Part 1: Etsy, the online e-commerce website focusing on handmade goods, crafts and vintage items, has continually come under fire due to incessant copyright infringement. Here is a typical scenario: An artist is surfing through Etsy looking for a Mother’s Day gift, when on the screen they are confronted with their artistic work adorning a t-shirt, a hat or a nice fluffy pillow. Outraged, they contact Etsy and ask for removal of the item. The request is ignored and the material remains on the site, leaving the artist feeling helpless and frustrated. Unfortunately, this story is not rare and while Etsy has become more aggressive in the past couple of years, the problem is far from resolved.
There are three villains in this story; Etsy, Etsy Store Owners, and China. Let’s start with China. When most Americans think of copyright infringement or knock-off items, they think China. China has been very laissez faire in its protection of international copyrights. Factories that produce large amounts of goods are more than willing to circumvent licensing due to the large fees that would entail. Consider a t-shirt factory making hundreds of t-shirts with individual designs. The the cost of licensing fees, the time necessary for developing those agreements, accounting requirements for payment to the licensees, amongst other monetary consideration, provides a real incentive for these factories to avoid the whole licensing process. Combine that with the lack of copyright enforcement by the Chinese government, and a there becomes very little reason for a Chinese manufacturer to pursue licensing agreements with U.S. artists. Also, the large amount of debt that China holds in U.S. Treasuries, limits the aggressive posture that the U.S. is willing to take on this issue.
The second villain is Etsy itself. At Etsy, anyone can make a store. There is little preventative due diligence on Etsy’s part. A person can just sign up, give the store a name and they are now a purveyor of goods. Creating the shop is free although there is a small charge for a listing and each listing will have a shelf life of about four months or until a product is sold. Etsy takes 3.5% of each sale. Because it does not own or distribute the goods itself, Etsy is considered a media distributor, like iTunes, and is bound by the Digital Millennium Copyright Act (DMCA). As such, they have the benefit of the “Safe Harbor” provision which means that if they implement the procedures dictated by the DMCA, the company cannot be sued themselves for copyright infringement. Of course, they have to follow those procedures, which according to many in the blogosphere, is not what is happening. Regardless, that safe harbor gives Etsy little reason to be proactive in stopping in infringement but only reactive as per the DMCA requirements. And if Etsy isn’t following those procedures as many suggest, then the problem will only exacerbated.
The third player in this game of infringement is the Etsy Store Owners. While many stores produce their own goods from their own designs, a number of stores merely buy their goods from China using online wholesale sites like Alibaba. Alibaba, a Yahoo company, is one of the most popular wholesale sites on the web, accounting for $160 billion in revenue. Only in the past month has Alibaba announced a commitment to combating online piracy. How that plays out and how long it will take to see any impact remains to be seen. In the meantime, store owners purchase goods without the due diligence required to ensure they are not purchasing infringing goods. Either these store owners assume anything the buy from China is properly licensed or the amazing prices convince them to look the other way.
Given the players in this game, it is not surprising that Etsy is rife with infringing material. So what can artists do to protect themselves from Etsy and other sites like it? I’ll talk about that in part 2.