Tuesday, January 24, 2012

Stop Online Piracy Act: Its impact for Japan and the World

Obviously online piracy is a serious problem and this not only for the gaming industry. In 2011 alone economists estimated an overall loss of around 75 billion dollars worldwide for movies, music, software, video games and other creative content through copyright infringements. While makers, politicians and researchers have tried to contain piracy with various tools (and success) for years, there is one approach which has received a lot of attention in the U.S. lately and which could lead to some reconsideration of local copyright agreements in Japan. On either side of the world everyone has been talking about SOPA – the Stop Online Piracy Act.


SOPA: Internet lockdown without controlling?

SOPA was first introduced into the House of Representatives in October 2011 and since then has together with its sister act the Protect IP Act (PIPA) brought many controversial voices to the scene. This topic has been grabbing headlines everywhere, with the most recent highlights being President Obama’s refusal to support the act and several huge protest campaigns including the temporary shutdown of websites of several US organizations and firms such as Wikipedia or Mozilla.

To sum up the controversy, SOPA would enable the U.S. government to shut down any website that has even only one single instance of copyright infringement by having internet provider and/or search engines block access to the site. This can be enforced without even hearing any argument from the so called “rogue website”.  Theoretically it means, that any complainant could prevent any business whatsoever with any website merely by filing a unilateral notice accusing the site of being “dedicated to theft of U.S. intellectual property”. This basically can result in the extinction of many major sites without any jurisdictional control. The definition of a “rogue site” is very vague. It applies to any site with user-generated content or sites which grant access to that type of content, even search engines, since any content a user has not explicit publishing rights for (e.g. a screenshot of somebody’s favorite video game) can be seen as an infringement.  

Since basically anybody can appeal to have a website shut down, some companies could take advantage of this law to shut down competitor sites and services. As a result any major user content driven site may – due to higher responsibilities – see the so-called chilling effect. This would apply to services such as Ustream, Facebook or Youtube etc. Companies would face additional costs on a large scale due to the implantation of monitoring systems, and on the other side may also lose what is most important to their business model which is interesting original content and of course users.

As a side effect, SOPA creates another problem for those companies the act is supposed to protect. In case of any copyright violation infringed companies would need to estimate the amount of their losses. In times where any information is basically accessible from any point in the world for almost no cost, estimating a price could very well end up being a never-ending task. 

The main reason behind all these problems is the fact that the bill only addresses the infringements with a ban of the domain name service (DNS) and not the IP address with the infringed copyrighted material. Many believe this is a result of the lack of technical know-how on the part of the representatives and writers. However the goal of the act is to radically eradicate online rogue sites and therefore is supported by major players from the music and film industry such as the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA) which suffer from piracy the most every year.

Increased pressure on the Japanese government

Together with the Entertainment Software Association (ESA) – the main body for all video game companies in the US – they have started the International Intellectual Property Alliance (IIAP) which is trying to impinge on copyright laws worldwide together with local industry associations.
One of their propositions for example is the international copyright pact “ACTA” which if adopted in 2013 under international law would also apply to Japan. ACTA enforces similar mechanics as SOPA especially the approach to monitor user data traffic and the blocking of sites. ACTA doesn’t go as far as SOPA but many fear that it may function as a stepping stone to establish even stricter laws similar to SOPA on a worldwide scale.

This assumption isn’t far-fetched since the IIAP has already successfully influenced other foreign laws:

-          New Zealand established a “copyright tribunal” which tries compensation cases for copyright damages after massive pressure from the US. 

-          France has the “three strikes” rule. If anybody breaks copyright law for example through illegal download of video games through peer-to-peer networks a total number of three times then their internet access can be cut completely.

-          The UK passed a law in 2010 named the digital economy act which enables ministries to have websites blocked by providers if a copyright law is infringed.
-          Since 2012 a similar law applies for users in Spain. In case of any copyright violation a special agency can ban websites. 

Specifically in the last case, the U.S. government actually threatened the Spanish prime minister because he tried to block this strict law which similar to SOPA and PIPA back in 2010. This shows how rigorous the U.S. government and the IIAP are trying to enforce the interests of their entertainment industry. 

Spain is one of the countries with the highest online piracy rate worldwide and therefore a large percentage of sites hosted there may be black listed by the U.S. (besides China, India, Russia and Indonesia), which could cause serious economical problems. 

Even Japan currently is facing an intensification of its copyright law since it may join the Trans-Pacific Partnership Agreement (TPP). Under the current law, the police can’t act against copyright violation unless the copyright holder himself files a complaint. With the new laws included in the TPP such complaints will become obsolete. Many fear that this change in copyright law would give too much power to the police and prosecutors, since they will be able to decide on their own regarding violations. It may destroy derivative doujinshi work in the manga and games industry, and as a result the whole industry could diminish. 

Even though Japan doesn’t belong to the top 10 list of copyright violators, the examples above show that local companies and the government can’t ignore this discussion about online piracy, since it will have wide-ranging effects on the local industry and even entertainment culture.

Even Japanese internet is becoming U.S. territory

Among all the anxiety about the bill and its counterparts there is one point which seems to be overlooked: SOPA and PIPA enable US-investigators also to access web sites of foreign providers. The logic behind the bill is that if online pirates can’t be addressed directly then their content should be completely blocked from the U.S. internet so U.S. advertisers and internet providers should be prohibited to cooperate with the alleged pirates and their foreign counterparts. 

This also threatens Japanese content providers, before even considering portal or community sites. For example, any video game content that is legally available in Japan could lose any technical service provider, advertising agency, its presence in social networks or even domains if those companies are based in the U.S.  Any kind of connection to U.S. based companies could cause this action; even if all content is hosted in Japan. Even if for instance the domain was purchased in the U.S. the website could be blocked. And then the Japanese company, for example a game developer, would need to go to court in the U.S. to appeal the decision.
 As for the gaming industry it could mean that the free flow of information between the U.S. and Japan for video games especially for non-major titles could totally dry up. Smaller Japanese developers already have difficulties targeting their titles to non-Japanese players or increasing their fan base overseas. A more radical copyright law such as SOPA would force U.S. based providers to be strict about foreign game content and information and perhaps even censor it. As a result of these sites from Japan being blocked U.S. fans of Japanese titles, especially those considered doujin,  would not only lose the opportunity to receive any information about their favorite title but possibly even the chance to ever play it.

Moreover even under the current U.S. law there is the threat that Japanese citizens could get pulled into jurisdictional nightmares.  There has actually already been one incident with a British student who was threatened with extradition to the U.S. and  Japanese citizens could also be turned in and sentenced to several years in the U.S. for just running a .com or .net website providing links to copyright protected material such as to download games, roms or torrents. [1]

Standpoints from and impacts of the gaming industry
As for the gaming industry not every company’s stance towards SOPA is clear. Some developers and publishers have clearly repudiated the act, others declared to stand behind it and still others act in the grey zone with controversial or non-statements.  Even some Japanese companies are included in this last group. Nintendo and Sony (besides US firms like Electronic Arts and Microsoft) have publicly stated their objections, while the Entertainment Software Association – the main body for video game developers in the U.S. which companies like Capcom, Konami, Namco Bandai, Square Enix and even Sony belong to as well – openly offers its support for the controversial bill.[2]

However, most big players in the game industry avoid taking a clear position to the act. The main reason behind this is something very characteristic for the local game culture: Most U.S. game developers and publishers fear the wrath of their fans. If it seems as if a certain company is planning to support SOPA, players would turn to them and say “if you don’t stop your support for SOPA we are going to stop supporting you”. 

Hooking up with like-minded players and forming communities is one of the most important factors for game fans all over the world. Sharing the game experience or simplly chatting about features, story or any other game aspect provides half of the satisfaction for a large majority of players. Along with this comes user generated content such as the streaming of game play videos. Gamers of all ages routinely post pictures or videos of themselves dancing and singing to copyrighted games or music, quoting their favorite character, uploading self-made mods or design works or even – especially lively in Japan – drawing doujinshi comics with alternative story outcomes. The variaety of user generated content is basically limitless. 

All of these things have, for the most part, been considered "fair use" under the law. However SOPA cuts right in here and would make all this content turn into a copyright infringement. All users would lose several fundamental rights, such as the freedom of expression, and the freedom to form groups and communities.[3]Due to this reason almost any gamer as well as the Entertainment Consumer Association in North-America and certain indie developers such as Notch, creator of hit indie game Minecraft, which very much relies on user input have rebelled against SOPA.  Not only could the act effectively shut down thriving gaming community sites such the many focused around Minecraft or e-sports streaming sites but could also end up putting individual gamers in jail.

However, it’s not only in the interest of gamers but also of every game company to carefully consider whether they should support the act or not. In any video game marketing strategy the internet plays an important role and the effect of fan culture and word-to-mouth in any community or social networks through content sharing has become a key point for many companies when promoting their titles. This especially applies to social game developers, a reason why western social games publisher Zynga was one of the first companies writing an open letter to those representatives responsible for SOPA. 

Since video games also rely on the original fresh content that gamers ideally come up with during game play, SOPA would freeze such innovation and developers would loose a great source of feedback on their titles. Moreover creative works developed out of the technology of certain games would probably suppressed by the new laws. Machinima, or videos designed through game tools such as Red vs. Blue[4]would never have come to live under SOPA. Therefore I can’t believe that this could be seriously considered by any game developer or publisher.

The greatest effect SOPA would probably have – as mentioned above –would be on social games or MMOs like World of Warcraft. Blizzard already learned a lesson when they tried to change their policy and to have all members of the Battle.net forums to post their real name. The fan backlash was enormous and showed the publisher how important it is to keep a free flow inside the community. Anything that negatively impacts consumer freedoms will also reflect back to the rest of the market and end up endangering game makers as well.

Even though the chances for SOPA and PIPA actually being passed by the U.S. Senate are diminishing, the efforts to fight online piracy through more radical laws will not stop and may eventually end up limiting not only pirated content but also human rights. It remains to be seen if the gaming industry and not legislators will find an effective way to either technically stop pirated content or develop a system of compromise to work with fans hand in hand. Perhaps Japanese developers and players can help out here.  There has to be a reason why Japan has a comparatively low level of piracy and maybe there is something here that the West can learn from.

[1] In the mentioned case a british stuendent ran a websites with links to streams of current US movies and TV series .
[2] ESA: “We look forward to working with the House and Senate, and all interested parties, to find the right balance and define useful remedies to combat willful wrongdoers that do not impede lawful product and business model innovation.”
[3] Indeed the White House mentioned something similar, speaking of ”reduced freedom of expression, increased cybersecurity risks or undermine the dynamic, innovative global internet”
[4] A video series based on the Halo games.