Sunday, March 11, 2012
Steve Baron: Internet Piracy
According to one report, in 2001, software piracy robbed the US economy of 105,803 total jobs, $5.9 billion in total wages, and $1.8 billion in total local, state, and federal income tax revenues. Companies like Microsoft spend a fortune on research and development to create intellectual property. They are quoted as spending $9 billion a year. When businesses spend that much money they expect protection and they expect good returns.
Internet piracy has been a hot topic for a long time, ever since Napster hit the headlines years ago. Now with the arrest of Kim Dotcom and the shut-down of his Megaupload file-sharing website, the saga continues. By the look of it there is certainly money to be made from internet piracy, if he is anything to go by—but also a big price to pay for doing the crime! Wikipedia has added to the controversy by taking a stand against the US government SOPA and PIPPA Bills which are an attempt to stop internet piracy in its tracks. Wikipedia took their English language content off-line for a day in protest.
The protection of intellectual property is a fairly new innovation. During the nineteenth century in America, anyone was free to reprint a foreign publication, without having to pay the author, as there were no copyright laws. The concerns over music piracy in particular, have been around since the 1940s, when a group of jazz collectors wanted certain records which were no longer being reissued, so they began pirating them. At the time, a New York company, Paradox Industries, became a major player in the pirating industry under the label 'Jolly Roger'. Columbia Records and singer Louis Armstrong filed a successful lawsuit against the company and were successful. This case brought about the Bennett Bill which made record pirating a criminal offence. Now we have the internet, piracy has become much easier.
Some might argue that intellectual property rights have created a monopoly. The economic argument against monopolies is that monopoly pricing creates what economists call a dead-weight loss which is not good for society as a true market equilibrium is not generated. While Microsoft may have become a monopoly to some extent, the music industry is not. There is ample competition between various record companies and consumers can buy thousands or even millions of different songs. Let's face it, if you aren't prepared to pay for a song then everyone has the chance to listen to it on the radio. If computer users do not want to pay for a Microsoft programme they can easily download a substitute like OpenOffice for free. The monopoly argument just doesn't hold water.
The trouble with internet piracy is that most people don't feel they are particularly doing anything too wrong and probably think their chances of getting caught are zero, or next to nothing anyway. While that may have been the case in the past, New Zealand has now passed laws to combat illegal downloading. The Copyright Infringing File Sharing Act imposes a fine of up to $15,000 for illegal down-loaders, but three warning letters are given before any fine is imposed.
If piracy downloading is not fully regulated then businesses have little alternative but to use secrecy to protect their works so it cannot be copied by competitors. In the case of copyright material it would have to be kept under lock and key, as Shakespeare did, so that only his acting troupe could perform his work and charge a fee for it. Imagine a world without being able to read Shakespeare, or use Microsoft products and the huge industry they have spawned, because they kept it all a secret? Society would be far worse off economically. Without intellectual property rights there would be little incentive to develop new ideas, new music, new books or new software because as soon as something was created someone would steal it and there would be no benefit to the creator. This is no different to real property rights. Without them farmers would grow crops, but their neighbours would let their stock wander over to eat it, saving them the cost of feeding.
Legislation is moving in the right direction but it still comes down to the individual responsibility. So the next time you are about to thieve someone else's intellectual property I just hope you might get a social conscience and cancel that download—or at least pay for it.
at 6:40 PM