Online Piracy – Innovation not Legislation: What We Can Learn From The Past

Online Piracy – Innovation not Legislation: What We Can Learn From The Past

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Technology moves faster than legislation. The moment Napster is sued for its centralised file-sharing service, technology allows users to move to non-centralised file sharing. The moment users of non-centralised file sharing are attacked, technology allows them to disappear; Hide My Ass enables users to surf the web anonymously.

Legal attacks on individual users only compound the problem for the copyright-holders. Analyst Don Labriola, citing work by Princeton Professor Joel Cooper, points out that “The harder you push the more you fail … applying an overly harsh remedy to even one community member can have undesired effects on the entire group”.

Some now see the error of this legislation. CEO of management company the Firm, Jeff Kwatinetz, believes that suing Napster “was the moment that the labels killed themselves”. More recently, ISPs in England have lashed out against the new Digital Economy Act, which forces them to suspend the internet connection of file-sharing users; branding it “draconian” (Andrew Heaney, TalkTalk’s director of strategy and regulation).

In Sweden, ISPs are rebelling. As in England, a new law—based on the European Union’s Intellectual Property Rights Enforcement Directive (IPRED)—allows copyright-holders to obtain a court order forcing ISPs to provide the IP addresses identifying which computers have been sharing copyrighted material. Swedish ISP ePhone has successfully appealed a court order demanding it hand over the IP addresses of P2P users. Significantly, the case is now destined for the European Courts of Justice; which will mean a review of how the IPRED law is used in Sweden. Meanwhile, broadband ISPs Tele2, Bahnhof, and Alltele all reacted by deleting consumer IP data; rendering the law somewhat useless.

There was a moment, in the not so distant past, when sense prevailed in a similar dispute between new disruptive technology and a threatened established industry:

In 1984, rather than criminalise the millions of users who already owned VCRs, the US Supreme Court found in favour of technology (Sony) over the copyright-holders (Universal). Universal Studios and Disney Productions owned copyrights on television shows and feature films broadcast by television networks. When Sony introduced the VCR, it suddenly enabled users to record (read ‘Download’) their copyrighted content to watch at more convenient times. This disrupted the prevailing commercial business model by allowing users to fast-forward the commercial breaks. Fearing loss of advertising revenues, Universal and Disney claimed that Sony contributed to large-scale copyright infringement by selling their VCRs. The Court ultimately resolved the conflict by extending “fair-use” to include the practise of time-shifting, recording a programme or film for non-commercial use.

In the end, of course, both Sony and Universal came out the winners; Sony by being allowed to sell VCRs, and Universal by inventing a more efficient and profitable business model – the movie-rental market. In 2009, sell-through video on physical media was the largest single revenue source for film in the UK.

So what are we to make of the recent news – the cracking of the content protection system for Blu-Ray? Are we to expect even tougher, harsher laws to protect the content owners?

If only we could learn from the lessons of the past, if only the content owners would understand the negative effect of harsh laws, if only the law were used effectively to help bridge the gap between established industries and new technologies.

Everyone involved could learn a thing or two from Donald Labriola’s illuminating work Dissonant Paradigms and Unintended Consequences: Can (and Should) the Law Save Us from Technology?Published in the autumn 2009 issue of the Richmond Journal of Law & Technology.

Labriola’s article highlights some of the problems of rationalist legal analysis in dealing effectively with illicit file sharing. By failing to recognize both parties in the dispute, the content owners and the online file sharing community, “rationalist analysis encourages a one-sided perspective that casts disruptive technology and new-paradigm communities as villains.”

Turning to the theories of social psychologist Leon Festinger, Labriola seeks to explain why seemingly rational solutions fail to work. By revealing the underlying motivations of both communities, he strives to add a level of subtlety to existing legal models used to understand and resolve such issues, pointing out that “[new communities] may be acting in accord with norms that the law will one day recognise.”

While it is reasonable that content owners should look to the law to protect their investments, appreciating the effect of their actions would help them avoid unintended consequences.

The [record] labels … have reinforc[ed] their schoolyard-bully image with high-profile lawsuits that threaten small-time music downloaders with extraordinary fines.

Record companies might instead try to understand the online music community’s shared beliefs and behaviour – as, for example, Apple has done with their iTunes Music Store. “Apple CEO Steve Jobs has made it clear that Apple is one of them, openly challenging the labels’ hardline anti-piracy stance.”

Labriola makes the point that “the courts have rarely done more than delay the inevitable.” Further, are the lawmakers’ efforts to shield established industries from new technology even desirable? “Technology that fosters more efficient and flexible ways of working, playing, communicating, or transacting business serves the public good and is essential for survival in a global economy.”

Instead the courts could help by working to build bridges. Rather than taking one side, force parties to submit to mediation or arbitration. “Consider how much healthier the music industry might be today had the A&M v. Napster court ordered it to negotiate joint ownership of Napster and work together in good faith to transform the site into a legal and profitable downloading service. Napster’s founders were clearly amenable to a merger but the labels could not risk alienating their … partners, such as CD retailers and distributors, by voluntarily undertaking such an effort. Had they been forced to do so under court order, however, they might have been relieved of much of that pressure.”

It is worth remembering that the Sony Court arrived at its ruling through conventional reasoning, by considering the relative effects of their actions on both parties.

Over 25 years on, “the lesson of Sony … is still being relearned to this day.”

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