Piracy Bill Misses the Point

Congress is pushing through a bill that would require domain hosting companies (people who register web addresses) to block US users from pirating sites. If the sites are located overseas then the bill would force ISPs to block access to the sites.

I don't necessarily advocate piracy outright, but when government reps are making statements like this:

“But it’s also become a tool for online thieves to sell counterfeit and pirated goods, making hundreds of millions of dollars off of stolen American intellectual property." - Sen. Orin Hatch (R-Utah) (Taken from the Wired article above)

... you know progress is about to get stifled. Piracy just isn't a black and white issue, and the numbers they quote are often ridiculous. I thought Republicans supported the free market? No pun intended.

Is piracy stealing... kind of. If you steal a tangible object the seller literally has less, but this isn't true of a digital copy. The price for one is the same as the price for infinity. You only deprive the creator of income if you would have paid for the content otherwise. How many times have you downloaded a piece of software or music because it was free that you otherwise would not have? In these cases where you have stumbled upon something you never knew you liked you have opened up a discourse with the producer of the content under which they could potentially profit from you in the future. Think of how broad most younger peoples taste in music is compared to their parents.

My broad taste in music means that I go to a lot of concerts, but I don't buy records. What does this mean for the band? They make more money and have broader appeal. Their pirated online albums serve as event flyers. Another example is the plethora of super out of reach expensive software for architecture school that I need to study and learn but can't afford. I learn these programs and when it's time for me to go to a firm they have to buy it. A copy of just plain AutoCAD costs $4,000 and every firm in the world has that. Why? It's not really the best drafting software necessarily but Autodesk does allow free downloads to students... is it any wonder that Google's Sketchup - a clearly inferior program - is now gaining traction because it's free?

There is a cost to users for pirating - that is - buggy software, older versions, no updates, and the time and knowledge to crack and obtain such things. Basically, people at the lower end of the economic spectrum engage in it - people that wouldn't have access to it otherwise. It's simple opportunity cost for the pirater. The real problem is with the pricing and distribution of media and software. I could bore you with this but I won't. Distribution must become intangible and prices must be cut drastically. A dollar a song and $600 for Photoshop CS5 is ridiculous. Content providers need to seriously consider ways of extracting higher amounts of consumer surplus (the amount that a buyer is willing to pay in addition to the asked for price) after dropping prices. Take for example ipods. Apple charges a base price for the unit with say 4 gigs, then so much more for 8 gigs, and so on. More people buy the product this way while at the same time Apple is able to get people who are willing to pay more to spend more. Look at what Microsoft is doing with Windows 7: Home, Home Premium, etc.

Of course there are problems with pirating but I think that often the benefits outweigh the costs. Pirating has changed the way we consume media and information. Bittorrents, a byproduct of pirating, is almost unarguably the best way to download anything. In some odd way it's almost tragic that a different generation (see, old white affluent men) feels the need to deprive us of something they do not and possibly cannot understand. There always seems to be debate in Washington about topics that my generation considers a moot point, but I suppose it's always this way. One day my generation will mold the world in the defunct image of their youth to the detriment of that times generation.

Reading Material

Someone finally replicated the Milgram experiments, sort of anyways. It hasn't been replicated because no review board would allow a similarly deceptive experiment to take place. The thoughts by a research assistant to Stanley Milgram are excellent.

The difference between a million and a billion shown graphically and in funnier comic form.

MIT Tech Review reads my blog (joke) and talks about electronic medical records and piracy (previously here and here, none of the links provided are especially great reads).

Q&A's with the author of the books Tyranny of Dead Ideas (good read, I may comment on it later) and Bottom Billion both from Freakonomics. The Bottom Billion guy, Oxford economist Paul Collier, kind of annoyed me. He had some great answers - he even mentioned Kiva as one of the best ways that Americans can get involved in Africa. The one that stuck out was this:

"I don’t know this stuff and don’t want to. But I am just about prepared to believe that the average Chinese person is smarter than the average Englishman." - Paul Collier after being asked about the controversial research of Richard Lynn.

Don't want to? Research regarding the average IQ of Asians by Richard Lynn showed their IQ's to be slightly higher than that of Caucasians. This was later refuted by James Flynn, the world's (likely) leading expert on IQ, who stated counter to Lynn that in fact Asians historically have had slightly lower IQ's than that of whites (Asian Americans: Achievement Beyond IQ, 1991, taken from Outliers p. 231). The delicious irony being that Asians out earn whites significantly here in the US. I'm not trying to be prejudice or inflammatory or whatever. I just believe in scientific rigor. I believe these questions and their answers are important. How can you not want to know?

Stuff Worth Reading

Great economic read. This has to do with GM mostly but the main thing I loved was this:

"For the broader markets to bottom and for the economy to bottom, certain cataclysmic events must occur. While the timing or form of these cathartic events are difficult to predict, you WILL know them when they occur. If GM and Chrysler are forced into bankruptcy, that will be the one of the bottom forming events.

Many more, such as the final nationalization of Citigroup (C) and Bank of America (BAC) and the complete unwinding of AIG are still required. Losses must be taken by all stakeholders, not just tax payers. Balance sheets must be purged and legacy liabilities written off. These companies need to be recapitalized and relaunched with pristine balance sheets. Only then can they contribute constructively to the economy and help engineer an economic revival."

Fantastic.

The Pirate Bay now has an app on Facebook (not a great read) to allow sharing of torrents. I'm sure that in many cases it's illegal as hell, but it does beg the question, can't this technology be used to disseminate information freely and legally in some way?

Another money scandal... although this time a company in CA walked out one their expecting (literally) customers who have fetuses growing in surrogate mothers; about 70 in all. Fortunately all of the surrogate mothers seem to be willing to still have the babies even though some of them are no longer receiving compensation. Legally they could abort the fetuses even against the wishes of the donors (biological parents). That's more or less the pinnacle of a moral dilemma.

An internet company works out of a tree house in PA. Just cool. I'd have to imagine that would make you a markedly happier person; at least it would for me. (Hat tip: wired.com)

The Music Industry

Recently the Pirate Bay has been in court in Sweden. Which is kind of a big deal because Pirate Bay is the largest bit torrent tracker and Sweden has some pretty lax laws regarding copyright protection. If you search Wired there are dozens of articles on the whole thing. For any of my readers, all 3 of you, who don't know what that is, a bit torrent is a downloadable file such as a music album or movie. What makes them unique is that the actual material (often copyrighted) is stored on user's computers, so the actual copyrighted material never touches a bit torrent trackers servers. The trackers such as Pirate Bay just point you towards the users who have the file. When you download a bit torrent you download it from several people at once. Hence, it creates a nice legal shelter.

Anyways...

EDIT (I misrepresented this quote): "Yes." - Per Sundin of the IFPI and Universal Music when asked if "people would have purchased every music track they got [for] free file sharing."

I wonder if he actually believes that? What a ridiculous thing to say.

I've pondered the whole pirating thing for a long time and haven't come to many substantial conclusions. I mean, it is stealing in the sense that it costs money to produce an album and the artists should get paid, but at the same time they're shoving an antiquated business model down our throats.

Here's what I've noticed with myself:

1 - My music taste is much broader because I am exposed to so much more online. I've noticed this with others too.

2 - Because of my increased musical palate I attend more shows. A lot more. This brings in far more money for a band than me purchasing their CD's.

3 - I don't buy CD's at all. Who plays CD's with any regularity?

4 - Downloaded music is popular because of the variety of choice, ease (you don't have to leave your house and it comes in MP3 format), lack of DRM, and if you don't like the music at least you didn't waste any money on it.

Going off of #4, I'm sure many people download music illegally mainly because it's free, but I feel like the vast majority of people do it for the other aforementioned reasons. What this signals to me is that people are pirating media in large part because illegal downloads offer something that their legal counterparts do not. It seems painfully obvious that this industries business model is dead. The iTunes store may be closer, but I say they fail too. What don't these people get? You must offer a superior product, a cheaper price, or preferably both. iTunes isn't any cheaper than buying a CD for the most part and a CD certainly isn't a better product. You have to convert it into an MP3, and how many people don't know how to rip a CD?

Regardless of how you feel about the legality of it all one fact remains. These companies exist to make money and right now they're contracting. What they're doing isn't working and they need to adapt or disappear. The album is how you get people to buy merch and go to shows. Therefore, make it as available as possible. If I were in charge I would experiment with pay what you wish album sales, free album downloads, extremely cheap album downloads ($1-3), and I'd send my bands out on far more tours. The last shows I've bought tickets to were: The Books (sold out in a week, show added, sold out), Iron and Wine (sold out the same day before I could get tickets), Kings of Leon (sold out, tickets were going for 5 times face value), Beck and MGMT (sold out, tickets were going for 3 times face value), etc, etc. If shows are selling out that means they're missing out on revenue; deadweight loss anyone? And the fact remains that I don't own a single tangible copy of any of these bands albums. That's right music execs, illegal downloading brought you my business and I bet I'm not unique.