My partner Brad and I spent Thursday in DC along with a bunch of entrepreneurs and VCs. We talked to dozens of our elected officials about an issue that is very concerning to us, protecting the safe harbors of the DMCA.
The DMCA is the Digital Millennium Copyright Act. It received unanimous support in the Senate and was signed into law by President Clinton in 1998. It is a complex piece of legislation but it contains four “safe harbors” for “network service providers. The four safe harbors are explained here. “Network service providers” is shorthand for web services. Companies like Google, YouTube, Facebook, and Twitter are “network service providers.”
The DMCA took a long time to become law. There were many legislative stops and starts on the way to its passage. Ultimately, congress and the administration forced the content industry to negotiate with the technology industry. That negotiation produced the compromises that are contained in the DMCA and that is what allowed it to get unanimous support in the Senate.
Fast forward to today. The content industry’s lobbyists have forged two new bills, one in the Senate called Protect IP and one in the House called E-Parasites. These bills were written by the content industry without any input from the technology industry. And they are trying to fast track them through congress and into law without any negotiation with the technology industry.
These bills are positioned as necessary actions to prevent “online piracy” particularly from rogue sites outside of the US. The technology industry is certainly concerned about online piracy. It has developed both protective technologies like DRM and alternative distribution services like premium streaming audio and video services such as Netflix, Spotify, and many others. These protective technologies and alternative distribution services have significantly cut the amount of online piracy in the past decade. An executive from Viacom testified recently in Congress that the vast majority of piracy is limited to “about 20 websites.” So the technology industry has done a lot to help the content industry get a handle on online piracy in the past decade.
If another negotiation is in order to amend the DMCA, then let’s have it. The last negotiation produced an excellent compromise that has stood the test of time and allowed important new services like Google, Facebook, YouTube, and Twitter to be created and become large companies and massive job creators.
It is this last point that is critical. The content industry is not creating new jobs right now. The tech industry, led by startups, have created all the net new jobs in the past five years. Companies like Apple, Google, Facebook, and startups like Dropbox, Kickstarter, and Twilio are the leading exporters and job creators of this time. They are the golden goose of the economy and we cannot kill the golden goose to protect industries in decline.
Big companies like Google and Apple can afford to defend themselves from litigious content companies. But three person startups cannot. And Facebook, Twitter, and YouTube were three person startups not so long ago. If they had not had the protection of the safe harbors of the DMCA, they could have been litigated out of business before they even had a chance to grow and develop into the powerhouses they have become. And venture capitalists will think more than twice about putting $3mm of early stage capital into startups if they know that the vast majority of the funds will go to pay lawyers to defend the companies instead of to hire engineers to create and build product.
The bottom line is that DMCA works. Its safe harbors have allowed the Internet to become the US’s most important new industry in a century and an a critical job creator. If we need to amend the DMCA, let’s do it with a negotiation between the interested parties, not with a bill written by the content industry’s lobbyists and jammed through congress on a fast track.
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