It has been one hell of a week. Emphasis on hell.
The online protest against the legislative duo of the Stop Online Piracy Act (SOPA) and the PROTECT IP Act (PIPA), meant that large swaths of the Internet — most notably Wikipedia — went dark on Wednesday. The protests appeared to have worked, or at least given legislators in Washington pause, as both pieces of legislation have been shelved for the moment. Emphasis on “on the moment” as SOPA has more lives than a zombie-vampire cat, seemingly being shelved and un-shelved every other day.
Yet the fight over online piracy is a multi-front war. Hours after the protest blackout ended, and before SOPA was put on hold, a federal indictment against file sharing site Megaupload.com led to the site being shut down and its founder (and three others) being arrested in New Zealand. (Remember that last bit, it’s important down the line.)
This prompted a retaliatory backlash from hackers and activists operating under the Anonymous banner, who launched Distributed Denial of Service (DDoS) attacks against the Justice Department, FBI, Recording Industry Association of America (RIAA), and Motion Picture Association of America (MPAA) websites, amongst others. What’s notable about the response was how swift and large it managed to be, although the question must be asked: how much does such an attack truly inconvenience these organizations in the long run?
Here’s an even better question: why were the MPAA and American legislators so hot to pass into law a bill that would have fundamentally altered the way that the Internet works? We must be talking a serious amount of money.
At present, the motion picture industry claims that it is losing $6.1 billion dollars each year to online piracy. When viewed through that lens it’s clear why the studios want to shut off the tap. But as Julian Sanchez – writing for libertarian think tank Cato Institute’s Cato @ Liberty blog – points out, cutting off American’s access to foreign piracy sites won’t recoup those costs:
SOPA, recall, does not actually shut down foreign sites. It only requires (ineffective) blocking of foreign “rogue sites” for U.S. Internet users. It doesn’t do anything to prevent users in (say) China from downloading illicit content on a Chinese site. If we’re interested in the magnitude of the piracy harm that SOPA is aimed at addressing, then, the only relevant number is the loss attributable specifically to Internet piracy by U.S. users.
Which has got to be a lot of cash, what with all those copies of X-Men Origins: Wolverine flying around the tubes. Right?
Of the total $6.1 billion in annual losses LEK estimated to MPAA studios, the amount attributable to online piracy by users in the United States was $446 million—which, by coincidence, is roughly the amount grossed globally by Alvin and the Chipmunks: The Squeakquel.
Wait. We’ve been fighting over CHIPMUNKS MONEY?
Not AVATAR cash? But CHIP… oh Kibo. Say it ain’t so.
Boing Boing’s Cory Doctorow posted those parts of Sanchez’ analysis, and for that I’m thankful. But digging in further we find this killer bit:
As one expert consulted by GAO [Government Accountability Office] put it, “effects of piracy within the United States are mainly redistributions within the economy for other purposes and that they should not be considered as a loss to the overall economy.”
Translated from the bureaucrat: the pirates were never going to spend money on X-Men: Origins: Wolverine anyway, so you might as well find something to sell to them they might actually want. Which is what some pirates have always argued (not to give them the moral high ground). I still find it ridiculous that there are people who claim to love, say, comic books, then spend their nights scanning and uploading pages so that people can read the books without paying. When their favorite books get canceled they rend their cosplay garments and mourn the loss. That sort of myopic hubris is reserved for presidential candidates exploring their relationship options.
Yet the shadow of Adam Smith’s invisible hand is at work here. There’s clearly a demand, and its not being met through legitimate channels. This is an opportunity for innovation, not an excuse to call Interpol. Instead of letting sites like Megaupload define the market, the entertainment industry should stop fighting the tech industry and start bankrolling a new way forward.
They’ll need to accept a few harsh realities to go along with that: profit margins will be lower; and the relationships that matter most are that of talent and fan, not agent and executive. For most of the Aughts we were told to embrace the idea of the personal brand. As it turns out, the brand is dead. No matter how much you try to dress them up no one will buy that a corporation is a person. (Well, one guy does. But no one really likes him.) Big media companies can either facilitate those relationships or watch their power inexorably slip away.
That’s the long view. In the short term we’re stuck with a very complex legal situation, which brings us to our last piece of news to consider.
This week the Supreme Court ruled that Congress has the power to remove works from the public domain and put them back under the protection of copyright. This is a huge blow to those who are fighting for a stronger cultural commons, and while the majority on the court argues that it doesn’t give the power to Congress to create perpetual copyright, the Court under Chief Justice Roberts hasn’t exactly had the greatest track record when it comes to curtailing corporate excess.
In some ways this is a special case, as the works in question are by foreign authors and fall under the purview of the Berne Convention — an international copyright treaty. The treaty in this case trumps the way copyright works here in the U.S.
And here we have the thread that ties it all together: the majority of the profits the MPAA claims to lose (which are guesstimates at best), the national identity of Megaupload (created by a German who lives in New Zealand, incorporated in Hong Kong, bane of American companies), and an international copyright treaty that infringes on rights proscribed in American law. The World Wide Web brings worldwide complexity; as citizens of the Internet we really are citizens of the world. Globalization has come home. You’re looking at it right now.
While the success of this week’s online protest against SOPA should go towards shutting up those who say that online protests are ineffectual, it’s still not enough to just change the minds of legislators here at home. This is a global battle in a global marketplace. Activists, entrepreneurs, and consumers alike need to scale up their thinking, or what we’ve built so far just might collapse under the weight of old wisdom that’s lived past its usefulness.