Why copyright laws should be abolished Pt.1

Dennis Chiang

In the debate about the abolishment of intellectual property rights, one of the most common issues I’ve found raised is the copyright infringement of multimedia content i.e. books, photographs, film, music and other audio-visual materials through file-sharing.

In the first of a 2-parter, I will be focusing specifically on the issue of copyright infringement through file-sharing and why prohibiting it for multimedia content is unnecessary as an incentive for producers, and deprives the best good possible to consumers.

One of the most common justifications for copyright is the fact that the original producers are being denied profit. Without copyright, a file-sharer is allowed to duplicate and distribute content for free and this leads to consumers paying less than what they would have otherwise payed, and therefore something has been ‘stolen’ from the producer.

But the flaw in this argument is the fact that the freeloaders only obtained the product according to their subjective valuation of it – in this case, they chose to pay nothing for it – so you cannot assume that if the file-sharer didn’t exist, the same individual would have purchased the original producer’s copy for its retail price.

Apart from the moral issues of property rights and ownership, the underlying contention behind the file-sharing issue is the idea of incentives. Opponents decry file-sharers, labeling them as pirates who are hurting the industry. But let’s deal with this common myth about copyright laws – that without them, producers will be disincentivised to produce.

The argument is that if file-sharing exists then how can the producer earn profits if everyone doesn’t have to pay anything? Why wouldn’t everyone just get it for free? The answer is that as long as there is demand for the good and there are people who want to possess it, the producer will be remunerated appropriately. The market functions on a very simple principle – supply, demand and price of commodities are coordinated according to the subjective valuations of the people.

So as long as we the consumers value the benefit of multimedia content and want it to continue in production, then the market will adjust itself to ensure that this industry thrives, whether that means that less of us become freeloaders (we start choosing to pay in other ways), the producers become more innovative with the way they sell their products (Radiohead has an interesting new business model in this regard), or the industry players strike until they get the remuneration they deserve eg. the 2007-2008 Writers Guild of America strike.

Industries will adapt to new advancements in multimedia content creation/distribution and the changing subjective valuations that consumers have of their products. Current technology such as peer-to-peer networks and cloud computing exists and will be used, constantly changing how much the consumer is willing to pay. The culture of file-sharing, along with all these new technologies that help facilitate it, will simply be integrated into new business models. And so, the claim that the multimedia industry needs copyright to survive, is as I have shown, sorely misguided.

I raise this point because unlike the fear-mongering propaganda we all have been exposed to (the ‘Daddy, what is a Cinema?’ ads in Singapore come to mind), the industry isn’t in its death throes because of file-sharing, and this is a falsehood we could do without. Instead, let’s examine how the market is responding to the presence of these freeloaders in the system and what adjustments are being made.

Freeloaders can only continue to get their content for free if the producer chooses to continue producing his content for them to copy off from. So the original producer still holds all the power. If the producer is unhappy with the current system, and think its not worth his time and effort to produce the good for the money he’s earning, then he can just choose another job. No one is forcing producers or companies to work in this industry, if people feel they could be earning more money by investing their time and effort somewhere else, then there’s nothing that prevents them from doing so.

Recently, the French dance music label Institubes for this very reason decided to close down. So the producers who don’t want to adapt to this new reality just go out of business.

But there’s a second group of producers however who decide to stay on in this industry and choose to accept the new realities of media consumption. These people feel its more profitable to adapt rather than trying to prohibit the use of new technology. I believe that more and more companies are voluntarily choosing this route.

Even though file-sharing may be rampant, money still can be made off consumers who agree with the producer’s valuation of the content and willingly pay for it, as well as other alternative revenue streams such as advertising, concerts, live performances, book tours, exhibitions, direct investment/donations, exclusive content/features and other new innovations in multimedia content creation and distribution. Companies know there’s money to be made here.

The key is translating the initially free consumption of specific multimedia content into money-making opportunities, whether it through advertising, offering premiums, exclusive features, services etc. that consumers would be willing to pay for instead of or after they consume the initial product for free. In addition to the traditional spin-off revenue made from things such as concerts, live performances, book tours and exhibitions, there are so many more sources of spin-off revenues available now and many more in development, and still others yet to be discovered.

For example, more and more companies are tying in multimedia content with services. The recently launched Amazon Cloud Drive provide consumers convenient purchase and better storage of multimedia content. These exclusive value-added services incentivises freeloaders to pay for multimedia content from those outlets, rather than just getting content for free. They would willingly pay for a more convenient purchase(a simple click of the mouse compared to scouring the internet for torrents) and the better storage capabilities that the product provides.

Things such as advertising has also adapted to the world of file-sharing. TV shows are increasing relying on product integration for advertising to reach not just the file-sharers online, but also the ‘legal’ viewers who choose to skip through ads on their digital video recorder. Hugely successful and popular shows such as Survivor and American Idol have been utilising product integration for some time now. Some would argue that in terms of advertising, it is more profitable for multimedia content producers to use product integration and file-sharing in conjunction, as the huge amount of reach it provides would be something that advertisers would be willing to pay a premium for.

I believe that is the way the world is headed in terms of multimedia content. There are so much opportunities for entrepreneurship and innovation in the digital sphere, and so much money to be made through alternative revenue streams – of which more and more include the condition of file-sharing. I believe many corporations now don’t want copyright enforcement on file-sharers, as they think they would earn more money without it.

So I think the incentive argument fails. I believe that there is overall more incentive for the industry to produce with file-sharing than without. Sure there are some who feel they can’t cope or adapt and die out, but that’s just the market working to eliminate the less efficient producers, and other companies will simply learn from their failures.

But then of course there is another group of producers, who think they could earn even more money in the current system. They want file-sharing to continue, because of all the spin-off revenue it generates, but they think they could be even more profitable with the occasional suing of individual file-sharers and torrent sites for damages. This two-facedness disgusts me, and it should disgust you too. Companies should not have an absolute right to earn as much money as they want. If so then we should just allow companies to sue us for any amount of money whenever they want.

Ask the heads of any of the big 4 music companies (Universal, Sony, Warner, EMI) that control 90% of all music and music-related content in the world whether they would prefer a world where file-sharing can be successfully prohibited, I think if they were to be honest with themselves they would say no. But in a court of law, when suing for damages, they will lie and say precisely otherwise, that they wished that group of people hadn’t engaged in file-sharing because file-sharing is bad and they don’t like it.

One cannot argue that we should continue to keep copyright laws around for these unscrupulous producers.

Some people however, choose to defend and justify intellectual property, such as copyright laws, in the context of rights.

Ayn Rand, one of the strongest defenders of intellectual property rights, argued that the state has the moral responsibility to respect ownership of ideas such as music/video/film as they are new creations born of the producer’s mind and therefore, a musician’s song is no different from a shoemaker’s shoe, both need to be protected as property that you own.

But we have to examine why rights and ideas are defended. Rights, systems and ideas are always a means to an end. Defending an idea for it own sake is meaningless. The reason why I believe in a certain principle or idea is because of the effects it produces.

Even Rand herself believed in her idea of rights because of its utilitarian function. In a nutshell she believed that the only moral purpose of one’s life was the pursuit of one’s own happiness and that full respect of individual rights was the only system that allowed for man to fulfill that purpose.

I believe that the best situation for humanity would be one where scarce resources do not exist and everything is available in unlimited supply.

Ideally, we should try our best to achieve that utopian scenario and always try to get as close as possible to this vision – the best possible situation for everyone. By following this ideal, we will ensure the best living standards and the best form of existence for all man.

The closest we can get to the utopian ideal of unlimited supply is that of optimal supply, and so it is only under this framework of attaining the optimal supply of goods, that I think we ought to recognise and defend things such as property rights and the profit-incentive.

Therefore, I only support market forces and the profit incentive because it leads to the most prosperous existence.

If it were proven that certain ideas I currently hold don’t aid in maximising prosperity, then I would withdraw my defense of those ideas, as I believe it is morally abhorrent to consciously deny the most amount of prosperity to the most amount of people.

A marketplace of ideas does exist, and competition – based on the success of their applications in the real world – between different principles and ideas will help us objectively identify the ones that help achieve the most happy and prosperous existence.

So If we value the notion that we should strive to achieve the best happiness & prosperity possible, we have to be willing to go where the evidence leads us. If it means legalising file-sharing then so be it. And the evidence seem to suggest this is the case.

The producers earn the greatest amount of profit, and those who want to still can get the content for free. Win-win. Of course it could be argued that the producers could be even happier if they engage in the unscrupulous practice of making profits off file-sharing and then occasionally suing for imaginary file-sharing related damages. Then it would be win-lose. We would be prioritising the producers desire for a greater amount of happiness over a greater amount of happiness for all.