What is Chokepoint Capitalism?

Why copyright alone can’t unrig creative labor markets.

A middle school doorway. Three cigarette-smoking hoodlums block it from a small schoolboy, seen from behind, carrying a backpack.
Buffalo Police Department/Public Domain (modified); Erik B. Anderson/CC BY-SA 4.0 (modified)

Chokepoint Capitalism is my next book, co-written with the brilliant copyright scholar Rebecca Giblin. It’s a book about how the markets for creative labor were rigged, and how artists, fans, tinkerers, regulators and lawmakers can unrig them.

That second part is key: this isn’t just a book complaining about how tough things are for artists — it’s a book about how we can make things better.

There’s an obvious reason that our book’s focus on shovel-ready projects to put more money in artists’ pockets is important: you’d have to be a monster to prefer a world that underpays the writers, musicians, actors, and film and TV creators whose work heartens and delights you.

The cover for the Beacon Press edition of Chokepoint Capitalism.

But there’s another reason that this focus on fixing creative labor markets is so important: because copyright, the primary tool we’ve given creators to give them power over their labor, has actually made things worse.

To understand what I mean, consider an analogy.

Say that every morning, you tuck $5 into your kid’s jacket pocket to buy lunch, but when your kid gets to the school doors, there’s a group of tough bullies who take away his $5. Every day, he goes hungry.

Giving your kid $10 won’t get him lunch! It’ll just make the bullies richer!

No matter how much money you give your kid, the bullies will take it. If they get rich enough, they can even bribe the principal to look the other way, and hire associates to staff their “toll booth” from dawn to dusk, so no kids sneak past them early in the morning.

That’s chokepoint capitalism. Giant companies corral an audience, locking them in through “digital rights management” (which locks all the media you buy to a platform controlled by the seller), or by subscription fees, or through exclusive deals with venues or radio stations, or by buying out any company that tries to compete with them, or by starving these upstart competitors by selling at a loss whenever a new company starts up, so they can’t gain purchase.

As a creative worker, you need to access those locked-in audiences — you need to stream your music on Spotify and/or YouTube; you need to tour in LiveNation venues and sell your tickets through TicketMaster (TicketMaster and LiveNation are both the same company!); you need airplay on IHeartRadio (which used to be ClearChannel), or you need access to the retail channels controlled by three record labels, or the two cinematic exhibitors who are controlled by four studios, or the four publishers, or the sole independent book distributor.

These companies know that you need access to the audiences they’ve trapped inside their walled gardens, and they treat you accordingly. They subject you to one-sided contracting terms, locking you in to using their suppliers at inflated rates, forcing you to sign over rights that someone else might buy from you (like audiobook or graphic novel or even TV and film rights), requiring that you accede to funny accounting practices that let them rob you blind, and then, to top it all off, they deprive you of the right to sue them by forcing you to sign a binding arbitration waiver.

When you’re passing through these chokepoints, it doesn’t matter how expansive your copyright rights are. You need to get through the chokepoint and the company knows it. Saying, “I won’t sell you my copyright unless you offer me a better deal” won’t get you a better deal —it’ll get you no deal. After all, all three labels, all four studios, and all four publishers have the same abusive terms as their competitors, so they all know that you can’t go somewhere else to get a better deal.

But like I say, it’s worse than that — because copyright isn’t merely an ineffective means of opening up chokepoints. Just as bullies can use your kid’s extra lunch money to buy off the school administration, the monopolists who capture audiences can use the copyright they extract from creators as a condition of doing business to shore up their chokepoints.

For an example of how that works, consider music sampling — the process of using a digitally recorded snippet of another song, a staple of hip-hop and other contemporary music.

In the early days of sampling, musicians didn’t bother to secure copyright permission when including a sample, no more than Ella Fitzgerald secured Harry Warren’s permission to scat a couple bars of That’s Amore in her classic performance of How High the Moon.

They assumed that samples were either covered by the fair use exception to copyright, or that the samples were di minimis — that is, too minor for the law to trifle with.

During those early years, hip-hop creators wove together compositions made up of hundreds of samples, producing music that was both critically acclaimed and commercially successful.

However, thanks to a terrible court decision, musicians began to “clear” their samples, paying to license them. At first, this was a boon to the “heritage acts” — Black musicians from the golden age of blues, funk and soul — who had been subjected to the most unfair contracting terms and who had been routinely defrauded by the record labels, who stole their wages with impunity.

But those benefits were short-lived. The labels — who were locked in an orgy of mutual consumption, merging with one another until only three remained — quickly amended their standard contracts to require artists to sign away their sampling rights as a condition of doing business.

Thus all the music that anyone wanted to sample quickly came under the labels’ control. And since it is very, very hard to buy the rights to a sample from a label without being signed to a label yourself, even artists who might go indie still had to sign a label contract and sign away the right to their samples.

As Kembrew McLeod and Peter DiCola described in their essential 2011 book Creative License: The Law and Culture of Digital Sampling, the creation of a new copyright over samples was quickly turned against artists and in favor of the corporations that exploited them.

Not only that, but the need to pay for samples effectively extinguished an entire genre of hip-hop — those tracks that used hundreds of samples. There was no way that an artist could ever recoup if they had to pay a label for each of those samples.

This wasn’t an obscure offshoot of hip-hop, either! The two most successful hip-hop albums in history at the time of the judgement were The Beastie Boys’ Paul’s Boutique and Public Enemy’s It Takes a Nation of Millions To Hold Us Back.

Hypothetical sample-clearning accounting for Paul’s Boutique, from “Creative License: The Law and Culture of Digital Sampling” by Kembrew McLeod and Peter DiCola. Used with permission.
From “Creative License: The Law and Culture of Digital Sampling” by Kembrew McLeod and Peter DiCola.

These albums made millions for the artists who created them, and for their labels. But neither album could be made today. If Public Enemy cleared every one of the samples on Fear of a Black Planet, they’d have $6.8 million in sampling fees on 1.5 million sales. If the Beastie Boys had cleared the Paul’s Boutique samples, they’d have lost $19.8 million on sales of 2.5 million CDs (McLeod and his publisher were kind enough to supply the chapter in question, along with the notes).

You could give today’s hip-hop creators 100 extra years of copyright and a statutory damages regime that allowed them to seize and sell all the worldly goods of anyone caught reproducing their music without permission and it wouldn’t give them a lick of extra bargaining power when they passed through the three chokepoints run by the three labels.

Far from it — they would be flensed of those new rights at the chokepoint, and the labels would use those rights to pursue any artist who dared to try to reach an audience without signing an abusive, confiscatory contract first.

That’s what we mean when we say that chokepoint capitalism can’t be solved with more copyright, and when we say that more copyright can actually make things worse for artists.

If you want your kid to be able to buy lunch, you don’t give him more money — you get rid of the bullies.

That’s the true focus of our book: while we do get into a lot of painstakingly researched material about how different kinds of chokepoints (ad-tech, book publishing, streaming, ebooks, live venues, etc) are constructed and maintained, the real meat of Chokepoint Capitalism is laying out the kinds of things that artists, arts groups, fans, tinkerers and hackers, small businesspeople, regulators and governments at all levels can do to bust open chokepoints.

Because copyright can help artists — if there are lots of buyers for your creative labor, you can play them off against each other and get a better deal for yourself (we spend a lot of time talking about how finally applying antitrust to the tech and entertainment giants would help artists).

But if there’s only a handful of colluding buyers for your work — if there’s a chokepoint that’s patrolled by powerful bullies — copyright won’t help you.

Speaking of chokepoints…

The audiobook market is controlled by one company, Audible, a division of Amazon. In some genres, Audible has more than 90 percent of the market. If you’re an audiobook listener, you almost certainly have an Audible subscription, which means that anyone who wants to sell an audiobook needs to be on Audible.

But Audible has a rule: to sell in its marketplace, you have to let Audible wrap your audiobook in “Digital Rights Management” — an encryption scheme that can only be legally decrypted using the apps and devices that Audible has authorized.

That means that every dollar a listener spends on an audiobook is a dollar they’ll have to give up if they quit Audible, because there’s no (legal) way to convert Audible books so they’ll work on non-Audible players.

The more Audible dominates the audiobook market, the worse they treat creators. Professional narrators’ wages have been steadily squeezed, as have payments to the independent studios that produce audiobooks. The self-published audiobook creators who use Audible’s ACX platform report hundreds of millions of dollars in wage-theft.

Naturally, we won’t sell our audiobook with DRM, so naturally, it won’t be available on Audible.

The Kickstarter logo over a phone playing the Chokepoint Capitalism audiobook and a mock-up of the hardcover.

Instead, we’re kickstarting pre-sales of the audiobook (along with print and ebooks). We’re currently at about $75,000, with 25 days to go. So far, our readers have pre-ordered about 1,500 DRM-free ebooks, 1,175 DRM-free audiobooks, and 650 hardcovers. They’ve also donated about 700 hardcover copies to libraries (if you work at a library and want to call dibs on one of those donated copies, fill in this form!).