TCS Daily

Let Hollywood Hack

By James D. Miller - August 22, 2002 12:00 AM

Hollywood wants to invade private computer networks so it can unleash viruses against copyright thieves. In a recent Tech Central Station article, Sonia Arrison argues against Congressional efforts to grant Hollywood hacking rights. Alas, without such rights, peer-to-peer networks will decimate the for-profit production of movies, music and even books.

Peer-to-peer networks pose a vastly greater threat to intellectual property than Napster did. Internet thieves copy content from each others' hard drives. With Napster, these criminals needed to operate through a centralized server. Peer-to-peer computing, however, allows thieves to exchange copyrighted content directly. Napster was like a single large open-air drug market that authorities could easily locate and shut down. Peer-to-peer pirating is analogous to having thousands of drug markets operating out of private homes.

To hinder peer-to-peer thieves, someone must hack into their network homes. Unfortunately, without monitoring, you can't identify which networks thieves use to exchange copyrighted materials. Consequently, to fight peer-to-peer piracy, Congress must curtail everyone's cyber privacy and allow copyright holders to access and sometimes disable private networks. While we should regret any loss of privacy, fighting crime often requires reducing the privacy rights of innocents. For example, our privacy is violated when we walk through a metal detector or are searched by airport security. Indeed, NASA may soon even scan the brains of airline passengers in efforts to detect terrorists. Surely, scanning hard drives is far less objectionable than scanning brains.

Should we, however, pay the privacy price necessary to deter Internet piracy? Some have argued that content providers need simply lower prices to more successfully compete against illegal downloads. What price, however, would copyright holders have to charge to attract paying customers away from piracy?

What price would I have to set to sell you my permission to speak English? I imagine readers of this article derive massive value from conversing in English. So, if you give me a mere $10, I will give you my permission to speak English. Obviously, you have the capacity to speak English independent of my permission, so only a fool would pay me my requested $10. What if I lower my price to $1, will you now purchase my permission? Again, since you can speak English for free, why would you ever pay for my consent regardless of how low a price I set? Similarly, if consumers can costlessly download copyrighted material, they should rationally never pay for legal copies. If you can costlessly obtain an illegal copy of a song, all the copyright holder really has to sell is his permission for you to listen. But, since it's permission you don't need, it's permission you shouldn't pay for.

Left unchecked, technology will further facilitate copyright theft. As broadband access proliferates, Internet users will be able to download stolen music and movies more quickly. Currently, books remain safe from peer-to-peer piracy because most consumers would rather read printed words than electronic text. When e-paper becomes as readable as physical paper, however, unrestricted piracy may destroy book publishers. If you can costlessly download any book you want in two seconds from a peer-to-peer network, why buy a legal copy?

Copyright holders would like to imbed copy protection technology in their products. A movie, for example, could contain a code allowing it to be played only on your hardware. Imbedded copy protection technology is foiled, however, if even one user creates and disseminates a clean and playable copy. In contrast, hack attacks on peer-to-peer networks succeed if they merely stop unsophisticated users from obtaining illegal copies. Furthermore, imbedded copy protection can never protect e-books since you can create a copyable e-book merely by scanning the text of a physical book.

In her article opposing Hollywood hacking, Sonia Arrison suggests that Hollywood need not fight peer-to-peer thievery because, as she correctly notes, "consumers will always be willing to pay market prices to be entertained." A market price is not the fair or reasonable price; rather it's the amount of money consumers must pay to acquire goods. But in a world of easy peer-to-peer piracy, the market price of movies, books and music is zero.

James D. Miller is an assistant professor of economics at Smith College.

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