Piracy is not Hollywood’s fault. Now what does that mean for policy?

by on October 30, 2013 · 2 comments

Ryan Radia is one of the few people in the world with whom it is a true pleasure to discuss copyright issues. We see eye to eye on almost everything, but there is enough difference in our perspectives to make things interesting. More importantly, Ryan’s only religious fealty is to logic and the economic way of thinking, which makes for reasoned and respectful conversations. So I am delighted that he took the time to conduct one of his patented Radianalysis™ reviews of the issues raised by PiracyData.org. As is very often the case, I agree from top to bottom with what Ryan has laid out, and it has prompted some thoughts that I’d like to share.

What Ryan is addressing in his piece is the question of whether shortening or eliminating release windows would reduce piracy. He concludes that yes, “Hollywood probably could make a dent in piracy if it put every new movie on iTunes, Vudu, Google Play, Amazon, and Netflix the day of release. Were these lawful options available from the get-go, they’d likely attract some people who would otherwise pirate a hit new film by grabbing a torrent on The Pirate Bay.” That said, Ryan points out quite rightly that “even if Hollywood could better compete with piracy by vastly expanding online options for viewing new release films, this might not be a sound money-making strategy. Each major film studio is owned by a publicly-held corporation that operates for the benefit of its shareholders. In other words, the studios are in the business of earning profits, not maximizing their audiences.” I couldn’t have said it better myself.

One thing that caught me off guard when we launched PiracyData.org (but that in retrospect should not have), is that many people interpreted our attempt to create a dataset as a statement that Hollywood is to blame for its own piracy problem. As I’ve explained, I think it’s dumb to blame Hollywood for piracy, and doing so was not what motivated the project. What motivated the project was Hollywood’s claim that private third parties, such as search engines, have an obligation to do everything in their power to reduce piracy, and that companies like Google are not doing “enough” today.

As Ryan points out, the studios could probably curb piracy by changing their business model, but doing so might very well mean taking a cut in revenue. And as he also points out, the studios are not audience maximizers; they are profit maximizers. This is why they are not about to drastically change their business model anytime soon, which is their prerogative and one I understand. But then the question is, how many resources should we expect taxpayers and private third parties to spend to ensure that the studios can maximize their profits?

In thinking about how to answer that question, I would remind myself of the constitutional purpose of copyright, which is “to promote the progress of science.” The purpose of copyright is about audience maximization, not profit maximization. Returns to creators are a means, not an end.

At this point, let me take a moment to head off any misinterpretations of that last paragraph and repeat, yet again, that piracy is wrong and illegal and inexcusable. I am not saying that piracy is a justifiable way to accomplish the constitutional purpose of copyright. What I am saying is that in deciding how many taxpayer dollars we want to expend on enforcement, and how many encumbrances we want to place on the property and liberty of third parties, we should ask ourselves: Will this further the progress of science? Or is it merely a subsidy to a particular industry?

As long as Hollywood has moves to make that could curb piracy, I don’t see how they can say to the rest of us that we’re not doing “enough.” Yes, the moves that Hollywood could make to curb piracy might reduce its profits (although there’s lots of experimentation going on and it’s yet to be seen what the ultimate equilibrium will be), but that fact tell us nothing about what obligations the rest of us have to prop up a particular business model.

The studios are in the terrible position of having to compete with piracy in a digital world, and I truly empathize with their plight. (I thank Ryan for noting that I, by pointing out this fact, am not celebrating it.) But given the fact of piracy, the question is, who should pay to address it? I don’t think it’s self-evident that it should be search engines or taxpayers.

As a final note, let me acknowledge that if Hollywood’s profits were to diminish, then we may end up with a different mix of films than we have today. We might get fewer big-budget action flicks like Avatar and more indie comedies like It’s a Disaster, which premiered online before its theatrical run. Again, it’s not self-evident that such an outcome would be good or bad. We’d have to ask ourselves whether such a new mix adequately promotes the progress of science or not. On that, for what it’s worth, here are some thoughts from Kevin Spacey.

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