Copyright conundrums for big business

There is a problem today with the importance of copyrights in the digital media realm. Both BoingBoing and Slashdot are reporting today on a recent Economic Times article which points out that Microsoft is facing up to $175M (in US dollars) of tax penalties to the Indian government for claiming that they were exempt from paying licensing taxes on software sold in India from 1999-2004. Apparently, Microsoft claimed that their software is "sold" to the customer as a product, and is not therefore "licensed" to the customer which would exempt Microsoft from paying the Indian "licensing" taxes.

This type of argument from Microsoft becomes a problem when their own Indian website terms clearly state that the customer is licensing (this is just one example of this type of language on Microsoft's India site) the product for use on their computer, not purchasing it as a product which can be resold, modified, or tinkered with however the customer sees fit. Microsoft may be acting relatively rationally here - attempting to reduce their tax load through creative accounting - but the fact remains that they are also circumventing their own arguments for why copyright is a "good thing" for software by opening themselves up to scrutiny by a government that is hungry for capital, is growing rapidly, and would prefer to see their own software companies become global powerhouses to shore up their own global economic status.

This type of problem with copyright laws is a difficulty for the recording and movie industries also, as BoingBoing points out in the article linked to above. As Cory Doctorow states:

"This have-your-cake-and-eat-it-too approach to licensing and sales isn't unique to Microsoft. The musician T-Bone Burnett once explained to me that the standard record deal gives artists seven percent royalties on sales and fifty percent royalties on licenses. However, when artists get paid by their labels for iTunes downloads, they're only paid the seven percent sales royalty, despite the fact that the record companies keep telling courts, Congress and customers that a download is not a sale, it's only a license, and don't you dare try to resell your music, loan it, or give it away -- all stuff you're allowed to do with purchased goods."

In today's digital media revolution it seems that the biggest problem is not the inability to make money, but the inability to combine the benefits of copyright laws of yesteryear with the near costless ease of replication and storage of digital media. Big business cannot, indeed, have their cake and eat it too when it comes to copyrighting digital media that is sold to consumers. It seems to make more sense to focus on enhancing "copyleft" or open source "licensing" to fit within the framework of current copyright laws. Doing so would cost businesses less money in legal fees, improve security of digital media and products, and allow more time, money, and energy for companies to focus on actually providing what consumers want: MORE media, MORE quality, FASTER access to media, MORE unique services, and BETTER customer service than the competition.