May 2007


Variety has reported that one of the Intellectual Property Strategy Headquarter expert panels has recommended that pre-authorisation for re-use of copyrighted content over internet channels be scrapped, requiring potential redistributors to simply pay royalties to copyright holders for content they stream on webcasts rather than gain prior authorisation. (see posts in VarietyAsiaOnline and commentary on ars technica)

According to a Nikkei BP publication article, a similar proposal has been put forward by Japan’s Keidanren‘s chairman Fujio Mitarai and Itochu chairman Uichiro Niwa , has been put forward as a way to both allow for the full utilisation of copyrighted content that may otherwise be ‘gathering dust’, and as enabler to fill the ever-expanding distribution channels with ‘much needed’ digital content.

[The government should establish new legislations that include a] “more simplified, convenient procedure that could replace pre-authorization by each right owner” in a bid to promote the distribution of digital contents.

The IPSH’s Intellectual Property Strategic Plans have long stated the aim to maximise the distribution of content over digital broadband channels (see Chapter 4 of the 2006 Strategic Plan (in pdf)).

The proposal was criticised by a group of 17 copyright organizations including the Japan Writer’s Association and JASRAC (Japanese Society for Rights of Authors, Composers and Publishers). Free-to-air commercial broadcasters are likely to be against the proposal as well as it not only loosens their control of content for which they own broadcast rights, but also threatens to erode their traditional business model of selling content-viewing audiences to advertisers.

Which situation is better for the sustainable development of the content industry is not a simple question to answer. On the ‘rights’ front, one school of thought would suggest content holders should be able to maintain control of their products and distribute them in a way that they see fit. At the opposite end of the spectrum, opinons abound that third parties should be able to redistribute content provided copyright holders are being paid for its use.

While it makes sense for a corporation to have control of its product portfolio and use it in ways it sees fit in order to maximise return (or minimise losses), allowing content to be reused by third parties may actually prove to be a profitable way for copyright holders to reap returns both on popular content and in particular on content that has not proved so profitable and has been consigned to be ‘locked in the vault’. While the knee-jerk reaction of incumbent rights holders would be to reject the new proposal, it might well be worth their while to consider the merits of a system that (on a limited basis?) provides them with new channels to distribute and gain revenue from their content.

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Skipping from content in Japan to pharmaceuticals in Thailand (see articles on compulsory licensing in Bankok Post and a Huffington post on IPR and access to medicines), parallels can be drawn between the two, where a government passes legislation that allows local firms to distribute the intellectual property developed by one patent/copyright holder provided they pay royalties for fair use. While ensuring the supply audio-visual programming on the one hand and the availability of life-saving (generic) medication at a low price on the other seem worlds apart, they also share common economic properties: high upfront development costs, extremely low marginal costs that make them both ripe for unauthorized use and compel developers to maintain firm control of distribution.

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Channel NewsAsia has picked up the Professor Phillippe Lasserre of INSEAD speaking at a seminar discussing the management of regional change. Lassarre has suggested that Singapore needs less central planning in order to catalyse creativity:

The choice – to a certain extent – is to accept some kind of what I have called disorder to promote creativity. It’s extremely difficult to be creative in a very planned and orderly manner

An entry on discontents in April questioned how limits on political freedom and freedom of expression inhibited (or enhanced?) creativity. These comments however, add the other side to that equation – that too much structure, even in a positive sense can reduce the need to innovate and think creatively. How many Singaporeans and expats living in Singapore have you heard refer to the nation as being over-pampered, spoilt, or looked after – just a little too well?

In this vein, Singapore’s Education Minister Tharman Shanmugaratnam has come out saying the nation needs to find it’s own ‘buzz’ to attract people in an Xinhua article. Tharman admitted that:

Singapore is referred to as a nanny-state, a “fine city”, with penalties for numerous offenses, and as lacking in creativity and an innovative culture…

…but also annouced ‘five key planks’ to ensure that the ‘Singapore Brand’ endures:

  1. Keeping the trust in the Singapore system
  2. being the most open city in Asia
  3. continuously remaking the country
  4. supporting individuals in breaking new ground
  5. strengthening a culture of excellence for all.

I wonder whether the ‘most open city in asia’ also includes non-economic openness? Singapore has thrived on its admirable efforts to provide one of the most open economies in the world, but if it wishes to capitalise on the creativity inherent in local and expat populations, it may need to look beyond economic freedom.

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The structure vs freedom dichotomy – and the need for both – is strikingly similar to the success of not just economies and political systems, but in the success of technological communications platforms. There has been some work that has suggested that the success of i-mode mobile internet in Japan for example, was due to NTT DoCoMo’s ability to strike a balance between open and closed systems to provide a platform that provided structure without restricting the activities of users. Perhaps policymakers in designing economic and political systems need to consider the need to allow people not to feel excessively restricted in their workplace, thinking space, and day to day lives.

A press release on the Indian Press Information Bureau has announced that Japan and India have signed a memorandum of understanding on Intellectual Property Rights in Tokyo.

The MoU covers three areas of capacity building, human resource development, and public awareness programs, with each government pledging to draw up annual action plans to implement the MoU.

If you take a look back through many of the Government of Japan’s Intellectual Property policy statements, the three areas mentioned in this MoU are some of the cornerstones of Japan’s IP reforms. Ever since Koizumi’s announcement of the ‘Nation Built on Intellectual Property’ policy in 2002, human resource development, public awareness, and even in it’s unstated form capacity building have carried through to one of the more recent policy documents, the 2006 Intellectual Property Strategic Plan.

The News (Pakistan) article also quotes an Indian Government official:

“The agreement consists of Japan’s support in areas such as the introduction of an electronic application system of intellectual property rights and education of Indian officials in the field,” the official said.

“Helping India in strengthening its policy on intellectual property rights is in the interest of Japanese companies considering investment in India,” he added.

This goes part of the way to answering the question why an MoU on IP with India? It would be interesting to know how much Japanese content IP is pirated in India and whether Japanese technology is also being used without paying royalties to patent holders.

Given Japan’s significant deficit in the terms of trade in copyrights, the government – and the industry – appear keen no prevent any unlawful use of Japanese copyrighted goods including content – just think back to JASRACYouTube incidents.

The protection agreement was Japan’s first with a developing country, he said.

The Content Taskforce (my translation of コンテンツ専門調査会)- a working group under the Japanese Cabinet Office’s Intellectual Property Strategy Headquarters (知的財産戦略本部) – released material associated with its March meeting.

A powerpoint presentation in PDF format entitled “About ‘Becoming a World-Leading Content Super-Power’” (my translation) summarises the strategy that is being put forward by the Cabinet Office committee to bring Japan to the forefront of the world content producing nations.

Below is a translation (all errors and strange English are mine) of the 6 points (found on pages 2-4) that outline the ideal situation for realising the creation of this Japan as a ‘content super-power’:

1. An environment where citizens can enjoy content

  • Citizens should be able to access rich content and create their own content from mobile devices and PCs independent of time and place.

2. Development of Human Resources

  • A variegated supply of human resources from outside and within flows into the content industry, allowing various parties to learn from each other.
  • Creators from overseas are drawn to Japan, allowing the nation to become a content creation hub.
  • Produce a large number of creators and producers that are able to use a variety of media to make a significant impact on the world stage.
  • Produce a large number of entertainment lawyers that have the knowledge and skills to negotiate internationally on fair terms.

3. Transactions and Contracts

  • Fair contracts need to be reachable across the whole of the content industry.
  • Based on a principle of ‘multi-use’, allow contracts to be signed where creators obtain fair remuneration.

4. “Business Chance”

  • Have Japanese content accepted throughout the world while content from overseas can be freely introduced into Japan.
  • “International Content Carnivals” and such events that hold international prestige would allow for content of various nations to be introduced and traded in Japan.
  • For capital to flow to the content industry from a variety of sources both domestic and international in origin.
  • The proliferation of a ‘business scheme’ that allows for online processing of rights and payments and a fair remuneration for creators while distributing a wide variety of content.

5. Eradication of pirated goods

  • Through the development of protection technology and system reforms including raising awareness amongst citizens, the production and distribution of pirated content will disappear

6. Education

  • Preparing the ground for the creation of rich content through nurturing creativity in school education.
  • Establish a climate whereby the rights of creators are respected.
  • Promote the improvement of basic morals for the enjoyment of digital content.

While North Korea more often makes headlines for nuclear tests and programs, economic sanctions, and human rights violations, the nation often described as reclusive and impoverished appears to have an emerging animation industry, according to an article from December 2006 on the Radio Free Asia website. The article indicates that North Korea is becoming a “significant player in the global business of animation and cinema—exporting cartoons throughout Asia, Europe, and North America.”

According to the article, the state-run SEK studio is one of the largest in the world, employing 1,600 staff who work with “state-of-the-art equipment.” The North Korean studio has worked on Pororo from South Korean, and US animated features such as The Lion King and Pocahontas, as well as the Teenage Mutant Ninja Turtles series.

The article also reports that South Korean animators have been collaborating with North Korean animators to produce some of their animated TV episodes.

The volume of these cross-border transactions (any data on exact numbers??) makes sense on a variety of fronts. From an outsourcing (both economics and supply chain manangement) perspective, North Korea uses the same language, is in close geographic proximity, has cultural similiarities at least historically. Vitally, one would expect enormous cost savings for South Korean firms to outsource animation work to the north. Politically, the South Korean Government has been eager to engage with the North so we could hypothesise at least that firms would face few political roadblocks on the Southern side. Political issues and transparency issues in the North not withstanding, the only key issues left would be quality of workmanship and the ability to communicate clearly to contractors what work is required.

On the quality front, animators featured in the article seem to think there is no problem:

Choi Jong-Il, president of Iconix Entertainment believes the technical skill of North Korean animators is well developed.

“North Korea employs animation to deliver various messages to the public, and North Korean animators have been sub-contracted by Japanese and European companies. That is why technically they are strong.”

Nelson Shin, founder and president of of Akom who has worked on animated television series including “The Simpsons,” “The Pink Panther,” “X-Men,” “Invasion America,” and “Arthur” and has directed “The Transformers”, was surprised by the quality coming out of North Korea.

“The first time I watched North Korean animation, I simply thought that if we tried our best, there might be a possibility to work together, but I had no idea North Koreans would turn out to be such outstanding animators,”

Yet Choi believes they fall down on their ability to communicate, which appears to be hampered by the lack of freedom of movement of people in and out of North Korea.

“To come up with work plans, one needs a steady flow of communication, but communication with North Korea has been very difficult,” Choi said. “Short of traveling there, the best one can do is to communicate via fax, but they’re not very enthusiastic about doing that either. This wouldn’t necessarily be a huge problem, if we could travel to North Korea freely, as we do to other countries.”

Shin however, is more positive about communications between the two nation’s animators.

“With South and North Korean animators working together, there are no misunderstandings or miscommunication. For three years, South and North Korean animators worked hard together and conversed well.

Shin has had his latest North-South co-production is 39-episode animated TV series titled “The People of Koguryo,” approved by the North Korean Ministry of Culture and the South Korean Ministry of Unification.

A post regarding a piece of Australian federal budget news on film investment policy – which points to a whole set of questions about the political economy of investment attraction and (sustainable) industry development.

The following Sydney Morning Herald article indicates that the Australian Government is planning to increase the refundable tax rebate for local film and television production as part of a A$283 million package.

Domestic film productions will receive a 40 percent rebate, other productions (eg television) will receive 20, while international films will attract a 15 percent rebate (up from the current 12.5%).

On the one hand, providing tax concessions may be a necessity for Australia to continue attracting international productions if it wishes to stay competitive and attractive in the face of many other international locations. This is particularly so when considering the effort some nations in the region are expending to promote their local industries.

But on the other hand, the question needs to be asked: is promoting the use of Australia as a site for location shooting and other production the most sustainable way to grow the industry? How much of the foreign investment that is attracted in this way will be used on “fee-for-service” work that does not provide local industry players with ownership of copyrights? In theory, “service work” provides locals with income and international exposure (provided a local subsidiary is not being used for the work). Yet without owning any of the property’s rights, firms have little in the way of reusable assets.

Singapore’s Media Development Authority (MDA), for example, gives very little consideration for where the production of projects it supports, such as animated TV series, are taking place. The most important factor for the MDA is that Singaporean firms are engaged in the high-end creative work and are retaining at least part of the rights to the content that is being produced.

In contrast, the Australian Federal Government’s 2007-08 budget seems to suggest that Australian policymakers are still too interested in attracting foreign capital and creativity to utilise the services of Australian talent. Given, the production process of an animated TV series is different to a live-action feature. Yet on first glance the tax incentives appear somewhat short-sighted or parochial on the policymakers front by exacerbating an artificial division between supporting “Australian stories” and allowing international films to use local locations and talent.

The differential tax treatment between local and foreign productions if its aim is to encourage foreign investors to put their money into productions that classify as “Australian” by employing a certain number of key cast and crew. Still, the question remains whether productions that the government has classified as “Australian” will be saleable in the international market.

Why is the government keen to promote the industry? And just what is the notion with ‘bringing Hollywood home’ (was Hollywood ever in Australia to begin with)? Are we witnessing a case of government pandering to lobbying from the local film industry? Australian games developers, for example, are eager to gain access to these funds that are only available to film, television, and documentary properties. While the games developers, who predominantly develop games for overseas publishers, would naturally be eager to access such lucrative tax rebates, it begs the question why does the film industry and not other ‘content’ industries receive such government support?

Should support be provided to the local games industry for the creation of ‘original’ IP rather than service work for international publishers?

See also SMH article ‘Filmmakers get…’

Several sources (IndianTelevision, C21Media) picked up the story of Singaporean firms chalking up US$128 million in sales deals at the recent MIPTV market in Cannes (S$193 million according to ChannelNewsAsia).

Featuring in the news were Singaporean production firms Big Communications collaboration with Flying Bark (EMTV) and Thunderbird Films based on a HarperCollins series (worth $6.5 million), and Scrawl Studios who concluded distribution deals for their animated series Nanoboy (on MediaCorp’s Kids Central), and co-production based on childrens book series Milly Molly was sold to various broadcasters around the world. Other companies striking distribution deals were or signing production MoUs were Upside Down Productions, Mega Media, Six-Six-Eight, Character Farm, and Media Freaks.

MDA CEO Christopher Chia held the sales up as an indicator of Singapore’s success, given the doubling from last year’s MIPTV sales. The biggest contributor to this however, was a collaboration deal by Singapore Technologies Electronics with Canada’s Nelvana Studios to co-produce three animated TV series and 10 DVD movies, which accounted for about US$100 million of the $128 million.

It is important to in the very least disaggregate this deal from the other deals, given that ST Electronics is the subsidiary of Singapore Techonolgy Engineering, and not necessarily the small to medium sized local content firms that the MDA is providing assistance to in Singapore.

Some related articles:
Channel NewsAsia: Singapore-made documentaries on Asia in high demand
Hollywood Reporter: MIPTV buyers pay attention to new media
IndianTelevision: $5 million India-Singapore-Korean TV co-production

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