Google bought YouTube in 2006 at the height of the infringement hysteria. The new owners got busy trying to get the platform up to legal standards and avoid billions in pending lawsuits. It seems that users had been posting a vast amount of copyrighted material, and Google was going to be held liable.
Over the next three years, the takedowns happened furiously. Users were having content deleted. Short films that used copyrighted background music found that their videos were silenced. Tributes to popular artists that used their songs went dark. Even videos of people dancing to a tune on their radio were torn down.
This was not fun for anyone. The artists didn’t like it. They are mostly flattered by tributes and happy to get their music out there. The copyright owners didn’t really benefit from it either. They get no new revenue through takedowns.
Google didn’t like it because of all the expense of creating bots to crawl the site. It was also embarrassing when the bots would take down a video of child’s party because the kids were singing “Happy Birthday.” For consumers and users, to have your video removed is an unforgivable insult.
No one really benefited from this system. And it was becoming more difficult to manage every day as uploads grew and grew (48 hours of new video appear every minute). But it continued, nonetheless. The presumption that copyrighted music cannot be posted on YouTube was built into the system.
No one really liked the way the system was working itself out. But it was hard to figure out another way. This is the system the law built. Surely, the law must prevail regardless of how absurd the results are. It was like the scenes in Arthur Miller’s The Crucible: No one in Salem really believed in the practice of killing witches, but people went along with the slaughter because that’s how the system worked.
Clearly, the law had set up an untenable situation. It created a system too costly for everyone. It was unsustainable. But what would change it and how? This is where the creative forces of the market economy came to the rescue.
Google worked out a new system of placing ads before videos and at the bottom of videos. Many of these ads are incredibly interesting, by the way, and not annoying to users, as they might be. (The whole institution of YouTube ads deserves an article of its own.)
Further, Google worked out a deal with users and copyright owners. If a given video infringed, the owner would be notified and would then get a choice to either order a takedown or have an ad put up on the video from which the owner would derive the revenue. Most everyone took the revenue solution, simply because it is more advantageous to the owner to gain than to slap the uploader around using the law.
What the owners have learned in the process is something that has been obvious to many of us for a long time but, for some crazy reason, was often lost on the enforcers. They learned that what looks like a violation of the law and infringement on property rights can be re-rendered as a form of peaceful advertising. Business enterprises have no greater enemy than obscurity and no greater friend than attentive people who might turn into customers.
Today, YouTube hosts vast quantities of material that, two years ago, was considered to be pirated and illegal. It is all there serving hundreds of millions of users who don’t pay a dime to get to it. It is doing what Napster did at the turn of the century, before it was destroyed by the government. But this free access is funded through peaceful forms of advertising. What the law had turned into a war of all against all the market converted to a system of peace and plenty for everyone.
This is an absolutely brilliant solution and a fantastic example of how the market is capable of providing peaceful solutions to problems that the law would otherwise handle with coercive brutality. The market solution here is “breaking bad” in the sense that it is an open rejection of everything the state is trying to stop. But because the costs of the coercive approach grew too high, the market found another way. War is expensive.
Prosperity requires peace. The state wanted war but the market said no. It would be far better if the regulations and monopoly protections were repealed and the market itself charged with the task of hammering out commercial models of distribution in absence of intervention. But rather than waiting for the law to change, the private sector found a way around the law.
This solution is changing the ethos of music distribution. When the South Korean singer/rapper PSY came out with his “Gangnam Style” video and song this fall, it went viral beyond anyone’s expectations. It is poised to become the first YouTube video to receive 1 billion views, and it has happened in a very short period of time.
PSY (Park Jae-sang) is an artist who had previously languished in obscurity for a decade. He knew the value of exposure. When his song began to be pirated, when restaurants opened with the name Gangnam Style, when T-shirts and products began to appear all over, he absolutely refused to enforce his intellectual property. He very cleverly saw that sharing can only be good for him. And sure enough, he is estimated to be raking in $8.1 million this year from iTunes downloads, concert tickets, and advertising alone. Thanks to his refusal to participate in the state’s system, he has become of the world’s most famous musicians, and he will soon be one of the richest too.
Let’s reflect on the lessons here. In our time, the state’s regulatory apparatus, not just in intellectual property, but in every area of life, has set up an untenable situation for nearly everyone. Even those who imagined that they would benefit from it are not doing so to the extent they believed. That is because the march of history does not stop in the face of even the largest attempts at enforcement. The market will prevail — which is just another way of saying that human action will prevail over the coercive machinery of the government — in the long run.
We are seeing this is every area of life. The state’s drug laws are under serious pressure from public revolt against horrible waves of imprisonment for actions that most people don’t consider serious crimes (like smoking pot). The war on terror has everyone exhausted and drifting toward noncompliance. The public school monopoly is slowing eroding due to the forces of home schooling, online learning, and creative market alternatives.
Even banking is undergoing an upheaval, despite the Fed’s and the Treasury’s attempts to monopolize the system. The new currency Bitcoin is growing and flourishing, despite every attempt to call it a fake and a fraud. New payment systems are popping up every day in the form of gift cards and instant charge cards that you can fill with cash. Digital applications are enabling new ways of lending and borrowing that completely bypass the official state system.
Folks, if you want to see how the state collapses in the future, this is the direction to look. It won’t happen through politics. It won’t happen by top-down reform. It won’t happen even through seminars. It will happen through the trial and error of entrepreneurship, because the market will not sit still. Faced with the ghastly costs of the anachronistic nation-state, it will continue to find creative and surprising ways around the coercive apparatus, effectively inventing new realms of freedom that permit progress to occur.
Every act of entrepreneurship is revolutionary and rooted in the anarchist spirit. It strikes at the heart of the status quo. It dares to be dissatisfied with what is. It imagines something new and better. It brings about unexpected, unapproved, and progressive change by adding a new dimension of experience to how we understand ourselves and how we interact with others.
Without entrepreneurship, history would lack forward motion, our understanding of the uniqueness of our time in this world would be forever undefined, and society itself would atrophy and finally die. With it, every attempt to control and freeze the world faces opposition and long-run failure.
History teaches that those who dare stand in the way of human progress will eventually be run over. Yes, there is plenty of friction and too many victims as we get from here to there. But we will get there, one creative act of disobedience at a time.