The Second Digital Disruption: Streaming & the Dawn of Data-Driven Creativity

Abstract

This article explores the legal ramifications that flow from the explosive growth of online streaming. Two decades ago rising internet usage led to the first digital disruption: Napster, file-sharing, and the re-ordering of numerous content industries, from music to film to news. The advent of mass streaming has brought us to the threshold of a second digital disruption, which will be driven by the ability of streaming platforms to harvest massive amounts of data about consumer preferences and consumption patterns. Coupled to powerful computing, the data that firms like Netflix, Spotify, and Apple collect allows those firms to know in incredible detail what consumers like. This knowledge is already shaping the content that streaming firms produce. And this shift toward what we call “data-driven creativity” has important implications for intellectual property law and for competition in markets for creative works.

This article explores these phenomena via a close look at the firm that is perhaps farthest along in its use of data-driven creativity. We show how MindGeek, the little-known parent company of Pornhub and a leading firm in the market for adult entertainment, has leveraged streaming data to not only organize and suggest content to consumers but even to shape creative decisions. MindGeek is itself the product of the same forces -- the shift to digital distribution and the accompanying explosion of free content -- that transformed mainstream creative industries and paved the way for the rise of streaming. We first show how the adult industry adapted to the first digital disruption, and how MindGeek prospered in this new environment. That story aligns with similar accounts of how creative industries adapt to a loss of control over intellectual property by shifting to piracy-resistant revenue streams. We then show how streaming firms such as MindGeek, Netflix, Spotify, and Amazon use data to make decisions about content aggregation, dissemination, and investment. Finally, we consider what these trends suggest for two key areas of the law: intellectual property and antitrust. By making creative production far less risky, data-driven creativity may drive down the need for strong IP rights. At the same time, the rise of data-driven creativity may reinforce the tendency of online markets toward dominance by a few major firms, with significant implications for competition and innovation.

Keywords: copyright, IP, intellectual property, streaming, competition, piracy, authorship, pornography, netflix, amazon, apple, innovation, disruption, technology