The Magazine

Pirates of the Future

Can intellectual property still be protected without invading privacy?

Jul 2, 2001, Vol. 6, No. 40 • By JAMES D. MILLER
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INTELLECTUAL PROPERTY RIGHTS will soon come under increasingly severe attacks from Internet pirates. These digital assaults should concern all those who believe that secure property rights provide the foundation for a prosperous society. Unfortunately, the best methods for protecting intellectual property should be anathema to conservatives.

The Internet already makes it easy for the well-wired to copy music illicitly. The likely growth of broadband Internet access will soon make it possible for many to pilfer movies as well. Anything we can watch, read, or listen to over our computers can be copied. Limited Internet connections currently make it time-consuming for many of us to download music, and nearly impossible for most of us to download movies. But this barrier against theft will soon crumble as cable and telephone companies rapidly increase Americans’ Internet access speeds.

Napster showed that people who wouldn’t even consider shoplifting would readily download pirated music. I once asked my intermediate microeconomics class at Smith College if morality would prevent any of them from using the Internet to steal copyrighted content. Out of about 40 students, only one confessed to unfashionable ethics. (Many colleges did prevent their students from using Napster, not because it was being used to violate copyright laws but rather because its overuse was clogging up their computer networks.)

If Americans are willing to steal intellectual property, and if increased access speeds will soon enable us to do so almost effortlessly, then a large part of our entertainment-based economy is in peril. Just as people have less incentive to work if high tax rates appropriate the fruits of their labors, so media companies would have less incentive to produce intellectual property if it is easily stolen.

In response to Internet piracy, the gut reaction of most conservatives would probably be to defend the imperiled property rights. Alas, to protect the property rights of media companies, the privacy rights of individuals would have to be sacrificed. Sure, for-profit firms like Napster can be sued for copyright infringement and either induced to mend their ways or forced into bankruptcy. But stopping individuals from violating copyright laws is much harder.

Imagine millions of computer users sharing files directly from each other’s hard drives. This is the essence of peer-to-peer computing, and it may become a big part of the Internet’s future. With peer-to-peer computing, users could search through other people’s hard drives for songs or movies without needing to utilize a central firm’s computer. There would be no Napster-like company for copyright enforcers to attack. To stop piracy in a peer-to-peer world, media companies would have to target individuals.

In a sense, catching copyright offenders is like catching drug sellers. When illegal drugs are sold or a song is illegally copied, there is no victim present to report the crime—as there would be in, say, a car theft or armed robbery. Nabbing copyright offenders, therefore, requires secretly watching them.

To do this, law enforcement would need laws that force computer users to "keep their blinds open" so that monitors could ensure they weren’t violating copyright laws. Imagine a group of college students who set up their computers so they can all copy each other’s files, without allowing access to people outside of their circle. In this situation, no one would be able to tell if these students were illegally copying movies. The only way to watch them would be to make it illegal for groups to shut out copyright monitors.

But even if a monitor had access to the students’ hard drives, the students could still encrypt their movies. Then the only way piracy could be stopped would be to ban encryption. Totalitarian governments would undoubtedly restrict peer-to-peer usage to prevent political debates. Unfortunately, the United States might have to do the same to protect property rights.

And even if individual copyright violators were caught en masse, what could be done to them? It would be politically infeasible to impose jail terms or crippling fines. It would be unwieldy for media companies to sue a massive number of copyright violators for small amounts. Perhaps, however, we could have reverse class action suits where one plaintiff sues many defendants. This would allow trial lawyers to feast on millions of American copyright violators.

Internet service providers like America Online could be held responsible for the copyright infringements of their users. But this would just shift the problem to these providers and force them to monitor users. If they were unable to stop most piracy, then they would presumably be sued and forced to pass on their legal costs to customers. This could actually limit copyright violations by making Internet access too expensive for many Americans.

Conservatives unhappy with the current state of popular culture might welcome a piracy-induced decline in music and movie production. They should beware, however, because Internet piracy might soon strike books. As computer screen quality increases and e-books become more popular, many people will be downloading books. Internet piracy could threaten the market for the written word.

If piracy can’t be stopped, then government subsidies might be needed to make the commercial production of movies, books, and music profitable. Many types of intellectual property would then become like public parks: free goods subsidized by the government. This would change what kinds of products were produced. Movie studios would make movies to please the bureaucrats who distribute the subsidies, without regard for how much the American public enjoyed their product.

If government subsidies were not provided, then media companies might be able to profit only by selling product-related merchandise or embedding commercials in their content. A future Star Wars movie might revolve around whether a Jedi Knight could pass the Pepsi challenge. Of course, hacker pirates could deprive this film of its Pepsi revenue by altering the movie and digitally renaming the Jedi Knight’s task.

When Odysseus was returning from the Trojan War he faced a tragic choice. He had to sail past either Scylla, a beast with six snaky heads, or Charybdis, a whirlpool monster that swallowed ships whole. Odysseus chose to save most of his crew and went past Scylla, losing one man to each head.

The United States faces a similar dilemma in deciding what to do about Internet copyright infringement. There will be far-reaching negative consequences regardless of our choice. By necessity, our goal must be to limit the damage rather than find an easy solution.

James D. Miller is an assistant professor of economics at Smith College.