Maybe it’s time, maybe not. But just thought I’d post some random thoughts on a current hot topic; namely SOPA & PIPA. I’ve never been an advocate of more laws, I’ve always thought we have a bigger problem enforcing our current laws rather than coming up with new laws. SOPA and PIPA are bills that intend to do away with internet piracy. While this does sound like an honorable ambition, adding new laws is not in my opinion the answer. It wasn’t long ago when eBay permitted the sale of firearms and illegal drugs via auction, no law was ever created that outlawed this behavior. The reason they no longer host those types of auctions is because the market responded negatively to that enablement. The leaders at eBay concluded they would be better off financially (in the long run) by not hosting those auctions. It wasn’t necessary to enact any new laws for eBay to make a change. The ethical values of the customer base dictated what was appropriate.
Ethical values are difficult to establish, however there are some common ethical values that should be held throughout a “free market economy.” One of those values is property rights (as indicated by Greg Mankiw) this includes intellectual property rights. So the question I see is whether the US is a free market? If we are then the citizens of the free market need to reject the idea of piracy, I would certainly concede this at least highly unlikely to be embraced by the masses. However this isn't the end all of our options as an ethical society, and there are ways corporations can encourage ethical behavior. A huge obstacle to teaching ethics requires some level of ethical behavior on the part of the teacher, in this case the movie and music production studios would be required to exhibit the same or greater level of ethical standard they wish to be embraced by their customers.
In my visit to China I observed very little respect for property rights (knock-offs are literally everywhere). In the US knock-offs exist but are not as successful as they are in China. Why are knock-offs unsuccessful in the US? I believe there are a couple of factors at play: 1) pride, US citizens tend to like having products of high monetary value, 2) quality, most knock-offs are of low quality and don’t stand up to the test of time, 3) ethical/moral integrity, I’m certain many people wouldn’t purchase knock-off goods on the basis of moral codes. Some drivers that perpetuate intellectual piracy include: 1) accessibility, a simple google search will net far more opportunity to pirate any copyrighted work rather than to legitimately purchase it, 2) cost, piracy is free (there is a further argument with regard to value of substance but I’ll just leave this as one point), 3) nefarious intentions, some people just like to “break the rules.”
My proposed solution for combating piracy is: increase the quality and accessibility of content, and reduce prices. Movie and music studios need to quit fighting against their customers, the exclusive content license deals are detrimental to the cause, they actually create a greater incentive to pirate movies when they engage in these back room deals. They also need to reduce expectations with regard to revenue per unit delivered, this must be done collectively. I know every studio thinks they produce better content than the next guy but the problem is they are all selling to the same customer base (for the most part). My general opinion is the customer base (people who enjoy movies and music) is not as discerning as the studios would like to believe. In other words, can you tell me the names of you top five favorite music/movie studios? But I bet you could name five of your favorite musicians or movies or whatever. So these studios need to work together to save their industry, people everywhere realize the reproduction of digital content is very simple and inexpensive, the prices charged by most distributors are obviously too high to deride piracy. I appreciate Apple and what they’ve done with iTunes, I think it’s a step in the right direction, though I don’t know what the biggest factors with regard to their pricing strategy are I would presume the studios are a big slice of the pie. It is likely some collaboration is going to have to occur between studios and distributors.
I do believe distributors serve a valuable position with regard to intellectual property; Hulu is a great example of a business model that has made this work well. They are a distributor for many TV networks, I hate it when I want to watch a show and I have to go to the network site because they won’t license it to Hulu to distribute. Apple has some of the same problems, which leads me to believe it’s more of a producer problem than a distributor problem. Lastly they need to improve the quality of product, my own personal opinion is if I could download a high quality (HD) easily and for about $1/per day. I would be more than willing to participate, as it is most sites want to charge $3-4 to rent an HD movie for a 24 hour period. This is again driving more traffic toward piracy, people know they can get a lower quality product by pirating however saving $3-4 for a lower quality product might be worth it where if they could pay a $1 for a higher quality product it likely wouldn’t be worth it. Again the cost of maintaining this property is very low, and reproduction costs are even lower. What is the justification for the high prices?
