The Industry Canada P2P Music Study, Part I

We’ve seen that the gaming of the electorate by veiled threats from members of Facebook groups, Twitter followers, form letter wizards and paid government consultants is quite appalling. There is some artifice to all of these things that relies upon the anonymity of the Internet and a distinct lack of transparency while bureaucrats, such as the person who posts pseudonymously on Michael Geist’s blog as “SB”, the “insider”, hide behind cover that they have created for themselves.

In a lot of ways, this is nothing new. Ward heelers have manipulated the electorate early and often in political life, and bureaucrats are called mandarins for a reason. When you are talking about Huey Long taking on Standard Oil or Rene Levesque staring down English Canada, you can understand that when stakes are high, demagoguery is likely.

Yet imagine if Huey Long had a letter writing wizard, or Boss Tweed could tweet. The Internet in all its high tech glory lends itself particularly well to obfuscation and intrigue.

But what about a good old-fashioned scam?

Based on my review of disclosed documents, I have to conclude that bureaucrats within Canada’s department of Industry purposely set out to create a study (“The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study for Industry Canada”, published in 2007) that would allow them to have their paid government consultants claim that file “sharing” is good for you. Yes, the very file “sharing” that Jaron Lanier tells us is destroying a generation of artists, the same file “sharing” that Mr. Justice Charleton of the High Court of Ireland tells us violates human rights, is actually good for the world’s artists, especially Canadian artists.

The music study reads like warmed over deconstructionist gruel, and seems pretty obviously to be targeted at a particular conclusion that has little or no connection to any commercial reality. Because no one could possibly think that theft is property—unless, of course, you also think that war is peace, freedom is slavery and ignorance is strength. Or more simply, unless you set out to reach that conclusion because of some overarching political belief system that preordained your conclusion.

The disclosed documents appear to show that officials in the department of Industry Canada, a major government branch of a major economic power, set out to develop a study that the Department could use to undermine a significant sector of its own culture. A study that was written by handpicked academics who were arguably underqualified to conduct it, who had no experience with the commercial sector concerned and who appear not to have educated themselves about it in any meaningful way. A study that was woefully underfunded for what appears to be one reason and one reason only—the officials in Industry Canada had already handpicked their author, presumably because that author would deliver them exactly the conclusions they wanted. A properly funded study would have entailed, as we shall see, a public call for proposals to which anyone could respond, including open-minded, unbiased scholars with experience in the field of econometrics. And that is exactly what the officials appeared not to want.

While the intended conclusion of the commissioned study was evidently predetermined, the fact that these bureaucrats sought out a consultant who would reach the desired result is not especially surprising, given their track record in contracting Michael Geist as an “outside consultant”. The disclosed documents in the music study case make it abundantly clear why the bureaucrats never paid Geist a penny more than $24,999 (the threshold for public tendering) for any of his numerous particular “consultations” — if they did so, the bureaucrats couldn’t handpick the “consultant” who would reach the conclusions they wanted. They couldn’t have someone whose views were so clearly aligned with their own. What is exceptionally vile about the decision to “untender” the contract for the music study is that powerful government bureaucrats chose to conspire against far less powerful artists and songwriters who trusted them to do the right thing. And it didn’t take long for the pre-ordained conclusions of the “music study” to be extrapolated to authors, game developers, actors, directors and other working people in the professional creative community—1 billion illegal downloads a month but no loss of income? So the harm from this study is not limited to music.

One may wonder why it has taken so long for the insightful documents to be produced given that the paper was published several years ago. I can only speculate that one reason might be that bureaucrats within Industry Canada sat on requests for disclosure for years, consistent with reports in the news of other Canadian citizens trying to find out what their government is doing.

All of this is, of course, of concern to the professional creative community around the world, because the drumbeat against artists is not limited by borders.

It seems very clear to me that everything about this music study was designed to be hidden. The public was only to see the conclusions, forever to be hidden from the light of day was the unsavory and invidious manner in which those conclusions were predetermined and engineered. It seems pretty obvious that the whole thing was a set up and that is very serious indeed.

That it happened in a country that has an abiding and enviable record of supporting its professional creators makes the process exceptionally reprehensible.

The Gomery Report, Cliff’s Notes Version

As a refresher, or for new readers, an “untendered” contract in Canada is a concept that grew out of an investigation into government contracting practices by a Canadian judge (Justice John Gomery, who also happens to be the former Chair of the Copyright Board of Canada). The 2005 “Gomery Report” proposed a standard to ameliorate the rather seedy practices of awarding (or “tendering”) government contracts to contractors who had a relationship with the bureaucrat approving the work, or of double billing for work already done in another context. Or, it must be said, tendering a contract to someone whose views were known and who would produce a study or other work product that the bureaucrat desired for purposes of advancing their own agenda.

The Gomery Report resulted in a number of easily understood regulations relating to the value of contracts awarded by government agencies to specific individuals—i.e., without “tendering” the contract for public bidding. The easiest to understand of all of these is that a government contract for $25,000 or more cannot be publicly untendered. This is not the only rule, but it is the dominant rule and it is a very bright line.

The Gomery Report was front page news and had to have made an impression on every bureaucrat in the Canadian government. The Gomery Report was issued a few months before Industry Canada bureaucrat Gary Lazarus renewed a dialogue regarding a commission for the music study.

For Whom Doth the Bell Toll?

Gary Lazarus, Senior Policy Analyst, Marketplace Policy Planning, Marketplace Framework Policy Branch, Industry Canada, wrote an email on October 31, 2005, in which he mapped out a proposed survey of Canadians’ file sharing behaviours to a Dr. Birgitte Andersen of Birbeck College in the UK. He wraps up by stating that the Department of Industry:

“[P]repared to offer you that limit which is $25,000 including the goods and services tax (GST). [REDACTED] My colleague [REDACTED] Terms of Reference for the contract, but essentially we would be [REDACTED] assistance and advice in the questionnaire design, that you would undertake the statistical (or econometric) analysis and prepare a report.”

To which Andersen replied by email on October 31, 2005, at 11:40, “Dear Gary, I am very interested in your proposal…”

Well, no kidding. I’ll get to the bent in her previous writings below and I think you will understand why this opportunity was manna from heaven.

Later the agreed upon $25,000 fee was reduced to $24,950, as evidenced on the disclosed contract by a sequence of ham-fisted, handwritten amendments that looks very much like the notes of someone trying a few times to calculate the “GST” tax so that the total amount would come in under $24,950. Why? Because of the $25,000 limit.

And so the die was cast.

So the first question you might ask yourself is why Birgitte Andersen? A Danish academic who was trained at the University of Reading and who works in London, England as a professor of Management at the University of London. No apparent ties to Canada, or any prior interest in Canada or the music business aside from deconstructionist analysis.

Who is this person, you may ask? A good question and a key fact. Yet, in the hundreds of pages of disclosed documents, there is no information on how the Industry Canada bureaucrats chose her.

One would think that in choosing an academic to lead an important government survey on file sharing you’d expect to see documents in the file something like this:

• A public request for proposal and a collection of the responses.

• Extensive notes on the various candidate(s) detailing their qualifications, relevant academic backgrounds and any issues regarding potential biases.

• Maybe notes from conference calls or meetings with various candidate(s) before making a final selection.

• Correspondence within Industry Canada regarding their thoughts on the candidate(s).

But the disclosed documents offer nothing on Andersen’s selection. Not a single note. Not a single email. Not a single document. Absolutely nothing. Professor Andersen appears to have been hired to lead a major policy study on the basis of a single telephone call (of which there appear to be no records) – that is unless the Department doesn’t want to disclose the reasons she was hired.

So I’ll try to offer a few guesses based on the available information.

Maybe Andersen was selected because her expertise in the music industry is so overwhelming that she needed no introduction. No, that doesn’t seem to be true. How about knowledge of file sharing behavior? Not that I can find. How about a familiarity with law enforcement or forensic sciences? Nope.

So why choose her?

When you find out a little bit more about Andersen’s academic interests it all fits together in a kind of weird way. Andersen is a strong critic of “mainstream economics” and “copyright law” in particular, who does not appear to have ever published a study for which she had designed or developed surveys, or analyzed survey data. It even appears that Andersen had never conducted research in Canada and had never analyzed data on file-sharing. Before being hand-picked by Industry Canada for the music study, that is.

This is not to criticize her political views, but the purpose of the music study was ostensibly nonpolitical. The kind of work involved is very dry stuff, consumer behavior not political science.

And even if she were an obvious seasoned expert, why would anyone ever think you could get the thing done for $25,000 all-in? I know a bit about analyzing file-sharing data, and that piece alone is something only a few people even kinda sorta have the source data for. And they don’t work for $25,000. Or with a tip of the hat to Justice Gomery—$24,950.

Yet Another Missed Opportunity?

Now you would also want to ask yourself, when I get attacked on this controversial subject, do I want to have someone not only qualified, but who is demonstrably neutral? Ya think?

Well, you won’t be surprised to know that that ain’t Andersen. Check out this deconstructionist babble: “[T]he copyright system can act as a vehicle for the crude expression of commercial power relations and, in the specific case of music, a weapon by multinationals against the creative independence of small countries and producers.” (Andersen, B., Kozul-Wright, Z. and Kozul-Wright, R. (2005) “The Social and Economic Effects of Copyrights in the Music Industry: A Contribution to the Convergence versus Divergence Debate“, in New Directions in Copyright Law, Vol I , Edward Elgar: Cheltenham , 132.)

Ah yes, music is used by “multinationals” against small countries. No, that must be search and Google she’s thinking of, not music and, say EMI. Every one of the true “multinationals” has an active A&R process in the countries where they do business, so I’m not quite sure how this works in the Andersen world (assuming she even knows what A&R is). And then there is that nasty “competition” business—did she even factor in the independent labels? Does she even know they exist?

And here it comes–digital piracy was a positive development because, “corporate interests generally have a stranglehold over the [music] distribution process. Where a new technology threatens that distribution stranglehold, we can expect litigation, as in the Napster case. … [T]he Napster case gives rise to some concern. Not only does the outcome of this case suggest legal limitation on the ability of new technologies to make inroads into such corporate power, but it also indicates the way in which copyright might function to stifle innovation in music delivery.” (Birgitte Andersen and Fiona MacMillan, “Music and intellectual property rights for business and society”, UNCTAD, Music Industry Workshop, 2001, pp 89-91.) Yes, I would bet that every online copyright infringement case in the last 10 years saw the defendant trying to pull off the “copyright misuse” defense—but never succeeding. Why? Because it looks a lot like artists and copyright owners protecting their rights from someone who was not respecting their rights. (I would distinguish Napster, but that’s another story.) It’s not “corporate power” that’s at issue—it’s the human rights of artists.

And here we come to the familiar chorus: The music industry amounts to “cultural imperialism” and copyright laws are “not a means to provide fair income to the music creators and their local cultural communities, but are for the grandness of commercial exploitation. … [International copyright law] may not only be an ethical problem but also a problem for the long-term success of the industry”.

Ah, yes. Property rights are actually an impediment to commercial success. That requires a little more explication, professor. “It is well-known that artists are not driven by reward incentives for their creative expressions, but instead driven by their inborn spirit.” (Birgitte Andersen, “In the Shadow of the Intellectual Property Right (IPR) System”, September 12, 2005.)

Let them eat cake, maybe? And well-known by whom?

And here we go to the Big Finish: “[W]eaker Intellectual Property Rights are essential to avoid … skewness [sic] within industries”. (Birgitte Andersen, “The Performance of the IPR System in The New Economy: Implications for Digital Inventions and Business Methods”, May 8, 2002, p.26.)

Now I don’t object to Andersen expressing these views. That’s certainly her right, just like it’s mine to take the stuff out of her, as the Brits might say. I’m also sure that she’s very good at the work that’s in her area and interest. But is she really the person who should be in charge of what could have been an important step forward in understanding the p2p reality and be promulgated as expressing the views of the government of a major economy?

And why couldn’t Industry Canada find a Canadian to do the work in Canada? Or someone who actually knew something about the subject? The internal FAQ from the disclosed documents tells us the party line:

Question: “Why did you pay a researcher from the UK?”:

Answer: “We did look for a Canadian researcher (it is always our preference) but could not find one who either had not done research for the industry or has publicly expressed strong views on the subject matter. This is why we hired Prof. Andersen.”

No strong public views? Not true. In fact, her views were so obvious and readily available it is simply impossible to believe they didn’t know exactly what they were getting. I also wonder if the “no industry experience” applies to all other consultants hired by Industry Canada? While you would not someone who is a biased academic, how could you justify hiring someone for an important project with NO relevant industry experience?

Unless of course, you wanted someone who would not know enough about the subject to questions the conclusions you wanted to reach regardless of the data.

Ivory tower bureaucrats around the world often ask artists to prove the obvious—that it’s hard to compete with stolen. You haven’t demonstrated a causal connection between the rise of file stealing and massive unemployment in your industry, sales that are dropping in a near straight-line decline. No, billions of copies being stolen could be explained other ways–your music isn’t appealing, the price is too high, you’re not making your music available digitally. How do we know it’s not your fault? While this causal connection does seem to be the sole quest of the ivory tower bureaucrats, it is noteworthy that it does not seem to be a mystery to an overwhelming majority of the courts—Napster, Aimster, Grokster, Kazaa, Pirate Bay, Isohunt, now Limewire. None of these courts—including the U.S. Supreme Court—have ever had a single doubt as to whether there was a connection between plummeting sales and massive theft through file stealing.

Given the scope of the problem, why does the music study reach such a distorted view of reality? (Maybe it’s because they, too, believe that “[i]t is well-known that artists are not driven by reward incentives for their creative expressions, but instead driven by their inborn spirit.”)

Doesn’t it seem that that the study’s failure to establish any causal connection would be itself subject to question? (Perhaps the “it is well known” standard applied?) It seems to me that Industry Canada had an opportunity—and a budget– to get to the truth which they studiously avoided.

The Music Study

According to the bureaucrats who commissioned the music study, the research was to be “used to develop specific policy proposals and legislative initiatives”. Now that’s odd, because if you look at the time-line, it appears as if the Government had already made up its mind about what their policy was going to be in this area. It is even odder when you consider that once the Department got the study they wanted with the conclusions they wanted, there was a significant time gap when they released it. According to the disclosed documents, Andersen’s “FINAL REPORT” was originally due June 15, 2006. And the Industry Canada contracts database has Andersen’s “Management Consulting” contract ending on June 15, 2006. Yet, the report wasn’t published for over a year and a half – until November 2, 2007.

So, what happened? Why wasn’t the report released closer to June 15, 2006? Wouldn’t you think that the results would be stale the longer they waited to use the information? Even if you believed the methodology was as solid as the Ark? Not surprisingly, Canadian Government guidelines indicate that the results must be published promptly. For example, once the “FINAL REPORT” deadline has lapsed, there is correspondence indicating that the report must be completed by October 22, 2006, because it is a Public Opinion Research study. As bureaucrat Martin Islam at Industry Canada writes to Andersen on August 28, 2006:

“Because this project is to be considered Public Opinion Research (POR), there are special rules regarding the maximum amount of time that can elapse following the last date of surveying before the research must be made public. We’ve recently had our meetings with the Communications Branch on this topic. They’ve informed us that we’ll not only have to submit your final report but also a translated version by October 22 [2006].”

This policy, of course, makes perfect sense. If you’re going to spend money on a survey (a snapshot of public opinion or behavior), use it or lose it! Yet Islam’s October 22 deadline comes and goes without any disclosed comment.

On November 15, 2006, Islam informs Andersen that there are three sets of comments on her study: One from Professor Petr Hanel of the University of Sherbrooke, an economist hired by Industry Canada to peer review the study; one from Decima, the polling company that undertook the survey used in the study; and, one from Industry Canada itself.

The selection of Professor Hanel to critique – rather than conduct — Andersen’s study is curious indeed.

If the analysts felt that Hanel was qualified to comment on this study, why not hire him to write it? As they wrote in their FAQ, the preference is always to hire Canadian authors. Perhaps they felt that Hanel would not give them the report they wanted? It looks like they were right at least in that respect – Hanel tore Andersen’s draft apart, concluding that the economic indicators that Andersen used were “biased and inconsistent”, that flaws in the data Andersen used “seriously compromises the validity” of her conclusions and that, in general, “the positive link between P2P and CD and MP3 purchases are not at all well established.” Aside from the fact that it makes no sense.

Not surprisingly, Industry Canada never publicly disclosed this critique.

In providing his own comments to Andersen, bureaucrat Martin Islam writes:
“These comments are meant to be constructive and should be taken as such. That there are so many should not discourage you. This is a challenging project. But we all feel you’ve done a good job so far and by the time the project is done you have produced a very good and useful piece of work.”

On November 15, 2006 Andersen responds, but virtually her entire response is mysteriously redacted out of the disclosed documents; I’m speculating, but it may be because she used words of haste, as it becomes pretty obvious that Andersen is NOT happy.

November 22, 2006: Islam asks Andersen if she’s had time to look over the feedback and asks if she’d be able to discuss. Andersen’s immediate response is partially redacted (again) and terse. She proposes some dates to discuss to proposed changes but then ends the email with a declaration of surrender: “Basically, I try to simply do the changes you ask me to do, rather than going into long discussions.” In other words, Industry Canada’s “objective” expert is conceding defeat – she will just put her name on the edits Industry Canada imposes on her. It makes you wonder – how much of the text did Industry Canada bureaucrats write? And, if a significant amount of the text was written by them – what exactly are their econometric qualifications on file sharing surveys?

On February 14, 2007, fully FIVE MONTHS after Andersen’s contract is over, Andersen provides “the final draft of the ‘music downloads’ paper”, in which she hopes that Industry Canada will be “pleased with the results and decide to buy us lots of drinks and take us out to expensive restaurants should the occasion arise. …”

Was the paper released around February 14, 2007?

No, it appears that bureaucrats at Industry Canada continued to edit and re-write sections of the report.

On March 5, 2007, Andersen replied to Martin Islam and Gary Lazarus that:
“We basically accept what you have been doing – although we may have done it slightly different some places. …”

So who actually wrote this paper? Isn’t it at least a collaboration between Andersen and uncredited bureaucrats at Industry Canada? And what exactly was it that Islam and Lazarus “had been doing” that Andersen “basically accepted”?

By the time April 2007 rolls around, Andersen is getting anxious to release the report. In response to her constant requests to publish the report, France Chevalier’s response (which is largely redacted) is “… What can I say other than that I have made every possible effort to allow the release of the results. I am still aiming to get approval to publish soon…”

However, by June, with still no response, Andersen seems quite understandably agitated, and she demands to know why there has been such a long delay:

“[The] VERY final version of the report was submitted in mid-March … I have now finally been kicked out of the conference (even presentation in parallel session) as I could not provide permission to present. … I have worked hard, putting my own research on hold given the work was a lot larger than anticipated, I have… paid for technical assistance, been available for communication whenever necessary, tried to collaborate at times, etc. I anticipate you understand my situation, and now I want to publish my research findings as I was promised initially.”

France Chevalier’s terse reply states, in part, that: “Unfortunately, as per the contract, the department retains the copyright and usually authorizes the author to publish whenever the decision is taken.”

Boy, that’s tough. Sounds like a major label talking to an artist, right? Not really. That would be the last artist that label signed.

You have to sympathize with Andersen. It would not surprise me if she wondered what kind of mean-spirited yahoos she had gotten hooked up with.

More months go by as a media release strategy was prepared. Remember that deadline for opinion research? Objects in your review mirror are larger than they appear.

The internal bureaucrat “Release Strategy” document states that the Department needs to have:

“A disclaimer stating that ‘The views expressed are those of the authors and do not necessarily reflect the views of Industry Canada’ is printed on the front page of the report. [And this is rich, given that amount of apparent rewriting done by Industry Canada]. The release will be low key, i.e. a posting of the report on the web without news release or any kind of proactive announcement. [REDACTED]…The report will provide valuable information to legislators and stakeholders concerned by the issue of P2P file sharing in Canada.” Remember that last sentence, we will come back to it in Part 2 of this article when it shows up again.

So, the question is raised, what was the IP Directorate hoping to do with the study they so carefully prepared? And who (or what) exactly was to be involved in the “low key release”—a name that was redacted in the disclosed documents?

What is clear is that Industry Canada bureaucrats believed the study had both Canadian and international utility. In terms of its international value, France Chevalier writes to Ron Parker, Susan Bincoletto and Gary Lazarus:

“[REDACTED] Also, the OECD is undertaking Phase II of its research project on Counterfeiting and Piracy, which will attempt to collect data and measure the problem of digital piracy in OECD Member countries. The Andersen study and the approach we used might be helpful to the OECD and represent as of today the only objective data and analysis that Canada has. You may wish to consider this information in your decision and recommendation to the DM concerning the release of the study.”

Having spoken at one of these OECD meetings, I can tell you this comes as no surprise to me. I do not think I have ever been in one room with more people who have less of a clue about what is happening on the street.

In terms of its use for the Canadian context, France Chevalier circulated a draft policy document internally:

“Bill C-60 proposed amendments to include measures to implement copyright protection in two WIPO Internet treaties. Such amendments would result in stronger copyright protection for the music industry. [REDACTED] aims at informing policy makers about the legal treatment that P2P technologies should receive in the Copyright Act and whether or not amendments are required to address this issue, and help to determine whether or not there is need to revisit our private copying regime.”

As Industry Minister Prentice prepares to introduce new copyright reform legislation, on October 16, 2007, the Speech from the Throne by the Governor General of Canada, which is the highest level statement of national policy in the country, declares that:

“Our government will improve the protection of cultural and intellectual property rights in Canada, including Copyright reform”.

October 25th, 2007, Industry Canada bureaucrat Albert Cloutier says to finally publish the music study “the sooner the better” and it is released by the government on November 2, 2007. Why the big hurry all of a sudden?

Now you have to ask yourself how could it be that the Industry Minister—a cabinet level position and head of the Industry Canada bureaucracy—would not know that his own department had commissioned a study that contradicted a major policy initiative of his own department, at least according to Geist.

The answer is, unfortunately, all too obvious—skilful sandbagging by a dedicated group of likeminded people embedded deep in the bureaucracy and able to spend money and allocate resources. It seems that even the most conscientious Minister could not be expected to know what dangers lurk in the shadows of his bureaucracy.

And as we will see in Part II of this article, only The Shadow knows.