I recently wrote a blog entry arguing against SOPA/PIPA, the proposed legal changes that would dramatically constrict the Internet as we know it. This post will update a bit of information on this topic.
First we see that file sharing and illegal downloads are not really theft as we classically define theft. Without question, illegal file sharing and copyright infringement are illegal - but simply aren't theft. Additionally, we find some discussion at Freakonomics extending the Times Op-Ed. Virtual goods (and by extension knowledge goods) do not share the same economic properties as physical goods.
Further, there is emerging evidence that cracking down on piracy doesn't increase sales of virtual goods. Looking at results in France, where a three-strike law fighting online piracy has been in place for seventeen months, piracy is down - but sales are not up.
Evidence suggests that free access sites are seeing some increased traffic, but the direct sales of music have not increased. I would like to take some issue with the review of French piracy though. If Beezik and Spotify are seeing noticeably increased traffic following the crackdown - indirect revenues should be impacted.
Essentially, stopping piracy may not increase sales of music or video. But, stopping piracy appears to increase use of other business models. These business models (analogous to radio in the pre-Internet era) do pay licenses back to the IP holders and typically generate their own revenues from advertisements to the "free loaders."
So, for those keeping score at home:
- File sharing may not be theft as we know it, but
- Economic damages do manifest from IP theft, however
- Those damages do not relate in any way to direct sales, and
- The real economic damages are probably felt by third party intermediaries who might otherwise provide the content "for free" via advertising revenue.
All the same, we need a massive overhaul and international standardization of intellectual property rights and enforcements.
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