Earlier today, Stephen Fry linked to an article by Matthew Yglesias that posits that a little copyright infringment may actually be good for society.
The article makes the usual arguments about the over-estimation of economic loss to copyright holders, who, of necessity, talk about opportunity loss rather than concrete losses. Of course, in practice it’s impossible to come up with a definitive figure owing to the nature of copyright infringement—simply put, infringers don’t tell the copyright owner about their infringement (the only case where that can really happen is with software, and software that makes any kind of effort to do that usually upsets the privacy lobby). My perspective, as a copyright holder, is usually that even if we assume conservatively that only 10% of pirates would pay, given sufficient incentive, it would still represent a sizeable loss on any reasonable estimate of the number of pirated copies of our software.
However, the article does make a few more interesting claims. First, it claims (giving the example of a pirated TV show) that the loss, however large, from infringement is offset by the “$15 to $85 worth of enjoyment” that watching a pirated TV show would create. This, it seems to me, is a bogus argument. A car enthusiast may get £100,000 worth of enjoyment from driving his Porsche; that does not mean that stealing one from the dealer is no longer a loss to society. And it certainly does not make stealing a £50,000 Porsche a net gain to society of £50,000.
It also points out that the loss to the copyright holder is not necessarily an economic loss to society overall, as the infringer may use the money saved to (for example) visit a pizzeria. Again, this argument is suspicious; it seems to me that it would apply equally to mugging… for instance, if I am mugged for £100, which is then spent on burgers, I have lost £100, the burger joint and its suppliers have gained——and by Matthew Yglesias’ argument, society has not lost out overall.
Taken together, these arguments are even more suspect. Not only can I steal a Porsche and have my £100,000 worth of enjoyment, but the £50,000 I saved on buying it can now be spent as well! Society doesn’t lose out at all, and I can claim (as Yglesias does) that the entire £100,000 worth of enjoyment was a gain for society too. Win-win, right?
Yglesias then goes on to say that, because the BBC has yet to release the second series of Sherlock in the United States, he has been downloading it illegally over BitTorrent. Leaving aside for a moment my irritation that, as a U.K. license fee payer, Yglesias has just admitted stealing from me, it seems to me to be difficult to take him seriously when he talks about the pros and cons of copyright infringement if he is also indulging in it himself.
The article proceeds to claim that there’s a “considerable” benefit in forcing copyright holders to compete with “free-but-illegal downloads”, citing the existence of iTunes and Hulu as examples of legal options that he feels might not exist without pressure from piracy. Again, I find the argument rather thin; piracy is essentially identical, economically, to having a competitor who is engaging in dumping). I have yet to hear an economist argue that it would be good if goods and services were stolen and dumped in order to depress the market price. On the contrary, the usual view is that price dumping of any sort tends to force competitors out of the market, and in the case of piracy, the competitors are the people making all of the content that is being dumped.
As for whether or not there’s a problem on the consumer side—as distinct from commercial pirates—I think Yglesias’ analysis is facile. First, the current situation, where there is an excess of entertainment available to the consumer, is a hang-over from the previous situation in which making music and movies was a highly profitable business. There is still a lot of that money in the system and it will take time to drain away.
Second, there is a tendency to under-estimate the scale of the problem of consumer infringement. Talking to ordinary people (and even celebrities like Stephen Fry, actually, whose own income is dependent to some extent on copyright), will rapidly disabuse you of the notion that piracy is not a widespread thing. Many people I have spoken to boast openly about how clever they are to get things for free rather than paying for them. Ordinary people. Not computer whizz-kids, not stay-at-home living-in-mum’s-basement types. Yet everyone always assumes that “it’s just one copy”, “it’s just me”, “the movie/ music/software company is rich enough anyway” and so on. In a way, Yglesias has demonstrated that himself—he apparently feels that it’s socially acceptable enough to tell us that he’s illegally downloaded the BBC’s Sherlock.
When piracy was just a case of sharing something with your friends, it was less of an issue for copyright holders. Of course, many of them protested the illegality of doing so, but I think even they knew that it wasn’t hurting them that much overall. The problem is that the Internet has changed “sharing with your friends” to “sharing with anyone who cares to”; the scale has increased out of all proportion.
Finally, I think consumers fail to understand the motives of some of the players in this argument, and many of them end up—effectively—astroturfing on behalf of big corporations who are making a profit from others’ piracy. There is a reason that Google searches for The Pirate Bay still work. There is a reason that registrars providing WHOIS hiding services refuse to stop hiding the details of their customers even when they are egregiously infringing the rights of others. There is a reason that ISPs refuse to enforce their own Terms of Service. None of these things happen in the case of child pornography, but all of them happen for copyright infringement, even when it is blatant.
It is certainly the case that advertising and donations on dedicated piracy sites makes money for their operators. Money that should, rightly, be going to the people who produced the copyrighted content that they help to distribute, but which, right now, is going to line the pockets of the operators of the site, of their ISPs and registrars, of payment processors and of advertising networks. SOPA, above all else, appears to be an attempt to curtail that flow of money, and so it is hardly surprising that many of the companies involved are protesting about it, though their PR departments have obviously concluded that it’s far better for their respective images to frame it as a stance on the moral high ground of opposition to censorship rather than admitting their somewhat baser motives.