Why Napster is Right: The Other Hand

Details
 

Counterpoint 
 

Example
 

Growth
 

Discussion
 

References

The difficulty, as we also pointed out, is that even if we allow downstream licensing, it is not that easy to enforce. Take, for example, the DeCSS fiasco. DVDs are encrypted. Through an error on the part of the DVD cartel, the decryption was reverse engineered and the passwords revealed. Although the cartel is attempting to suppress the DeCSS program through legal means, the cat is basically out of the bag. No matter what courts should decide (and so far they have favored the cartel), too many copies of DeCSS exist in the wild. Unless all are identified and destroyed, along with every bit of source code and the knowledge in people's minds of what the password is, DeCSS or an equivalent will continue to be available. Unless all existing DVDs are somehow recalled, every movie so far released on DVD (and any future movie that will play on existing players) can be ripped. The point is, as time goes on and no matter how good the technical means by which material is protected, those technical means are going to be beaten (probably by some curious teenager) and the whole amount of resources spent upon them will lay in waste. At this point enforcement becomes prohibitively expensive. Only draconian and totalitarian methods such as monitoring all internet traffic for content, prosecuting millions of individual users, prohibiting anonymous means of communication, or simply disconnecting the entire internet can realistically prevent distribution. At the moment the movie industry is protected by the fact that even a highly compressed movie requires on the order of 650 Megabytes of storage, which with current bandwidth makes widespread distribution impractical. But bandwidth and compression will improve with time, so this is just a temporary respite. 

Notice also, that reverse engineering and secretly distributing material has a cost. Is the ingenuity of hackers well used from a social perspective by reverse engineering decryption schemes designed to protect the monopoly of intermediaries? Most likely not, as "current hackers" are just playing cat and mouse with "former hackers" to code/decode software, in a game that looks a lot like a zero-sum game. Surely this talent could be put to more productive use. 

So, if we accept the arguments of the production side protectors, are we doomed to a world either without music, books and videos, or a totalitarian world in which the government, or the RIAA or whoever publishes something has the right to spy on every household for compliance? We think not. Most of the arguments over copyright and Napster have little to do with economic efficiency, as we discuss extensively  in the details essay . They are, more simply, arguments over income/wealth distribution. Creative activity generates tremendous surpluses: at relatively low cost, it is possible to create works with enormous social value. To whom should this value belong? The creator without whom the work would not exist, or the user without whom the work would have no value? Much of the current "piracy" rage is driven by producers (not the actual creators, but usually the intermediaries) who demand all the surplus for themselves. These producers (distributors) are very few, large and cartelized. In 1996 the five larger companies controlled more than 70% of the global market for recordable music. Collecting societies, that administrates copyrights in various countries and collect fees, also earn substantial amounts. about 8-9% of the total pie, in fact. In a world where downstream copyright protection was absent or reduced, these "parasitic" intermediaries will be gone, and socially useful resources thereby released. A more reasonable system,  allocating a modest amount of the surplus to the producers would therefore make it relatively easy to cover production costs, and reduce the burden of enforcement. Suppose, for example, the length of copyright protection for downstream licenses was reduced to one or two years. The typical book spends a year in hardback before being released in paperback, so by the end of the second year, the bulk of profits have been made. In fact material that generates significant profits beyond the second year generates so much profit during the first two years, that production cost (taking account of risk) is easily recouped by then. Indeed, even accepting the producers arguments, a strong case could be made that protection of a year, or even 6 months would suffice to recoup production costs. 

How would such a proposal reduce enforcement costs? First, it is much easier to keep something successfully encrypted for two years than for 128. So technical means would have a chance of working. Second, by focusing enforcement on just a small number of recent productions, legal action can be much more effective. Third, the incentive for "piracy" is greatly reduced when the material will be legally available in one or two years anyway. Fourth, since a much shorter copyright term will reduce the price at which copyrighted material is sold (hard to charge $20 for a CD when it will be available for $1.50 in 6 months), the incentive for users to violate the law is also much reduced. Finally, the moral aspect should not be underestimated. In the software market, people have shown they are willing to pay a modest premium for "legitimate" software. With reasonably priced electronic material, available for free or nearly so in one or two years time, the enforcement problem should be a reasonable one. 

Ultimately the question for producers is: do we try to forge a workable law, or do we tilt at windmills, creating socially wasteful and unenforceable laws that do nothing but undermine confidence in the very same rule of law? Or, perhaps it is not a question for the producers, but for the rest of us.