising and data mining.” And “it seems inequitable at best” for these platforms to advocate for free culture when they’re in the business of monetizing the culture of others. While some tech innovators ostensibly seek balance between the rights of creators and the public interest in access to knowledge, O’Connor notes that they often treat “free access as a trump card” to favor their rights over the rights of others.

O’Connor notes that both search and social media platforms depend on the content created by others to make a profit. This includes the “treasure trove of personal preferences and habits” that are packaged and sold as valuable data as well as the creative works with which users populate their platforms:

The business models of Google/YouTube, Facebook, Pinterest, Instagram, and other search firms and social media platforms rely on content as a mere “commodity” that is sent through the systems by users as fuel for this community of users to engage with the platforms in ever-increasing amounts. Because the business models are largely ad-based and depend on data mining for revenue, the number one imperative for the platforms is to maximize the number of users and click-throughs.

These platforms greatly benefit from Section 512 of the DMCA, which creates incentives for them to be “reactive, not proactive” when it comes to the rights of creators. Tech innovators get the advantages of the safe harbors by simply responding to takedown notices, and the threat of “red flag” knowledge encourages a hands-off approach. O’Connor points out how this leads to a perverse situation where search and social media platforms see “no upside to monitoring” for violations of creators’ rights.

O’Connor contends that the “most troubling aspect” of this situation is that search and social media platforms “appear to value their own contributions—the computer code and business model—over the vast amounts of other people’s content that effectively power use of their systems.” And this gets to O’Connor’s central point: These platforms are “economically benefitting from their own IP-protected services by monetizing these services through a model that undermines creators’ IP.” That is, it’s not that these tech innovators are anti-IP, it’s that they think their own IP is more important than the IP rights of creators.

To illustrate, O’Connor points to how Google heavily relies on its own IP:

[W]hen Google, for example, uses its advanced algorithms to profit from advertising and data mining tied to links to pirate sites or copyright-infringing content on its subsidiary, YouTube, it is very much relying on its patents, trade secret, copyright, and contract protections on these algorithms so that other search and social media firms cannot simply duplicate this code.

O’Connor explains that tech innovators can “freely advocate for copyright reform that would weaken copyright enforcement for content owners without much risk that any changes would hurt their own appropriation mechanisms.” Even if their efforts successfully weaken some of their own IP rights, such as copyright protections for their source codes, they have a panoply of other appropriation mechanisms that they can rely on instead, such as patents, trade secrets, contracts, and the like. Importantly, the same does not hold true for the many content creators that have only their copyrights to protect them.

In the digital age, the differences between creators and innovators are rapidly disappearing, and companies like Pixar, Getty Images, Valve, Netflix, and YouTube produce both new technologies and content. While the “rhetoric on the tech side” seeks to “paint this as a battle of the future versus the past,” O’Connor reasons that it “all comes back to inputs, outputs, and appropriation mechanisms.” Both creators and innovators require “inputs to develop their value-added outputs.” And while this may be easier to see with content creators, since their inputs and outputs are publicly accessible, the same holds true for tech innovators, whose technological inputs and outputs largely operate behind-the-scenes.

O’Connor concludes that creators and innovators alike depend on appropriation mechanisms, for without them, “few would be able to realize or implement their visions with any degree of certainty.” However, many tech innovators are attacking the appropriation mechanisms of content creators under “the guise of a kind of open source ethic for content.” But these innovators, O’Connor explains, are “simply trying to keep their input costs as low as possible while glossing over the fact that they vigorously control, protect, and monetize their outputs.” And as the line between creators and innovators further erodes, O’Connor hopes that these tech innovators will soon realize that the IP rights of creators are just as important as their own IP rights.