All your game plays are belong to Nintendo?

Hi everyone at Culture Digitally!  For those of you I haven’t met before, I teach intellectual property at Rutgers Law School and I was one of the founders of the Terra Nova weblog.  I’m also a Culture Digitally RSS subscriber, a big fan of the site and the authors here, and I’ve even posted a few comments now and then.

Below is a cross-post of something I wrote for Gamasutra about Nintendo’s monetization of user-generated content on YouTube, specifically “Let’s Play” videos.  This post was written for Gamasutra’s audience of game designers (not media studies scholars).  It lay out the basic legal structure of the dispute.  For this audience, I think there are some obvious connections to the conversations around free/fan labor, the interplay of technological and legal controls, and debates over the nature of games as new media artifacts.  But the post below doesn’t explore that much — it frames the issue as a simple question of intellectual property law without much theoretical gloss.

I’m working through these issues as part of my investigations of user-generated content, so any thoughts or reactions would be welcome.

Recently, Gamasutra and other news sources reported on Nintendo’s claiming YouTube ad revenues for videos featuring gameplay footage.  Nintendo explained that “for those videos featuring Nintendo-owned content, such as images or audio of a certain length, adverts will now appear at the beginning, next to or at the end of the clips.”  Apparently, in practice, what this means is that certain YouTubers who were monetizing extended Nintendo gameplay videos will now lose their advertising income stream.  Instead, YouTube will share those revenues with Nintendo.

If you worked to create a video channel and a YouTube subscriber base only to have Nintendo grab your ad revenues, would you be happy about this?  No, you wouldn’t.  Zack Scott, a YouTuber with over 200K subscribers, isn’t happy.  On his Facebook page, he explains (to a growing chorus of over 8K “likes”) that he’s giving up on making any more Let’s Play videos for Nintendo games: “I love Nintendo, so I’ve included their games in my line-up. But until their claims are straightened out, I won’t be playing their games. I won’t because it jeopardizes my channel’s copyright standing and the livelihood of all LPers.”

As Gamasutra reports, other LPers (Let’s Play creators) are upset too.  But the claim they make isn’t just that they’re being deprived of their livelihood.  They also complain, like Scott, that Nintendo is betraying its “fans” and shooting itself in the foot.  A common theme is that Let’s Play videos provide “advertising” for Nintendo, building interest in their games and helping to sustain the community of enthusiasts.  (In a similar vein, see this article on game modding by Hector Postigo.)  To put it simply, if Nintendo cuts off Zack Scott’s income stream and Scott stops making walkthroughs of Nintendo games, it’s Nintendo that loses.

So why would Nintendo shoot itself in the foot?  The answer can be summed up in two words: intellectual property.

As a co-director of the Rutgers Institute for Information Policy and Law, my day job is teaching and researching how intellectual property law applies to new technologies.  I also have a particular affection for the law and business of video games.  So I’m going to break the IP issues here down, as briskly as I’m able, in four component steps: 1) YouTube, 2) copyright, 3) trademark, and 4) IP policy.

1. YouTube

First off, I think it’s interesting that much of the media coverage of this situation is simply pitting the Let’s Play creators against Nintendo.  This conveniently lets the technological behemoth that is YouTube float in the background in soft focus.  But YouTube should really be front and center in this dispute.  Consider: YouTube created the various “livelihoods” at stake by starting its Partner Program; YouTube orchestrates and directly profits from the advertising monetization of Let’s Play videos; it is YouTube’s Content ID technology that is helping Nintendo to locate gameplay videos; and finally, Nintendo could never have usurped Zack Scott’s ad revenue streams if YouTube didn’t enable that action.  YouTube is smack in the middle of this dispute, and it is playing on both sides of the field.

But, in a way, that’s a legally mandated position for YouTube, if YouTube wants to stay in the good graces of the copyright regime.  From the standpoint of intellectual property law, YouTube’s actions as an intermediary are primarily governed by the rules of the Digital Millenium Copyright Act, and 17 U.S.C. 512(c) in particular.  As an online “service provider” under that statute, YouTube can be shielded from liability for the copyright infringements of its users, but only so long as it complies with the “notice and takedown” requirements of the statute.  This means that when a copyright holder informs YouTube that a particular video infringes its rights, YouTube must “expeditiously” disable public access to that content.  YouTube must also comply with many other requirements of Section 512.  For instance, it must terminate account holders who are repeat infringers and must accomodate “standard technical measures” that relate to copyright policing.

So, essentially, in order to benefit from the “safe harbor” of Section 512, YouTube is required by law to play nice with the copyright industries.  Apparently, in this case, YouTube has made the decision that playing nice means that Nintendo, not Zack Scott, is the rightful owner of the advertising revenues that are generated by Zack Scott’s Let’s Play videos.  As YouTube states in its monetization policy, “Videos simply showing game play for extended periods of time may not be accepted for monetization.”

So YouTube owns its platform and it can run the platform as it sees fit.  But is giving Nintendo the advertising revenue stream here the right call as a matter of copyright law?  That’s a tricky question.

2. Copyright

Among the general public, copyright law is an increasingly familiar concept.  Still, that doesn’t make copyright “ownership” any less weird as a theoretical matter.  We know what it means to own a physical item, but when we say Nintendo “owns” fictional characters such as Mario, Toad, and Princess Peach, what does that mean?

From the standpoint of copyright law, “ownership” means that Nintendo has the exclusive right to reproduce and distribute copies of the many works that incorporate those particular characters.  Nintendo also hold the exclusive rights to adapt those works into new forms of media and to “perform” those works publicly.  You can find these and other exclusive rights (there are six in total) in the copyright statute at 17 U.S.C. 106.  In theory, a Let’s Play video could infringe upon several of those rights.  The uploaded videos (arguably) reproduce Nintendo’s work, perform it publicly, distribute it, and may even create a “derivative work” based on it.

But does that mean that all unauthorized uses of recognizable Nintendo works on YouTube are always infringing?  No.  Indeed, it’s notable that, in its statement, Nintendo referred to “Nintendo-owned content, such as images or audio of a certain length.”  That’s a curious qualification for Nintendo to make as the copyright holder — why “of a certain length”?  I think Nintendo is probably admitting that short clips of gameplay footage, when used in the context of commentary or criticism, are not subject to Nintendo’s exclusive control.  This is because the copyright statute, at 17 USC 107, makes it clear that the public has a right to “fair use” of copyright-protected works.  This means that, without Nintendo’s authorization, the public, in certain circumstances, is entitled to use Mario, Toad, and Princess Peach “for purposes such as criticism, comment, news reporting, teaching…, scholarship, or research.”

So doesn’t that apply directly to Zack Scott?  Isn’t a Let’s Play video a form of commentary or criticism under Section 107?  Maybe it’s even a form of “news reporting” or “teaching”?

Perhaps, but the case law on fair use makes it clear that not all uses of a work in “commentary, criticism, news reporting”, etc., will be fair use.  It’s certainly possible to use a work and comment upon it, yet to use too much of the work and thereby exceed the protections of the fair use doctrine.  For instance, I could not republish the entire first Harry Potter book with a few additional comments added, and claim that act of reproduction as a legal fair use.  It may be that Nintendo believes game play videos “of a certain length” will be categorically outside the bounds of fair use and should be exclusively within its control.

Nintendo may believe that, but I’m not so sure.  As Zack Scott puts it: “Video games aren’t like movies or TV. Each play-through is a unique audiovisual experience.” I think that’s just right — the peformance of a video game is something different than a clip from a movie.  It could be argued that footage of original and creative game play — even extended footage of creative game play — constitutes a form of “transformative fair use” under copyright law.  A very recent case in the Second Circuit, Cariou v. Prince, might be understood to support this argument.  Following that case, if the aesthetic appeal of a Let’s Play video is perceived as fundamentally different than the appeal of the interactive game, fair use might actually exist.

I’m hardly certain that the average federal court would accept that argument, but I do know that such evolutionary twists and turns are common in the law of fair use, which is notoriously unpredictable.  Indeed, I think part of what may be motivating Nintendo’s move here is the concern that the unauthorized monetization of gameplay video performance is rapidly becoming the “new normal.”  Nintendo may be concerned that if it doesn’t assert its copyright interests, courts will ultimately start to accept the practice of monetizing unauthorized game play footage as a conventional form of fair use.  And that sort of rule could have significant repercussions for the emerging North American pro-gaming scene.  (As a point of comparison, see, e.g., T.L. Taylor’s discussion of Blizzard’s dispute with KeSPA in her new book.)

3. Trademark

Although copyright is the IP language being used by all the parties here, it’s worth pointing out that Nintendo’s IP rights aren’t limited to copyright: Nintendo also claims trademark rights in Mario, Toad, Princess Peach, etc.  (The “Princess Peach” trademark is at Reg. Serial No. 85,497,172, if you want to look it up.)  In theory, trademark law is narrower in scope than copyright law.  Trademark is intended to protect consumers from being deceived about the source of the goods and services they find in the marketplace.  And personally, I don’t think most people watching a Let’s Play video featuring a Nintendo game are going to be confused about the origin of the video.  In other words, I doubt anyone would presume Zack Scott’s videos are the works of an employee working for Nintendo.

However, in recent years, some trademark owners have become much more aggressive about their IP rights.  Some have sued, for instance, filmmakers who make humorous references to their products without authorization.  Statutory expansions in the legal protection of brands, such as the Trademark Dilution Revision Act, may apply to famous video game characters, such as Mario and Luigi.  For better or for worse, many trademark owners feel legally obliged to actively police against unauthorized commercial uses of their brands.  This means that concerns about Nintendo’s trademark interests, as well as its copyright interests, may explain Nintendo’s efforts to limit the emerging business models of Let’s Play monetization.

In summary, while Nintendo may indeed be shooting itself in the foot by grabbing the revenues from YouTube Let’s Play creators, it may think this short term sacrifice makes sense in the long term.  Nintendo may be willing to shoot itself in the foot today rather than allow unauthorized monetization to shoot it somewhere closer to the heart in the future.  Nintendo may see today’s Let’s Play monetization as the tip of a looming user-generated iceberg.  It may view the loss of “free” advertising as preferable to the loss of exclusive control over the performance of its games and its associated brand.

4. Policy

Finally, I’ll want to add a brief appeal to you, the reader.  Nintendo might be making a mistake, but it is surely pursuing what it believes is best for its own interests.  But in the context of IP rights in video games, what do you think is in the best interest of the public?  What should be the scope of intellectual property rights in video games?

This isn’t just an idle question — it is a matter that is being debated in Congress right now. The day after Zack Scott complained about Nintendo’s YouTube actions, a Congressional subcommittee was considering how copyright law might be better adjusted to our new digital era.  Copyright law is hardly set in stone.  Periodically, Congress rewrites the copyright statute in very significant ways.  It seems that a new balancing of digital copyright law is on the horizon in coming years.  But in the case of new media, what should that balance be?  Would we be better off in a world where Zack Scott could monetize Nintendo games in Let’s Play videos to his heart’s content?  Or is it better if Nintendo has the right to sue unauthorized Let’s Play creators for statutory damages?

At present, I’m trying to come up with my own answers to that question, in part by gathering data about the extent of contemporary creative practices surrounding games and other new media.  As part of a project funded by the National Science Foundation, I’m doing research on the extent and nature of user creativity online.  I’m looking at YouTube and many other forms of game-related creative production.  So, if you have a second, I’d be very interested in knowing about your own creative practices related to video games.  I’ve posted a survey online here.  My research team hopes to publish the results of the survey, as well as other research from the project, by the end of the summer.  And in the meanwhile, I’d be interested in hearing your thoughts about the rights and wrongs of the Nintendo / Let’s Play kerfuffle in the comments below.

And, to tweak that last bit for Culture Digitally: I’m also very interested in hearing your comments about the political and cultural issues present in this situation.