Copyhype

“The law needs to keep pace with technology. There’s no point in talking about broader copyright policy if exclusive rights can’t be enforced. … I always start with the enforcement issues online because if there isn’t effective enforcement possibility, then there is no meaningful exclusive right and then copyright doesn’t work.”

That was new US Register of Copyrights Maria Pallante, speaking with Ars Technica last week. Artists and creators recognize her words as common sense. But there are those among the critics of copyright law who would argue every point she mentions.

Why should we worry about enforcement, they might ask. There are groups who express concern about the rights of creators but oppose any attempts at enforcement, whether through new legislation that attempts to keep pace with technology, voluntary agreements that attempt to make existing law work more effectively, or even individuals who attempt to assert their core rights granted by copyright law.

There are those who go even further and question the need for a broader copyright policy at all. Surely the internet and digital technology has rendered copyright obsolete.

I agree, however, with Pallante. It’s important, during these times when the ways in which art, media, and content are produced and accessed are rapidly changing, to ensure that the concept of copyright remains vital. That’s not to suggest that the focus should only be on enforcement. There are numerous factors that play a role — from pricing, to building sustainable business models, reducing the complexity of licensing, and many others.

But at the core of the “copyright question,” if you will, is a choice: a choice between what end results a society wants to encourage.

Copyright as a Choice

Nobel Prize winning economist Douglass North discusses this choice in his Prize Lecture:

The organizations that come into existence will reflect the opportunities provided by the institutional matrix. That is, if the institutional framework rewards piracy then piratical organizations will come into existence; and if the institutional framework rewards productive activities then organizations – firms – will come into existence to engage in productive activities. ¹“Douglass C. North – Prize Lecture“. Nobelprize.org. December 9, 1993.

In their seminal work on the economics of copyright law, William Landes and Richard Posner talk plainly about how these two different incentive choices would play out:

Without copyright protection, authors, publishers, and copiers would have inefficient incentives with regard to the timing of various decisions. Publishers, to lengthen their head start, would have a disincentive to engage in prepublication advertising and even to announce publication dates in advance, and copiers would have an incentive to install excessively speedy production lines. There would be increased incentives to create faddish, ephemeral, and otherwise transitory works because the gains from being first in the market for such works would be likely to exceed the losses from absence of copyright protection. There would be a shift toward the production of works that are difficult to copy; authors would be more likely to circulate their works privately rather than widely, to lessen the risk of copying; and contractual restrictions on copying would multiply. ²Landes and Posner, An Economic Analysis of Copyright Law, 18 J.Leg.Stud. 325 (1989).

It really is as simple as that. Yet one will hear a whole host of ills supposedly caused by copyright. Obviously, copyright is not perfect; nothing is. But it’s wrong to think that weakening copyright protection will, as if by magic, cure this host of ills.

The Choice for Emerging Economies

Earlier this year, the Social Science Research Council released a report on Media Piracy in Emerging Economies (MPEE). ³Some have hailed the report as effectively establishing that enforcement of IPR’s in emerging economies doesn’t work, but that is an overly superficial reading of the report. The report describes, using media reports, informal interviews, and focus groups, the accessibility and consumption of pirated works in several countries. What conclusions it can derive from these observations point toward the idea that these issues are multifaceted.

Without any context, a reader could readily assume that the choice of piracy over copyright would be far more beneficial. In the short run, they may be correct in a strictly economic sense — though in a strictly economic sense, natural disasters are beneficial in the short run since they lead to lots of new building projects afterward.

But in the long term? Choosing to incentivize piracy over copyright is detrimental, not only to creators, but the general public as well.

When it comes to emerging economies, it’s especially important to make note of this. Encouraging the development of copyright in these economies often comes from foreign countries with established cultural and media production. It’s often assumed that this encouragement is a one-way street: foreign entities are the only ones to benefit from stronger copyright regimes in emerging economies.

Not so. In fact, piracy usually has the effect of stalling the development of local artistic and creative firms.

The US was once an emerging economy, and its history provides an example of this effect. George Haven Putnam describes one common pattern of cultural development in emerging economies like the US, and ancient Rome before that:

The literary life of the American Republic has, of course, during a large portion of its independent existence, as in the old colonial days, drawn its inspiration from the literature of its parent state, Great Britain. There has been, in this instance, as in the relation between Rome and Greece, on the part of the younger community, first, an entire acceptance of and dependence upon the literary productions of the older state; later, a very general appropriation and adaptation of such productions; still later (and in part pari passu with such appropriation), a large use of the older literature as the model and standard for the literary compositions of the writers of the younger people; while, finally, there has come in the latter half of the nineteenth century for America, as in the second half of the first century for Rome, the development, in the face of these special difficulties, of a truly national literature. For America, as for Rome, this development was in certain ways furthered by the knowledge and the influence of the great literary works of an older civilization, while for America, as for Rome, the overshadowing literary prestige of these older works, and the commercial difficulties in the way of securing public attention and a remunerative sale for books by native authors in competition with the easily “appropriated” volumes of older writers of recognized authority, may possibly have fully offset the advantage of the inspiration. ⁴Authors and their public in ancient times: a sketch of literary conditions and of the relations with the public of literary producers, from the earliest times to the invention of printing, George Haven Putnam, pg. 68 (1893).

James David Hart, in his own history of American publishing, describes the same effect of piracy on American authors:

Samuel Goodrich, the Boston publisher, estimated in 1820 that three-quarters of the books Americans bought were of English origin. In the early years of the century, bookdealers opposed a tariff on printed matter because America could not furnish enough books for the expanded reading public. As printing became a big business, they fought against the importation of English books but still clamored for the works of English writers because, without copyright and royalties, they could be sold at better profit. Either way, English authors were favored. ⁵The popular book: a history of America’s literary taste, James David Hart, pp. 67-68 (Univ. of Cali. Press 1950).

Basically, foreign books are better, both in quality and desirability, and because of piracy, they are as cheap or cheaper to purchase than domestic books.

Hart goes on to show how US publishers finally gained the upper hand:

More authors came to public attention with the growth of interest in the novel, many of them Americans after the International Copyright Law of 1891 for the first time made their works no more expensive to issue than those by foreigners. After 1894 more novels, though not always more popular novels, came from Americans than from Europeans. ⁶Hart pg. 185.

The US experience from 100-200 years ago is not an isolated one. The same holds true if we’re talking about a country on the other side of the world in modern times. Scholar Jiarui Liu recently examined the effects of piracy on domestic musicians in China:

[T]he findings here suggest that a high level of piracy could have profound effects on the profitability, applied business models, and creative processes of domestic musicians. In many cases, piracy of foreign works could be more devastating to domestic companies than to foreign companies. Because the competition from low-priced pirated works both online and offline undercuts stable income from royalties, Chinese musicians have witnessed the entire music industry becoming increasingly dependent on alternative revenue streams such as advertising, merchandizing, and live performance. The pressures of paid appearances and extended tours have started to squeeze the time that artists need to spend on music production. The alternative revenue streams also force many music companies to abandon traditional album contracts and operate in a way more like talent agencies that control all aspects of an artist’s career. Music companies are inclined to sign talents at a very young age with a long-term agency deal in order to exploit the full value of artists in the advertising market. In addition, the need to attract sponsorship opportunities puts more emphasis on non-musical qualities, such as a fresh appearance and healthy public image, which to some extent marginalizes “pure” musicians who have less value in those alternative markets.

Most importantly, as copyright piracy obstructs the communication of consumer preferences to musicians, an increasing number of musical works are created to accommodate the tastes of entrepreneurs (e.g., sponsors and advertisers) rather than those of average consumers, and this has caused a fundamental shift in the creative process of the Chinese music industry. Although entrepreneurs should arguably be willing to take whatever is popular among music fans as a draw to their own products, the expectations of entrepreneurs and consumers do not always meet in a dynamic market setting. For this reason, the interests of less commercial artists and new artists are more likely to be compromised. ⁷Jiarui Liu, The Tough Reality of Copyright Piracy: A Case Study of the Music Industry in China, 27 Cardozo Arts & Entertainment 621, 623-24 (2010).

It’s not only local creators who are harmed by the piracy of foreign works; open-source software suffers from the piracy of commercial software.

The MPEE report notes that in South Africa, where local music production revolves around a small handful of professional software packages:

Because the production community is relatively small and interconnected, shared production techniques and training introduce strong network effects in the choice of products. Producers tend to use software that has been ‘vetted’ in their communities, and these choices tend to self-reinforce as producers and musicians exchange knowledge. In our interviews, open-source alternatives, such as Audacity, did not even register. ⁸Pg. 122.

In emerging economies, the problems piracy causes for open-source alternatives are magnified. Louis Suarez-Potts, the community manager at Sun Microsystems Inc. for the OpenOffice.org open-source project, was asked about these problems:

“Piracy hurts open source because open source asks people to help give back and contribute code, but they say, ‘Why should I help? I have Microsoft Office for free,'” Suarez-Potts said.

Around the world, he said, many national governments are realizing that this hurts them, too, because their citizens are then consumers of stolen technology rather than active participants in open-source communities that can help people gain technology skills that benefit workforces and nations.

By cracking down on software piracy, nations around the globe are starting to see that they can help themselves dramatically by encouraging innovation and creativity — as well as job growth and richer economies — through open-source development, he said. ⁹Todd Weiss, Software Piracy Hurts the Open-source Community, Too, ComputerWorld, July 23, 2008.

As these examples show, the effects of piracy are felt by more than just those whose works are pirated. When it comes to debates about copyright and piracy, it’s important to keep in mind the core of the “copyright question” — the choice between what activities we want to encourage.

With that in mind, Maria Pallante is entirely correct. There are many questions concerning broader copyright policy, but without effective enforcement, copyright simply doesn’t work.