Composer and performer Jean-Michel Jarre put his finger right on the right approach to online policy in a recent speech to policy makers at an SIAE event in Italy.  (Jean-Michel is the current president of CISAC.)  Jean-Michel gave his own interpretation of the “value gap” calling it instead a “transfer of value” which is exactly what it is.  And when you consider who is the greatest offender in the “transfer of value” ecosystem, it’s not AT&T or Verizon, it’s not Time Warner or even Cox–it is Google, and, of course, Facebook that is the worst of the worst.  And while Jean-Michel didn’t call out Google or Facebook by name, the Leviathans of Silicon Valley were lurking behind every word.

MTP readers will remember that I have been emphasizing the income transfer in the “digital economy” or what Lessig calls the “sharing economy” or what we call “getting Googled.”  This income transfer is based on the idea that the people who do the work get little or none of their labor value.  This income transfer occurs on pirate sites when artists’ work is literally stolen and distributed in ad supported piracy with advertising sold by the biggest advertising networks.

The income transfer is not difficult to see–the songs, recordings, movies, television programs or books are simply stolen and posted on ad supported sites that directly compete with legal sites.  The value of these works are converted into advertising revenue by unscrupulous brands and ad networks and published on pirate sites with that value sucked out by everyone involved.

The fact that these sites continue to flourish is not only attributable to a perverse interpretation of safe harbors–these site flourish because of gutless national governments that allow the income transfer to continue, Kim Dot Com notwithstanding.

The biggest offender, though, is the one search engine that drives the most traffic to these sites (where they are also found on the other side of the transaction selling advertising)–Google.  Google is an integral part of the income transfer economy, receiving over 1 billion job-killing take down notices in the last 12 months.

The next biggest offender–and one that many artists are not really focused on–is Facebook.  Whatever we may think about Google’s role in the income transfer economy, at least Google acknowledges that it needs a license for its music properties like YouTube.  Facebook is entirely unlicensed and operates its own walled garden pirate operation.

Jean-Michel’s speech (as quoted in Complete Music Update (but without the snark)) sums it up:

[T]he truth is that the creative economy, for the creators whose works are driving it, is still under-performing. We need to fix flaws in the environment in which creators are working. And if we do, the economic benefits will be enormous, leading to further growth and many more jobs.

The biggest flaw I want to highlight today is what is known as the “transfer of value” or the “value gap.”  To survive and thrive, creators must be fairly paid for their works. Yet today, some of the world’s major digital music services are building large businesses on back of creativity while paying next to nothing in return.

This is not fair. It is a market distortion. And it is holding back growth in the creative sectors.

Bingo.

One way to fix this is not by trying to get rid of the safe harbor which solves a problem by providing a little latitude to reasonable people acting reasonably.  To take one example, the ISPs participating in the Copyright Alert System should not be lumped in with Google.  Let’s face it–Google is in a class of its own and should not be entitled to benefits for which Google bears no burden.

There is no part of Google’s business that has greater resources available to it than search. Mrs. Palsgraf take note–if Google search attracts over 1 billion take down notices a year, then you can be sure of one thing–search is working exactly as planned, and the plan is to keep transferring the value of everything the network touches including the labor value of every artist and songwriter in the history of recorded music.

Facebook is also working exactly as planned and rips off songwriters, artists, publishers and labels all the live long day–not to mention selling artists names as advertising keywords which is the ultimate insult-to-injury commoditization.

Jean-Michel is exactly right.  This job-killing market distortion must be fixed.