Complex issues that are oversimplified and distorted for comedic value are enjoyable and even valuable in providing us with a respite from serious deliberation on such things. But, if these oversimplifications and distortions are presented as truthful representations of facts -- that are just delivered in a funny way -- they risk undermining serious discussions that can create workable solutions. This TED Talk is simply a comedic straw man ... not an idea worth spreading!
To give an example, Mr. Reid defines the $150,000 in statutory damages contained in Section 504 of the U.S. Copyright Act as Congress and Hollywood's view of "the precise amount of harm that comes to media companies whenever a single copy of a copyrighted song or movie gets pirated." This is a gross misrepresentation of the Copyright Act's damages section. Section 504(c) of the copyright act sets two types of damages:
(1) Actual Damages: which is actually the precise amount of harm from an infringement -- currently this would be somewhere between $.99 and $1.29 for a digital songMr. Reid portrays statutory damages as actual damages and thereby creates an easy target to attack. But you might ask, why do we have statutory damages in the first place? Is that just a semantic argument? No, it is not. Let us pretend there is no statutory damages available under copyright law. What would most people do if they want the newest digital release of their favorite musical act? They could go online and purchase it from the record company who would charge them $1.29 for this one song. Or they could go find a pirated copy somewhere online for free. What is the potential cost of downloading the pirated copy? Well, it ranges from $0 if they get away with it to $1.29 if they get caught.
and
(2) Statutory Damages: which ranges from a low of $200 to a high of $150,000 per work infringed and depends on the intent of the infringing party.
Where would this system leave the record company? They would have a simple choice: either hire a lawyer and bring a lawsuit in federal court against the the person for $1.29 or do nothing and absorb the loss of that sale. What would the cost of a lawsuit be? Well, I can assure you it would be higher than the potential return of $1.29. So the only rational act for the record company would be to do nothing. With this system, would you expect a vibrant music industry? How much quality music would we have?
To further examine the need for statutory damages, let us look at one more illustration from the world of retail sales. If you were to walk into a store, take an item, and walk out without paying for it, what are the potential risks? If caught, you face criminal prosecution that could result in a fine that exceeds the value of the item stolen, time in prison, and a permanent criminal record. Why have such laws? The answer is obvious: if the only risk to theft was paying for the item you attempted to steal, most people would have an incentive to attempt to steal the item first and then just pay for it if they were caught. Indeed, if there is no cost placed on the act of theft that exceeds the cost of the item stolen, we would be creating an economic incentive to steal and theft would become the norm. The potential benefit (free stuff) would far exceed the cost (paying for the item), therefore, you are no worse off for attempting to steal the item than you would have been had you not attempted to steal the item.
But, as economists like to remind us, everything has a cost. The costs of this increase in theft and the countermeasures that would be needed to combat it would then be passed on to all consumers whether or not they are participating in this unethical behavior. Some otherwise ethical persons would see that they are being unfairly treated in this system and would decide that theft is the only way to keep from bearing the cost of others' theft and a new social norm would ensue. There is a reason that nations like China and India (ranked 27th and 46 respectively in the International Innovation Index (the U.S. ranks 8th)), who place less value on the enforcement of intellectual property rights, have lower levels of innovation despite the impressive levels of educational attainment and talent of their people.
The statutory damages clause of our Copyright Act is an indication of the value we place on innovation and creative endeavors. Statutory damages attempt to place a cost on the act of the theft itself and thereby deter such behavior and encourage innovation and creativity. To state otherwise, as Mr. Reid does to much applause and many laughs, is to not understand the issue, to distort the facts, and to spread misinformation. It in no way lives up to the TED Talk's mantra of presenting "ideas worth spreading."
There's actually an additional and much stronger argument in favor of Statutory Damages that you didn't make. That is that in every case when someone was sued by a record company, they weren't sued just for downloading. In fact, if all you do is download music, you could never get sued because you could never get caught. Indeed, it could be argued that merely by downloading, you haven't made a copy (which is made on the host's computer) and thus didn't infringe. Everyone who has ever been sued or threatened with suit has made their music library available for downloading by others. That's how you get caught and why you get sued -- not because you downloaded some songs worth $.99-$1.29 each but because you let the entire world come to your computer and take those songs for themselves. 99% of people who download have no idea that that is happening (your music library was shared by default in Kazaa and other peer-to-peer clients) and no one has any idea what or how many copies were downloaded from the user's machine. Thus the suits aren't for downloading the individual songs, but for allowing others to download your songs. Since the number of downloads from a user's machine is always unknown, statutory damages can never apply.
ReplyDelete"That is that in every case when someone was sued by a record company, they weren't sued just for downloading..."
Delete"...Everyone who has ever been sued or threatened with suit has made their music library available for downloading by others."
There is a logical fallacy in your reasoning.
To be able to download the "free" music (right or wrong) someone has to make their library available. Your argument that it is people who are making their libraries available, and not those downloading, that get sued does not make any sense. If noone makes their library unavailable then there will be no source to download and they will not be any "illegal" downloads. You cannot separate the two and speak as if one can be done independent of the other, ergo (by your reasoning) individuals just downloading items for their personal use are not the ones the law is after.
If we were to take the argument further, it would be the individuals making their libraries available that should not be bothered. It is not criminal to leave your belongings out in public (whether you own or are just licensed to use them), and you are not responsible for any individuals who happen to decide to "steal/pick" the items. At most I can see allegations of criminal negligence but that would not even stick.
I watched that Ted talk as it was tossed around facebook. Yes, I chuckled a bit, even though some of my income comes from music royalties. to me, (and many songwriters / arrangers / composers)the most offensive phrase that kept coming up was the word "CONTENT". "we're selling "content" as if it cereal in a box. It is the imagination, ingenuity, and ideas of a creative person. Period. It is not just "content." Your statement: "There is a reason that nations like India and China, who culturally do not value intellectual property rights, have very little innovation despite the impressive level of educational attainment and talent of their people." should speak volumes to those with open minds. Thanks. TM
ReplyDelete"There is a reason that nations like India and China, who culturally do not value intellectual property rights, have very little innovation despite the impressive level of educational attainment and talent of their people."
DeleteA specious argument. Assuming there is correlation, you have not shown causality
I am simply pointing out the more communal nature of those cultures and the impact that nature has on innovation. There is support in the literature for the thesis that a strong correlation between societal norms regarding property and innovation exists. The policy makers in China and India have approached increasing homegrown innovation by strengthening their IP laws. To attempt to catch up to the U.S. they have, along with other countries like Russia, attempted to obtain innovation through other means. Here are a few sources, but by no means exhaustive of this rich topic: http://www.nbr.org/publications/element.aspx?id=520
Deletehttp://www.npr.org/2011/11/03/141997331/china-russia-top-list-of-u-s-economic-cyberspies
Ken: Having been to several TED conferences and reading your summary, it is not surprising to me that a presentation on "Copyright Math" would be presented as comedy. The TED attendees have this notion that whatever they put on the web should be for them to make money on, and to hell with the creators. The Silicon Valley/Venture Capital community is not interested in protecting the rights of artists, only in lining their own pockets.
ReplyDeleteNobody denies there are damages. The TED talk points out, correctly, that the industry is using STUPID numbers to completely overstate the problem.
ReplyDeleteYou assume that filesharers should be sued in the first place. Every major study shows that filesharing helps the bottom line of content creators.
ReplyDeleteIf the actual damage is $1 for the song plus I send it along to max 1.5 people(a common setting in a torrent program) then how is $200 minimum a reasonable fine for $2.5 worth of damages? In these cases you are also assuming that all parties would actually have paid if there was no free alternative.
The only fair thing would be to go after people who are making money from other people's copyrighted works. Free filesharing is so many steps removed from actual damages that it has to be protected by individual freedom.
You are also ignoring the fact that human beings are social animals. Sharing is one of the most important (and highly rewarded) traits. To try to stop people from spending their own time and money to share something with another person would be to try to make human culture inhuman. Sharing something with someone else is exactly what causes people to want to pay artists and want to share their own art with others. If you succeed in changing the culture then artists would have no money instead of the ever growing share that we can enjoy precisely because of the sharing that technology allows.
KJS - I disagree that "every major study shows that filesharing [sic] helps the bottom line of content creators."
ReplyDeleteThe results of these studies that you mention are simply not one-sided. There are contrary results from objective and respected researchers on both sides of the debate. (c.f., Liebowitz, S., et al., "Economists Examine File-Sharing and Music Sales" found at http://www.utdallas.edu/~liebowit/intprop/MIT.pdf and Martikainen, E., "Does File-Sharing Reduce DVD Sales" found at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1742443).
Also, the quantitative study of file-sharing's impact on the creative industries is in its infancy. It is common in new fields of study, where researchers have just begun to gather data and test hypotheses, that results often conflict and experiments require repeated replication to test validity. We are simply to early in this process to give too much weight to the small body of research that support either of our positions.
Also you must remember that the music industry has had a long history of using a model of sharing to drive sales -- we call it terrestrial radio (also known as AM/FM radio). So in this sense I agree with you that some level of sharing can indeed spur sales. But digital file-sharing is drastically different for a number of reasons.
One such reason is that if you cannot differentiate your product, then you must sell it cheaper to compete in the marketplace. This is a basic tenant of competitive advantage theory. But a digital download is a digital download -- there is no difference between a legal one and an illegal one. The digitization of media has created a situation that differentiation of the end product is difficult if not impossible.
Another reason digital file-sharing is different is that there are very little transaction costs to file-sharing. Other types of sharing usually require some level of effort that acts as a cost (i.e., barrier) to sharing. These costs are usually referred to as transaction costs and will often act as a barrier or restraint on action. But digital file-sharing is so easy, there are no real effort barriers to it.
Regarding your statements that my arguments would somehow "make human culture inhuman," I am in no way trying to dehumanize people nor am I ignoring our social nature. (I have a masters degree in theological studies from a well respected divinity school and keep such things at the forefront of my thoughts.) I think the act of sharing is very altruistic and demonstrates humankind at its best. But you are advocating sharing something you have no right to share. You own a copy of the song, not the copyright. You are confusing your personal property with the author's intellectual property. You are giving away something that does not belong to you when you "share" in this way. Respect of others property, property that they created through effort and skill, is a very human trait also.
Lastly, my post was really intended to raise the issue that I believed that Mr. Reid's presentation does more harm than good. You may be right about file-sharing and I may be wrong. I believe that intelligent minds can differ on how best to solve problems. But, we seem to find ourselves in a time where funny rhetoric, spin, misinformation, and oversimplifications have replaced the respectful and intelligent exchange of ideas. I believe that Mr. Reid's presentation represents the former rather than the latter.
Ken: As one who earns his living creating and selling copyrighted intellectual property, I am pleased with your thorough and insightful overview. Seriously, I am. And I am sympathetic with your observation that "...misinformation, and oversimplifications have replaced the respectful and intelligent exchange of ideas."
ReplyDeleteAs a humorist, however, I want to encourage you, as gently as necessary, to try and appreciate the bold satire in Mr. Reid's comic presentation. That's what comedians do - the ones who aren't simply getting laughs from reading the daily headlines straight off the page (and likely in the process violating the spirit if not the letter of the Fair Use provisions of the copyright laws). Of course Reid has taken things ridiculously out of context to come up with his punch line: The $8 Billion iPod. That was the joke. Everybody in the room got it, and laughed in sincere appreciation of his clever sleight-of-calculator performance.
Some of us were so intrigued with the genesis of his humor, that we tracked down more of the facts, eventually encountering, among other posts, your thoughtful commentary. If it takes Mr. Reid's humor to keep the conversation going, more's the better.
@dsart: I do appreciate Mr. Reid's comic presentation. His delivery is spot on and his satirical constructs are engaging and very funny.
DeleteAs a teacher of IP law, however, my concern about his presentation persists. We as a culture seem to be creating a perception of IP law that is so divorced from the truth that it is distorting the public debate and the actions of the masses.
On the one hand, I believe that IP law is being strengthened in the wrong ways (life of the author plus 70 years is an over-incentive for creation and thereby harms the entire system); yet, it is becoming socially acceptable to steal IP from the internet. Rhetoric such as Mr. Reid's, and I see it more as rhetoric than satire, fuels passions not reason. We simply need more reason in this policy debate. In essence we need more people like you -- your post is well taken and adds much constructive thought to my blog. Thank you!
To further examine the need for statutory damages, let us look at one more illustration from the world of retail sales. If you were to walk into a store, take an item, and walk out without paying for it, what are the potential risks? If caught, you face criminal prosecution that could result in a fine that exceeds the value of the item stolen, time in prison, and a permanent criminal record. Why have such laws? The answer is obvious: if the only risk to theft was paying for the item you attempted to steal, most people would have an incentive to attempt to steal the item first and then just pay for it if they were caught. Indeed, if there is no cost placed on the act of theft that exceeds the cost of the item stolen, we would be creating an economic incentive to steal and theft would become the norm. The potential benefit (free stuff) would far exceed the cost (paying for the item), therefore,you're no worse off for attempting to steal the item than you would have been had you not attempted to steal the item.
ReplyDeleteJust to make sure copyright law isn't some sort of outlier, could someone please cite a reference in U.S. Law, outside copyright, where statutory damages for "theft" are 150,000 times that of the actual damages. I've heard of trebled damages, never sesquimillenial damages.
But, as economists like to remind us, everything has a cost. The costs of this increase in theft and the countermeasures that would be needed to combat it would then be passed on to all consumers whether or not they are participating in this unethical behavior.
ReplyDeleteWhere isn't that the case? The difference here is that the content providers haven't been deprived of any real property, so there is no increased cost due to theft, only cost due to countermeasures. By this argument, if the content provider's cost of countermeasures is zero then the marginal cost of increased piracy is zero.
Good one on the statutory damages, Ken!
ReplyDeleteBut what's up with the 58 billion annual loss the movie industry claims? Can someone explain that one?
Or the 373'000 jobs lost?
These numbers do seem quite ridiculous.
Hi Ken,
ReplyDeleteI find your article interesting, but somewhat flawed in its logic. Let's go though a few points.
"(1) Actual Damages: which is actually the precise amount of harm from an infringement -- currently this would be somewhere between $.99 and $1.29 for a digital song."
Actually, the actual damages could be far less than either of those figures, and could easily go high into the negative numbers, because 1. the downloader may be somebody who never would have bought the music at any price whatsoever, and 2. by them having it, and playing it, they are giving free advertising and publicity to that music, and encouraging legal sales from their friends and acquaintences. So if even 1 friend hears and downloads one copy, the damages are $0. If 10 do that, or if it goes viral, the "damages" could easily go into the negative thousands or more. As a matter of a fact that's exactly how performers like Justin Bieber became so rich and successful. The vast majority of his early downloads were all free, and there still are hundreds of millions of free views/downloads/listens that can be attributed to him.
As Cory Doctorow has clearly and repeatedly explained, what is death these days, is complete obscurity, not fame. People pirating (I shouldn't even use the word pirate in this context but I'll stick with it for the sake of simplicity) music are allowing somebody who has not been fortunate enough to win the lottery or get carried by a large music conglomerate based on last century's business models to get much needed publicity. Each copy that is out there is a free advertisement for the work, which brings me to your inaccurate metaphor about shoplifting.
When a person shoplifts, they TAKE AWAY a physical good thus PREVENTING the store from EVER profiting from the sale of that item, when there is IP piracy, a COPY is made, and the "original," is left unscathed. as a matter of a fact, there isn't even such a thing, in that context, as an "original," anyway.
Then you ask, "where would we be if there were no statutory damages?"
Well, There is rampant piracy every day right now, and yet the music and creative field is at its most vibrant in the history of the world. Even the outdated unnecessary record industry is doing great, but it most certainly doesn't have to anymore, with the likes of iTunes, Amazon, tunecore, myspace, facebook, pandora, etc. where artists can now appeal directly to users without the extraneous middle man taking the lion's share of the money.
Have RIAA lawsuits "helped artists?" not really, because they have taken their winnings for themselves. I have yet to hear about any actual artists who got anything from all that money the lawyers have been winning making a mockery of our legal system by exploiting lobbyist driven copyright law that needs to be completely either trashed or revamped to reflect the fact that over 70% of the population have "pirated," and do so because they at least do not see anything wrong with it.
Laws that go against the behavior of the masses in favor of the oligarchs have historically been the basis of revolutions.
It is amazing what a little thought and logic does to the whole house of cards that is the justification for oligarch friendly copyright law. We need laws based on empirical evidence, not on what "seems to feel good," to those legislators who have not really thought things out very carefully.
I meant "Analogy," instead of "metaphor," above. thanks.
ReplyDelete