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May 21, 2010

James Murdoch: British Library’s newspaper archive harms the market

James Murdoch, chairman and chief executive of News Corporation, Europe and Asia, opened UCL’s Centre for Digital Humanities last night with a lecture that attacked the British Library for its plans to make a digital archive of over 40 million newspapers available online.

Here is the full speech:

Tomorrow’s Humanities

Ladies and gentlemen, Provost, distinguished guests.

It is a great honour for me to deliver the first annual lecture of the University College London Centre for Digital Humanities.

I want to use this opportunity tonight, not only to celebrate the mission of the Centre, but also to reflect with you more widely on technology, culture and society.

I’d like tonight in particular to discuss the consequences for creativity of this digital world we now live and work in.

To think about the implications of universal connectivity; of the instant distribution of

content; and of an imbalance that exists between the humanities and technology.

I count myself lucky to work in the creative industries, a sector populated by companies that increasingly operate across all parts of the digital world. Our business – News Corporation – is just one of those companies.

Today we publish atlases – that business at Collins is two centuries old – as well as Wolf Hall; we make movies and TV, from Avatar to Slumdog Millionaire, to national Geographic documentaries and Glee; we publish The Sun every day; more Bibles than anyone else in the world; and the world’s pre-eminent business newspaper, The Wall Street Journal.

That breadth prompts some thoughts which I would like to share with you, whether you are a scholar, an engineer, or an artist. Whatever your background and viewpoint.

I make these remarks at a time of great debate about the future of journalism. Many voices predict its demise as it goes through a transition from being a medium that is predominantly physical to one that is predominantly digital.

It is in this context of real consequence that The Times and The Sunday Times will soon become among the first papers in the world to assert a fair value for their online editions.

I am particularly delighted to be here tonight because the mission of the Centre is something that is important to me.

There is some irony in a college drop-out addressing such a distinguished audience, in such a distinguished place.

An early flirtation with Academia, starting as a teenage volunteer with a pick axe – more hard labour than ivory tower, I learned – and ending some years later in the bowels of the British School at Rome, was never going to get me here.

My career has since taken a somewhat different path. But it has remained, I would say, absolutely within the same field: because today’s creative industries are tomorrow’s humanities.

As a discipline, the digital humanities have grown from the simple use of databases in scholarly work, to an approach championed here at UCL: a partnership in which technology is neither the servant of the humanities, nor its master, but an equal partner.

The result has been a balance that has fostered innovation on both sides.

To take one example from the work you do here: the digital exploration of the complex stratigraphy of the Vindolanda tablets from Hadrian’s Wall. That work has led in turn to the improvement of scanning and diagnosis of breast cancer.

Or how 3D imaging is being improved through the challenge of being applied to ancient material like the fragments of the Thera frescoes: tiny pieces of which can now be recombined more accurately and quickly than could have been achieved by human eye and hand.

And I must also mention the project that aims to bring together the voluminous unpublished writings of Jeremy Bentham into a single digital resource.

This is an act both of scholarship, and of filial piety towards one of the founding fathers of University College itself. And I understand that Bentham himself will be presiding – both in spirit and in body – over our drinks later tonight.

These initiatives – and there are many more – reflect the way in which the world of scholarship now has the benefit of technology that would have amazed a scholar working even a decade ago, let alone in Bentham’s day.

Italo Calvino memorably put the reader in a network of lines that intersect in his groundbreaking mystery of misprints, lost endings, found beginnings, and unexpected ordering out of chaos – If on a Winter’s Night a Traveller.

We find ourselves at such a nexus today. We have little regard to geography, or indeed time: we are always in a centre of learning, at an intersection of opportunities.

We can study NASA’s photographs of exploding galaxies, Darwin’s papers, or Lincoln’s letters, with ease. We can jump from one place – the Sky News app – to another – the shopping basket waiting to be delivered – all on our smartphones, at the tap of a finger.

It brings to mind Bilbo Baggins’ half-warning, half-dare to his second cousin: ‘It’s a dangerous business â€¦ going out of your door…you step onto the Road, and if you don’t keep your feet, there is no knowing where you might be swept off to.”

That road is open to us all the time, wherever and whoever we are. We are immersed in a digital world, at an intersection of infinite possibility and complexity. This is not some sort of prediction.

The boundaries between types of media have already gone. Every one of our cultural and creative activities can be expressed as a series of ones and zeros. And because they have a common environment, you can flow them into one another and mix them up, virtually without friction, or any sense of physical time and space.

Tonight I want to ask what that world means for the balance between technology and creativity. To ask whether that balance has been upset.

Whether the relationship between creators and their rights, and the means of distribution, needs to be reformed.

I want also to try to put into context the prevailing consensus about the digital world and the way in which it works – the consensus that the free flow of information not only can, but must, literally, be free.

I want to inquire – as dispassionately and factually as I can – into what drives that consensusâ€¦ because I believe that the digital consensus is flawed. Although expressed in terms of high principle and morality, it is more revealing to study the economics of the thing – to find out what’s really going on.

I want to show you that restoring the balance between creators and the means of distribution would be a huge spur to creative growth â€¦ and that an approach based on experience – on a proven approach to protecting creative vision – is the key to a thriving creative sector and a rich and continuing tradition of these digital humanities.

Forgive me if I sound foreboding. I know – the established consensus about the digital world today is straightforwardly utopian.

First, it has a firm belief that the old rules relating to physical things like books and music are simply irrelevant to the digital world, so there is no point in looking back. As many people put it, we have a new paradigm: we all own everything, so no-one owns anything.

The internet – and everything on it, it is said – wants to be free.

Second, digital networks are depicted as forces of nature. The idea that anyone might try to shape the future, to influence events, to innovate with an outcome, is seen as foolish – or indeed out-of-touch.

You can see why this vision appeals. It feels radical and new. It makes sense of some of the things that we see around us. And a lot of digital change is genuinely exciting and fun to be involved in.

Anyone who has watched the two minute and 18 second retelling of the entire Star Wars trilogy – in Lego – will know what I mean.

Yet there are some immediate concerns. We cannot just assume that greater connectivity is a force for good in and of itself.

It might be easy to assert that if everyone, everywhere, can access anything with a browser and a broadband connection, then our society – all societies – are going to be wiser, better informed and more democratic.

In many ways that is true. But we must not be naÃ¯ve to the fact that this frictionless society is one which is uncharted – and human behaviour in a context of ultimate plurality – huge choice and connected everywhere – is still a new subject.

We certainly have easier, faster, cheaper ways to share with each other. But we have to face the fact that a huge amount of the capacity now available is used to distribute things without the permission of their creators, let alone any payment to them.

In the first quarter of this year alone, there were 190 million downloads of Hollywood content in just 20 countries.

You can add to that substantial illegal web streaming, where viewers watch without downloading. This is not the stuff of a few students outwitting the system. It is deliberate and on an industrial scale.

The numbers continue to show that well over half of all internet traffic consists of illegal file sharing and other forms of piracy.

I am struck by the number of commentators who switch seamlessly from one strongly moral argument in favour of free content as being good for society: to another which seems to me to be completely immoral: saying that we can’t stop people distributing content without permission, so we may as well give everyone the right to do so.

Finally, it is true that new models of ownership and commercial activity have developed in the networked world. And, indeed, that many people like to share their material for nothing greater than the simple recognition of their authorship. But is it right to assume that the system will only allow for everyone’s doing so? All of the time?

Now would be a good time to pause, and to ask: who gains? Why are these utopian arguments so prevalent and powerful? In whose interest is their primacy?

Putting the rhetoric of freedom to one side, what we can see is a number of competing interests on a common digital terrain.

Let’s start with creative companies – and remember I work for one. Although they range in size from global players to oneâ€man shops, every one of them has a clear interest in producing creative material that people want to buy – for a fair price.

They have an interest in ensuring that creators are incentivised to continue to produce material that audiences want. They naturally place a high value on independent creativity.

Other companies have completely different incentives.

Take the search business. It depends on an ability to index and search other people’s material, and present the results of those searches to its users surrounded by advertising.

Search is a highly profitable business, because the raw material presented to customers can be indexed at essentially zero incremental cost.

Therefore, information that might only be searched or indexed with a fair price paid to the producer undermines that model.

What is often absent from the public’s understanding and commentators’ calculation, is that without investment in original content in the first place, there will be little to index, search, and aggregate.

We should also consider consumer electronics companies and device makers. Devices –however smart they look and however innovative they are – are lifeless without content.

Manufacturers have a clear incentive to drive the cost of content toward zero – in order to drive customers to buy their products, without additional competition from rights holders for their customers’ money.

This digital terrain is crowded – but it’s not only populated by commercial interests.

A public body like the British Library, for example, is not driven by a bottom line. But as an organisation, the Library has a clear incentive to extend the range of its services as widely as possible and thus secure more public funding to do so.

This is a circular process: funding drives new activity, which creates more requests for funding; popularity makes demands on the public purse easier to bear.

Take the current controversy over the Library’s intention to provide unrestricted access to digital material.

Material that publishers originally produced – and continue to make available – for commercial reasons.

Like the search business, but motivated by different concerns, the public sector interest is to distribute content for near zero cost – harming the market in so doing, and then justifying increased subsidies to make up for the damage it has inflicted.

The case of the British Library goes even further. Just yesterday, the Library announced the digitisation of their newspaper archive – originally given to them by publishers as a matter of legal obligation.

This is not simply being done for posterity, nor to make free access for library users easier, but also for commercial gain via a paid-for website. The move is strongly opposed by major publishers.

If it goes ahead, free content would not only be a justification for more funding, but actually become a source of funds for a public body.

When we look over this terrain, we can see the economic pressures driving down the value of content are very powerful. Arguments over rights and wrongs seem little more than a disguise for self-interest.

‘So what?’ you might say. That’s competition. And in large part I would agree with you.

But I would urge you to bear two things in mind.

First, cultural content has a social importance different from, say, the automobile or energy markets, and beyond its economic contribution – because it is the sphere of ideas, imagination, accountability and communication. It’s economic – and therefore self-perpetuating – independence is essential to the functioning of a democratic society.

If you want to understand why that matters, look at journalism.

Journalism was the making of News Corporation; it is still fundamental to what we do; and we believe utterly and completely in the contribution independent journalism makes to a free society.

Yet journalism – print and digital – faces trouble. In the last year in the U.S. alone, 109 newspapers shut down or stopped publishing a print edition, leaving many cities without a single paper.

The reasons are not hard to understand. Search companies and aggregators skim content from a thousand sources, sell it to clients, scoop up advertising revenues and put little or nothing back into professional newsgathering.

Second, many of the pressures on content – journalism included – are caused by governments. Frankly, states provide a level of subsidised news that is: incredibly high; comprehensive; and well funded.

The creative industries are not without blame – acquiescing, or simply not reacting, for far too long. But that period is ending.

I believe that if there is an imbalance between the providers of creativity and those who exploit it, then we should care about it, and do something about it. Not in the interests of a particular company or sector. It is the public whose interest we need to serve – both people now, and future generations who deserve to enjoy the richness and diversity of material that we know we are capable of producing.

My questions this evening are therefore simple but fundamental.

Do we at present have a fair balance? I do not believe we have, and I fear that the problem is growing rapidly worse.

Has it moved against the creators in favour of distributors, whether public or private?

In my view, yes it has: and it has done so decisively.

What should we do to restore balance to the system? Is there anything that we can do? The answer is simpler than you might think.

On the wall behind me you see the words: ‘remember the days of old: consider the years of each generation’. Of all places, in this room we should be mindful of that maxim in answering those questions.

Because we have been here before as a society, and we have arrived at rather different conclusions to those of the digital consensus that I described a moment ago.

We happen to be almost exactly at the three-hundredth anniversary of one of the first codifications of intellectual property rights: the introduction of literary copyright into British law.

In 1710 – on the 10 April, to be exact – Parliament passed the so-called Statute of Anne. I’ll quote from its preamble, in which it announces itself to be:

An Act for the Encouragement of Learning, by Vesting the Copies of Printed Books in the Authors or Purchasers of such Copies, during the Times therein mentioned.

It then explains what had been happening:

Whereas Printers, Booksellers, and other Persons, have of late frequently taken the Liberty of Printing, Reprinting, and Publishing, or causing to be Printed, Reprinted, and Published Books, and other Writings, without the Consent of the Authors or Proprietors of such Books and Writings, to their very great Detriment, and too often to the Ruin of them and their Families…

And it goes on to say that a law should be enacted:

…For Preventing therefore such Practices for the future, and for the Encouragement of Learned Men to Compose and Write useful Books.

The Statute was a reaction to a time of unprecedented technological change. Printing presses offered the prospect of cheap copies of books, and the knowledge they contained, for the many instead of just the elite.

Low-cost copying and distribution had created a revolution in access to information.

The approach of the authorities in Britain to the invention of printing, as in most countries, had at first been control and censorship. For many years in English law there had been a legal cartel in printing: only members of the Stationers’ Company were permitted to publish books.

In 1695 the Stationer’s monopoly was allowed to lapse, and when it was finally replaced fifteen years later, the Statute of Anne ushered in a transformative new approach.

Not only did the Statute create for the first time in English law a system of copyright, but crucially it recognised also the rights of the author – the creator – alongside that of the printer and bookseller.

The legislature had listened to the voices of those, like John Locke and Daniel Defoe, who had argued that – and I quote: ‘To print another Man’s copy is much worse than robbing him on the Highway; for the Thief takes only what he finds about him, but the Pyrate Printer takes away his inheritanceâ€¦[which] both is and ought to be the Due, not of the Author only, but of his Family and Children.’

The Statute was the start of the development of a system of copyright and of authors’ rights that now extends to forms of creativity that were undreamt of in the days of Queen Anne, and to issues way beyond the regulation of the London book trade.

The statute reflected and encouraged the transition in literature from a system in which aristocratic patronage was key – a state of affairs that had existed since at least the time of Augustus and Vergil – to that in which writing became a profession at which one could make a living.

This was the era of Pope, and Johnson, and writers after them.

It is not a coincidence that Pope himself was a keen litigant in matters affecting his intellectual property, or that Johnson’s most famous remark is directly concerned with the economics of creativity. ‘No man but a blockhead ever wrote, except for money’ has become worn by over-use, and was in part a joke: but it carries a clear message about the reality and opportunity of late 18th Century literary life.

Of course, wealthy people still today commission art works or make gifts to museums.

Patronage is far from dead. But copyright developed a way to provide the creator with an income into the future: a longer term in which more creation was enabled and authors could control their careers and pursue their visions.

If you want a neat example of this then consider Dickens, many of whose novels were published chapter by chapter with a popularity directly reflected in the sale of weekly or monthly magazines – a creative discipline which anyone who has worked in commercial television, particularly in the United States, will immediately recognise.

The Statute of Anne was an attempt to control piracy and balance the interests of authors, printers and the reading public – a balance beneficial to all.

By the standards of today’s digital consensus the Statute would have to be regarded as a colossal mistake. Instead, we should surely applaud the wisdom and foresight of the legislators of three hundred years ago.

They looked to the long-term interests of society and the creative industries of their time.

Their innovation helped to usher in a period of growth in publishing, writing and journalism, and in the size of the reading public.

The recognition by the Statute of Anne of the rights of authors was primarily an economic one. But I do not need to convince this audience that author’s rights mean far more than simply providing for a financial return for the creator.

Today, copyright gives creators the right to be credited for their work. The vast majority of things are not written for money, at least not directly, despite Dr Johnson’s jest: the

American Declaration of Independence; the wartime speeches of Winston Churchill; or the outpourings of innumerable bloggers are not the creatures of royalty payments.

But nor are they thrown aside by their authors. Attribution and the ability to prevent plagiarism are just as important to most writers as commercial return, as the legion of creators licensing their work under the Creative Commons attests.

Copyright also can be transferred to others, for the benefit of society, as the Great Ormond Street hospital enjoys royalties on Barrie’s Peter Pan; as does Westminster School for the works of A. A. Milne.

This is not a zero-sum game. If you want to offer your product for free, then there is nothing to stop you – and it’s a lot easier these days to do so.

The only temptation you need to resist is the idea that what you want to do is what everyone else should be made to do.

The defining characteristic of the world created by the Statute of Anne and its successors has been the protection it offers to artists: and the encouragement that it provides to risk.

It opens up a literally boundless world for a determined individual with a creative vision.

A good example is James Cameron, the film director. As someone who cares very deeply about the environment, he had been thinking for well over a decade about making a film around the impact of reckless human exploitation of natural resources.

A film that would transfer the action to another, delicately realised and completely self-consistent world.

To do that properly required two things: massive advances in computational power –rendering a whole new world is no simple math problem; and a partner with the willingness to risk huge sums on a belief that the story would resonate with people across the world.

The result – as I am sure you will have guessed by now – was the movie Avatar. There are not many companies willing to risk a quarter of a billion dollars on a single project – but ours was one of them. We believed in Jim Cameron and we knew that technology was ready to transform the way we can create and tell stories in audio-visual media.

Nor was Avatar innovative in a merely technical sense. Cameron’s attention to detail extended to a whole new language, the Na’vi tongue. At long last those with a master’s degree in Orcish now have a fresh challenge.

In the process, the investment in Avatar gave us major advances in the 3D technology that looks likely to be the next mainstream innovation in both movies and television.

A technology now being applied to other worlds – literally – as Jim has shown interest in improving the visual capability of the next NASA Mars Explorer.

But Avatar is not typical. The importance of 3D was not just that it made the film so exciting to watch: it also made it relatively less attractive to copy and view illegally.

Other films now have their profits routinely looted through piracy.

The workprint of one film, Wolverine, was stolen and posted on the internet and then downloaded 14 million times prior to theatrical release. It has now been downloaded more than 25 million times – with five European countries accounting for much of the total.

This shows that great damage can be done at lightning speed.

We might seem to have come a long way from the work of a few gentlemen debating the rights of booksellers and authors in 1710. But we have not.

The principles set out in the Statute of Anne represented a major step forward in the free flow of ideas.

It recognised that piracy would have led to a long-term decline in the distribution of books.

It provided for a system in which creativity was incentivised – an engine for the development of knowledge and learning – just at a time when a fully literate society was beginning to emerge.

Three hundred years later, and after innumerable books, plays, movies, TV shows, and assorted flotsam, jetsam, and lagan, we can say that the champions of the Statute of Anne offer us lessons we should continue to learn from and apply.

In conclusion, I believe that we need to approach the future of the creative industries – the future of the humanities in other words – in an economically serious way – as we should do with all forms of enterprise.

This is a significant sector. In 2008 it represented some 7% of the total wealth created annually in the European Union – some â‚¬860 billion – and provided some 14 million people with jobs. Yet billions annually are lost to piracy and a cumulative total not far short of 200,000 jobs have already gone.

That suggests that we should recognise the fundamental role that property rights play in the making of cultural things. Compared to the exciting rhetoric of the need for everything to be free, that might seem unglamorous, unromantic, and indeed hard-hearted.

But it may be all of those things and yet still be a better road for our society to take.

Do not be misled by claims of high principle in this debate. When someone tells you content wants to be free, what you should hear is ‘I want your content for free ‘ – and that is not the same thing at all.

We must rediscover something that should be very obvious: the importance of placing a proper value on creative endeavour.

Just look at the newspaper business. For years, many newspapers have put no value at all on the work they place online.

In contrast, at News International here in the UK, we are proud of the quality of our journalism and the contribution we make to life around the country, and indeed for our readers around the world.

We are one of the largest employers of journalists and editors, and maintain an incomparable range of foreign correspondents, contributors and bureaux in all sorts of

places.

We attach a fair value and a fair price to the journalism we produce. What is so controversial about that?

Shouldn’t we welcome a revolution in journalism that answers the needs of readers – and provides the means for sustained further investment? Without some simple common sense – like this – the alternative we face is a grim one: to have news that is produced only by the wealthy, the amateur, or the government.

Asserting a fair value for digital journalism is a starting point. I don’t think we will be alone in taking this kind of action. And although these steps have provoked some alarmist comment, no-one who really cares about the humanities of tomorrow should be either shocked or affronted by what we are doing.

Can we agree that preserving and rewarding creativity is in the long-term interest of our society?

This problem will not be solved by the creative sector alone. Governments should enforce basic property rights – even in this digital environment. Some have started. In some quarters this has caused alarm. But what is really alarming is that it is controversial at all to shut down vast pirate sites or disconnect repeat offenders who have no regard for creators’ rights.

According to a detailed study by Tera Consultants, if we continue down the path we’re on, piracy could inflict a cumulative 1.2 million job losses in the European Union by 2015.

Is it, moreover, unreasonable to suggest that companies that make a living out of indexing and sharing the creativity of others might make a fair contribution to those who create the material they need for their businesses?

Should it be controversial to suggest that public bodies are prevented from endlessly extending their remits, profiting from work they do not create, or dampening innovation and investment?

Three hundred years ago, when statesmen wrestled with these issues, they struck a fair balance between the rights of creators and the power of technology. We must do the same:

â€¢ Creative industries must develop and protect the value of what they create;

â€¢ Public bodies should be restrained from crowding out productive investment;

â€¢ Government should act to ensure that the copyright framework in this 21st century digital environment is fully functional; to stimulate future growth and diversity of creativity, by respecting and reaffirming these basic rights.

By taking action and showing commitment, we can succeed in addressing the imbalance that exists today.

We can change things for the better, as society has done before at times of technological change.

In this success, when the statute of Anne has its four hundredth birthday – and this Centre marks its centenary – there will be a whole new set of things to study and whole new eras of human output to celebrate.

We shall still then be able to say that human society, culture and creativity is growing ever richer.

Thank you for listening.