Sunday, December 18, 2011


In a matter of days, it looks likely that congress will pass SOPA (the Stop Online Piracy Act), another gift to special interest groups from motion picture and recording industry.

The bill targets sites like Sweden's The Pirate Bay, Hong Kong based MegaUpload or the Dutch site TorrentFreak requiring search engines, discussion forums, blogs and DNS providers to censor access to these types of sites prompting comparisons to China's great firewall.

The technical cluelessness on display in the congressional hearings is embarrassing, but, really, who expects anything different? Leading engineers have petitioned in opposition on the grounds that this legislation imposes serious burdens on infrastructure providers and probably won't even work.

How big a problem is this?

Technical issues aside, we should recognize that bootlegging movies or music is a fairly low-cost crime as far as society is concerned. Comparing it with illegal drugs, as The Economist does, is a joke when you think about lives wrecked by meth or crack or the ongoing drug war in Mexico. Piracy seems pretty benign next to the consequences of financial malfeasance in recent years, but now we're talking radical crazy talk.

The biggest consequence of piracy is that an artificial monopoly is less lucrative than it would otherwise be. Legal monopolies have a long history of abuse. They're a great way for politicians to give out favors and ask favors in return. In a textbook specimen of double-speak, any recognition of this economic and political reality is called sympathetic to piracy, something like being called a pinko in the McCarthy era.

A couple definitions

Rivalry is an economic concept describing whether the use of a good by one party precludes its use by another. The distinction being made here means that a million people could listen to Lady Gaga's latest tune at the same time. A million people could not ride in my car or live in my house. My house and car are rival goods. Songs are non-rival.

For every copyrighted work not pirated, how many would be purchased? My guess is that this ratio is low. I'm pretty sure nobody has convincingly shown otherwise. For the items not purchased, the utility of consuming them is lost, with no corresponding gain to the monopolist. This is called a dead weight loss, meaning some people could be made better off without making anyone else worse off, but we fail to do it. This loss is the music/movies/etc that wouldn't be enjoyed if they weren't pirated.

Willful ignorance of these simple but important ideas bugs me a lot more than bozo-grade technical knowledge.

Which is worse, the problem or the solution?

Now, it's important that creators of valuable intellectual property make a decent living. Few question that. What we're talking about is whether publishers should put up toll booths on the road between the consumer and the producer, and whether the government should enforce the use of these toll roads, when technology has made such choke points obsolete. Since distribution is now practically free, is it a good idea to create costly and ultimately ineffective legal barriers to replace the physical barrier that no longer exists?

Let's total up the costs. There's dead weight loss. There's a loss to innovation and culture which suffer when the interchange of ideas is impeded. There's the technical costs of implementing measures like SOPA, (and DRM and copy-protection before it), which tend to fall on paying customers.

To be fair, a partially market based means of valuing intellectual property and rewarding its creation is not to be dismissed lightly. Blocking access to download sites will result in some revenue trickling down to deserving artists. Too bad, no one speaks about the issue in terms of balancing benefits against costs.

The real problem

[The nightmarish SOPA hearings By Alexandra Petri, Washington Post]

It's shameful that congress is so eager to shill for corporations and their lobbyists rather than protect the interests of the people they are elected to serve.

Update:SOPA and it's sister PIPA (the PROTECT IP Act) have been temporarily shelved, thanks to an enormous public outcry and the opposition of Oregon Senator Ron Wyden. Clay Shirky sums it up, like so:

We should delight in the stand we’ve taken in favor of things like, say, notifications, and trials, and proof before censoring someone, but we should get ready to do it again next year, and the year after that. The risk now is not that SOPA will pass. The risk is that we’ll think we’ve won. We haven’t; they’ll be back. Get ready to have this fight again.

A political economy

A recent piece in the Economist ( A new anthology of essays reconsiders Thomas Piketty’s “Capital” , May 20, 2107) ends with these words: &q...