Remix: Making Art and Commerce Thrive in the Hybrid Economy

JOANNE MYERS: Good morning. I'm Joanne Myers, Director of Public Affairs Programs. On behalf of the Carnegie Council, I'd like to welcome our members, guests, and C-SPAN Book TV.

For those of you who are conversant with the subject of intellectual property, you will understand what a privilege it is to be hosting one of our country's most original and influential legal scholars. Of course, I'm speaking about Lawrence Lessig, our nation's leading expert on cyberlaw, the evolving law of the Internet. Professor Lessig is a law professor at Stanford. He is founder of the school's Center for Internet and Society. He also chairs the Creative Commons, which is the powerful alternative to America's traditional copyright regime. This system allows creators to surrender some rights to public use while retaining others through a variety of licensing and contract provisions.

Our speaker is known for focusing on the social dimension of creativity, especially looking at how creative works build on the past. This will be the basis for his discussion this morning.

I know most of you are familiar with the adage that you can't judge a book by its cover. However, in this instance the jacket of Professor Lessig's latest book is quite revealing. The title of his book is Remix: Making Art and Commerce Thrive in the Hybrid Economy. If you look carefully, you will see that there are two circles, one blue and one pink. "Remix" is in the center of this, and, when mixed together, makes purple. I want to make it clear that the new color isn't as important as the concept behind it, which is the idea that the mixing of two creates something different than that which was there before.

In the world of art, this isn't a problem, as artists are always mixing colors to develop new shades. But when it comes to music in the digital age, when an individual rearranges or remixes the normal listening experience with the use of technology, either by adding or subtracting, regardless of whether the changes are subtle or substantial, there is bound to be a legal issue, as many content producers consider that they have an absolute right to protect all access to and uses of their work. They challenge the proliferation of technologies that can be used by ordinary folks, especially the younger generation, to make unauthorized and, in their view, illegal copies.

It is this latter group that concerns our guest the most. This younger generation has been told that if they use previously created music, they are committing criminal acts. Accordingly, Professor Lessig asks, what kind of moral platform will sustain our kids when their ordinary behavior is deemed criminal? Who will they become?

In Remix, our speaker spotlights the newest and possibly the most harmful cultural war, a war that is waged against our kids and others who create and consume art. To change this environment, he reenvisions copyright laws for the digital age. In the past, copyright laws were established as a way to give writers, musicians, and artists control over how their work was used. Yet, as the Internet has evolved, a new hybrid economy has emerged, which blends traditional commercial enterprise with the Internet-friendly ethos of sharing. As these sites continue to grow, like YouTube and Wikipedia, they increasingly rely on user-generated remixes of information, images, and sound, and are examples of how we can combine the commercial and sharing economies to create value for both sides.

Professor Lessig argues that America's copyright laws have ceased to perform their original beneficial role, that of protecting artists' creations while allowing them to build on previous created works. He believes that if copyright laws are properly balanced for both the user and the creator, the incentives to produce great new works that otherwise would not be produced will still be there, and they will flourish.

That being said, I rest my case and invite you to join me in welcoming one of the most instrumental voices in the deliberations that will define the character of innovation, creativity, and the discourse of our future, our guest today, Lawrence Lessig.

LAWRENCE LESSIG:Thank you very much.

I confess I feel a little bit lost. I usually make presentations with the Mac version of PowerPoint, Keynote. That has become so central to the way that I speak, I'm not sure I know how to speak without it now. Usually PowerPoint/Keynote presentations are awful. Mine aren't, I assure you. Indeed, in the last five years, no one has ever asked me to speak without my Keynote presentations. Indeed, now they don't want me; they just want the Keynote presentation. So I was a little skeptical that anyone would be here today. I thought this was a joke, that I would be invited to speak without it. But I'm glad to have the opportunity.

This book is about two moments of hope and inexcusable fear. The first moment of hope is inspired by a story of some testimony that I read, testimony given in 1906 by John Philip Sousa before the United States Congress. In 1906, the United States copyright law was behind the protections granted to copyright owners in Europe. In particular, it didn't grant any protection for work that was mechanically reproduced. So if you took a John Philip Sousa composition and you performed it and recorded it and sold the recordings, John Philip Sousa didn't get any money. So Sousa came to Washington for the purpose of trying to get Washington to expand the protections of copyright to match the Europeans.

But he launches into an extraordinary attack in this testimony against what he calls the "talking machines," by which, of course, he meant the record player, phonograph, and eventually he would complain the same way about radio. His attack has a very distinctive character. Sousa said, "When I was a young boy, in the summer evenings you'd hear young people together singing the songs of the day or the old songs. Today you hear these infernal machines going night and day. We will not have a vocal cord left," Sousa said. "Vocal cords will be eliminated by a process of evolution, as was the tail of man when he came from the ape."

So this is a vision of a certain kind of culture that this professional is celebrating. It's amateur culture. It's a culture where people participate in the creation and the re-creation of their culture. That was central to his vision of what culture should be, and not because he as a professional thought that these amateurs would be better producers of culture than he. Of course, he thought he would be better than they. But it was very important to him, almost in a Jeffersonian sense, to imagine these people creating the culture around them as they consumed the culture around them.

Now, I use that vision of culture and describe it, using modern computer terminology, as a kind of "read/write culture." It's a culture where people read, consume, but they also feel empowered, entitled to write, to create in response to what they consume.

I contrast that vision of culture to the opposite—in computer terminology, what we could call a "read-only culture," a culture where what people do is just simply consume, where they don't feel entitled or empowered to take what they consume and do anything with it. They feel like their job is to be a couch potato, to sit there and just see or listen and do nothing more.

Sousa's fear was that that's who we would become. Now, of course, he was right; that's who we did become. The history of the 20th century is this extraordinary history of a concentration of the creativity of our culture. Never before in the history of human culture had its production become as concentrated, never before as professionalized. Never before had the participation of ordinary people in the creation and spreading of culture been as effectively displaced, and displaced for exactly the reasons he said, because of these "infernal machines."

You think about the contrast between the 20th century and every century before, and it is quite striking. In the 19th century and every century before, the ordinary ways of producing and spreading culture were the sorts of things that ordinary people did. It's not that everybody could play the piano. But there wasn't anything weird about being able to play the piano or play the violin. Indeed, it was part of what it meant to become part of culture to learn to produce in exactly that way. The distinctive forms of cultural production were, in this sense, democratic.

But for the 20th century, some of the most important forms of production were not, in this sense, democratic. It wasn't the case that in the 1930s it was normal for people to make films. It wasn't the case that it was normal to record a record and to spread it or to create a radio station and to broadcast it. These were things that some people did, but normal people didn't do this stuff, and we had a culture that developed that was very different from the culture of the 19th and the centuries before, where it was separated between what normal people did and what a certain cultural elite—I don't mean that in a negative sense, just in a descriptive sense—did. That contributed to exactly what Sousa was fearing—this sense that there were some who were entitled to create and to spread their creativity and the rest of us who were entitled simply to consume.

When you see a story like that, the most distinctive and one of the most exciting things about the Internet is that it's returning, restoring the read/write culture that Sousa celebrated. Once again, all the forms of cultural production that are around us are democratic, the sort of thing that anybody can do. If you have a 16-year-old kid who doesn't know how to make a movie, there's something wrong with your child. We have come to a place where it is completely ordinary to imagine that we will express ourselves in all sorts of different ways.

We grew up making mixed tapes; our kids grow up remixing the music they listen to. The whole way in which they interact with others is about creating and sharing their creativity. They are expected to do this.

One of the reasons I like to make presentations with the technology is that I get to show you some of these things. If you don't spend a lot of time in these spaces, you might not even have a sense quite of what it is. But there is an extraordinary phenomenon developing on YouTube right now. It's a kind of call-and-response. For example, you will have one group of kids that will film themselves dancing to one song and then 10 or 12 or 20 other people will dance to the same song, showing their own version of the dance to the song. It's a kind of increasing competition. Or some people will take video and remix it with some audio track in some hilarious way, in this way which the technology allows, and then other people will do the same sort of thing in response. So it's a call-and-response that increasing defines how this space gets used, and it is exactly the equivalent of what Sousa spoke of when he spoke of the young people together singing the songs of the day or the old songs, except now they are not singing on corners; they are singing into their little cameras on their computers and sharing it with everybody around the world.

This is an extraordinarily important and valuable development in the way our culture exists right now. It's something we should celebrate, we should encourage. But, in fact, it's something which is increasingly regulated.

I came back from Hong Kong two weeks ago. I was told a story in Hong Kong about a kid who took a video that he had made and he synchronized it with a music track of one of his favorite musicians and he posted it on his Web site. He wasn't selling anything. It was just a commentary on some local political event. He was criminally prosecuted for this act. He was criminally prosecuted pursuant to statutes that this government had insisted China adopt in order to comply with our vision of what intellectual property regulations are. The Chinese government says, by prosecuting this person criminally, they are setting an example for everybody, so that nobody will do this.

You say, what is this that we're trying to stop our children from doing? What is the criminal act here that it is outrageous for us to imagine our children pursuing in the secrecy of their own bedroom? The criminal act is to express themselves creatively and to share that creativity with others, in this amateur way.

That's again the point that I want to take from Sousa. Sousa recognized that a copyright policy has to support both the professional and the amateur. It has to create the incentives necessary for the professional. That's why he was there in Washington. He was trying to get them to change the incentives so he would get more money from his creativity. But it was also important to him to leave a certain space free for the amateur and to insist that it be free. Indeed, he was ridiculed by one congressman, Congressman Frank Dunklee Currier, who was a copyright skeptic. He thought copyright was already too powerful. Currier said in response to Sousa's romanticizing young people together singing the songs of the day or the old songs, "Isn't that forbidden under our Copyright Act?"

Sousa said, "What are you talking about?"

He said, "Well, it's a public performance. Isn't it required that they have permission from the copyright owner to engage in this?"

Sousa evokes this extraordinary sense of outrage. "I never thought it was a crime to get together and sing," Sousa says.

It's this intuition that I think we have lost. The idea that there should be an exemption, a space of freedom for the amateur to engage in the participation with our culture, is somehow ignored in the current regime of copyright. The current regime presumes the amateur is like the professional and needs to be regulated in the same way.

So the first point that I wanted this book to try to convey is that opportunity that these technologies have given us to restore, in some sense, the way culture had always been, except for in this one bizarre century, the 20th century.

The second part of this moment of hope is more economic. It focuses more on an economic opportunity, not a cultural opportunity. This is what I refer to in the title as the hybrid, with the "hybrid economy." To see the hybrid economy, I have to describe the two things that the hybrid is a mix of.

The first thing the hybrid is a mix of is the traditional commercial economy, which you all understand as the economy where what you get is a function of money. You go into the grocery store, you give them a dollar, they give you two bananas. That's the trade, quid pro quo. We understand in that context that money is the term of the expression. It's the way we speak. It's completely appropriate for the store to say, "I'm sorry, I'm only going to sell you one banana for a dollar today," or to give you a discount to try to get you to buy more bananas. That's the natural way that economy functions.

But we sometimes forget that there is another economy out there, a sharing economy. It's an economy in the sense that it exists over time and it only exists when you make certain kinds of exchanges in a way that's reciprocal—or at least we hope that's the way it exists. But in that type of economy, money is not the way in which you speak. You have friends. You might get together with your friends for lunch. You might say, "Oh, this was a great lunch. Let's have lunch next week." If your friend responded, "I don't think so. How about if I give you $100 instead?" it's not just unusual; it would radically change the nature of your relationship. Or if you start whining to your friend about whatever problem you have and your friend turns around and says, "I'm sorry, I charge $200 an hour for this kind of advice," it would change it.

Think about romantic relationships. Obviously, this is a more distinct way in which it could be changed. If in the middle of a romantic relationship, one person were to offer the other a bunch of money to continue the romantic relationship through the evening, it's not just that one would find it out of place; one would, appropriately, either be turned on or outraged at this particular way in which the relationship had been redefined.

So the thing is to recognize that we have what I call these sharing economies in our lives, and people celebrate them and want to protect them. Indeed, this is not a conservative/liberal thing. It's not just that liberals love sharing economies. Conservatives, too. Indeed, the whole regulation against prostitution is a regulation to protect a certain kind of relationship from money, to keep money out of it, because the sharing economy inside of that relationship is so important, according to some people's visions of this.

In the Internet we have both commercial and sharing economies. In the commercial economy—things like Amazon or Dell Computers—you pay your money, you get your stuff. We also have sharing economies, like Wikipedia. Wikipedia is an extraordinary site of thousands of people, for free, spending an enormous amount of time trying to make this encyclopedia one of the most important contributions to public knowledge that we have. If you started paying people in Wikipedia, I think it's plausible that we would get less quality in the work that Wikipedia does. It's something about participating for the good of participating that inspires a certain kind of creativity, and if you changed it into a simple purchase of time, people would treat it differently.

So that economy is a sharing economy; Dell Computers is a commercial economy.

But what I wanted this book to suggest is that we recognize the hybrid that's developing between the two. Increasingly, we see businesses—commercial economies—that are trying to leverage sharing economies to produce value for them, and sometimes the other way around. Sometimes you see sharing economies that are trying to leverage commercial economies to create stability for the sharing economy. The first is more familiar. Let me give you some examples.

Think about Flickr. Flickr is an online photo-sharing site. It developed an enormously powerful community of people who wanted to share their photographs, to make their photographs available for others and to share the knowledge about how to produce great photographs. This site, of course, existed initially as simply a relationship between people trying to share. That was its sharing economy. But when Yahoo bought it, Yahoo wanted to leverage that sharing activity into value for Yahoo. And indeed it did. It's one of Yahoo's most successful business ventures, buying this particular sharing economy. So this is an example of a hybrid. You have a sharing activity that's being leveraged for commercial benefit.

There is an online virtual world, which is Second Life. If you have ever seen Second Life, it started out as this extremely beautiful 3-D-like vision of green grass and oceans. People then started populating this space in virtual characters and started building things there—cities or houses or cars or bars. All sorts of stuff that's in the real world they built there for free. Indeed, they paid for the freedom to build those things there and then they spent an enormous amount of time creating communities in these spaces.

All of that activity between these people in Second Life is part of a sharing economy. They are doing this exchange in just a social, sharing way. But the activity is designed to create value back to Linden Lab, the creator of Second Life.

Here's one final example. George Lucas wanted to take his 30-year-old series Star Wars and excite a new generation of kids about it. So he took the Star Wars series and created a Star Wars mashup site. What the Star Wars mashup site did was to take clips from the Star Wars movies and make it available for kids to take and to remix, upload their own music, upload their own pictures, mix them together, and create little mini-Lucas movies.

Once again, what Lucas was trying to do was to produce a world where people were sharing their movies and activity and excitement around this series of films, but by doing that, he wanted, obviously, to leverage that excitement into more value for Lucas.

The point to see is that this is a newly empowered kind of economy that I think the Internet is supporting. I'm not saying it never existed outside the Internet, but I am saying that the Internet makes it more feasible for a wider range of commerce. Indeed, once you see the model of the hybrid, it's hard to see any interesting Internet business that isn't actually trying to deploy the hybrid.

Think about Amazon. Is Amazon just a commercial economy? So much of the value of Amazon comes from people for free contributing to Amazon reviews of books to try to signal to other people which books they should buy and which books they shouldn't—people devoting their time to making Jeff Bezos's company more profitable.

Even a company like Microsoft recognizes this. Microsoft has an enormous customer-support center which is driven in large part by a user-generated content group, where people spend an extraordinary amount of time helping other Microsoft users use Microsoft products. These people do it for free. They just sit there and answer questions on these Microsoft Web sites, to help other people use Microsoft products. Instead of going down to their church on Sunday and helping with a bake sale or something like that, they spend their time trying to help Microsoft make more money.

It's a bizarre fact, but it's not an accident. There's something called the Communities Technology Group inside of Microsoft. A guy named Marc Smith runs it. He's a brilliant former academic. The group devotes an enormous amount of energy to tracking the "health of communities." They have ways to measure whether the communities are interacting with each other in a healthy, productive way. If they are, then they encourage them. If they are not, they figure out what they can do to encourage them. That activity of encouraging and fostering the healthy community translates into more profit for Microsoft, because there are more happy Microsoft users.

I think this vision of a hybrid is a good one. I celebrate it. I promote it. I think it's something that we should understand and try to encourage. What it does is to enable a commercial platform upon which an important social activity gets built. The stuff that's going on in the sharing community is the kind of human interaction we should be encouraging. If a commercial framework around it makes it possible, then more power to the commercial framework.

But I think what's interesting is that commercial entities are just beginning to figure out how they should relate to the sharing economies. One model of this I think of as the Darth Vader model, which, you will see in a second, relates directly to the Lucas story. If you read the terms of service on the George Lucas site, George Lucas's lawyers have said that when that kid takes the Lucas movies and remixes them, George Lucas owns all the rights. Indeed, if the kid composes music and uploads it to George Lucas's site and remixes it with George Lucas's movies, George Lucas has a worldwide, perpetual, free right to exploit that music to his own advantage without paying the kid a dime.

Essentially, this is sharecropping in the digital age that he has created. You can understand why he did it. The lawyers George Lucas employs are people that I have trained and other people from my university have trained. How do we train Hollywood lawyers? We train them to be as aggressive as they possibly can be, to take all the rights they possibly can. That's their job. If they leave anything on the table, they have failed.

The point to recognize is that that attitude is going to be destructive, counterproductive in this new hybrid economy. What we need to do is encourage a way of thinking about the proper relationship between the commercial entity and the sharing economy. We don't need to legislate it or worry about anybody doing it from a policy perspective. My prediction is that businesses that think about this in an appropriate way will be more successful than businesses that think about this in a traditional way. This again is an exciting moment of hope, because this is a model for seeing how this edifying social activity that happens in the sharing communities can be supported in the context of the Internet environment by commercial activities.

Those are the two moments of hope.

Here's the inexcusable fear. We are about a decade into a war. Actually, there are a lot of wars that we are in the middle of, but the one I want to focus on is the copyright wars, wars which my friend the late Jack Valenti referred to as his own "terrorist war," where apparently the terrorists in this war are our children.

This war that has been waged since about 1998 has been waged to stop something called peer-to-peer piracy, which is the sharing of files, contrary to copyright law, using peer-to-peer servers, primarily music, but increasingly movies. I personally oppose peer-to-peer file sharing. My book Free Culture, I think, 16 times says I think peer-to-peer file sharing is wrong, as well as being illegal, and people should not engage in it.

But the one thing we should have learned after these ten years is that the war against peer-to-peer file sharing has been an utter failure. It has not in any sense reduced the "bad behavior" out there. Peer-to-peer file sharing has gone up. Indeed, the one thing we know from statistics is that peer-to-peer file sharers don't read Supreme Court opinions, because after the Supreme Court declared finally that this was an illegal activity, it continues just the same.

So this activity, which all of your kids and maybe some of you—but I won't ask you to identify yourself—engage in, this activity of getting access to content across the Internet for free, is not a regulable activity without destroying the Internet. Of course, we could stop it if we cut the wires. But if we don't cut the wires, we're not going to stop it.

What do you do when you are waging an unwinnable war? Historically, Americans have typically continued to wage the war for many, many years ever more vigorously against the enemy. Of course, that's what we did with Prohibition for many years. That's what we have done in other literal wars.

When I first got into this debate, I had the great honor to debate Jack Valenti. Indeed, one of the two people I dedicate this book to is Jack Valenti. Jack and I debated at Harvard. His argument in that debate was that the thing we should worry about the most is that a whole generation of our kids is growing up living life against the law.

He said, "What is the moral basis for this generation when they think to themselves it's totally okay just to go break the law?" And they do break the law, and they justify it in what they do, in the way they live their life. "What will we become?" he asked.

I, of course, was totally impatient with that question. I was, like, "That's not the issue. The issue is, what did the Framers of the Constitution think?" or, "What do we need to create incentives for production?" or, "What freedoms do new innovators need?" I didn't care at all about the kids.

But in the five years since I published Free Culture, I have produced two kids—or my wife actually did the producing. I did the diaper changing. Now I think that it's Jack Valenti's question which is the most important question. I think the most important issue here is, what do we do when we are producing a generation that lives their lives against the law? How do we respond to that?

Jack Valenti's solution was to wage an ever-more effective war against the enemy, to increasingly insist on stricter penalties, again and again to get Congress to pass new laws to criminalize this behavior, to force universities to be engaged in the simple task of controlling how their kids use the Internet. But my response is that we ought to stop suing our kids and find a way to sue for peace and to figure out a way to build a copyright system that doesn't criminalize an activity that we know everyone is going to engage in, but which rewards artists for their creativity.

Over the last ten years, there have been an extraordinary number of such proposals. Terry Fisher at Harvard, I think, has the most compelling description, in a book called Promises to Keep, of a copyright regime where we wouldn't try to control "sharing," but we would find a way to measure who is more popular than who and compensate on the basis of that measurement, so that we could compensate the artists and not have a world of criminals.

A whole bunch of similar proposals have been made by other organizations. The Electronic Frontier Foundation [EFF] has a voluntary collective license. Most surprisingly to me, last week Judge Patel, who is a California judge who was the judge who oversaw the Napster case, the first case to declare this activity to be illegal, just gave an extraordinary speech where she said what the United States government has got to do is adopt a collective license for this peer-to-peer file sharing and stop calling it criminal.

The point is, we just change the law so the activity is not a criminal activity and copyright owners get paid for their work being shared.

The thing to do is think about, what if we had done that a decade ago? What if, at the very beginning of this, Congress had done what, of course, we professors think they should always do—listened to the professors? I think most of the time that would be a terrible mistake for Congress, I'll confess. But this time, what if they had done it? What if they had adopted a compulsory license a decade ago?

One thing we know for sure is, artists would have gotten more money. Over the last ten years, artists have gotten nothing from peer-to-peer file sharing. They don't even get anything when the RIAA [Recording Industry of America] sues on their behalf. That money goes into some big collective pot. Artists don't get money from that lawsuit.

Number two, we would have more competition in businesses. If the rules had been clear, businesses would have been able to build business around these clear rules and more people would have been encouraged, and then we would have lots of new innovation in the way culture gets spread.

But number three, the point that was most important to Jack and is most important to me is that we wouldn't have had a generation of criminals raised within our schools. We wouldn't have people who think to themselves, "The law is an ass, and I'm going to ignore the law." That's the thing that I think we have to focus on now. We are not going to kill this form of creativity. We can only criminalize it. We are not going to stop our kids from producing in this way or make them passive, the way we were growing up. We can only make them "pirates."

The question we need to ask is, is this any good? Our kids live in this age of prohibitions. They live life constantly against the law in all sorts of areas. Sometimes that's appropriate. We need to stop them from drinking and driving. That's appropriate. But when we can regulate them differently so that they are not criminals in their ordinary behavior, we need to do this, because living life against the law is corrosive and corrupting of the very value of the rule of law, the very core of the democracy. If a democracy cannot order itself to encourage that kind of rational regulation, then there's a fundamental problem with the democracy.

Let me just end with—I was told that I'm supposed to read, just to demonstrate, I guess, that I can read. Well, I can read, and I want to show you that I can. Let me just read a couple of sections from the conclusion of the book, which actually signals work that I'm doing after this series of books about IP [Intellectual Property].

This is going to be more interesting than the first couple of sentences make it sound, I promise. Just bear with me for a second.

"The economic theory behind copyright justifies it as a tool to deal with what economists call the 'problem of positive externalities.'"

That's the boring part. It gets better from here.

An externality is an effect that your behavior has on someone else. If you play your music very loudly and wake your neighbors, your music is producing an externality. That's the noise. If you renovate your house and add a line of beautiful oak trees, your renovation produces an externality. That's the beautiful trees. Beauty is a positive externality. People generally like to receive it. Noise is a negative externality. People, especially at 3:00 a.m., don't like to receive it.

Copyright law deals with positive externalities by creating incentives for people to produce great new work which otherwise they wouldn't have because their work can be so simply shared and spread.

Now I say that economists call these externalities the problem of positive externalities. But you might rightly wonder, why are positive externalities a problem? Why isn't it a positive good that expression should flow freely from one to another all over the globe"—this is quoting Jefferson—"'for the moral and mutual instruction of man and improvement of his condition'? Why isn't it peculiarly and benevolently the Internet's nature to be encouraged rather than restricted?

The answer, for the economist at least, is that while there's no doubt that free is good, if everything were free, there would be too little incentive to produce. If there is not enough monetary incentive to produce, the economist fears, then not enough stuff is produced.

In this book I have sketched a bunch of obvious replies to these fears. There are a ton of incentives beyond money. Look at the sharing economy. There are 100 million blogs, only 13 percent of which run ads. Look at Wikipedia or free software. Look at academics or scientists. We have plenty of examples of creative expression produced on a model different from the one that Britney Spears employs.

But I've also made the other side of the argument clear, that the sharing economy notwithstanding, there's lots that won't be created without an effective copyright regime. I love Hollywood movies. If anybody could copy a high-quality Hollywood film the moment it was released, no one could afford to make the $100 million blockbusters. So give me this example at least, and if there's at least this one example, it's plausible there are others—movies, maybe music, maybe some kinds of books, dictionaries or the novels of John Grisham.

We should, of course, be skeptical about how broadly this regulation needs to reach. Stephen Breyer got tenure at Harvard with a piece that expressed deep skepticism about how broadly copyright needed to reach. But I am convinced that it reaches into some places at least, and for those cases, without solving this 'problem of positive externalities,' we wouldn't have that kind of creativity.

So to get Hollywood movies, to get some kind of blockbuster films, to get maybe Justin Timberlake-like music and a few types of books, we run a copyright system. The system is a form of regulation. Like most regulation, after a while it becomes big and expensive. Federal courts and federal prosecutors spend a lot of money enforcing the law that copyright is. Companies invest millions in technologies for protecting copyrighted material. Universities run sting operations on their own students to punish or expel those who fail to follow copyright's rule. We build this massively complex system of federal regulation, regulation that purports to reach anyone who uses a computer, to solve this 'problem of positive externalities.' Good for us. Our government is working hard to solve this problem.

But what about negative externalities? What does our government do about those? Think, for example, about mercury spewed as pollution in the exhaust from coal-fired power plants or think about carbon spewed from these coal-fired power plants. These two are externalities. Millions are exposed to dangerous levels of mercury because of this pollution. The planet teeters on a catastrophic climate tipping point because of the carbon. Whatever harm there might be in not having yet another Star Trek movie, the harms from these negative externalities are unquestionable and real. They cause real deaths. They will cause extraordinary dislocation and economic harm. So given its keen interest in regulating to protect against uncompensated positive externalities, what precisely has our government done about uncompensated negative, harmful externalities?

In the past ten years, at a time when Congress has passed at least 24 copyright bills and federal prosecutors and federal civil courts have been used to wage a 'war on piracy' so as to solve this problem of positive externalities, what exactly has the government been doing about the negative externalities? The answer is, not much. Though President Bush successfully deflected Al Gore's charge in 2000 that we face a carbon crisis by promising to tax carbon when elected, within two weeks of his swearing-in, he reversed himself and indicated he didn't think global warming was a problem. Though the Clean Air Act plainly regulates pollutants like mercury in power plants, in 2003, the Bush Administration changed the regulations to allow polluters to avoid having to reduce mercury.

Thus, with these real and tangible harms caused by negative externalities, the government has done worse than nothing, at the same that it has devoted precious resources to fighting a problem that many don't even believe is a problem at all. So what gives?

It has been a decade since I got myself into this fight against copyright extremism. Throughout this book, I've argued that a decade's work has convinced me that this war is causing great harm to our society, not only from losses in innovation, not only from stifling certain kinds of creativity, not only because it unjustifiably limits constitutionally guaranteed freedom, but also and most importantly because it is corrupting a whole generation of our children. We wage war against our children, and our children will become the enemy. They will become the criminals we name them to be, and because there is no good evidence to support that we will win this war, there is all the reason in the world to stop these hostilities, especially when there are alternatives that advance the purported governmental interest without rendering a generation criminal.

But there is insult to add to this injury. The point is not just that our government is waging a hopeless war. It is that our government does little to fight real harms while it wastes real resources fighting problems that are not even clear harms. Why does it do that? The lesson a decade's work has taught me is that the reason has nothing to do with stupidity. It has nothing to do with ignorance. The simple reason we wage a hopeless war against our children is that they have less money to give to political campaigns than Hollywood does. The simple reason we do nothing while our kids are poisoned with mercury or the environment is sent over the falls with carbon is that our kids and our environment have less money to give campaigns than utility and oil companies do. Our government is fundamentally irrational for a fundamentally rational reason: Policy follows not sense but dollars. Until that problem is solved, a whole host of problems will go unsolved—global warming, pollution, a skewed tax system, farm subsidies. Our government is irrational because in an important way corrupt, and until that corruption is solved, we should expect little good from this government.

This book is not about that corruption generally. All I have aimed for here is to get you to take one small step. Whatever you think about global warming, the environment, tax gifts to favored corporations, subsidies that benefit only corporate farmers, at least think this: There is no justification for the copyright war that we now wage against our kids. Demand that that war stop. Once it's over, let's get on with the hard problem of crafting a copyright system that nurtures the full range of creativity and collaboration that the Internet now enables, one that builds upon the economic and creative opportunities of hybrids and remixed creativity, one that decriminalizes the offense of being a teen.

Thanks very much.

QUESTION:Who pays the compensation for the common license that you want to carve out? How do the artists get compensated?

LAWRENCE LESSIG: Under the different schemes that have been proposed, different people are going to pay. EFF's voluntary collective license says, basically, if you pay a flat amount—meaning you, the consumer—you are immune from any prosecution for file sharing. At the other extreme, Terry Fisher's proposal imagines taxing either at the Internet service level or whatever is the efficient, according to the economists, place to tax, to raise the money necessary to compensate for the loss that is estimated to be produced by the file sharing.

I think Terry's proposal goes too far. He wants to just whole-hog replace the copyright system with this. But I think his proposal is perfectly adequate to think about a complementing part of the copyright system that simply tries to compensate for whatever loss you expect is being produced by peer-to-peer file sharing.

At one point, the expectation was that peer-to-peer file sharing would destroy the commercial marketplace. As Jack Valenti famously said again and again, how could you ever compete with free? But Steve Jobs has shown that you can compete with free. His most successful iTunes Music Store, the number-one place people get music right now, charges for music—for every single song you could get for free on the Internet through peer-to-peer file sharing.

So these economies exist in parallel. We just need to estimate, I think, what the cost of the one is and figure a way to compensate on the basis of that cost.

QUESTION: I'm just wondering, are there any voices in Congress who are seeing things as subtly as you are? Is there anybody who is further down the line than just coming at it with a hammer?

LAWRENCE LESSIG: When I launched the project Creative Commons, which I helped start, Jack Valenti gave us a video in which he surprised the world by endorsing Creative Commons, because he said, "This is about artists choosing what to do with their copyright, and, of course, I support that choice by artists." Then he said, "I hope I don't ruin your project by endorsing it, Larry, because, of course, many people would think my endorsement is a reason not to support the project."

I feel a little bit the same way when I start thinking about naming members of Congress who actually get it, because, of course, that might be more harmful to them than helpful here.

But let me just name one, Rick Boucher from Virginia, who has been an enormously important force in trying to get Congress to recognize the importance of fair use and to balance fair use in the context of this economy. He is at least one person. I think there are others. Zoe Lofgren has been very important in this as well. But there are not enough.

The point is, when Congress does what it has done in this area, it often doesn't even understand that there is another side to the question. It frames this issue as if the only question is, how do we stop people from "stealing"? That is an important question. I'm not denying that. But there are other important questions, extremely important questions, here. For example, every single book published in the history of publishing we have available to us today. There is the vast majority of film produced in the 20th century that will literally disappear because it is burdened by copyright restrictions that will not expire until the film has literally turned into dust, since it's nitrate-based stock.

It's even worse than a copyright problem. There was a fantastic Democratic documentary filmmaker, Charles Guggenheim, who died in 2002, who made the Robert F. Kennedy Remembered film that was shown at the 1968 convention. Interestingly, his son, Davis Guggenheim, who did Al Gore's movie, made the Barack Obama film shown at the 2008 Democratic Convention.

Charles Guggenheim, extraordinary filmmaker, has a daughter, Grace Guggenheim, who has spent literally 20 years of her life clearing the rights so that his documentaries can be distributed. Why should it take 20 years to do that? The practice of making documentary films was that you would, say, take 60 seconds from CBS, and you wouldn't assert fair use to take those 60 seconds, because the lawyers would say, "Oh, that's too complicated. There's no way to rely on fair use." You would get a license from CBS. The license from CBS would say, number one, you agree that all your rights are governed by this license. You will claim no fair-use rights. Number two, this license gives you the right to this film for five years, North American distribution, educational purposes.

So at the end of five years, you can only distribute the film if you go back and get permission once again from the original rights holder. That's an impossibly expensive process. What that means is, this whole archive of documentary films, which is the most direct way for our kids to understand those periods—our kids can read ten books about the 1930s and not understand anything. If they watch one movie, they have an access to that time that is powerful and compelling. But all of this film will literally be unavailable for legal distribution because this system of regulation sits on top of it and locks it up, in ways that make no sense from the perspective of what copyright was to be about.

It's those kinds of problems that I think Congress should be focusing on. Yet Congress is oblivious to those problems. The problem it wants to worry about is, how do we stop kids from sharing illegally?

QUESTION: A follow-up question to that question is, as we watch Obama staff different positions and so forth, which are the positions that we should be watching in this regard? What kinds of questions should be asked of those people? Is it the Justice Department? Is it the Federal Trade Commission? Who's important here?

LAWRENCE LESSIG: I was a big supporter of Barack. I was a colleague of his at Chicago, so I knew him long before people could even pronounce his name. I helped the campaign think about technology policy. But I made a self-conscious decision—I'm sure the campaign was happy about this—not to try to talk to them at all about IP issues, because I knew it would get them in such trouble with traditional Democratic communities to imagine that they were associating with me. Indeed, Huffington Post posted an email from the American Association of Publishers to all of their lobbyists saying that they had to get inside the administration to assure that the administration did not listen to the views of Obama's friend Larry Lessig and follow policies about IP reflected in my own views.

I have no reason to believe that the administration is going to be much better than a Republican administration would have been. Indeed, in this campaign, the McCain campaign was extraordinarily progressive about copyright issues. The McCain campaign relied, as the Obama campaign did, on YouTube. There's this ability, with the Digital Millennium Copyright Act, to get YouTube to take down videos if you just simply notice that there's a copyright problem with them. YouTube has the practice that if you are complained about three times, they shut down your channel. So this creates a strategic opportunity in political campaigns, where, if you can get three complaints against your opponent's channel, it gets shut down. Now, maybe it's only shut down for a week, but in the middle of a campaign, a week is a long time.

So McCain wrote YouTube and said, "This is outrageous. You have to stop this. This is plainly fair use, all these things that you're doing. You have to stop taking these things down merely because of a complaint."

YouTube's response was, "We can't distinguish. It's not our job to distinguish. We just obey the law and we take it down."

So he was actually pretty good about that. I'm not predicting who would have been better.

But if we wanted to get the administration to think about these issues, there are three things that I think we should focus on:

Number one, the latest regulation that's trying to deal with "piracy" creates a copyright czar, a person charged with prosecuting in this space. It's going to be very interesting who that person is. Is that someone who is simply a Hollywood-type enforcer or is it somebody who has a broader understanding of these issues?

Number two, in theory—although it's not a necessity—there's a registrer of copyrights that might need to be appointed. There is no reason to expect that one has to step aside, but if she does, there's a question of who that person is. The current registrar of copyrights is someone whom I have never met. Even though I have met every single president of every single media company and all these people in the actual commercial side, this government official has never thought it important to even talk to me about these issues. So there is not a sensitivity, I think, to the importance of these issues in that office right now.

The third place is in the context of patents, the head of the Patent and Trademark Office. Again, the question is not whether you appoint somebody who is against patents—that would make no sense—but whether you appoint somebody who is sensitive to the way in which patents can both help innovation and hinder innovation.

It would be great to see progress in those three spaces, but again I don't think this campaign was fought about those issues and I don't see any reason to expect that there will be wonderful changes there.

QUESTION: Is anything being done abroad in this area?

LAWRENCE LESSIG: Lots is being done abroad by the United States government. The United States government has used its enormous power as a trading partner to force countries to sign bilateral agreements that impose stricter copyright rules on those countries than the international treaties require. We have an international treaty, which is the TRIPS Agreement, complementing the Berne Convention. Those agreements tried to set some balance in protection and in license or access. The United States government insists on stronger protections, and so they have forced countries like China and countries like Australia and Chile and Korea and Taiwan to engage in negotiations about stricter protections. One of them produced the result that I talked about in Hong Kong of somebody being arrested for remixing and posting something on the site.

Of course, a country signing a trade agreement can oppose the IP part of this trade agreement, but it is never going to make sense for them not to sign the agreement, regardless of what the IP stuff is. So all these countries are signing these bilateral agreements. But what's striking to me is, if IP is a balance, which everybody says it is—it's supposed to be a balance between protection and access—and if the international agreements expressed a balance, it's just as bad to insist that a country impose stricter agreements than it is to have a country impose less strict agreements than the international agreements established. It's just as bad to overprotect as to under-protect. Yet the United States government goes out there and insists that everybody overprotect.

There are two countries that have been very important in resisting this. One is India and the other is Brazil. Both these countries have facilitated a development agenda at WIPO, the World Intellectual Property Organization. That development agenda, I think, is beginning to try to rebalance these issues by reminding WIPO that it's actually a United Nations organization, not a committee set up by Hollywood, and WIPO is beginning to understand that it has wider interests to consider than just what the copyright maximalists say. So I think there is some potential for progress there.

But as long as the U.S. trade representative thinks that his job or her job is simply to represent one slice of the American economy to its maximum extent, I think we are going to continue to do harm internationally.

QUESTION: You are now teaching at Stanford University, and that's the center for producing the next generations for Silicon Valley. How do the graduates who are now in Silicon Valley feel about this? Are they trying to find ways to implement what you were suggesting?

LAWRENCE LESSIG: Yes, they are. I think there's kind of a fun, unfair way to describe California. So let me be unfair, but fun. There's a fight between the north and the south. In the north, there are people who believe in a more balanced set of freedoms. They think that freedom encourages creativity and innovation. They are actually pushing to defend it. In the south, they believe that more property and more control is the way to produce lots of innovation. That battle of north and south is vigorous in California right now.

So graduates from Stanford—some of them work in Silicon Valley; some of them go to work in Hollywood. Those who work in Silicon Valley are working hard to build an infrastructure that supports this more balanced system. I think companies like Google and companies like Yahoo have been quite innovative in pushing the lines of fair use in ways that I think are progressive. But the graduates that go work in the south increasingly believe that—or at least until recently, have believed that more effective control is important.

I say "until recently" because I'm actually optimistic about this "war." I don't think Congress is going to get it anytime soon, but I do think that industry gets it, and increasingly Hollywood gets it. Increasingly, Hollywood is deploying its assets in ways that encourage lots of people to participate in sharing that stuff. Increasingly, Hollywood gets that if they are going to encourage respect for their creativity, they have to respect other creators, like the user-generated creators that are producing this stuff. So I think the market is actually pushing towards the rational solution. The government is five or ten years behind, but the market, both in the north and the south, is encouraging it.

So I hope that my students, or students from Stanford, help that progress. But I think, more likely, it's going to be the businesspeople who push that progress, who get the importance of this.

There is one final story, I think, that brings this out. I don't know if you remember that dog that Sony made called the AIBO dog. It was a little robot dog. It could do things, follow you around, make you feel welcome when you came home, things like that. It cost about $1,500 when it was first released. If you spend $1,500 on a robot, you're likely to love it. So lots of people really loved their Sony AIBO dog, and people put up Web sites to encourage people around the Sony AIBO dog. One of them, aibopet.com, described how to hack the dog, by which I don't mean with a machete, but to teach it to do new tricks. One of the tricks was how to dance jazz. Some foreigners are confused. All of you recognize, of course, that dancing jazz is not a crime in the United States. Outside of Georgia, you are safe to dance jazz, and even your dog is safe to dance jazz. So there is no criminal activity here.

But Sony sent this person who put up this Web site a letter saying, "You violated the DMCA by circumventing our copy protection protocol, and we demand you take this down immediately." This created a firestorm in the press about how crazy this was. They were threatening a suit against these people who were trying to teach the dog to dance jazz. But then inside of Sony, the business unit people said, "Wait a minute. Why are we suing people who are making our product more valuable? If the dog can do new tricks, it's a more valuable dog. So why is it in our interest to punish people who are helping us for free?"

That's the recognition that the hybrid economy needs. Why are we punishing people who are helping us? We should be encouraging them. Eventually, Sony's position here was to be open and encouraging. It's that dynamic that is encouraging to me. As more people recognize that balance here actually can be profitable, that IP is not a religion, that it's a simple business asset that you deploy to maximize value to the business, not to respect the gods of IP, I think we will actually move to a place where there's a more sensible system in the market, and then we have to move to a place where there's a more sensible system in government.

Thanks very much.

JOANNE MYERS: Thank you very much for opening up a new way of looking at the Internet.