The Non-Problem Of Online Piracy

A blog about business and economics.
Dec. 15 2011 1:51 PM

The Non-Problem Of Online Piracy

The controversy over the Stop Online Piracy Act and Protect IP Act legislation pending in Congress have pretty overwhelmingly focused on free speech issues (see, e.g., James Losey and Sascha Meinrath in Slate eloquently making the case again) but I think it's worth calling into question the underlying economic premises here as well.

It's no secret that high-end income inequality has increased substantially over the past several decades. That's happening for a variety of reasons. One reason, however, is that the returns to being a superstar content creator are much much higher in 2011 than they were in 1981. That's because the potential audience is much bigger. It's bigger because the world's population is larger, it's bigger because many poor countries have gotten significantly less poor, and it's bigger because the fall of Communism has expanded the practical market reach of big entertainment conglomerates. At the same time, the cost of producing digital media content has fallen thanks to improved computers and information technology. Now step back and ask yourself why we have copyright in the first place. Well, it's because policymakers think that absent government-created monopolies there won't be adequate financial incentives to go out and create new content. That's not a crazy thing to believe. But the implication is that if globalization and technology drive the returns to content ownership up, we need less IP protection. Instead, we've consistently gotten more. Copyright terms have been extended. Copyright terms have been extended retroactively. We've added "anti-circumvention" rules. And now we're talking about SOPA and Protect IP. But why? What's the policy problem being addressed here?

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Obviously the people who own copyrights would like to make more money. But should we care? Are we worried that movie stars aren't getting paid enough? They seem to get paid plenty. New albums are released. People write books. There are plenty of shows to watch on television. There are lots of great new video games and other kinds of software to use. Nor is there any reason to believe that perfect copyright enforcement is a desirable public policy goal. Perfect enforcement would imply massive deadweight loss. In the absence of serious evidence that the public is suffering from some kind of content drought, I think we have ample reason to oppose new strong IP rules even without any of these other concerns.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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