By legalizing Internet file-trading tools, a California court handed a major victory to communism. The Internet allows the well-wired to take copyrighted material freely. Left unchecked, rampant copyright theft may soon destroy the for-profit production of movies, music and books and may usher in an age of digital communism.
Technology will soon increase the ease of copyright theft because as broadband access proliferates, more people will be able to download pirated movies and music quickly. Currently, authors are safe from Internet piracy because most book readers still prefer printed words to electronic text. We may soon, however, see electronic paper that is as easy to read as printed pulp. How much money would Tom Clancy be able to make when readers can download all his books freely in under a second? Can you imagine college students paying $75 for a textbook they could download for free?
The best hope to stop copyright piracy lies in stopping the distribution of peer-to-peer networks that facilitate such theft. By holding that these networks have no liability for inappropriate use of their tools the California court has reduced the value of digital property rights.
Some have claimed that Internet piracy simply represents another form of competition and all copyright holders need do to compete successfully is to lower prices. But a central tenet of economics holds that if multiple firms sell identical products, consumers will patronize the lowest price provider. If pirates give away their product for free, content providers can compete only by also charging nothing.
The ability to exclude is the essence of property rights. If I “own” land but anyone can trespass I don’t really have any property rights. Similarly, if I own a movie, but anyone can freely watch it, my rights have disappeared.
Is it necessarily bad if piracy destroys intellectual property rights? After all, when everything is free we can live out Karl Marx’s dream and have everyone take according to his needs.
The twentieth century witnessed a brutal competition between communism and capitalism. Communists believe that people can be motivated to work for the common good, while capitalists believe that profit provides the best catalyst for economic production. Capitalism, of course, triumphed mainly because of its superior economic performance. By decimating profits for content producers, peer-to-peer piracy may give us a communist system of intellectual-property production.
I imagine that few would invest in a factory in the Congo. Because of political strife, property rights in the Congo aren’t respected, so it would be nearly impossible to profit from building a factory in the Congo since once it was built, armed men would come and steal the equipment. Businesspeople only make investments they can profit from.
Copyright holders were able to sue Napster into submission, but Napster had a centralized database that was easy to locate and destroy. New forms of Internet piracy, however, rely upon peer-to-peer networks where users download material directly from each other’s hard drives. Since it would be impractical for content providers to sue millions of Internet users, to protect digital-capitalism copyright holders must be able to stop the proliferation of piracy tools.
Some might argue that copyright holders should fend for themselves in the marketplace. Imagine, however, the fate of stores if there were no effective laws against shoplifting: Theft would drive them to bankruptcy. True, copyright holders can somewhat protect themselves by imbedding copy protection technology in their products. A movie, for example, could contain a code allowing it to be played only on your hardware. Imbedded copy-protection technology is foiled, however, if even one user creates and disseminates a clean and playable copy. Furthermore, imbedded copy protection can never protect e-books since you can create a copyable e-book merely by scanning the text of a physical book.
Of course, copyright holders could still find a few ways to profit in a world of rampant piracy. Movies could be financed by the sale of action figures and musicians could profit from concerts. It’s difficult to see how authors could profit, however, except, perhaps, by begging for tips.
— James D. Miller is the author of Game Theory at Work.