Virgil Cojocaru is a JD candidate at Osgoode Hall Law School.

‘The Long Tail’, written by Chris Anderson refers to the alleged effect of online stores such as Netflix appealing to smaller niches. Individually these niches do not yield a large profit, but collectively (hence the long part) they can provide a handsome reward. Some academics, such as Sergui Netessine at the University of Pennsylvania have risen to challenge this theory. They argue that niche title consumption is not expanding as fast as its availability is increasing online. Yet big title consumption is skyrocketing. Chris Castle’s post on IP Osgoode elaborates on this finding in greater detail.

Anderson’s argument that his analysis is based on absolute numbers rather than relative numbers might be moot. Critics argue trends are set by relative numbers. In terms of percentage niche rentals are declining. On the other hand, Netflix’s 20% top movies account for an increasing percentage of rentals. This pattern points to the inevitable consolidation of the online titles towards the most popular. It appears the tail did not expand far enough, and stayed rather flat. I will explain what I mean by the former characterization in the following paragraphs, and why I think the former is linked to the latter.

What challenges does this pose for IP and copyright?

First, there are only a few titles which make big profits for rights holders. If their consumption has skyrocketed on legal distributions sites such as Netflix, imagine the traffic on P2P sites. This is infringement under s. 27(1) of the Canadian Copyright Act, for overstepping the rights of the owner outlined in s. 3. However, it is hard to see how much money is lost, because after all P2P sites are part of a black market. This is another challenge for copyright in general. Rights holders are bleeding out; however, it is hard to tell just how fast.

This brings forward a unique challenge for copyright—a balancing act of sorts. Too much control on the Net would stifle transactions and undermine the whole purpose of the IP regime to encourage the creation of new works. Bill C61 tried to address the balance between rights holders and users, taking into account new technologies. Please see sections 29.21 and 29.22.

Perhaps the only way is to compete with P2P. Legal sites might have niche titles available, but perhaps they do not have enough of them. There are certain publishing barriers in terms of cost. This is not a problem for P2P. The black market might have niche titles which could not pass the publishing barrier, as well as looked after classics which are not worth republishing. Anderson might have gotten part of his point right. So far, this data shows that people are not willing to forget about big titles any time soon, so they will not switch only to niche titles. This does not mean that they are not also looking for niche titles. Perhaps the reason why niche consumption on legal sites is not growing reflects a lack of variety when compared with P2P. Competition is all about relativity.

If this is the case, it promises to be a serious problem for the copyright regime, both in terms of relevance and the protection of economic rights. Due to today’s digital and communication technologies more people are creating. To be able to capitalize on your economic rights as a creator you have to find a publisher who is willing to sell it on the market. However, if such creators cannot get past the publishing barrier, the only other way to get such exposure is on P2P. This means that the author might not receive compensation for their work. At the same time, the copyright act becomes less relevant.

How might this be overcome? Through the Internet and digital storage technology. If a ‘niche’ title is forecast to make less money, have different levels of publishing. Make it only available online to save publishing costs. In order for the IP system to stay relevant it has to keep attracting new talent. Today’s niche titles could be tomorrow’s hits. This has to be complemented by a reformed legislative framework which sets specific structures for dealing with today’s technologies, giving rights owners the security they might need to explore new applications on the Net. Both the law and our way of applying copyright have to change.

Posted in Contracts, Copyright, Digital Downloads, IP, Infringement, Internet, Internet Sharing, Movies, Technology, copyright reform