Notes: "Free Culture" Ch. 5 Piracy

PIRACY I

The recording industry estimates loss at about $4.6 billion every year to businesses that do nothing but steal others people’s copyrighted content, copy it, and sell it without permission of copyright owner. 

 

"The MPAA estimates that it loses $3 billion annually worldwide to piracy" (63).

Lessig iterates: Piracy is wrong – legally and morally. Three arguments in favor of piracy:

1. "...in any case, it does no harm to the industry. The Chinese who get access to American CDs at 50 cents a copy are not people who would have bought those American CDs at $15 a copy. So no one really has any less money than they otherwise would have had" (64). But there are still people who can afford to pay for those DVDs they pirated who should have paid the copyright owner.

2. "Extremists in this debate love to say, 'You wouldn’t go into Barnes & Noble and take a book off of the shelf without paying; why should it be any different with on-line music?' The difference is, of course, that when you take a book from Barnes & Noble, it has one less book to sell. By contrast, when you take an MP3 from a computer network, there is not one less CD that can be sold" (64). -- weak argument for the morality of piracy, still.

3. It actually helps the copyright owner: "When the Chinese 'steal' Windows, that makes the Chinese dependent on Microsoft. Microsoft loses the value of the software that was taken. But it gains users who are used to life in the Microsoft world. Over time, as the nation grows more wealthy, more and more people will buy software rather than steal it. And hence over time, because that buying will benefit Microsoft, Microsoft benefits from the piracy" (65). The addiction strategy does work as a marketing tool. But we should still let companies decide when they want to give their stuff away for free. 

Lessig concedes: Not all "piracy" is wrong.

Distinction between piracy and p2p sharing: "For (1) like the original Hollywood, p2p sharing escapes an overly controlling industry; and (2) like the original recording industry, it simply exploits a new way to distribute content; but (3) unlike cable TV, no one is selling the content that is shared on p2p services" (66).

PIRACY II

"The key to the “piracy” that the law aims to quash is a use that “rob[s] the author of [his] profit.” This means we must determine whether and how much p2p sharing harms before we know how strongly the law should seek to either prevent it or find an alternative to assure the author of his profit" (66-67).

Napster didn't do anything new – they just put together things that independents had already developed (67).

Four kinds of file sharers:
1. Users who download instead of purchase

2. Those who want to listen to music before they purchase it

3. Those looking for content that is either not on the market or too expensive. Net damage is zero if the content isn't being sold anymore

4. Users downloading content that is not copyrighted or the owner is giving it away

Only the 4th is legal, and the 1st is the most harmful. "Type 2 sharing is illegal but plainly beneficial. Type 3 sharing is illegal, yet good for society (since more exposure to music is good) and harmless to the artist (since the work is not otherwise available). So how sharing matters on balance is a hard question to answer—and certainly much more difficult than the current rhetoric around the issue

suggests" (69).

Still, it is difficult to determine just how harmful p2p sharing is. Often times, those seeing loss in profits blamed technology for the problem, to be solved by banning or regulating it (69).

So the question we must also pose is "how harmful type A sharing is, and how beneficial the other types of sharing are." If type 2 outweighs type 1, then sharing is clearly beneficial (70).

"But let’s assume the RIAA is right, and all of the decline in CD sales is because of Internet sharing. Here’s the rub: In the same period that the RIAA estimates that 803 million CDs were sold, the RIAA estimates that 2.1 billion CDs were downloaded for free. Thus, although 2.6 times the total number of CDs sold were downloaded for free, sales revenue fell by just 6.7 percent...
If I steal a CD, then there is one less CD to sell. Every taking is a lost sale. But on the basis of the numbers the RIAA provides, it is absolutely clear that the same is not true of downloads. If every download were a lost sale—if every use of Kazaa “rob[bed] the author of [his] profit”—then the industry would have suffered a 100 percent drop in sales last year, not a 7 percent drop" (71).

"If efforts to solve the problem of type 1 sharing destroy the opportunity for type 4 sharing, then we lose something important in order to protect type 1 content." Society does not just lose money from p2p sharing -- it is also enriched (73).

But the war is still against all file sharing. When Napster said it could reduce all copyright infringement down to 99.4%, the district court told them that wasn't good enough. "If 99.4 percent is not good enough, then this is a war on file-sharing technologies, not a war on copyright infringement... zero tolerance means zero p2p" (74).

Our culture has not always been like that. The law usually strives for balance. The two main goals of copyright legislation during the compromise affecting records and player pianos were 1) "to [assure] that new innovators would have the freedom to develop new ways to deliver content" and 2) "[assure] that copyright holders would be paid for the content that was distributed." They were worried that if copyright holders (CRH) could charge however much they wanted for their content, then one medium's CRH would stifle a different medium, OR that letting a medium use copyrighted material for free would "unfairly subsidize cable." So Congress compromised to "assure compensation without giving the past (broadcasters) control over the future (cable)"(75).

Of the Supreme Court case for the movie industry vs VCR recording, the court wrote "Sound policy, as well as history, supports our consistent deference to Congress when major technological innovations alter the market for copyrighted materials. Congress has the constitutional authority and the institutional ability to accommodate fully the varied permutations of competing interests that are inevitably implicated by such new technology" (77).

"In none of these cases did either the courts or Congress eliminate all free riding. In none of these cases did the courts or Congress insist that the law should assure that the copyright holder get all the value that his copyright created" (77). New technology always creates this fight with the old medium, and everyone is concerned about protecting their property.