The hybrid model and copyright: could Wattpad do for publishers what YouTube did for music and movies?

Abstract

Lawrence Lessig famously claimed that the US is becoming less a “free culture,” with the ability of new creators to build on and remix older works heavily regulated. He argues that copyright laws have changed to protect the media companies rather than the creators.1  This essay begins by examining how YouTube has provided an incentive for big media companies to overlook copyright infringement by monetizing unauthorized use. It uses YouTube’s business model as a framework to discuss publishing models and digital copyright infringement, with particular emphasis on Wattpad, which bills itself as “the YouTube of publishing.”

Introduction

The turn of the millennium was an interesting time to be a pirate. In 1998, the Sonny Bono Act extended the American copyright term by twenty years, meaning that works slated to enter the public domain that year—most notably, the earliest Mickey Mouse movie—would stay protected until 2019.2 Meanwhile, the World Wide Web was exploding in popularity, and with it, file-sharing software such as Napster, and, later, Kazaa, Limewire, and torrents. Despite heavy DRM (digital rights management) and lawsuits from major record companies, so-called “pirates” showed no signs of slowing down. Heavier locks led to more sophisticated workarounds; new file-sharing platforms sprung up as fast as lawsuits crippled others. Media companies pushed for more restrictive copyright protection in courts, while online, people all over the world performed what Anil Dash calls “a massive act of civil disobedience”— posting videos online with the words “no infringement intended.” These words indicate that they purposely violated copyright because the law didn’t match their expectations of how they could share and reuse content.3

The deadlock between media companies and pirates came from a clash between two coexisting economies. In the first, “commercial” or “commodity” culture, items have a value and are bought for cash. In the second, “sharing” or “gift” culture, items are exchanged reciprocally and offering cash is inappropriate4 5—just imagine handing a fifty-dollar bill to great-aunt May in exchange for the hand-knit sweater she gives you for your birthday. Online, the two economies clash: “Within commodity culture, sharing content may be viewed as economically damaging; in the informal gift economy, by contrast, the failure to share material is socially damaging.”6 Audiences wanted to share with their online communities or even between devices, and heavy DRM made piracy the easiest way to do so. They wanted to create new videos or music based on their favourite clips, and to share with others, without having to pay exorbitant fees.

YouTube and the hybrid economy

Fast forward to the present day. Copyright law hasn’t changed, but now anyone can watch He-Man singing a falsetto version of a Four Non-Blondes single7 or see Buffy stake Edward.8 Creators of remixes rarely find themselves faced with enormous lawsuits. What has changed?

YouTube, owned by Google, is a video-sharing platform that has been a hotbed for copyright infringement. In 2007, Viacom launched a $1 billion lawsuit against Google for allowing copyrighted videos to be uploaded.9 They reached a settlement in 2014, and that same year, Google released a white paper outlining its approach for stopping piracy. Google began by working to make YouTube a “better, more convenient alternative” to illegal sharing. Meanwhile, they “follow the money,” taking a two-pronged approach to ensure money flows to the right places.10

First, Google cuts off pirate sites from its ad program, removing an economic incentive for them to operate. Second, and most importantly, it compensates rights holders for infringing uses of their work. More than five thousand rights holders use YouTube’s Content ID program, which fingerprints the videos and music they upload and notifies them when a new upload matches their content. Rightsholders can choose between three options: to earn a percentage of ad revenue from the video; to track its viewing statistics; or to remove the video from YouTube. The vast majority choose to make money. Some earn a six-figure income from YouTube views, and the program has made over a billion dollars for the media industry since it was launched. Google’s policy has achieved what years of lobbying against copyright never could: “When copyright owners choose to monetize or track user-submitted videos, it allows users to continue to freely remix and upload a wide variety of new creations using existing works.”11 It has set a new de facto standard for copyright where remixes are not only accepted, they are encouraged—after all, they generate profit for the rights holders without them having to do any work.

YouTube marries the commodity economy to the gift economy, creating what Lawrence Lessig describes as a “hybrid economy.”12 Hybrid economies benefit from the work of the communities they foster, walking a delicate line to monetize that effort without offending their users. Lessig claims that nearly every interesting online company follows a hybrid business model, and it’s not hard to see why: they make use of a diverse range of human talent and interests to create a democratic platform where anyone can find what they are looking for. In this model, “consumption is no longer necessarily seen as an end point in an economic chain of production but as a dynamic site of innovation and growth in itself.”13 Consuming a movie doesn’t end at buying the DVD—it continues online with reviews, remixes, and fan videos.

Can this model work for publishers?

Publishers have an unusual relationship to piracy. Unlike other major media companies, few publishers have taken action against digital copyright infringement, and the handful of cases that made it to court were largely unsuccessful. J.D. Lipton notes that it’s surprising publishers have not been more active in copyright litigation, since “the threats to digital publishing from unbridled copying and distribution are arguably greater than the threats to other digitized industries.”14 Readers do not tend to reread books, so they are unlikely purchase a book if they enjoyed the first read. And unlike music and movie companies, publishers rarely profit from events, shows or merchandise sales.

There are several reasons why publishers are less concerned about piracy than their movie and music counterparts. The first is the barrier to entry: a digital book requires a tablet or e-reader to enjoy comfortably. Another is lack of demand: Tim O’Reilly famously said, “Obscurity is a far greater threat to authors and creative artists than piracy.”15 O’Reilly saw piracy as a hidden tax on the few books that were successful enough to be shared online.

But a happier reason why publishers are not worried about piracy may be that publishers are already ahead of the curve when it comes to copyright. Offline, book publishing already exists in a hybrid economy. Content is available for free from public libraries. Fair use citation is not only not litigated against, it is encouraged. In fact, essays such as this one can be seen as the original remix, drawing disparate sources together to create something new and (hopefully) contribute to a larger conversation.

The problem? As content moves online, these models will break down. Publishers will need to find a model that, as Techdirt writer Mike Masnick puts it, connects with fans and gives them a reason to buy.16 Otherwise, publishers risk losing sales to piracy or, worse, dooming themselves to irrelevance as readers turn to media they can consume the way they want to.

Wattpad’s transition from sharing to hybrid model

One possible model might be Wattpad, which bills itself as “the YouTube for books.”17 Wattpad is a self-publishing platform that allows users to read stories, comment on them and post their own for free. Wattpad fits in nicely with Lessig’s characteristics of a sharing or gift economy.18 It capitalizes on the “Long Tail”—since it can store a vast amount of stories, it can cater to niche interests without additional cost. It plays “Little Brother,” gathering minute data on its audience so it can rebuild the site according to their needs. And it can be “Lego-ized,” meaning that it can fit together with other content, both on- and off-site, to build something new. Users can add any content they want, influencing the range of content from vampire romance to nonfiction. They can comment on each others’ works, influencing books in progress with their suggestions. Like a sharing economy, Wattpad is still struggling to make money in a way that doesn’t alienate its users. It currently experiments with banner ads and native advertising.

Wattpad could adopt a YouTube-style model towards copyrighted works, compensating authors when their works are used in fan fiction. Fan fiction is a murky copyright area. It is technically illegal, except in specific circumstances such as parody. Despite this, most authors embrace fan fiction as a way to connect with their audience and build a community around their work. Now, however, “the rise of self-publishing has coincided with a blurring of the lines between noncommercial fan fiction and commercial self-published work,” Lipton argues.19 Rather than force fans to take down their works, Wattpad could share a portion of ad revenue with the rights holders. Wattpad also allows its users to select from different licenses, ranging from All Rights Reserved to Creative Commons licenses,20  so self-published authors can choose how their own work will be used.

As Wattpad gains momentum as a platform, it will also attract pirates. New York Times bestselling author Jasinda Wilder’s book was posted on Wattpad without her permission. The person who posted it gave the work a different title and author name. Wilder’s book was read 41,000 times before a user identified it as a pirated version and notified the author. Wattpad removed the book and blocked the user, but did not notify readers that a different author had crafted the book they’d enjoyed. Wilder estimates that she lost $168,000 in royalties from the incident,21 although it’s doubtful whether the readers would have paid for her book in-store. If Wattpad had handled the situation differently, she might have gained a new audience, as well as data (through comments and profiles) about who was reading her book and how.

Conclusion

A Publisher’s Weekly  article on the Jasina Wilder incident theorized that “plagiarizers on sites like Wattpad often commit their crimes to develop a following, so that they can rely on an established audience to purchase their own paid work.”22 Interestingly, the language used identifies the crime as “plagiarism,” rather than “piracy,” showing the different attitude towards sharing text as opposed to other media. But as Wattpad continues to grow, its users will probably share content on it for different reason. Like the teenagers posting “no infringement intended” videos to YouTube, readers will copy their favourite books to Wattpad because they want to share them with their community of followers and take advantage of Wattpad’s in-line commenting system. Publishers will then have to make the difficult decision—take down these books and risk alienating a fan community, or leave them online? If Wattpad examines YouTube’s model for combating piracy, it may be able to truly cement its place in online reading while keeping publishers and readers happy, transitioning from a sharing economy to a true hybrid model.

References

1. Lessig, Lawrence. Free Culture: How Big Media Uses Technology and the Law to Lock down Culture and Control Creativity. New York: Penguin Press, 2004.

2. Copyright Term Extension Act, 1998. http://www.copyright.gov/legislation/s505.pdf.

3. Dash, Anil. “The Web We Lost.” Dashes.com. Accessed January 9, 2015. http://dashes.com/anil/2012/12/the-web-we-lost.html.

4. Lessig, Lawrence. Remix: Making Art and Culture Thrive in the Hybrid Economy. New York: Penguin Books, 2008, 117.

5. Jenkins, Henry, Sam Ford and Joshua Green. Spreadable Media: Creating Value and Meaning in a Networked Culture. New York: New York University Press, 2013, 60.

6. Jenkins, 64.

7. “He Man Sings 4 Non Blondes (Original).” YouTube. Accessed January 30, 2015. https://www.youtube.com/watch?v=X8Nc8RCLy1s.

8. “Buffy vs Edward: Twilight Remixed — [original Version].” YouTube. Accessed January 31, 2015. https://www.youtube.com/watch?v=RZwM3GvaTRM.

9. “Viacom International, Inc. et Al v. Youtube, Inc. et Al, 1:07-Cv-02103, No. 1 (S.D.N.Y. Mar. 13, 2007).” Docket Alarm, March 13, 2007. https://www.docketalarm.com/cases/New_York_Southern_District_Court/1–07-cv-02103/Viacom_International_Inc._et_al_v._Youtube_Inc._et_al/1/.

10. How Google Fights Piracy. Google, October 17, 2014. http://googlepublicpolicy.blogspot.ca/2014/10/continued-progress-on-fighting-piracy.html.

11. How Google Fights Piracy, Google.

12. Lessig, Remix, 177.

13. Burgess, Jean, and Joshua Green. YouTube: Online Video and Participatory Culture. John Wiley & Sons, 2013, 13.

14. Lipton, Jacqueline D. “Copyright, Plagiarism, and Emerging Norms in Digital Publishing.” Vanderbilt Journal of Entertainment and Technology Law 16, no.5, Spring (2014): 585. http://www.lexisnexis.com/lnacui2api/api/version1/getDocCui?lni=5CP4-X3W0-02C9-D08K&csi=239002&hl=t&hv=t&hnsd=f&hns=t&hgn=t&oc=00240&perma=true.

15. O’Reilly, Tim. “Piracy Is Progressive Taxation, and Other Thoughts on the Evolution of Online Distribution.” OpenP2P. Com, 2002. http://www.openp2p.com/pub/a/p2p/2002/12/11/piracy.html.

16. Masnick, Mike. “My MidemNet Presentation: Trent Reznor And The Formula For Future Music Business Models.” Techdirt 6 (2009). http://www.techdirt.com/articles/20090201/1408273588.shtml.

17. Landau, Emily. “The Wattpad Cult: Why Toronto’s Buzziest Tech Start-up Is a Self-Publishing App Beloved by Teen Girls.” Toronto Life, 2014. http://www.torontolife.com/informer/tech-informer/2014/11/10/the-wattpad-cult/3/.

18. Lessig, Remix, 128-141.

19. Lipton, “Copyright, Plagiarism, and Emerging Norms in Digital Publishing.”

20. “Copyrights – Help Center.” Wattpad. Accessed January 28, 2015. http://support.wattpad.com/hc/en-us/articles/200773104-Copyrights.

21. Rosen, Judith. “Wattpad Pirates Get Craftier.” Publisher’s Weekly, November 13, 2014. http://www.publishersweekly.com/pw/by-topic/digital/copyright/article/64657-wattpad-pirates-get-craftier.html.

22. Rosen, “Wattpad Pirates Get Craftier.”

2 Replies to “The hybrid model and copyright: could Wattpad do for publishers what YouTube did for music and movies?”

  1. This is a solid, informative essay on hybrid economy and the ‘long-tail’ benefits of the business model YouTube has employed in regards to digital copyright infringements and the monetization of such. Its main task, as outlined by its effective title, questions whether this model would work for the publishing industry.

    The structure of the work is well laid out, first providing context for the question with brief historical and industry overviews. One small criticism on the structure is the brief amount of time this leaves in the essay to deal with the Wattpad example specifically. Further details about Wattpad and how the company might adapt the Youtube business model and overcome the challenges it faces would provide the reader with even more information to answer for themselves the question posed.

    Intoned from the opening sentence was a sense of playfulness that was touched on a couple of times throughout the work. When author Jasinder Wilder estimated she lost $168,000 in royalties, she provided the funniest quote I’ve read in a very long time. The sources used added both strength and the appreciated playfulness mentioned above.

    I felt among many of the essay’s strong points that the explanation of hybrid economy in regards to monetizing unauthorized use, and the way it is being implemented online, was most informative and intriguing to read.

    I thought there was an opportunity to draw a stronger comparison between a gift/sharing economy and great aunt May as traditionally gifts, in particularly gifts from family members for special occasions, are given freely with no expected compensation (other than a hug of course). Altering the maker of the sweater to an acquaintance, and the recipient to someone who liked the sweater might be a stronger comparison—although detracting somewhat from the cash argument made.

    I agree with the work that Wattpad’s biggest issue moving forward is the risk of alienating their community members. They will have to make a move at some point, although it’s uncertain if their strategy is to monetize their existing network or to continue building a network (they’re aiming for 1 billion) before making their big move. Again, if anything, this is where I felt there was room for more detail within the work.

    In conclusion, I still think this essay fully achieves its purpose in supposing a hypothetical into the reader’s thoughts while arming the reader with enough information so she/he might come to their own opinion about whether a hybrid business model would work for the publishing industry, and for Wattpad in particular.

    On a final note, I must disagree with the author’s opening sentence: “The turn of the millennium was an interesting time to be a pirate.”
    It is, in fact, always an interesting time to be a pirate.

  2. This is a well-written and well-argued essay that puts forth a novel, plausible, and timely proposition for a site like Wattpad.

    The essay puts forth an original proposition, but not before situating the reader with the necessary background to understand and make sense of the proposition. In doing so, it strikes just the right balance between the two.

    I was pleased to find enough caveats and notes throughout the essay to cover what would otherwise be questionable claims. For example, Wilder’s claim that she’d lost $168,000 is followed by the important observation that this claim assumes every infringement would have resulted in a sale. Astute observations like this one strip away potential counterarguments and lend credibility to the author. Katie has obviously thought through the issues and reflects this in her writing.

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