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Thursday, August 22, 2002

The Miller Fisking-Let's start with this Tech Central piece from two weeks ago, where Sonia Arrison critiqued the Peer to Peer Piracy Protection Act. The act allows companies to hack into individual's computers in order to prevent Napster-style copying. At the time, I commented "What part of 'unreasonable search' don't they get?" The two sheriff’s deputies (in my MBA MIS class) that I shared that with later that night were shaking their heads in disbelief, agreeing with my take. Now, James D. Miller, a good U of Chicago Ph.D., is siding with the industry in his reply to the Arrison piece.
Hollywood wants to invade private computer networks so it can unleash viruses against copyright thieves. In a recent Tech Central Station article, Sonia Arrison argues against Congressional efforts to grant Hollywood hacking rights. Alas, without such rights, peer-to-peer networks will decimate the for-profit production of movies, music and even books.
Last we've checked, CD buying has gone up among MP3 swappers, with downloads acting as shareware. Not everyone ponies up, but the record companies are selling more product.
Peer-to-peer networks pose a vastly greater threat to intellectual property than Napster did. Internet thieves copy content from each others' hard drives. With Napster, these criminals needed to operate through a centralized server. Peer-to-peer computing, however, allows thieves to exchange copyrighted content directly. Napster was like a single large open-air drug market that authorities could easily locate and shut down. Peer-to-peer pirating is analogous to having thousands of drug markets operating out of private homes.
The real difference was that with a central server, you can sue and shut down the server, as the industry did with Napster. Peer-to-peer requires suing individual users, which will create bad PR.
To hinder peer-to-peer thieves, someone must hack into their network homes. Unfortunately, without monitoring, you can't identify which networks thieves use to exchange copyrighted materials. Consequently, to fight peer-to-peer piracy, Congress must curtail everyone's cyber privacy and allow copyright holders to access and sometimes disable private networks. While we should regret any loss of privacy, fighting crime often requires reducing the privacy rights of innocents. For example, our privacy is violated when we walk through a metal detector or are searched by airport security. Indeed, NASA may soon even scan the brains of airline passengers in efforts to detect terrorists. Surely, scanning hard drives is far less objectionable than scanning brains.
Metal detectors are used to protect lives, Dr. Miller. It's one thing to try and stop the next 9-11 and saving hundreds or thousands of lives. That even most hard-core libertarians will grind their teeth and accept. Also, the areas where weapons aren't allowed are clearly marked-if you don't want to be searched, don't go into those areas. The difference between metal detectors and computer snooping is that we're going from saving lives to saving the record industry a few bucks and going from an accenting-to check in a few locales to a nationwide computer hunt. Also, we'll have companies rather than security guards doing the snooping. I don't think we'd like the metal detector thing quite as much if Time-Warner reps were coming into my house without a warrant at 2AM to search for weapons. The magnitude of the financial losses doesn't justify the trashing of Fourth Amendment.
Should we, however, pay the privacy price necessary to deter Internet piracy? Some have argued that content providers need simply lower prices to more successfully compete against illegal downloads. What price, however, would copyright holders have to charge to attract paying customers away from piracy? What price would I have to set to sell you my permission to speak English? I imagine readers of this article derive massive value from conversing in English. So, if you give me a mere $10, I will give you my permission to speak English. Obviously, you have the capacity to speak English independent of my permission, so only a fool would pay me my requested $10. What if I lower my price to $1, will you now purchase my permission? Again, since you can speak English for free, why would you ever pay for my consent regardless of how low a price I set? Similarly, if consumers can costlessly download copyrighted material, they should rationally never pay for legal copies. If you can costlessly obtain an illegal copy of a song, all the copyright holder really has to sell is his permission for you to listen. But, since it's permission you don't need, it's permission you shouldn't pay for.
That a fairly lame analogy, although I'd love to have the copyright to English™. In the computer realm, we have a rough equivilent called Windows. While bootleg copies of Windows are available, plenty of people still give Bill Gates his pound of flesh. Secondly, not everyone is computer-savvy enough to download copies of songs and burn CDs. Thirdly, some of us are actually honest. The fact that downloads are illegal will deter a lot of people.
Left unchecked, technology will further facilitate copyright theft. As broadband access proliferates, Internet users will be able to download stolen music and movies more quickly. Currently, books remain safe from peer-to-peer piracy because most consumers would rather read printed words than electronic text. When e-paper becomes as readable as physical paper, however, unrestricted piracy may destroy book publishers. If you can costlessly download any book you want in two seconds from a peer-to-peer network, why buy a legal copy?
E-paper's a ways off. Technology will also facilitate the purchase of copyrighted material, as people might buy e-books more easily that they might buy hard-copies that take days to physically deliver. Why would the E-book experience be any different from what we've seen in the CD/MP3 market?
Copyright holders would like to imbed copy protection technology in their products. A movie, for example, could contain a code allowing it to be played only on your hardware. Imbedded copy protection technology is foiled, however, if even one user creates and disseminates a clean and playable copy. In contrast, hack attacks on peer-to-peer networks succeed if they merely stop unsophisticated users from obtaining illegal copies. Furthermore, imbedded copy protection can never protect e-books since you can create a copyable e-book merely by scanning the text of a physical book.
And the publishing industry in the US is quivering over the bootleg book business today? If they are, I haven't seen much press on it. Some current CD can't be played on a computer and people don't like that. The industry can use copy protection at the cost of annoying their honest customer with extra hoops to jump through. If the lost revenue from pirating is greater than the lost revenue from ticking off the paying customers, then such copy protection will make sense.
In her article opposing Hollywood hacking, Sonia Arrison suggests that Hollywood need not fight peer-to-peer thievery because, as she correctly notes, "consumers will always be willing to pay market prices to be entertained." A market price is not the fair or reasonable price; rather it's the amount of money consumers must pay to acquire goods. But in a world of easy peer-to-peer piracy, the market price of movies, books and music is zero.
In a world of shoplifters, the market price of jewelry is zero. We don't live in a world of shoplifters. Internet file swapping may depress prices for swappable material- it seems to be doing the opposite. Even if file-swapping does depress prices somewhat, I don't think such economic losses warrant the trashing of the Fourth Amendment's protections against unreasonable searches. I though TCS was a libertarian joint; how'd this piece get posted here?

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