This week, Sebastian Holst, Executive VP of PreEmptive Solutions and member of ACT, testified before the House Judiciary Committee’s Subcommittee on Intellectual Property at a hearing on “The Rise of Innovative Business Models: Content Delivery in the Digital Age.” As the only software developer on the panel, Mr. Holst’s perspective was of particular interest to the Subcommittee members.

Unlike the think tanks, CEOs of major companies, or industry reps, Mr. Holst is a software developer or content creator, a business owner, a creator of tools that help organizations protect their content, a victim of piracy, a producer of software for all platforms and is engaged in multiple business models in the digital marketplace. He, like thousands of other ACT members, represents the engine of innovation that propels our country to the forefront of technology. Copyright isn’t just about music and movies- it’s a core part to the entire innovation ecosystem.

The Subcommittee members raised several important questions about copyright, technology, and where the two intersect.

The question of whether there should be a digital first-sale doctrine has been debated for years. In response to Rep. Chaffetz’s questions about a digital first sale and whether consumers who have legitimately acquired a copy of copyrighted product should be able to transfer possession to someone else, Mr. Holst responded that it depends on the agreement between the buyer and the seller at the point of sale and that if there were to be a digital first sale right, then as a business owner that would be reflected in his pricing. The technical difficulties of ensuring a digital copy was not retained by the original consumer along with the greater flexibility of use given to the consumer would require different pricing options even for a small software company, just like the major content industries. However, unlike the large companies, small software businesses are not in the same position to withstand lost revenue from piracy or lost sales. Lost revenues and opportunities really do mean less ability to innovate- and the app industry is an industry exploding in growth.

Content delivery has indeed changed.  And the smart phone is now a primary mode of content delivery, largely due to mobile apps. Holst’s testimony explains “…the new mobile app economy has significantly altered the barriers to entry faced by independent authors and software vendors. For people who want to create new mobile apps the barriers are wonderfully low, allowing more time to focus on the innovation part- or copyrighted app content. Rep. Duetch asked Mr. Holst about his experience with the various app stores.  The app platforms provide developers with several benefits, like discoverability, delivery of product, and ease of getting paid. However, Mr. Holts explained that there is a difference between curated stores like iTunes, Microsoft and Amazon and a non-curated marketplace like Google Play. Curated stores are safer for consumers (far less illegal product of risk of viruses or malware) and generally provide a greater return on investment to developers. And, the Apple store has been been quick to take down alleged pirated apps, even within 48 hours.  As the only app developer, Mr. Holst provided the real-world information Congress needs to better understand the software industry.

And, in what was likely new information to the Subcommittee members and audience alike, Mr. Holst explained how app developers are being harmed even when they offer FREE apps! When content is stolen from a free app the developer must still pay service provider fees, like video streaming costs even if there is no ad revenue. “It is not a victimless crime” says Holst.

In the end, Holst reaffirmed the importance of copyright protection to the growth and continued success of the mobile app industry. “Copyright laws have been working well but there is always room for improvement.” Holst stands ready offer his expertise and experience in the software industry to assist the Subcommittee in its review of the copyright law.