As new digital technologies proliferate, tension between consumers and corporations has increased due to the new challenges confronting entertainment industries. Historically, the anime industry has leveraged the activities of fans through strategic ignorance in order to grow the foreign market in the United States. I am interested particularly in exploring how these fan communities functioned as proselytization commons to develop this market -- that is, how their illegal activities actually created growth and benefits for the industry. These fan activities, however, have also created pressures and potential harms for the industry by demanding a departure from a traditional physical-media business model. Furthermore, since anime fandom is an especially participatory community, rights-holders will increasingly be faced by more unauthorized reproductions of their works and expectations from fans of the ability to engage with this content. I have chosen my sources in order to reflect the multi-faceted perspectives currently competing in the debate over how to balance the interests of creators and fans. In my paper I will examine anime fandom and its relationship with the anime industry as a paradigmatic case of a "hybrid economy," where balance is achieved through cooperation between both groups in order to maximize the benefits of fan engagement while minimizing the harms.

Henry Jenkins has emerged as the leading scholar on fan communities and participatory cultures.  In specifically addressing anime fansubbing communities, Jenkins presents a familiar argument of piracy actually serving as a promotional activity for anime properties.  He notes that by the Japanese anime industry being tolerant of grassroots activities in the United States, “much of the risks of entering the Western markets and many of the costs of experimentation were borne by dedicated consumers.”  This tolerance of fan activities represents part of a Japanese cultural tradition that permits expansion and engagement with media properties.  For example, manga artists and studios have permitted the appropriation and infringement of their copyrights by amateur artists in the doujinshi market.  Rather than viewing these activities as a threat to the value of their properties, Japanese companies have recognized that collaborative structures are important in “developing compelling new content or broadening markets.”

As other scholars such as Leonard and Kelts have noted, anime fandom helped build up a structure for an American market through experimentation with unfamiliar content and promotion of niche titles.  Jenkins's analysis of how companies must balance fan engagement along with protection of their properties is particularly relevant to the ongoing controversy in anime fandom between fansubbing groups and licensing companies.

Joshua Daniels describes the negligence of licensing companies to account for fan sentiments towards preservation of original works as a market failure that can be remedied through an expanded Fair Use statute.  He argues that society has an economic interest in maintaining the integrity of works, and therefore the harm caused by licensing companies that heavily edit or censor these properties can be understood as a negative market externality.  In order to correct this market failure, Daniels proposes that the law must channel incentives such that licensing companies are forced to take into account fan interests in preserving these works.  However, he also cautions that there is a substantial risk of destroying the market entirely if too broad of an approach is taken to remedy the failure.  Therefore, he proposes legalizing fansubs to an extent under a right of public access to foreign works in their original form when there is no other practicable legal means of obtaining that access.  In this way the competing interests of rights-holders and fans are balanced in favor of public access.

Daniels recognizes a demand for authenticity as a particular characteristic of anime fandom that promotes a cultural goal.  Insofar as some fansubs promote this end, we may consider legalizing their practices in order to incentivize companies to distribute an original version of the works they license.  Indeed, many fansubbing groups, such as Live-Evil, work specifically with older anime that were heavily modified when broadcast in the U.S. market.  Daniels's proposed model, however, would likely create undue burdens for companies that are attempting to localize otherwise unintelligible cultural shows.  While promoting public access to works is a valuable goal, Daniels seems to prioritize cultural over economic production when instead both concerns should be balanced.

Justin Sevakis presents an overview of the anime industry's current decline in sales, which he attributes both to digital fansubbing and corporate reluctance to adopt new technologies.  Unlike many other authors who have written about fansubbing, Sevakis recognizes a qualitative break between the VHS distribution networks and current digital fansubs with decentralized distribution.  The internet has dramatically lowered the barriers to obtaining fansubs, which are now easily available at the click of a button on a multitude of streaming sites.  While fansubs might have previously been a non-rivalrous work that served a promotional function for the licensed products, digital fansubs have effectively usurped the licensed market by offering a product of the same quality for free and faster than legal avenues.  The fansubbing groups, however, are simply responding to fan demands for timely releases, which the industry has failed to meet.  In order to prevent further losses and rebuild the industry, companies must adopt a digital model that provides American audiences with “a legal, inexpensive way to watch new anime in English.”
 
Rather than idealizing the cultural benefits of fansubbing, Sevakis presents a practical understanding of how fans and the industry operate in the digital market.  People watch fansubs because there is a market vacuum that the anime industry has ignored for several years.  Rather than providing a legal avenue to meet this market demand, anime companies have responded like many other entertainment industries by believing they can guilt their fans into sticking with a failing business model.  Furthermore, the industry has confounded the size of the fan community with the anime consumer market, which in fact represent audiences with varying levels of engagement and interest; not all fans share the same buying practices as collectors, and indeed many are simply interested in just viewing a series once and not owning it on DVD.  These considerations complicate the perspective of fansubbing as an activity that promotes economic and cultural growth because they demonstrate the real harm to the anime industry being caused by illegal reproduction in fan communities.

13. Kirkpatrick, S. (2003). Like holding a bird: What the prevalence of fansubbing can teach us about the use of strategic selective copyright enforcement. Temple Environmental Law and Technology Journal, 21, 131-153.

Sean Kirkpatrick uses the examples of fansubs and AMVs to argue that “entertainment copyrights works best if grasped loosely.”  In his article, he undertakes a fair use analysis of both these works: (1) fansubs are non-transformative and are created for the exact same entertainment value as the originals.  Therefore, the first factor weighs against a finding of fair use. (2) anime is a creative work and therefore falls into the core of copyright’s protection.  The second factor weighs against a finding of fair use.  (3) fansubs copy the work entirely at a qualitatively-similar level.  The third factor weighs against a finding of fair use.  (4) the likelihood of harm for either direct or derivative markets is difficult to determine in this case.  However, since fansubs share their purpose with the original work, the potential for harm would likely be viewed as greater and therefore the fourth factor would most likely way against a finding of fair use.  Kirkpatrick does not entirely concede the fourth point, however, and argues that fansubs parallel the Betamax case of time-shifting.  In this sense fansubs, like taped television shows, are not used to build collections or libraries, and therefore would not impact future sales.  Instead, he argues, “the interests of fans and corporations need not be mutually exclusive” and “cooperation is a far better way to promote the profitability of one’s copyright than bullying.”

While Kirkpatrick’s fair use analysis is mostly correct, industry representatives would justifiably take exception to the parallel between fansubs and Betamax.  Not only are the technologies significantly dissimilar, but fansubs are produced for an audience that would otherwise not have access to these shows and therefore does diminish the value of licensing the property to distribute in the U.S. market.  While these objections are important, they do not undercut Kirkpatrick’s conclusion that cooperation between fans and industries will be necessary to achieve the end goal of promoting anime, which is in everyone’s interests.

Professor Lawrence Lessig has been the most eloquent proponents of the Free Culture movement since its inception.  He argues that recent copyright laws abandon a tradition of free creative expression that has existed throughout American history and instead impose undue restrictions that have chilled the growth of culture, especially at this moment when digital technologies have enabled audiences to participate in making their culture unlike ever before.  Lessig was particularly outspoken about the failure of copyright to distinguish between commercial and non-commercial lifetimes of works, the latter of which is important and valuable for the development of culture. In this context, copyright does not fulfill its goal of promoting progress, but rather burdens free expression and does harm; access to culture is a value which the current market system and copyright regime have inhibited.

Although Lessig does not address fansubbing directly, his arguments about the value of access to non-commercial works can logically be extended to this domain.  Typically fansubbing groups only work on unlicensed series, which are only distributed in Japan and therefore unavailable to English audiences.  By prohibiting altogether the translation and reproduction of these works, copyright law is not incentivizing their legal distribution, but rather restricting cultural growth by indiscriminately denying American audiences any access to an entire medium of expression on the basis of preserving the rights-holder’s complete control over distribution even if they are not commercially exploiting the work.  In this case copyright has not balanced the interests between creators and the public, but rather established a view of creative works as absolute property rights that creators are entitled to perfectly control.  Neither the Constitutional basis nor the long history of copyright law supports such an interpretation, which has been shown to be deleterious to the purpose of expanding culture and promoting creativity.

Jordan Hatcher describes the fansubbing community as sitting at an interesting boundary between creative production and file-trading.  He notes that fansubbers are guided by a cultural goal and attitudes that exist within the community itself, comparable more to the FOSS movement rather than typical pirates.  After recognizing these nuances between fansubbers and pirates, Hatcher asks, “Do our laws stifle creativity and sharing to the point where it harms society?”  While there are certainly cultural benefits created by the fansubbing community, there also exists the potential to replace market need for official licensed translations, thus causing an economic harm to the artists and creators of these works.  He argues that a fair use defense based on these benefits, such as market enhancement or interest-building, are undercut by the reality of fansubbers' actual practices of providing a substitute product.  While Hatcher concludes that it is still too early to come to any conclusion about the benefits of fansubs, he believes that the relationship between fansubbing communities and the anime industry will “reveal a great deal about copyright in a connected digital world.”

Hatcher challenges the model of fansubbing as an activity that creates growth and benefits for the anime industry by undercutting the traditional market enhancement argument that fans usually propose.  Copyright should not be frivolously violated because protection of creative products is a culturally beneficial instrument that provides creators with incentives to produce new works.  Therefore, in order to produce a culturally beneficial arrangement that incorporates the benefits of fansubbing communities while minimizing the harms to creators, both groups must respect the value each respectively generates and come to an agreement that meets their common goal of promoting anime.  Such an agreement is possible because, unlike typical pirates, fansubbing communities operate around a code of conduct and thus have demonstrated a level of compliance with industry requests not seen in other areas of the piracy debate.

Sean Leonard extensively documents the history of anime in the United States from 1976-1993 in order to demonstrate how fan communities acted as proselytziation commons that shaped the formation and initial operation of the anime market.  Leonard defines a proselytization commons as a free exchange of media in order to advance a directed cause, namely the promotion of anime to a wider audience.  While these fan activities infringed on the copyright of Japanese companies, the companies nevertheless responded with either strategic ignorance – that is, they sought benefits that result from unauthorized use – or plainly dismissive ignorance.  Leonard’s legal analysis classifies the fansubbers’ activities as producing a desirable outcome, but not being sanctioned by law.  Since current copyright law prohibits these culturally beneficial activities, Leonard proposes a revision that excuses unauthorized reproduction of foreign works until they are actually licensed and distributed in the domestic U.S. market.  He grounds this revision on the early American tradition surrounding copyright law based on an originalist interpretation of “limited Times” and “promote progress” in the Constitution.

Leonard’s analysis of the history of fansubbing presents one of the strongest rebuttals to the argument made by many media industries that the progress of culture requires “perfect control over copyright from fixation to expiration.”  Grass-roots distribution of anime through fan networks not only promoted cultural growth by acting as a proselytization commons, but also created a multi-million dollar market for these products as well.  Therefore, the example of fansubs demonstrates how culturally beneficial activities that in fact meet the goal of “promot[ing] progress” are nevertheless unjustly restricted by rigid copyright laws.  The fact that current copyright laws are in fact having the opposite of their intended effect should prompt citizens and lawmakers to consider exemptions, such as expanding Fair Use, that legalizes these activities.

Anime music videos (known as AMVs) hold a peculiar place in American culture - they are arguably (in some cases more than others) flagrantly illegal and unfair uses of copyrighted material, yet are tolerated, even tacitly endorsed, by the copyright holders. This endorsement does not even come with any kind of control or regimentation, as it might in other fan circles. By a fortuitous mix of the original Japanese artists' treatment of copyrights and fan-made material (rather than simply Japanese copyright law), and the domestic anime market's existence and continued life and being owed to the loyal and proactive fanbase, AMVs are allowed to thrive. Their only tangible opposition (and not much at that) comes from the music industry's reluctance to allow songs to be distributed wholesale over the internet. Yet so far, AMVs as whole have been allowed to give people an artistic outlet in the manipulation of media that would normally be protected.

Hatcher, Jordan S. "Of Otaku and Fansubs: A Critical Look at Anime Online in Light of Current Issues in Copyright Law." Script-ed, Vol. 2, No. 4, 2005
Hatcher examines the workings of the American anime industry, paying the most attention to the history and physical process of fansubbing. Fansubbing is the process by which fans take Japanese anime (taped from broadcast television or DVD/home video), translate it and edit the video to include their own subtitles. Fansubs used to be distributed on VHS either in stores or among fan clubs, but are now almost exclusively found online. Hatcher suggests that the anime industry, though it has unquestionably benefited from fansubbing and other forms of high-level fan involvement, is now "held hostage by the internet and their otaku-consumers." By now professional licensing and localization companies can do much of their own advertising and market research due to the growth and age of the domestic marketplace; yet such companies know that to crack down on the core loyal fans will almost certainly result in a huge backlash from those on whom they rely most. In contrast to common internet "pirates," fansubbing groups commit infringing acts in the open (as publicized on websites or individual named in credits attached to their work) and are confident in the moral high ground of their actions (if a work is not yet licensed in America, it is seen as "perfectly legal" to make it available in fansubbed form, for example-despite international copyright laws); the common conception of "anime fair use" makes many technically illegal uses practically immune to legal retaliation

The almost forced acceptance of the fan use of anime in America, in order to maintain loyalty and relevancy among fanbase, makes anime music videos relatively easy to allow for domestic copyright holders. A lawsuit that attacks a now established tradition within the community would alienate much of a company's fanbase, driving them to other sources-including illegal ones if nothing else is available. Given the companies' general tolerance of (or lack of legal action against) the availability of full episodes or movies online, music videos are a much easier sell as "advertisements" for their products as opposed to replacements or illegal derivative works. And given the industry's heavy stake in the convention scene, it is clear that the community aspect of anime fandom must be maintained and courted in order to stay viable.

Leonard, Sean. "Celebrating Two Decades of Unlawful Progress: Fan Distribution, Proselytization Commons, and the Explosive Growth of Japanese Animation." UCLA Entertainment Law Review, Spring 2005
Leonard's paper on American fans' use and distribution of anime goes into great depth on the legal issues raised, and often ignored, in regards to copyrighted works. The original Japanese copyright holders spurred on American fan-imports and fansubs by "abandoning" the market early on; in this way it was law-breaking American fans, clubs and conventions that created almost single-handedly what is now a visible and profitable market for the Japanese owners and the American licensors. Currently, though the Japanese owners do finally play in the American marketplace, they are nearly as willfully ignorant (in practice) of fan infringement than they were when America was still written off as an impossible market. But while first this ignorance was a result of their not thinking any American infringement could possibly hinder them financially, reasons for this now include the historical and continued support and "free publicity" for anime that American fans would not be so willing to embrace legitimately had it not gained buzz from prior illegal distribution among fan networks. Yet Leonard outlines all of the various ways that obtaining, translating, distributing and showing fansubs break any number of American and international copyright laws. Though fans often cite fair use as a defense for their actions (though a case has never been brought to court), Leonard dismisses all of the potential factors that would constitute fair use save for the "purpose and character" in the commerciality of fansubbing; in this case, fans often do their work for no profit and as a courtesy to fellow fans. In every other sense, their use is wholly unfair.

Here we see the rough legal guidelines that both Japanese and American anime copyright holders tend to adhere to when dealing with fans. In general, fan's use of anime is forgiven and often ignored, unless it exists in direct competition with legitimate localized releases. Anime Music Videos (not mentioned by Leonard) are another, altogether less potentially dangerous (than importing and fansubbing) form of "free advertising" for anime and of strengthening the fan networks that built and maintain the American anime audience. Again, Japanese copyright holders are shown to display a willful ignorance of American fans use for the most part.