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Piracy On The Net: Why It Needs More Policing


Economic Viewpoint

Piracy on the Net: Why It Needs More Policing

All over America, computer enthusiasts have a marvelous new way to assemble record collections--MP3 files. These are highly compressed data files that allow an ordinary computer to download music from the Internet. You can sign up with a chat room that promotes exchanges of MP3 files and search for virtually any compact disk or tape that exists. (Within days of release, someone puts it into cyberspace.) Then you download the files. Voila! You can carry around hundreds of albums on your laptop, and never buy another CD.

Is this legal? So far it is. In principal, you are infringing on somebody's copyright, but so far the courts have held that neither you nor the manufacturer of an MP3 player is violating any law. The chat room is effectively colluding in an act of piracy, but it can't be prosecuted any more than the phone company can be if somebody uses the telephone to plan a bank robbery. How much money is this costing the music industry? Probably billions.POLARIZED. What is happening with music is also happening with software and magazine and newspaper articles, and will soon happen with movies, as video-streaming technology becomes cheap and sophisticated. But does any of this really matter?

Here, the world divides into two polarized camps. The libertarians, declaring that "information wants to be free," say it is futile to try to build walls or collect tolls. This camp includes not only Net philosophers and users accustomed to a free Internet but also many promoters of electronic commerce and its attendant technology. On the other side are record producers, performing artists, authors, the movie industry, and many software companies, who consider Internet pirates the bandits of the Information Superhighway.

Some, like Microsoft Corp., are on both sides of the divide. While Bill Gates's lawyers vigorously go after pirated software, Microsoft is promoting its windows media player to work with the next generation Walkman style MP3 players that will allow consumers to play music collections that are invariably pirated. But how different is this, really, from past generations of kids who taped songs off the radio, students who photocopied book chapters, or movie buffs who taped videos, notwithstanding the ominous "FBI Warning" posted by the video-rental shop?

Very different, say the alarmists, because in the past electronic piracy was a hassle, and the quality tended to deteriorate with the copy. After the novelty wore off, it wasn't worth the trouble, so the pirated market share was trivial. With the Internet, searches just take a few keystrokes, the copies are perfect, and piracy will become the norm.

Not different at all, say the libertarians. Ever since the printing press, authorized intellectual property has always had leaks, and on balance the leaks only stimulated new technology and markets.

The libertarians argue that record producers and Hollywood studios are largely parasites anyway. They imagine a world in which a recording artist or independent filmmaker can connect directly with a mass audience, with no middleman whose main function is marketing hype. Many Internet pioneers, as a matter of principle, distribute software at no charge. But this utopian vision of a world where everyone is an inspired amateur begs the question of how the professional filmmaker, actor, writer, or producer is supposed to make a living.

An Internet that is a safe harbor for pirates will gradually erode intellectual-property protections as we have known them since the British crown first invented modern copyright nearly three centuries ago. Ironically, entrepreneurs with an ideological aversion to government are now begging government for more regulation. Under lobbying from the entertainment and software industries, copyright law was tightened in 1998 to cover the Internet. But these new protections are all but unenforceable technologically.

Any serious policing of Internet piracy would require much tighter regulation, of the kind that has been anathema on the Net. One approach would collect tolls from end users, on the model of royalties paid when radio stations spin disks or theaters stage performances. Logically, computers would have to carry some kind of monitoring devices to detect copyrighted matter. How society deals with this dilemma has the most profound implications, and paradoxes abound. As owners of intellectual property seek to protect their rights, the alternative to public regulation may be a far worse balkanization of the Internet by private interests enforcing private contracts. An unregulated Net is also a menace to personal privacy. The Wild West days of the Net are probably numbered.By Robert Kuttner


Steve Ballmer, Power Forward
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