Why PROTECT IP/SOPA Is The Exact Wrong Approach To Dealing With Infringement Online

from the you're-getting-the-problem-backwards dept

As the various "battle lines" are supposedly being drawn between the entertainment industry and the tech industry in the fight over PROTECT IP/SOPA, it's worth pointing out that nothing is further from the truth. For decades, the tech industry has regularly supplied all sorts of useful new technologies to the content industry that has allowed them to make more money, while decreasing their costs of production, distribution and promotion. Of course, the problem is that every time the tech industry does so, the entertainment industry flips out and misinterprets efficiency as some evil form of "piracy." That's because, as an industry, the entertainment industry has always focused on keeping things inefficient and on making money in the complexity of inefficiency. Making things more efficient messes with that business model... even if it always (always!) opens up greater opportunity.

The latest technological problem is the internet, which is, by default, the world's greatest copy machine. It's also a phenomenal tool for creation, promotion and distribution of works. It's also a fantastic tool for monetization... but not in the traditional ways.

The industry, of course, freaks out and declares that the problem is "piracy." And, let's be totally clear here: "piracy" is a problem for the legacy industries that it disrupts.

But what kind of problem?

The industry has interpreted it as a legal problem, or an enforcement problem. However, there's little evidence to support this assertion. In fact, there's a tremendous amount of empirical evidence that it's not an enforcement problem at all.

Instead, it appears to be a business model problem. The money being spent by fans continues to rise, not shrink. It's just that it's going to different places than it did in the past. That suggests a business problem for the legacy players who have had their businesses decimated. So, again, let's agree on a fundamental point: "piracy" is absolutely a problem for the legacy players. The money is still being spent, but it's a business problem in that the money is shifting to other venues.

Given this simple realization (piracy is a business problem, not a legal/enforcement problem), you can pretty quickly understand why SOPA/PROTECT IP is the exact wrong approach that will actually do more harm to the entertainment industry. That's because what the entertainment industry needs to adapt and change its business are the new platforms that make it easier for them to make money. As we've seen over and over again, the most successful (by far) "attack" against piracy is awesome new platforms that give customers what they want, such as Spotify and Netflix. Services like those have been shown, repeatedly, to be the single best way to cut down "piracy," because they offer something better, something more convenient and with better features.

Unfortunately, SOPA/PROTECT IP actually makes it much harder and much more expensive to develop the next generation of platforms that will help to solve the business problem the entertainment industry faces. The main "enforcement" mechanism in these bills is to put liability on third party service providers coming from the tech industry, undermining the safe harbors of the DMCA and the legal framework that has allowed tons of important internet platforms to evolve. It makes it so that next generation of Spotifys and Netflixes can't even get started. The liability and the risk is much higher. Rather than two guys in a garage coming up with the next great thing, they need two guys and a dozen lawyers. That makes the garage crowded. And expensive. And it means the venture capitalists, who fund innovation, will be a lot less likely to invest.

The end result of attacking a business problem as if it were a legal problem is that it leads to attacking the key thing that the entertainment industry needs to deal with the problem created by piracy. In other words, by misunderstanding the nature of the problem, the entertainment industry is (yet again) aiming the weapons that the tech industry has given them right at their own feet.

Filed Under: business problem, innovation, legal problem, piracy, protect ip, sopa