Rod Sims: Governments must not give AI companies a free pass on copyright

At the end of June, Australian Sen. David Pocock alleged that the Albanese government was considering two competing proposals to change copyright policy for AI training.

Pocock said one proposal would create a copyright “carve-out” for artificial intelligence companies tied to billions of dollars in data centre investment and hundreds of millions of dollars annually for a creative fund. The other proposal instead would expand licensing agreements that would clear the way for AI companies to legally use Australian material to train their proprietary technology.

While the detail is not available, these proposals on the surface are deeply problematic.

But first, what other sector refuses to negotiate with suppliers and instead goes to government to bypass such a step? When the chief executive of Anthropic came to Australia recently he spent a lot of time with the government, but it seems no time with those whose content he needs.

This is a familiar pattern with tech companies. They provide content to users as if it is their own but do not feel obliged to pay for it; Anthropic, for example, recently reached a US$1.5-billion (C$2.1-billion) court settlement of a class action taken by authors.

In the simplest example, if you ask a search engine or AI what is going on in economics or politics anywhere in the world they will usually distill the content of media organizations to provide the answer. The platform or AI company has no ability to answer the query; they have no resources devoted to doing this. They supply the platform and algorithms, which are valuable but useless without the content they call on.

Traditionally, they have wanted this content for free. That they often are successful is reflected in the stratospheric valuations of these organizations, while the value of those providing the necessary content is falling to the point that their existence is threatened. Society must care about this anomaly. Quality media underpins our democracy as it provides a vital journal of record, a forum for informed debate and establishes necessary shared facts. Our writers, artists and composers are fundamental to our culture and identity.

We cannot know the accuracy of Pocock’s allegations but we do know that discussions have occurred and that the two proposals appear to align with what the AI companies are seeking. We cannot, therefore, be complacent.

The flaws in the first proposal seem clear. In essence they remove rights holders’ control over their content and pass this to AI companies. No ability to withhold their content; no ability to understand how their content is used; no ability to control how it is shown; and an uncertain payment. Without these features there is no copyright protection; copyright means payment and control. Further, there have been many suggestions concerning “creative funds” to finance future works. Such funds misalign whose content is being used and what the money in the fund would be used for. The second proposal is unclear. But it can work only if it relies on voluntary agreements between various rights holders and the AI companies.

AI companies should be treated the same as other companies. If they want a necessary input to production they should negotiate for it.

Some argue that we must avoid the high transaction costs of AI companies needing to do numerous deals, but the AI companies have enormous resources. Further, it is possible to devise licensing structures in each field to deal with this. In each area there are a few large players and collective bargaining can cover the rest, as it did with Australia’s News Media Bargaining Code and Canada’s Online News Act. Yes, the deals will be complex, but that is the point; avoiding this complexity simply highlights the flaws in a compulsory across-the-board approach.

Each sector will have different approaches to the nature of the payment and the terms of use. Bilateral deals recognize that rights-holder categories are different; think media versus writers versus performing artists. And, keep in mind, the rights holders have an incentive to do deals to get paid now rather than looking to potential later court-awarded damages.

Protecting the AI companies from negotiating with rights holders is not what governments should be doing; they should be facilitating negotiations, as was done with the News Media Bargaining Code and Online News Act.

Of course, the AI companies would love to come to places like Australia and Canada if they could bypass copyright protections in ways even the U.S. does not allow. Yet having weak copyright protections would damage our countries and do a disservice to creators globally.

If Australian Prime Minister Anthony Albanese makes an announcement about copyright at his AI speech on Wednesday, presumably he will put forward proposals that can be discussed and negotiated with rights holders. And at least Australia is having a discussion on these issues; the Canadian government’s recently released AI strategy didn’t once mention “copyright,” prompting a fierce backlash from media and cultural groups that stand to lose millions.

Paying rights holders appropriately for their content gives them the incentive to keep creating content; not paying them has the reverse effect, which should worry us all.

The Australian

Rod Sims is enterprise professor at the Melbourne Institute of Applied Economic and Social Research, University of Melbourne. From 2011 to 2022 he was chairman of the Australian Competition and Consumer Commission.