Solving the Underlying Economic Problem of Internet Piracy

This essay is definitely thinking along the correct directions.

Posted on February 8, 2012 at 6:46 AM • 57 Comments

Comments

Mike BFebruary 8, 2012 7:32 AM

The truth is that Big Content isn't threatened so much by Internet Piracy, instead it is the threat of new media being able to cut the old media middle men out of the loop and invalidate their existing monopolies and barriers to entry. Big Content is a classic example of an industry that is protected from competition and therefore becomes bloated and dysfunctional. Just like how politically connected Unions in Cities line New York and Boston enrich their own base at the expense of the population as a whole, the Content industry is able to use favorable laws to virtually ensure a profit extracted from the wallets of consumers one DVD and movie ticket at a time. Of course they share the wealth with large workforces, lavishly paid stars, agents, hangers on, waiters, extras, etc, etc, but that is just evidence of how much pork there is in the system that could be cut for the consumer's benefit.

The more Big Content continues to alienate the 99% of people who are consumers the more its political power will continue to erode. Eventually one day there will be a reckoning when their leeching become unsustainable and there is a legislative backlash.

Jim LillicotchFebruary 8, 2012 7:38 AM

There has never been a legitimate study done to indicate that Internet Piracy is actually a problem (how does it promote and many jobs does it create).
Just calling it a problem without any evidence IS a big part of the problem.

MunkyFebruary 8, 2012 7:52 AM

The media industry going from 8tracks to cassettes/vcr to cds to dvds to digital allowed these groups to resell their products over and over. In addition the advancing technology made the production of high quality media to be that much cheaper. These factors have created a golden age for the industry and they used the record breaking profits to lobby for their industry; this created industry protections that no other industry receives.

For example the fashion industry, they design a new shirt and walmart-type places not long after basically make cheap copies and start selling those shirts. Original designers dont get any sort of protections; they dont get to refuse anyone from returning crappy products.

Want to fix the copyright situation? Go back to the old system before dmca where non-commercial copyright infringement is legal.

Natanael LFebruary 8, 2012 8:07 AM

Like what Mike B says, a big part of the problem is control. The big companies want control, and they want to exclude competition. They don't want new services offered by random upstarts, they don't want indies to get big without getting them signed, etc... They want to control the entire market.

Probably because they know they aren't competitive, if they'd drop the grip of the market, they'll lose.

phred14February 8, 2012 8:15 AM

@Mike B

Spot on about the "new media threat"!

Have any of you bought a new camera lately, one that can take movies as well as stills? Well go read the materials in the manual more carefully. You'll find that your ability to take movies is "licensed", not bought, and that license is for no-commercial purposes only. If you want to make your own movie and then attempt to make any money off of it, you have to use "professional" equipment that has the right license, because "amateur" equipment has specific license encumbrances to prevent this. In other words, you've got to "pay to play", and the playing field has already been tilted. As far as I know, this "barrier to entry" has never been tested in court.

WinterFebruary 8, 2012 8:51 AM

Note that the Media industry rips of BOTH consumers AND artists.

Like Mike B wrote, their biggest threat is artists and consumers coming together without passing their toll booth.

They need the control to ensure an artificial scarcity of content. There is the back catalog that competes directly with new releases. And there are ample talented people willing to make music and movies of "good enough" quality.

The biggest problem for artists is not piracy, but obscurity.

NeenekoFebruary 8, 2012 9:24 AM

It is nice to see a piece talking about the 'service' issue. Something that often gets lost in the rhetoric is that a great deal of piracy is not an issue of cost, but of providing a superior product. Compare Netflix streaming to PirateBay... torrents almost always win not just in convinece but in mechanical issues like encoding quality, completeness, and low error rates in labeling/ordering. If media companies can not provide a product of equivalent quality to what hobbyists (fans) in their basements put out then of course they are going to have problems with piracy...

Not only that, but it communicates a disdain for the customer since it makes it look like they do not consider the effort worthwhile.. they seem to just not care about their own product unless it is an AAA title or a major movie. Anything 1 off and it tends to have the feel that they gave it to some intern who would rather be doing something else.

Fred PFebruary 8, 2012 9:29 AM

As "piracy" is a taking on the high seas by force, is "internet piracy" a taking on the internet by force?

There were 445 recognized instances of piracy in 2010, costing over 7 billion dollars. Over 1,000 sailors were captured, and over 50 ships http://www.icc-ccs.org/news/429-hostage-taking-at-sea-rises-to-record-levels-says-imb

What relation does this category of crime "piracy" have to do with what is mostly copyright infringement? Virtually none.

We already have names for copying things in violation of copyright - bootlegging, copyright infringement, etc. We don't need to conflate these with serious, violent crimes.

Other than that fairly major quibble, it's a pretty good article. I don't think that everyone will move away from physical media (there's still a significant amount of trade in vinyl)- but using his solution, it would be easy to make your own.

I guess the other thing I should mention is that laws could help against copyright infringement. At the moment, there's no way for an end user to tell if something is infringing on a copyright. I would think that a standardized database could be created and used to enable querying to determine if something has a copyright claim on it.

LesFebruary 8, 2012 9:38 AM

The article makes two points.
First point: legal downloads should be convenient. Fair enough.

Second point: the movie industry should not pay itself so well, or make movies that the author doesn't like.

That second point is so bad that it taints the first point by association.

NobodySpecialFebruary 8, 2012 9:51 AM

@phred14 that requirement is for the H264 codec in the camera.

If you think the MPAA/RIAA are bad - wait till you have to deal with the patent monopolies surrounding standards

Fred PFebruary 8, 2012 9:56 AM

-Jim Lillicotch

There are a number of partial studies on the matter. For example, there's Study on Intellectual Property Rights, the Internet, and Copyright http://www.iprcommission.org/papers/pdfs/study_papers/sp5_story_study.pdf

It largely concludes that copyright in its present form is mostly a bad thing for the 50 least developed countries. User's rights need to be strengthened and copyright holder's weakened in those countries. They also suggest that in general, software copyright durations need to be reduced, even in the most-developed countries. It also specifically calls out the DMCA's provisions against specific types of software as something not to do.

NobodySpecialFebruary 8, 2012 10:33 AM

@les "should not pay itself so well, or make movies that the author doesn't like."

And the movie industry shouldn't blame piracy when its summer blockbusters, "Shrek 17" and "Ironman vs Alien and Predator go to Miami beach" don't do the same box office as StarWars.

Ryan McGinnisFebruary 8, 2012 10:57 AM

I would respectfully disagree on several of this essay's points, and the easiest way to show that this man wrong is through empirical evidence.

Let me get one point out of the way that I do agree with -- piracy will never be killed. But this is a bit of a strawman; even anti-piracy advocates recognize that piracy can be killed nor is anyone attempting to do it -- they're just trying to reduce it. In the same vein, computer viruses will likely never go out of style and network intrusions will never be fully stopped, but by taking mitigating measures they can be reduced.

On to the main point of the article -- that piracy is a problem of competing distribution models -- new and sexy pirate torrents versus old and busted retail media. While I would never argue that having to go to a retail location to purchase something is easier or better than simply downloading the content, what the article writer brazenly admits is that the very program that he says should be used as a model to solve piracy (Steam) is not solving piracy. Steam is an incredibly easy to use program with lots of great features -- programs that can be installed on any machine, can be archived in the cloud (and downloaded for free and many times as desired), purchased and played instantly, and often for low prices since Steam has huge sales several times a year. Steam gives indie game producers an outlet that they never had at retail and Steam pushes updates in the background as needed. It's amazing.

But despite Steam being all these wonderful things for video games distribution, it hasn't put a dent in video game piracy. Even those wonderful (and inexpensive!) indie titles are freely pirated on a massive scale. The vast majority of these games can be purchased and played within minutes or seconds after a small payment via credit card on Steam, and yet, behold! Piracy of these titles thrive.

The reason for this is rather simple and intuitive -- pirated goods are FREE. Traditionally the power struggle between producer and customer goes like this: producer wants to maximize profit and minimize development cost, customer wants to minimize cost to themselves and maximize item utility. Through these variables we get much of modern retail economy. If an item costs too much or is not of a sufficient quality, a consumer either purchase a similar (but less expensive, or higher quality) item from another producer or refuses to purchase until the price or quality reaches a certain level. Whether there are other producers out there creating a competing product weight heavily on this equation.

Pirating creates artificial competition. I say artificial because the price for pirated materials is zero, and it is artificially at that level not because the goods are worth zero but because the goods are stolen. Now the developer has a new competitor, and one that is pricing things predatorily. There is no level of price reduction the developer can do that will match the price of the pirate and for the most part any increase in quality is pretty easy for the pirate to match. Developers only have so many tools to mitigate this -- price reduction (to try to lure the slightly ethical pirates away), DRM, forced online authentication, etc. All of which cost money, which comes right out of the developer's pocket.

(As a side note, it also effects the entire system which relies on an implied contract of quid pro quo. A company is not allowed to take our money and then refuse to give us a product; with the payment comes an expectation of getting what we paid for. We accept this as fair. Why are consumers allowed to take a product and not give the company its money? This seems to me a pretty difficult ethical question for pro-piracy types to explain away, and I've yet to see any really good concrete arguments advanced.)

So you have a system in which an artificially zero-priced product is competing with a product that cannot lower price to zero. The technology is such that stopping or even hobbling the ability to pirate is impossible -- at least, not without impacting an enormous number of other internet services completely unrelated to piracy. What are we left with? Well, the carrot is already out there for several media forms (Steam, iTunes, Amazon music, etc.), but apparently a stick is needed. You may not be able to increase the price of pirated goods, but you can increase the risk one assumes when either downloading or distributing such goods. This is where legislation (and enforcement) comes in.

To say that legislation simply can't work is incorrect. We have many examples of behaviors that society has deemed disruptive being severely limited through creating laws that specifically carve out sanctions to be meted out to those who practice such behaviors. Why do people plug parking meters? Because there is a fine if they don't. The higher the fine and the more reliable the enforcement, the higher the meter-plugging compliance. People are, in this case, acting in their best interest, since it's cheaper to plug the meters consistently than to pay the fine. Piracy could easily be controlled using the same sort of system; all it would require is legislation. It might not be popular legislation (at least with people who like to illicitly download copyright goods without paying for them), but I suspect that it would be highly effective if the enforcement were consistent enough and the penalty harsh enough. Pirating would then no longer have a zero cost, but would rather have a cost based on a risk of a financial penalty that far exceeds the cost of legitimately purchasing the goods.

In summary, the idea that piracy has zero impact on commerce is silly; if you give things out for free, that is going to have an impact on the market for competing goods. The idea that non-free competing services can motivate pirates to stop even casual pirates is not realistic; people who casually pirate are usually doing it because of price, as demonstrated by the massive amount of games pirating still on-going despite the existence of Steam, or the massive music piracy ongoing despite alternatives like iTunes and Amazon. The idea that legislation cannot possibly work has not been shown; indeed, looking at the history of the effects of legislation on similar kinds of freeloading shows that increasing the risk of relatively large financial sanctions has a very direct and very elastic effect on the freeloading behavior.

Clive RobinsonFebruary 8, 2012 11:06 AM

As others have noted the "industry" sits there acting as both a "toll booth" and "choke point" and one little trick they pull is talent killing by way of putting an artist "in jail". They do this by using what in effect is an impenetrable contract with clauses that allow them to stop an artist from putting out their work.

These contracts are usually closely guarded secrets, however an artist called George Michael decided to go to court to get his artistic freedom back, the result was "the contract" was entered into court as evidence and therefore became part of "the public record" and yours to view for the price of copying. Which several people did, and lets put it this way, I'm sure even the judge needed two bottles (one of whisky the other of Aspirin) to help him through it.

One thing that has become clear is the "traditional industry" not only "speaks with one voice" (of avarice) but also appears to act as a single body... Thus I suspect as many others do are a cartel or monopoly neither of which is legal, but then illegal monopolies paying off politicos is the epitome of "The Great American Dream" or as Mark Knoffler of Dire Straits put it "Money for nothing"...

But enjoyable as a bit of spleen venting is at A&R Men and their ilk of money grubing porkers (heck they make lawyers, bankers and relators/estate agents look good and that's no mean feet ;) they are not realy the proplem but the symptom.

The underlying problem is of trying to apply the limitations of physical "tangible objects" to information "intangible objects". Lawyers have built a Pandora's Box of IP legislation that tries to hold the idea that all things are subject to the constraints of physical laws, and thus are amenable to the due process of "m'learned friends" irrespective of rhym or reason.

The simple fact is that in this day and age intangibles like information and very unlike tangables of times past have such a low cost of duplication, storage and transmission that they are effectivly irrelevant to any sensible measure.

The myth was largly based on the idea of the physicality of the storage medium such as a book, song sheet or record and how expensive (relative to the actual purchase price) they were to duplicate.

You can actually see the idiocy of the idea in "The doctrine of first sale" where an IP holder (not the originator most times) has the right to say it won't sell a book in area A, but having sold a copy in area B have no right to stop the buyer in area B selling it on to another person who might just take it into area A and then sell it on again (providing they don't try to pass it of as "first hand").

The simple fact is information is not real in the physical sense, it is like the shadows between physical objects that you might capture with a camera a mear ghost in time and place, that otherwise would be forever changing. So whilst you might have copyright on your photograph as a "work" you cannot say that you have priority over the person next to you taking their own photo and thus making their own unique "work". Not that it will stop those with deep pockets trying to protect their pork barrel.

And whilst there might be physical limits to what we can store or transmit as "knowledge" information is effectivly only limited by the relationship objects have with each other and that is in any practical sense iss as near infinite as makes no difference.

So how do you stop secondary copying, transmission and storage, only by making one or elements of the equation more expensive than purchasing an original copy. Where expensive is not of necessity measured directly in financial terms but could be in terms of creature comfort or gratification.

As we know it is a lot harder to make water flow up hill than down, you can only do it by putting constraints around the water and applying sufficient energy to counteract gravity. Thankfully humans can be bought with vanity or convenance or even just by a style or look.

Thus trying to make secondary copying more expensive will hurt other things whilst pandering to peoples failings tends not to. One of which is to make people feel good about themselves.

For example how many people on a blind taste test can tell the diferance between a glass of Auzzie fizz at $10 a bottle and French fizz from the Champagne region at $120 a bottle?

Effectivly they are buying a "perception" and that is the only way the likes of Disney etc will survive by making people feel good about their experiance with them...

Dr. I. Needtob AtheFebruary 8, 2012 11:06 AM

The author states that file sharing is theft and "not moral" as if that was an objective fact, but is that statement really justified?

Morals come from within and we consider them to be eternal. What was immoral now was always immoral, so one possible measure of the morality or immorality of any act is whether you would expect a primitive man to instinctively understand it. Consider this scenario:

A cave man builds an ax by tying a sharpened stone to a stick. Another member of his tribe likes the ax and so he steals it.

In this case the act seems obviously immoral, no matter when it occurs in mankind's history, and it seems plausible that other members of the tribe would disapprove and pressure the thief to return the stolen property, possibly under threat of banishment.

Now, imagine that a primitive man invents the ax. His fellow tribe members admire it and study how it was made. They begin gathering materials to build their own axes, but then the inventor announces that anyone who builds an ax must first acquire his permission and pay a tribute.

Would you expect those primitive men to understand and accept that? Would they see any immorality in copying the ax without permission and without paying a tribute to the inventor? It seems more likely that they'd think he was crazy.

My conclusion is that the concept of intellectual rights is really just a modern and artificial invention of mankind, and is not based on morality.

It may be correct to consider practices like copyright violations unethical, since ethics are established by society, but they are not necessarily immoral, and there is an important difference between the two. Ethics can change as society evolves. For example, slavery was once ethical but was always immoral.

Perhaps it's time for our ethics to adapt a little in order to accommodate our rapidly advancing communication technology.

NeenekoFebruary 8, 2012 11:27 AM

@Ryan

Actually, I would argue that Steam has done quite a bit to stem piracy. While it is true that games on Steam are still pirated, I have gotten the impression the rates are lower. Valve is also not one of the companies that is ranting all over the place about 'piracy is killing us!' so they seem to think their method is helping.

Chris BrandFebruary 8, 2012 12:01 PM

@Ryan McGinnis http://www.arcticstartup.com/2012/01/23/statistics-on-scandinavian-music-streamers points to a study that shows exactly the opposite - essentially, that once Spotify launched in Scandinavia, people switched to using it rather than unauthorised downloads.
"Across all three Scandinavian countries, the survey also shows that over half the people who previously downloaded music illegally no longer do so after they have been given access to a streaming service."
As for competing with free ? Bottled water is a great example. It's also important to note that it costs the rightsholders the same amount that it costs the pirates to make that one more copy, so the pirates really don't have any competitive advantage.

AdamFebruary 8, 2012 12:10 PM

Several things would put a serious dent in piracy:

a) Low prices offered on fair non discriminatory terms. i.e. no signing exclusivity contracts
b) Dump DRM for watermarking and other passive measures.
c) If DRM absolutely had to be present in some form then make it an industry standard with fair use baked into the platform.

Both b) or c) should permit users to format shift their content.

Of course there will still be lamers who would pirate even if content was half its current price but there is no doubt that price puts people off. Make stuff cheaper and more freely available and the reason pirate disappears for many people.

Name LessFebruary 8, 2012 12:15 PM

It has been my opinion-- having had some of my writings published on the InterNet (my jokes referring to it as the InterNyet are no longer funny given SOPA, PIPA and the likelihood those same "controls" will be hidden under PCIPA) is that piracy is NOT an outright "taking" but creates, for want of a better term, an easement.

Yes, property rights-- intellectual as well as real-- can be encumbered by such easements, limiting the highest price that can be demanded for a property. Such encumbrances DO NOT drop the value of the original property to ZERO, however.

I have wondered what happens when a movie on an encrypted disk transitions to public domain; will the previous property owner be required to provide such content in a form no longer under control?

Julien CouvreurFebruary 8, 2012 12:31 PM

The Gordian knot of IP is solved easily once you realize that ideas cannot legitimately be considered property.
Because ideas cannot be taken, they cannot be owned. In fact, claiming to own an idea implies that other people don't own their brains or their physical property (paper, ink, printer, computer, etc.). So IP is incompatible with actual property and freedom to contract.

You can find a more detailed version of this analysis by looking up Stephen Kinsella.

When it comes to business models, there is no right to a specific business model. But even so, I doubt content creation would be terrible after repealing IP laws.
First, how could one claim that the current level of innovation is "optimal"? Second, there are alternative business models to fund creators (sponsorship, pre-payment, physical events, and probably more).

Ryan McGinnisFebruary 8, 2012 12:35 PM

@Chris Brand: Bottled water is NOT a good comparison. Bottled water and tap water are not the same goods.

Bottled water is portable and comes in a disposable container. Tap water is water that comes out of a faucet; unless you do something to it, it is not portable. For that, you need a glass or a bottle. Most glasses or bottles are not considered "disposable", meaning that you either have to hold on to them after you use them or it takes up space in whatever bag or case you haul around to hold all your stuff. Additionally, marketing has managed to convince many people that there is a qualitative difference between bottled water and regular water. (This, BTW, can also be done with pirated materials; it would perhaps not hurt for legit media outlets to point to the number of trojans that often hide in the keygens of popular pirated software, even though this isn't really much of an issue).

Now let's look at pirated content vs legit content on Steam.

Pirated content is instant download, can be re-downloaded at any time, is an exact copy of the legit content you can get on a retail disc, and is easy to install.

Steam content is instant download, can be re-downloaded at any time, is an exact copy of the legit content you can get on a retail disc, and is easy to install. The only extras you get on steam or automatic updates; pirated material requires you to manually install updates.

The difference is that Steam costs money; pirated material does not.

The difference between pirated audio vs iTunes is even smaller. It's literally the exact same thing; one just costs money, the other does not.

Ryan McGinnisFebruary 8, 2012 12:42 PM

@Julien Couvreur

The Gordian knot of IP is solved easily once you realize that ideas cannot legitimately be considered property.

If you look at Copyright law in the United States (both the law itself and the case law), you will see that what you are saying is explicitly stated. These laws do not apply to ideas, only expressions of ideas. Which is to say that I cannot copyright the concept of photographing a tree, but if once I do photograph a tree (using my own composition, exposure settings, depth of field settings, lens choice, etc.) that photograph, which is my expression of my idea of photographing a tree, can be (and is) copyrighted. Everyone else is free to continue to photograph trees, be it that tree or other trees. There is no restriction on ideas.

SlartyFebruary 8, 2012 1:11 PM

I would urge anyone (particularly @Ryan McGinnis) to read the following before coming to a view about the economic factors of the media industry:

http://www.techdirt.com/skyisrising/

"For years now, the legacy entertainment industry has been predicting its own demise...

... we've looked into the numbers to get an honest picture of the state of things. "

DanielFebruary 8, 2012 1:25 PM

"that photograph, which is my expression of my idea of photographing a tree, can be (and is) copyrighted. Everyone else is free to continue to photograph trees, be it that tree or other trees. There is no restriction on ideas."

That position is based upon an arbitrary distinction between an idea of a thing and an expression of the thing itself. Why stop where you stop? There is also a difference between the expression of a thing and the thing itself. There is a distinction between the thing and the atoms which constitute it. One can continue drawing ad hoc lines wherever one wishes and call it the law. In fact, that is the law. But it doesn't make those lines any less arbitrary and capricious.

The best line to defend intellectual property is based on the pragmatic affects of removing it. Property of all kinds is designed to provide incentive towards certain behavior and disincentive other behavior. We can imagine a society without property but I think it would be quite difficult to imagine a modern society without property.

mashiaraFebruary 8, 2012 2:14 PM

@Ryan McGinnis

Time is money, convenience has value. This means that having a high-quality content-service with reasonable prices will sway enough of people from "pirating" to legitimate purchases.

I still buy my music mainly on physical media (except where not available and I have the option of supporting the artist directly by buying a download), but that's because I'm old-fashioned, though media will get ripped to FLAC as a first thing and also encoded to some lossy format so I can fit more on my phone, I'll play the FLACs via Squeezebox so same audio quality but much improved convenience (back in the day I used to have huge CD-carousels so I don't have to mess around with the individual discs all the time), but these days there's very little music I'm interested in buying that I know of (I have about 700 CDs at the moment, most of them are over 7 years old), a factor could also be that I no longer have the time to spend 6+ hours a week in record stores trying to find new interesting music.

Maybe I'm just weird, but downloading (even though I have a decent connection) gigs of movie file is just not worth it, I can get the movie from the rental place quicker and some snacks on the same trip and it costs a few euros, my time spent hunting for a good copy is *much* more valuable. Anything I think is worth watching more than once (maybe one of my friends wants to see it too) I usually just buy, though rarely at the eye-watering "new release" price, I can wait a month or two for the price to drop. If only ripping blu-rays was as trivially easy and reliable as DVDs I could start buying more of those (I won't take the physical discs with me on a trip, replacing them is way too expensive [there's a "fun" sideline of the license vs purchase [ie: If I'm buying a license instead of physical goods then why can't I get a replacement disc without paying for a new license?!?])


Of course all copyright infringement is impossible to eliminate without at the same time turning the society to something the Combine (yes, a Half-Life reference now that Valve's been mentioned) would be envious of.

Not that it's about copying per se, but about control, also a sideline.

I personally haven't pirated games since the days of sneakernet, but I also didn't buy them much (maybe one a year, from the discount bin, I have other things to do as well), then came Steam for OSX (my main OS), I have a rather large collection there now (and maybe 60% of those are windows-only, but I have multiboot for such occasions), granted a large amount of that is "cruft" from bundles but the bundle was cheaper than getting just the game I happened to want, also I have the three first Humble Bundles redeemed also on Steam because it makes managing the library a breeze.

I guess I have rambled incoherently for long enough

DanFebruary 8, 2012 2:17 PM

Re: all issues surrounding photographs of trees and the like.

Here's a cute little article highlighting the slippery slope the whole piracy witch hunt has sprayed with more freezing water.
Judge says taking similar-looking photos is piracy
Take a unique picture that looks a lot like mine? That's a piratin'. Hope that new guitar riff you're working on doesn't sound anything like a song owned by a record company.

mashiaraFebruary 8, 2012 2:25 PM

@Dan that particular case is not nearly as clear-cut as that, the decision is bad, yes, but mainly because of slippery slopes. In this particular case the defendant was acting in bad faith and needed slapping on the wrists.

Or maybe I missed your point ?

DanFebruary 8, 2012 2:42 PM

@mashiara, no you pretty much got it. That case was the hyperbolized silliness that we can run in to, on both ends of the spectrum. On one hand, yes the guy was practically asking for it. On the other hand, it could also set a precedent.

Also people kept talking about photographs of trees. I didn't want anyone to get sued.

GeorgeFebruary 8, 2012 2:51 PM

Gee.... might some of the points this article makes be relevant to two other unwinnable "wars" that are currently costing trillions of dollars and achieving only the erosion of once-sacred rights?

Could it be that working to increase the world's highest incarceration rate is not the solution to the drug problem? Or that costly security theatre that causes more difficulty for innocent people than for terrorists (and actually amplifies the impact of terrorism) is not the solution to terrorism?

RyanFebruary 8, 2012 2:59 PM

@George:

These two things are not related. Drugs exist because there is strong demand; the "war on drugs" has been an attempt to restrict supply. Drugs are unique in that many of them make you chemically dependent and that there are no substitutes; other products people can often do without or do with an alternative. Thus, restricting the supply of drugs is a fairly ineffective method, since the demand for them is much less elastic than with other products; decreasing the supply simply drives up the prices (which people still willingly pay due to addiction) and drives the industry towards people who are willing to take criminal risk for financial gain (i.e. -- organized crime). The "war on drugs" would likely be over in two days if the drugs were allowed to be sold over the counter at Walgreens.

Piracy is different. There is already a supply of the product freely available at uninflated market rates. Nobody is trying to choke off your supply of Spiderman 2 or Skyrim. Drastically reducing piracy is a much simpler legislative task than eliminating drugs; you simply go after the advertisers who support pirate-based websites, the pirate websites themselves, and make sure to from time to time make an example of one of the downloaders themselves (which creates a fear-based incentive to not pirate). Since there is a parallel supply chain (i.e., the legitimate sales of the product), demand for pirated goods should decrease rather elastically as the risk of consuming and distributing such goods is increased. Whether lawmakers will go down this road or not remains to be seen, but right now all signs point to yes.

JordanFebruary 8, 2012 3:07 PM

@Ryan, all valid points. The question with piracy is how do you legislate and go after advertisers who support pirate-based sites that do not reside in your jurisdiction?

The internet being world-wide as it is, companies based in the United States can lobby and petition for laws all they want. If the country that houses the advertisers and/or the pirates doesn't honestly care about Big Media based in the U.S. losing money, it's a dead end.

This will be a big factor as China and India are going to start being a bigger and bigger part of that market. More and more advertisers and companies are going to be springing up in other areas of the world. As it is the U.S. can barely get cooperation from Sweden to close The Pirate Bay. What are the U.S. and Hollywood going to do when Indian, Chinese, or Russian advertisers being to pump huge money into sites that draw off Hollywood's wealth?

Maybe Hollywood will innovate? Nah, that'd make way too much sense.

JBFebruary 8, 2012 3:46 PM

@Ryan McGinnis "Why are consumers allowed to take a product and not give the company its money?"
They shouldnt be, but among other things I think the producers are not doing themselves any favours by their hardline tactics against the infringers. This sort of persecution simply pits a large portion of your customer base against you and without respect it's a lot easier to justify infringement.
Also with the continual extension of copyright and discussions about infringement in the public more and more people are coming to realise that they are having their rights eroded.
We live in interesting times and eventually we'll strike a balance, however it's not right that people have their lives ruined for a simple act of sharing without any profit motive.

JB

cdmillerFebruary 8, 2012 3:49 PM

Once information is digitized, the costs of replication and distribution are close to nil. This means the open market value of a digital copy of a movie also becomes pretty close to nil. The purpose of digitizing data is easier (and cheaper) copying, storing, processing, and distribution. Welcome, big media, and Ryan, to the free market in the information age.

Ryan McGinnisFebruary 8, 2012 4:15 PM

@cdmiller:

If the value of copies of a movie ever reaches zero, people will stop making movies. Full stop. That's how free market works in any age. :)

Natanael LFebruary 8, 2012 6:01 PM

@Ryan McGinnis: You are forgetting something. Piracy has no cost to the author, at most it's maybe a decreased income. In fact, the biggest pirates are ALSO the biggest buyers, and it's actually fairly well known by everybody who knows more about pirating that it's not rare that you download something to see if it's good before you pay.

Also, the no-cost thing means there can be rampant piracy on the back of the moon by a trillion aliens, and the author would never notice a thing, not even in his wallet.

So what does that mean? Simple - the only thing that matters is the income! So accept piracy as unavoidable, meet the demand with better services, adapt your prices to reality, etc...

Trying to change laws will only lead to people moving to anonymization and moving things over hard drives ("sneaker net").

Mike RoseFebruary 8, 2012 7:00 PM

@Ryan
It's a no-brainer. I don't get what you don't understand about it.

---Steam---
You pay a small price (roughly $20) and within 5 clicks of your mouse button, you've just purchased a game and are already verbally abusing other players online through your microphone.

---BitTorrent---
You begin the manual search of the various bittorrent sites, marvelling in your own thrift. You're one of the smart consumers!

You find a number of versions of the game in various torrents on various sites. All of them vastly different in size, which makes you question what you're actually getting. Are you getting cutscenes or other material usually included with the game, or has the torrent author decided that such material is irrelevant and wasting valuable space? You choose one that's roughly in the middle of the range and hope for the best.

You then proceed to download this torrent, with risks such as whether your ISP is being a good samaritan and believes you deserve ACTUAL JAIL TIME for the heinous crime of receiving a particular sequence of of 0's and 1's. If your ISP is lazy, then you still have to contend with data corruption, waiting for 'seeds' on the torrent, slow download speeds etc.

Assuming you've made it this far and now have the game on your hard drive, without data corruption or ARMED PARAMILITARY busting down your door, you'll still have to wonder what malware you now have installed on your disease riddled PC. Given that antivirus vendors generally only give a damn about worms, there's a very good chance that your particular AV isn't even capable of detecting what ukranian botnet you're now part of.

Right, you've finally got the game, malware and all. Can you play it yet? Definitely not. You'll now need to go out and find a crack to play the game, from horrendously designed websites bombarding you with popups, pop-unders, sexually explicit ads and false 'download' links. You managed to find your game in the list, but to your dismay there are hundreds of cracks for this particular game. Now you have to try and figure out whether you've got the European version or the US version, do you have version 1.06 or 1.06a? You swallow your pride and insist that this is still better value than just paying $20, and download a few cracks, hoping that they're not going to overwrite your MBR or install spyware.

After trying a few of these cracks, you find one that works! PUNCH THE AIR. You did it! You go to load up the game and find that you can't play online, because you need a steam account.

---Conclusion---
Of course the torrents are still there, but anyone who's downloading the game is definitely not someone who can afford the game to begin with so really, what's the harm? It's not a lost sale, despite how hard the lawyers want to argue. In fact, Steam appear to understand this point and to my knowledge haven't sued anyone for copyright infringement in the last few years. The only ones complaining are the large multinationals who don't have a financial stake in Steam.

MagnumFebruary 8, 2012 8:35 PM

re Posted by: Ryan McGinnis at February 8, 2012 4:15 PM

So no-one would ever make a film just because they wanted to express something? That's what art has been all about for a lot longer than the "free" market has been around. Also the idea that the current state of the film or recording industry is free is absurd with the money-sucking barrier between artists and their consumers.

The aim IMO of anyone that produces copyable content is to get that content into as many hands as possible. So BitTorrent, p2p, broadband etc are their friends, not enemies. I reckon a successful business model can be built around people desperately wanting more of a certain type of content such that they're willing to pay current(ish) DVD prices to get the latest episode of X now instead spending an evening refreshing Pirate Bay until someone bothers to rip and upload it.

Another point: about a year ago I watched my first film in a theatre for several years ago: Tron. Apart from the film being a big disappointment, the whole cinematic experience was very unpleasant. I felt like a piece of meat being transported along an assembly line designed to extract the maximum amount of money from me at the minimum cost. There was hardly any personal interaction: one usher to cover about eight screens, and no ticket booths instead you buy tickets from a machine (which by the way didn't have a tray to catch its printed tickets, it actually spat three thermally printed papers onto the floor: one for the ticket, one to exchange for the stupid 3D glasses, and one receipt).

GaryFebruary 8, 2012 10:15 PM

Ryan,

"you simply go after the advertisers who support pirate-based websites, the pirate websites themselves, and make sure to from time to time make an example of one of the downloaders themselves (which creates a fear-based incentive to not pirate). Since there is a parallel supply chain (i.e., the legitimate sales of the product), demand for pirated goods should decrease rather elastically as the risk of consuming and distributing such goods is increased."

Funny how that is exactly what the content industry has been doing during the past decade and funny how ineffective it has been.

I used to pirate when I was a penniless college student. Now I have a full time job and have cash to spend. Now that $50 is no longer a luxury, I actually prefer to get my games over Steam rather than pirate. It's much more convenient, organized, and I don't need to worry about my computer being added to a Korean botnet or having over-restrictive DRM spyware actively and intrusively interfering with normal use of the product.

That and I don't feel like I'm being extorted with Steam nor am I bombarded with legal agreements every time I want to play a game.

John David GaltFebruary 8, 2012 10:35 PM

First, the word is infringement, not piracy.

Second, both Hollywood and the music industry have so swindled and screwed their actual artists that they no longer hold the moral high ground on IP, if they ever did. Indeed, many artists now urge their audiences to infringe.

And third, where the author said continued infringement is inevitable, that unfortunately isn't quite true. There is one possible way it can be stopped, and that is for government to outlaw (or at least license) the general purpose computer (or at least, any computers without hidden back doors that enforce DRM-like restrictions against their owners at Hollywood's behest). The dozen or so Big Media companies, including Time Warner, are already pushing for this to happen, and Microsoft is cooperating with them.

Which means the bottom line is: either we lose traditional intellectual property law (and potentially all the output of Hollywood and Nashville, if the alarmists are correct), or we lose the freedom to control our own computers (and potentially all privacy, plus the ability to be content originators in competition with the Big Media).

And with these two choices before us, I say the only rational choice is to keep the computer and lose Hollywood.

JohnstonFebruary 8, 2012 11:10 PM

Primer, one of the best sci-fi films of the last decade, cost a grand total of only $7,000 to make. And the filmmakers aren't attack dogs either.

I agree with the Forbes article. I don't think Hollywood will move to an Internet distribution model until it's too late, though. And in the meantime, Hollywood's never-ending lack of originiality*, combined with its aggression and support of SOPA, ACTA and other legislation, means that they've lost their chance. That ship has sailed.

It's time to move on and investigate alternatives, which are now reality thanks to ever-more powerful technology in the hands of common people.

[1] How many times has a Big Content film been introduced with something like: "There's a crazy madman threatening to destroy everything, AND ONLY ONE MAN CAN STOP HIM!!!! And besides, Hollywood mostly only does sequels, remakes, and book adaptations (which almost always pale in comparison to the original, actually-creative book). With high quality video and high-performance editing computers in the hands of independent filmmakers, Hollywood is in trouble. And the next generation won't beat viewers with a stick and bribe politicians to enact draconian laws, either.

fbmFebruary 9, 2012 12:35 AM

I agree that the general direction of supplying customers content should change to reduce piracy, but this article is so opinionated with generalizations and misinformation that it's hard for me to read.
Apparently, people want content (movies, games, music, etc) that they can freely access and SHARE. But therein lies the issue. The copyright holder doesn't want you to share it. They want your friends to pay for it too.
The argument that movie studios and fat cats at record companies have too much money is ridiculous logic. Who are we to tell someone they have too much money? Eventually, those industries will have to figure out for themselves how to best serve their customers and cut out losses, just like every other business on the planet.

MrOutcomesFebruary 9, 2012 12:50 AM

Workers in many industries have been made redundant by technology or regulatory change: horse-excrement shovellers, dock workers, import licencing bureaucrats. They might still find jobs, but at lower rates. Why should those in the movie industry be any different?

PiracySuckFebruary 9, 2012 2:42 AM

First off, wrt to URL: http://embeddedsw.net/MultiObfuscator_Cryptography_Home.html, why isn't Blowfish highly regarded in this implementation of "obfuscation crypto". Is it now patented by BT Counterpane?

Okay just to put it simply, piracy kills ingenuity and commerce in one stroke.

While arguments for and against piracy are equally valid and hold individual merits I want all of you to think of the following reality:

Most of those I know personally; who use pirated goods have hardly ever in their lives purchased the legit copy at full retail price (in half their lifetimes). Even if their home-entertainment system costs a huge sum, they only w0uld invest in sub-par BlueRay discs bought at below retail prices. Their rationale to buy dirty goods is always the price barrier. The issue is not the price but the evil intent to get something at zero or little cost. That is the very thing that makes the piracy industry thrive. From software to entertainment content my country is rampant with piracy and it is killing our own local entertainment industry too.. It's simple - piracy only feeds the trolls and illegitimate idiots who have never contributed a dime of ingeniuety or sweat into those finished goods. It is easier to rip-off others work i guess.

Of a handful of people i know, about 80 -90% of them have no qualms about supporting pirated goods even after knowing the fact that it feeds other vices. Or that they are robbing fellow humans of a decent income.

Natanael LFebruary 9, 2012 4:30 AM

@piracysuck: "the evil intent to get something at zero or little cost", just like the companies' evil intent to sell the goods at a high cost?

You antipirates never cease to amaze me with how easily reversed statements you make. Also, just because you only seem to know evil pirates, does that mean the whole world is full of them?

"Piracy industry", that was fun. And again, see my trillion-pirating-aliens argument - the only thing that matters is how many that pays, pirates don't cost you a thing.

Daniel WijkFebruary 9, 2012 4:32 AM

PiracySuck: If the price is the point the recourse is clear: lower the prices.

At some point they become affordable by most people who now pirate and then they will buy most of their content.

Its as simple as that, really.

PerseidsFebruary 9, 2012 4:37 AM

@fbm
"""The argument that movie studios and fat cats at record companies have too much money is ridiculous logic. Who are we to tell someone they have too much money?"""

After the content industry lobbies for ever more drastic laws that cut our freedom [1], because they claim to have not enough money, we have every right to take a close look at their salaries.

[1] As far as I know there is still no legal way to play CSS DVDs with linux for example. (Let's not even talk about SOPA, I can't stand those discussions anymore.)

PerseidsFebruary 9, 2012 4:51 AM

@PiracySuck
"""Most of those I know personally; who use pirated goods have hardly ever in their lives purchased the legit copy at full retail price (in half their lifetimes). Even if their home-entertainment system costs a huge sum, they only w0uld invest in sub-par BlueRay discs bought at below retail prices. Their rationale to buy dirty goods is always the price barrier. The issue is not the price but the evil intent to get something at zero or little cost."""

Looking at our friends really doesn't help in this discussion. Everyone I know who pirated music and software now uses Itunes and Steam, therefore I conclude piracy is non existent in this area. Whose perception of reality is right and whose is wrong?

WinterFebruary 9, 2012 5:05 AM

Many commenters seem to forget that the point of the matter is NOT that piracy should be stopped, but that artists should be recompensated.

Currently, it is clear that the INDUSTRY is doing very well under the current circumstances. It is unlikely that they would do better if there was no piracy. I have never seen a realistic estimate that shows us that the INDUSTRY could in any way extract more money out of consumers than they do now.

What is also very clear is that artists do very badly under the current circumstances. The reason is not piracy, but the monopolization of all distribution channels. The bargaining power of the artists is minimal, so they recieve next to nothing from the INDSTRY.

Actually, artists earn the major part of their income from performing and a pittance (if anything) from the sale of canned performances.

The real danger for the INDUSTRY is that artists find out that they earn more when they are pirated more. Because, they more they are pirated, the more they can earn performing.

PerseidsFebruary 9, 2012 5:30 AM

@Ryan McGinnis
"""As a side note, it also effects the entire system which relies on an implied contract of quid pro quo. A company is not allowed to take our money and then refuse to give us a product; with the payment comes an expectation of getting what we paid for. We accept this as fair. Why are consumers allowed to take a product and not give the company its money? This seems to me a pretty difficult ethical question for pro-piracy types to explain away, and I've yet to see any really good concrete arguments advanced."""

In the mindset you've set yourself into there won't be a good concrete argument.
You see data as goods that must be traded one on one. If I don't pay for the movie the company looses money. But that is rarely the case. For example in the past years a friend of mine has downloaded several series. He would never have bought them on DVD (because series 7 of Doctor Who just isn't worth 70€, compared to 10€ for a good book - which he bought anyway). The other legal alternative would be to watch it on television with advertisement (and crappy synchronization). But who would notice he watched that advertisement. The channel would get it's money whether he tuned in or not, as he was never asked about his viewing preferences (and would even answer it out of privacy concerns or basic annoyance of random telephone surveys and the like).

paulFebruary 9, 2012 9:31 AM

As various people above have pointed out in parts, the underlying economic problem of piracy is not about lost sales. It's about a few thousand people who make mind-boggling amounts of money as intermediaries in the process of getting movies and music and games from the creators' hands to your eyeballs and eardrums. And even if a new setup enriches people beyond their wildest dreams, it won't enrich the same people.

(One of the things I found interesting in this connection was some of the media focus on the ostentatious wealth of the founders of MegaUpload, as if it were somewhoe different in degree or kind from the ostentatious wealth of producers, studio moguls, top agents and so forth.)

fbmFebruary 10, 2012 6:25 AM

@Perseids

""After the content industry lobbies for ever more drastic laws that cut our freedom [1], because they claim to have not enough money, we have every right to take a close look at their salaries.""

Agreed - my comment was assuming no legislation action either past or present. Surely we'll have the right to question that if a similar situation arises.
However, this rationale can't apply in defense of illegally downloaded copyrighted material if there is no legislation on the docket. In other words, we can't use the fact that we think they make a lot of money to justify illegal downloads. I'm not saying you are, I'm just saying .... B-)

DerfFebruary 10, 2012 7:56 AM

If a friend lends me his lawnmower and I refuse to return it, I have stolen something. If a friend lends me a cd and I refuse to return it, I have stolen something. If a friend lends me a lawnmower or a cd and I return it, I haven't stolen anything. If I make a copy of the cd before I return it, my friend's cd is not diminished in any way, so why does that equate to me illegally boarding a ship, murdering the crew, and selling everything on board as plunder?

Doesn't my friend, under right of first sale, have the ability to tell me to go ahead and make a copy of his cd? This specific issue will come up more as 3d printing technology advances.

From a music perspective, the origin of our music industry lies in wandering minstrels, from the dawn of the first song, copying and performing each others' songs at will. Why does the 20th and 21st century music industry think it is owed the right to lock up this content?

LeeFebruary 12, 2012 3:37 PM

The major issue is that the industry is trying to maintain an antiquated market whereas the (empowered) customer is basically saying "Stick it".

If I look back 10 years or so to when a R1 DVD came out and R2 still had the movie playing in theatres, that gap has closed as everyone in Europe went region-free and bought from the US.

This situation today is exactly the same. I download lots. Mostly TV shows as I don't want to wait months to get what I want to watch - after all, the Internet's talking about it the next day. Studios are not going to control and manage my consumption - no way.

And so piracy is actually helping to educate this industry. If they treat the market as global and sell direct, I'll happily pay $1 per TV show I'm presently downloading and $5 per movie. Not a problem.....but until they realise this model is the way forwards, they're going to be chasing their tails.

For what it's worth, the pirates represent 5% of the consumer market (guesstimate) and thus there will still be a market to sell content to cable providers and so on with no loss in revenue. Heck, just a bucketload of happy customers singing your praise.

Music's done it with DRM-free music - it did not kill them.

Listen to your customers. That's it, it's that simple.

VlesFebruary 15, 2012 6:35 AM

2300 years later Aristotle wins again...Plato might have stretched the boundaries, but the real value is in the physical.
As the soul and body are two, so also we not two parts of the soul...

I'm 30 years old. I remember well my first hifi set I bought at 13 to appreciate music. I had saved all my pocket money for 2.5 years. (Mum and Dad gave me $5/week) and specifically looked for a good set and speakers with frequency range of 20Hz - 20.000Hz. In the end I purchased a Pioneer SX-P530 (still working). Call it delayed gratification...

I can remember going through my dad's CD library (1993) and wasn't allowed to handle the discs until I was around 12. (For fear of scratching etc.) - How the times have changed...

He still has these discs (looked after well, but no vinyl to be seen). I can remember seeing him marvel at these new discs, the little booklet coming with it, handling this precious cargo as if holding shiny jewels to the sun. Was this music really of higher qualiy than the music stored on the vinyl albums he owned? He rebought some of it on CD.

And now? Explain to a kid where music comes from if you "grab" it from a computer and fumble with blanc discs? Quickly burn something then this plastic circle more and more often ends up like a throw away product, under piles of paper, under coffee mugs..

or in the bin..

There's this man who instinctively knew how to bridge this gap (the virtual and physical divide) and sadly he has passed on but in pondering the content industry and how he could make a difference he well understood restoring the value of the container by cradling the artistic IP work/value in a magical, beautifully crafted physical product worth the cost of owning. A work of art, of superior craftsmanship (thanks Richard Sennett) worthy in itself, through it's beauty and inner workings to also be able to contain works of art. It is here to stay. I'm glad for it because I love running to music. Especially anything Rory Gallagher.

What he created and archieved for virtual content is no different than what Imhotep created for the pharaoh (pyramids) or
Vespesian for the Roman people (colloseum).
However the cost price of the optical disc now and the ease and time taken to produce a copy have severely degraded the value of the artistic container to well...nothing. And perhaps with it goes a certain sentiment. A feeling of value often expressed by your level of care, thought, respect and above all appreciation of the work and value that it contains. Modern day discs ought not to be used to store art.

If discs are here to stay, please restore their value. I don't know how you can differentiate best, but maybe make these optical discs out of corundum.
Up the price to reflect the cost and value of synthetic sapphire. Add colours (red for ruby, blue for sapphire). Store higher quality of content on these discs and market their durability. (Include extra content, scratch resistance, can be handed down generation after generation). Invent speakers and gear capable of reproducing a concert (go back to analog sound storage with the disc?) that is just not possible with modern day digital formats and ear plugs. Idea?

Leave a comment

Allowed HTML: <a href="URL"> • <em> <cite> <i> • <strong> <b> • <sub> <sup> • <ul> <ol> <li> • <blockquote> <pre>

Photo of Bruce Schneier by Per Ervland.

Schneier on Security is a personal website. Opinions expressed are not necessarily those of Co3 Systems, Inc..