Police Ticketing Informal Rideshare... >>
<< 'Kony 2012' Filmmakers Can't Take Parody; Send...
 tdicon 
EFF Launches 'Defend Innovation' Site In An... >>
<< Would We Prefer HTC To Be Making Cool New...
 | 

Studies

by Mike Masnick

Wed, Jun 20th 2012 10:49am




Filed Under:
chilling effects, european union, investment

Companies:
cablevision, dropbox


The Chilling Effects On Innovation Caused By Bad Copyright Law

from the it's-feeling-frosty-in-here dept

We've talked a few times about how attacks on new innovations in the name of protecting copyright can create massive chilling effects. For example, the increasingly questionable arguments against Megaupload have created a real chill for online cloud storage providers. That was likely manifest last week in the news that Dropbox was killing off its "public folders" feature in deference to its link feature, basically making the product less useful.

Matt Schruers, from CCIA has an interesting blog post up which ties actions like those done by Dropbox here with a new study showing how the chilling effects of bad copyright law can impact innovation. The full study (pdf) is actually something of a follow up to an earlier study we wrote about, which showed how good judicial rulings on copyright which allowed for greater innovation (such as the Cablevision ruling, which allowed cloud-based DVRs to exist) contributed directly to greater funding of innovation.

This new study, also by Harvard professor Josh Lerner, highlights the unfortunate opposite impact: the chilling effects on investment in innovation that comes as a result of anti-innovation judicial rulings. In this case, Lerner looked at specific rulings in the EU:
We analyze the effects of a court ruling in France and several court rulings in Germany on VC investment in cloud computing firms in these countries. These court rulings were seen as negatively affecting the development of cloud computing, and our findings confirm this view by showing that these rulings regarding the scope of copyrights had significant, negative impacts on investment. Specifically, we find that VC investment in cloud computing firms declined in Germany and France, relative to the rest of the EU, after the French and German rulings. Our results suggest that these rulings led to an average reduction in VC investment in French and German cloud computing firms of $4.6 and $2.8 million per quarter, respectively. This implies a total decrease in French and German VC investment of $87 million over an approximately three year period. When paired with the findings of the enhanced effects of VC investment relative to corporate investment, this may be the equivalent of $269.7 million in traditional R&D investment.
Combine these two studies and you can see how these chilling effects can be quite massive in terms of investment in innovation. Of course, investment alone is not the sole determinant of the pace or success of innovation, but it is a key factor. And scaring investors away from innovations can have a major impact on the public and the economy.

34 Comments | Leave a Comment

If you liked this post, you may also be interested in...

Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Anonymous Coward, Jun 20th, 2012 @ 11:02am

    convincing governments that innovation is of more importance than protecting companies that produce little plastic discs is where the difficulty lies. it's very hard to 'encourage' politicians to look to the future and support a business that hasn't yet thrived when pitted against one that is already established, even though it is well out of date. but then, living in the dark ages is where so many politicians prefer to be, given their own ages

     

    [ reply to this | link to this | view in chronology ]

    •  
      identicon
      arcan, Jun 20th, 2012 @ 11:48am

      Re:

      maybe there should be age caps and term limits on any elected office then. like no one over 50 could be a senator or no one over 45 could be a representative. and i mean they can't run not oh you turn 51 your fifth year of senate-hood we can't let you run.

       

      [ reply to this | link to this | view in chronology ]

  •  
    icon
    average_joe (profile), Jun 20th, 2012 @ 11:10am

    We've talked a few times about how attacks on new innovations in the name of protecting copyright can create massive chilling effects. For example, the increasingly questionable arguments against Megaupload have created a real chill for online cloud storage providers. That was likely manifest last week in the news that Dropbox was killing off its "public folders" feature in deference to its link feature, basically making the product less useful.

    Yeah, it's terrible if tech companies have to think about other people's rights when choosing what features they provide. Not.

     

    [ reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Jun 20th, 2012 @ 11:21am

      Re:

      What about my right to use Dropbox to help distribute things that I've made?

      Why does the possible thought that someone, someday might use this feature for something that other people dislike more important than my ability to use this feature right now for legitimate reasons?

      Why do they win? Because they have more scary lawyers?

      Are you also pro gun-control because someone might do bad things with them? What about banning bleach and ammonia because you can do bad things with that combination? What about banning soft drinks because people might get fat? Where is the line where the possible bad use outweighs the possible good use?

      We have DMCA takedowns when actual bad use is discovered. They weren't using it. That's not my fault. But now I can't use Dropbox for legitimate purposes.

       

      [ reply to this | link to this | view in chronology ]

      •  
        icon
        average_joe (profile), Jun 20th, 2012 @ 11:51am

        Re: Re:

        There will always be services for sharing legitimate files, and the ones that do it best will be rewarded by the market. The law will always have a pull on technology. Less money being poured into questionable services isn't really a bad thing, IMO. That means the system is working. Sorry, but not all innovation is good innovation. Innovators need to take the law into account.

         

        [ reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Jun 20th, 2012 @ 11:52am

          Re: Re: Re:

          There is nothing questionable about the fundamental principle of a public folder. I upload stuff, people download stuff. Whether I use it for good or bad has nothing to do with the concept itself.

           

          [ reply to this | link to this | view in chronology ]

        •  
          identicon
          arcan, Jun 20th, 2012 @ 12:12pm

          Re: Re: Re:

          any sort of innovation is better than no innovation. which is what legacy industries want.

           

          [ reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Jun 20th, 2012 @ 12:14pm

          Re: Re: Re:

          What exactly is a "questionable service?" Who gets to define what a "questionable service" is? How is the public folder feature of Drop Box (or equivalent features of other online storage systems) in some way "questionable?" Is a storage location accessible by anyone on the internet somehow "questionable?" If so, we'd better shut down the internet.

           

          [ reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Jun 20th, 2012 @ 12:27pm

          Re: Re: Re:

          Name one service for sharing legitimate files that hasn't been dumbed down to the point of uselessness.

           

          [ reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Jun 20th, 2012 @ 1:54pm

          Re: Re: Re:

          Just like those pesky 'colonists' took English law into account when they were 'innovating' a new country....

          Oh snap... they totally ignored the laws that they did not agree with as free thinking individuals and attempted to create a more free, open, and honest society (and look how well that turned out...)

          Sorry, but not all laws are good laws. Laws need to take the will of the people into account. (FTFY)

           

          [ reply to this | link to this | view in chronology ]

      •  
        identicon
        Anonymous Coward, Jun 20th, 2012 @ 12:57pm

        Re: Re:

        if you are referring to megaupload - they were using DMCA takedowns, and are claiming they were within the law on that aspect. in fact a major issue of the case is about links vs files, which in my view is a drummed-up bogus argument by the DoJ trying to turn a technical issue into proof of criminal intent. In this sense - even worse. Things were done according to the law, and this is precisely because other cyberlockers are now falling over themselves to avoid the same fate - all pretty arbitrary.

         

        [ reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Jun 20th, 2012 @ 11:25am

      Re:

      Tech pirates on the other hand have no problem innovating.

       

      [ reply to this | link to this | view in chronology ]

      •  
        icon
        average_joe (profile), Jun 20th, 2012 @ 11:45am

        Re: Re:

        And they'll go right on innovating. Innovation doesn't mean doing whatever you can think of. It also means thinking about what you're doing. It's not only what can be done--it's also what should be done.

         

        [ reply to this | link to this | view in chronology ]

        •  
          icon
          :Lobo Santo (profile), Jun 20th, 2012 @ 11:47am

          Re: Re: Re: Classic!

          Ah yes, the old "you'd best think hard before trying to improve your corn crop by selective breeding because Monsanto might sue you" argument.

          Man, that's a classic!

           

          [ reply to this | link to this | view in chronology ]

        •  
          icon
          The eejit (profile), Jun 20th, 2012 @ 11:52am

          Re: Re: Re:

          Oh the irony.

          What should be done is to scrap IP in its current forms and a complete reboot of the whole damned thing.

           

          [ reply to this | link to this | view in chronology ]

          •  
            identicon
            Anonymous Coward, Jun 20th, 2012 @ 2:33pm

            Re: Re: Re: Re:

            Well scrapping IP completely from one day to the next will probably cost like 2-5 % of the western countrys jobs. That is a pretty steep cost for something like scrapping IP. Might as well illegalise import and gathering of oil.

            While the intentions are good, it is just a catastrophy economically! The right way to do it is to keep laws reasonable(that is close to status quo or slightly laxed), have judges be pragmatic and tell the industry to live or let die...

             

            [ reply to this | link to this | view in chronology ]

    •  
      icon
      The Groove Tiger (profile), Jun 20th, 2012 @ 12:03pm

      Re:

      As usual, average_joe demonstrates a complete lack of journalistic integrity with this comment. Not a single source cited, nothing fact-checked. Just the worst type of "reporting" possible to come from a wannabe journalist like this.

      And you claim to be a reporter? C'mon, you can do better than that.

       

      [ reply to this | link to this | view in chronology ]

      •  
        icon
        E. Zachary Knight (profile), Jun 20th, 2012 @ 12:32pm

        Re: Re:

        Don't forget, he did not negotiate with Mike in order to quote that paragraph. He is violating his own principles.

         

        [ reply to this | link to this | view in chronology ]

        •  
          icon
          average_joe (profile), Jun 20th, 2012 @ 1:02pm

          Re: Re: Re:

          lol

           

          [ reply to this | link to this | view in chronology ]

        •  
          icon
          The Groove Tiger (profile), Jun 20th, 2012 @ 3:10pm

          Re: Re: Re:

          I see. Obviously, claiming to be a journalist is not an excuse to steal other people's hard work. Thousands of corn farmers probably lost their jobs due to the amount of text he quoted for free.

          His fixation on 12-year old boys only makes his lack of morals more obvious.

           

          [ reply to this | link to this | view in chronology ]

    •  
      identicon
      freedom (TM), Jun 20th, 2012 @ 12:14pm

      Re:

      simple minds with simple answers

       

      [ reply to this | link to this | view in chronology ]

    •  
      identicon
      VMax, Jun 20th, 2012 @ 12:18pm

      Re:

      You mean Granted Monopoly control, not right.

       

      [ reply to this | link to this | view in chronology ]

  •  
    identicon
    Applesauce, Jun 20th, 2012 @ 11:11am

    Stopping Innovation is the intention.

    The legacy players WANT innovation prevented. For them, this is a feature, not a bug. Disruption is the biggest threat to their rice bowl.

    A naive observer might wonder why the legacy players don't try to innovate themselves, but that would require work, thought, and foresight. Much easier to simply shut down any competition.

     

    [ reply to this | link to this | view in chronology ]

  •  
    identicon
    bob, Jun 20th, 2012 @ 11:16am

    Astroturfing from Big Search...

    What do you expect?

    I can tell you that copyright law also increases innovation and investment. If there's no return on making a movie, book, album, etc., no one is going to pay for it.

    Here's an experiment for you: go to investors and ask for money to make something and release it into the public domain. Then go to a control group and promise to copyright it and sell it. You'll get a much more positive response from the second group. That's the kind of innovation that real copyright supports.

    Big Search just wants to make sure that its source of free content keeps flowing because they can't make their billions selling ads if they actually have to share with the content creators. (That's one kind of sharing that Big Search doesn't believe in supporting.)

     

    [ reply to this | link to this | view in chronology ]

    •  
      identicon
      arcan, Jun 20th, 2012 @ 11:52am

      Re: Astroturfing from Big Search...

      Micheal bay's 500 million dollar boom-fests are not innovative in the slightest. they are just massively wasteful. the average surat could make a better movie for a 10th that price.

       

      [ reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Jun 20th, 2012 @ 1:29pm

      Re: Astroturfing from Big Search...

      "Here's an experiment for you: go to investors and ask for money to make something and release it into the public domain. Then go to a control group and promise to copyright it and sell it. You'll get a much more positive response from the second group. That's the kind of innovation that real copyright supports."

      That almost sounds like a challenge for an interested individual and Kickstarter to take on at some point.

       

      [ reply to this | link to this | view in chronology ]

    •  
      icon
      Richard (profile), Jun 20th, 2012 @ 2:00pm

      Re: Astroturfing from Big Search...

      Here's an experiment for you: go to investors and ask for money to make something and release it into the public domain. Then go to a control group and promise to copyright it and sell it. You'll get a much more positive response from the second group. That's the kind of innovation that real copyright supports.

      Funny thing is that when that experiment has actually been done (eg on Kickstarter) the result has been the exact opposite of what you claim!

       

      [ reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Jun 20th, 2012 @ 5:46pm

      Re: Astroturfing from Big Search...

      I can tell you that copyright law also increases innovation and investment. If there's no return on making a movie, book, album, etc., no one is going to pay for it.

      "Is the copyright on this piece of entertainment still enforced? If not, I'm simply not going to partake in it!"

       

      [ reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Jun 20th, 2012 @ 11:20am

    Sure we may be killing maybe $1 billion dollars of investment in the economy with our strict IP enforcement, but it's well worth the cost considering we're saving $1 million dollars a year for legacy industries.

    Oh wait, our deterrence isn't saving ANY money for legacy industries? Well then we'll have to pass even more draconian laws that cost us $10 billion a year in investments, and if that doesn't work then even more draconian laws will be needed!

     

    [ reply to this | link to this | view in chronology ]

  •  
    identicon
    zippy, Jun 20th, 2012 @ 12:32pm

    "BUT, BUT... COPYRIGHT MUST BE PROTECTED AT ALL COSTS!!! EVEN IF WE HAVE TO DESTROY ALL OF CIVILIZATION TO DO IT! OLD GUARD LEGACY MEDIA INDUSTRIES MUST NOT BE FORCED TO CHANGE, EVER!! THEY MUST ALWAYS BE ALLOWED TO SWINDLE—ER, EARN—AS MUCH MONEY FROM THE PUBLIC AS THEY HAVE ALWAYS MADE, REGARDLESS OF THE ADVANCE OF TECHNOLOGY! TECHNOLOGY MUST BE DESTROYED, EVEN THOUGH THE MODERN RECORDING AND FILM INDUSTRIES WOULDN'T EXIST WITHOUT IT!!! YOU CANNOT MAKE US CHANGE!! NEVER!!! PIRACY!! PIRACY!! PIRACY!! RANDOM CATCHWORD #62497581!! MAXIMALISM!! MAXIMALISM!! MONEY!! MONEY!! MONEY!! WAAAAAAAAHHHHHHH!!!!!"

    /sarc

     

    [ reply to this | link to this | view in chronology ]

    •  
      identicon
      arcan, Jun 20th, 2012 @ 1:17pm

      Re:

      where is your start sarc.... according to you everything above the /sarc is all sarcasm...

       

      [ reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Jun 20th, 2012 @ 1:36pm

      Re:

      This time period is going to be referred to as the "Second Dark Ages" by historians a few hundred years from now. Because by then I bet a lot of the stuff that survives from this period will be locked down in DRM and/or proprietary formats from companies that have long since gone out of business and taken all their precious imaginary property into the same black hole that they and their massive arrogance collapsed into.

      That said, given the success rate of DRM in the present time, odds are that cracking through the digital handcuffs and releasing the culture of the past probably won't be that difficult for the historians of whatever enlightened era follows this one after our present civilization is dragged halfway back to the stone age in the name of copyright and monopoly protection.

       

      [ reply to this | link to this | view in chronology ]

  •  
    icon
    Richard (profile), Jun 20th, 2012 @ 2:10pm

    Dropbox public folders

    As a committed dropbox user I have to say that - whatever the merits of this story in general terms - I can't agree with the comment about dropbox public folders. The link feature is actually a better way of achieving the same thing. You can post a link to any dropbox folder - which then becomes effectively a public folder. It made no sense to have two ways of doing it. If I was running dropbox I would have done the same. This has nothing whatever to do with chilling effects, it is just a sensible technical rationalisation.

     

    [ reply to this | link to this | view in chronology ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Save me a cookie
  • Note: A CRLF will be replaced by a break tag (<br>), all other allowable HTML will remain intact
  • Allowed HTML Tags: <b> <i> <a> <em> <br> <strong> <blockquote> <hr> <tt>
Police Ticketing Informal Rideshare... >>
<< 'Kony 2012' Filmmakers Can't Take Parody; Send...
 tdicon 
EFF Launches 'Defend Innovation' Site In An... >>
<< Would We Prefer HTC To Be Making Cool New...
 | 
Follow Techdirt
Flattr rss rss
A word from our Sponsors...
Sponsored Resource
Essential Reading
Techdirt Reading List
Techdirt Insider Chat

A word from our Sponsors...
Recent Stories

Saturday

9:00am: Awesome Stuff: Cool Product Designs (4)

Thursday

12:52pm: AT&T Continues To Mock The Concept Of Net Neutrality; This Time With Google Hangouts Block (29)

Wednesday

11:43am: The McCain Cable Bill Can Only Do So Much; Real Change Is Market-Driven (25)

Saturday

9:00am: Awesome Stuff: Time To Rethink Your Keyring (11)

Tuesday

8:57am: Over 90% Of The Most Innovative Products From The Past Few Decades Were NOT Patented (35)

Monday

6:00am: When Startups Need More Lawyers Than Employees, The Patent System Isn't Working (53)
5:13am: Moral Panic Over Google Glass: White House Petition Asks To Ban Them To Prevent 'Indecent' Public Surveillance (79)

Saturday

9:00am: Awesome Stuff: Films About Things Techdirt Talks About (20)

Friday

5:11am: Blackberry CEO Predicts Tablets Will Be Obsolete In Five Years (54)

Thursday

3:25pm: Giant Patent Troll Intellectual Ventures Does 'Study' To Show How Much Everyone Loves Patents (22)
More arrow
A word from our Sponsors...

Close

Email This