Nintendo, the famous Japanese toy and game company behind Mario, Zelda, Metroid, Star Fox, Donkey Kong, Kirby and many other iconic characters from our childhoods is in the news lately. No, not about another poor quarterly earnings report or an Nintendo executive lowering their own salary. Nintendo is in the news because they have finally given details about their official policy in dealing with YouTube content creators (and I’m sure eventually they’ll get to Twitch live streamers as well). I’ll go into the specifics of that policy in a bit but the main issue I want to talk about is fair use. How the current law defines it, how it applies to gaming and YouTube content creators, when it doesn’t apply, and how to fix it.
First, Nintendo’s policy. YouTube content creators can register either their entire channel (or one they set up) or individual videos with Nintendo to enter into a revenue sharing agreement. If a content creator registers an entire channel then Nintendo receives a 30% cut of whatever ad revenue the videos on the channel get, regardless if there are videos on the channel which do not feature Nintendo content. This is on top of the cut that Google takes from each monetized video and for content creators that are part of a multi-channel network or MCN there is also the cut that the MCN takes per video. That’s at least a 3 way split on revenue which is inconsistent to start with. Registering individual videos gives Nintendo a 40% cut of the revenue but at least content creators have finer control over their videos in this scheme. The rates are also subject to change whenever Nintendo wants them to with no discussion.
Once the channel or an individual video has been registered, Nintendo has up to three business days to “review and finalize” the video. Which essentially means Nintendo has veto power over the video and if they don’t like what the video shows or says they can deny it. It also takes up to three days just for a channel or video to be “registered”. That’s potentially six days between when a video is finalized by the content creator and when they can show it to the public to make money from it. On top of that, Nintendo does not pay out in this revenue sharing scheme until 2 months after the content is published. That’s an entire month more than the normal AdSense payout plan that content creators get for their videos. That means that google gets their share of the revenue after a month but the content creator has to wait another month before getting a payment from Nintendo. What Nintendo clearly wants here is an extension of their own marketing department, not an independent community sharing their views, good or bad, on Nintendo’s games.
This entire policy is bad for both parties. Nintendo technically gets less money than if they had claimed all the content creator revenue from videos featuring their content like they were doing in the past and putting up all of these barriers for content creators to earn a living makes content creators really disincentivized to produce Nintendo content. Somebody like Pewdiepie with at least several million active subscribers not showing Nintendo content is a huge loss in potential customers and sales. This is free, highly effective, advertising Nintendo is turning down in favor of what will most likely be a tiny fraction of a revenue stream from people who sign up for their new program. The astoundingly poor business decision aside, what many people will bring up is can Nintendo even legally do this? Or better phrased, who owns the content that content creators make, the content creator or Nintendo? In comes the importance of fair use.
The Copyright Act of 1976 was the first legal codification of what “fair use” was. The idea of it had been around far earlier than that and court proceedings had used their own definitions of what fair use might entail for their decisions before the act. Section 107 of the Copyright Act is as follows;
“Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;\r\n\r\n(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.”
So what does that legal mumbo-jumbo actually mean? Well, very little. In fact, even after it was given a legal definition, it has still been left up to the courts to decide what is and is not fair use, but over hundreds of court cases a few precedents have been set and if a content creator could prove their use of copyrighted material fits under these fair use precedents then it is considered ok for them to receive a revenue from their work. Generally a work can be considered “fair use” if it is a small excerpt from a larger piece used for news, critique, education, or for parody. If what is used can be proven to not financially damage or impact the copyright holder in any meaningful way. Or that the work is truly transformative instead of derivative. The key term here as it relates to YouTube videos is “transformative”.
YouTube offers a very different medium for displaying media than any other form in the past. YouTube allows literally anybody with a computer and a camera or capture software to upload what they are doing for anybody else with a computer and an internet connection to see. One of the most popular uses of YouTube is for “Let’s Play” style videos. These are videos showing a person playing a game and usually feature entertaining or inciteful commentary on what they are doing as they do it. Some content creators use YouTube to post reviews of games in which they need to showcase parts of the game they are talking about to best inform consumers of their potential purchases. Some content creators make parodies of characters, songs, or other game assets for comedy. All of these videos offer regular people a chance to reach an audience they otherwise would never had the chance of obtaining due to older form media like television, radio, or publications. The latter three types of videos I mention people would seldom argue that they don’t fit fair use yet occasionally even they are attacked. No, the real argument here is whether a Let’s Play video can be considered fair use.
As I mentioned before, “transformative” is the key distinction in determining whether a piece of work can be protected by fair use and it is that distinction that wins or loses court cases. It is also the hardest to give a clear cut answer to what is and is not “transformative”. For a piece of work to be considered transformative it must be considered to have radically changed the use of or appeal of the original work it was based on. If it doesn’t then the work is considered to be derivative, which means a work that is based off of another work but does not add enough to uniquely distinguish itself from the original work. Essentially, transformative is what a derivative work strives to achieve. For instance, the C++ programming language could be considered a derivative of the C programming language. However, had C been copyrighted, C++ would be considered transformative since it took the original work and made vast improvements and additions to it. C++ would be considered fair use. Programming languages are generally not copyrighted as they are considered basic tools of construction but it still illustrates the difference between derivative and transformative.
A video game is a very different medium than other creative forms of media. Even in highly linear games where every person must technically go through the same moments of the game, the fact that games are an active experience as opposed to a passive one means every single person experiences a unique version of a game. Somebody watching a YouTube video of a person playing a game will never be able to perfectly replicate the experience of the person in the video if they played the same game. Add onto that potential additions a content creator might add to their video. The unique commentary that the content creator shares as they play the game, graphics that the content creator might edit into the video to assist in the narrative, and the unique intro and outro that a content creator might place on every video all add up to what I believe to be a transformative work. The people that subscribe to popular YouTube content creator’s channels watch the videos not because of the game that is being played but because of the personalities of the people playing the game. That to me seems as transformative a process as anything could be considered being. Let’s play videos also usually act as better advertisement for the game that is being played than the publisher or developer’s own advertising which defeats the financially damaging argument.
This belief comes with a few caveats. I believe content creators should edit out cutscenes in their videos. Similar to a movie, a cutscene is a passive experience and I completely understand developers complaints that they don’t want the stories to their games spoiled by these videos (the caveat to this is if the cutscene is being parodied, then it is back to being fair use). I also think content creators should edit out the audio of the games they are playing. This is more due to the complexity that is music copyrights in games and how sometimes even the developer or publisher does not own the rights to the music in their games. Lastly, I believe Let’s Play videos need some form of commentary over them so it’s not just a silent play-through of a game. If these conditions are not meant then copyright holders do have the right to issue a claim against the video. I get that to a developer seeing their game in a video that they have spent so much time on comes with a certain degree of protectiveness. Going after YouTube content creators however is not the right way to go about removing access to content that the developer wants as many people as possible to be aware of.
This case by case nature of which videos qualify as “transformative” and which videos do not is why the definition of fair use is very unlikely to be updated but I’d still like to see a few changes. The Copyright Act is from 1976. That’s twenty plus years earlier than the proliferation of the World Wide Web as it is used today and over thirty years older than YouTube where these fair use issues are arising. I would like to see a new copyright act issued which takes into account the information age we live in. Fair use needs to be better quantified so as to leave less ambiguity in how to deal with it. Exactly how much or how long of a sample can be taken of a copyrighted work to be considered fair in as many use cases as can be ascertained at the time of this new act (how much of a song, how much of an article, how much of a video, etc). A formal definition of what it means to be “transformative” needs to be added as well because most of the ambiguity comes from interpreting what is and is not transformative. I think there will be a lot less lawsuits and a lot more enjoyment for everybody if fair use can be better defined for the modern age and YouTube content creators get left alone to their craft.