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November 3, 2015

Carrots, Sticks, and Straw Men

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“An abundance of ideas” is the stated organizing principle of the Copia Institute, a new think tank “from Mike Masnick and the team behind Techdirt.” But their latest paper, “The Carrot or the Stick?: Innovation vs. Anti-Piracy Enforcement,” offers no new ideas. The paper purports to demonstrate that anti-piracy policies are ineffective and, alternatively, that introduction of legal online content distribution platforms correlates with a reduction in theft. As such, enforcement regimes should be abandoned in lieu of “innovation.”

Per Masnick:

What if the answer to Hollywood’s concerns about piracy actually come from Silicon Valley?  What if the best way to reduce piracy is to let innovation flow, and to provide better services that reasonably respond to consumers and their entertainment needs?

But as Masnick surely knows content creators already make their works available on an abundance of legal online distribution services. Indeed, there are over 400 licensed video services and 98 licensed music services worldwide, and digital books, magazines, newspapers, photos and other works are ubiquitous.

Instead, Masnick offers a straw man argument, as no one is arguing that enforcement is the only solution to online theft. Indeed, in the real world, rights holders are pursuing voluntary, market based solutions amongst good faith stakeholders to combat piracy. For instance, the five largest ISPs and the content community created the Copyright Alert System to educate users about infringing activity and help guide them to legal alternatives. And the advertising industry recently announced the formation of the Trustworthy Accountability Group, which will help advertisers ensure their valuable brands don’t appear on websites dedicated to theft, thereby helping to take the profit out of piracy while at the same time protecting their good names. Further, recognizing that rights holders should ask of themselves what they ask of others, the MPAA launched, a search tool that helps connect consumers with particular movies or shows of interest to them among so many options.

Masnick’s assertion is further undermined by the fact that even pirates admit enforcement regimes can be effective. In an ironic twist, just yesterday TorrentFreak published an article offering grudging admiration for the efficacy of site-blocking.

So when Masnick suggests that the answer to theft is “innovation” forgive me if I roll my eyes. Nobody wants consumers to enjoy their work more than the creators themselves do– they just want it done through the market and not simply stolen.

Further, Copia’s assertions are at best misleading. For instance, while the authors’ focus is on the video and music markets, the piracy stats they use are primarily about software piracy–not music and movie piracy–as they come from the Business Software Alliance, which represents companies like Adobe and Microsoft, not record labels and movie studios. (As an aside, if you want a good laugh, read this 2012 blog by Masnick savaging the BSA data he relies on in this paper).

Also, Copia uses language like “relatively low” to describe piracy rates of 27% in the United Kingdom. I suppose 27% is “low” compared to the 74% figure offered for China, but is that an acceptable amount of theft? how we should be measuring ourselves? Would any industry accept 27% “shrinkage”? Creators deserve much better.

Worse, there appears to be some intellectual dishonesty at play here. Copia states:

An analysis of anonymized internet traffic data… concluded that the block of The Pirate Bay website by itself had no effect on encouraging users to adopt legal content services, as users may have switched to alternative file sharing sites or used VPN (virtual private network) services to circumvent the block.

I suspect that is a deliberately incomplete representation. While Copia chose not to include any citations in their paper, I presume they’re referring to peer-reviewed research by scholars at Carnegie Mellon University that also concluded:

[B]locking 19 different major piracy sites caused users of those sites to increase their usage of paid legal streaming sites such as Netflix by 12% on average. The lightest users of the blocked sites (and thus the users least affected by the blocks, other than the control group) increased their clicks on paid streaming sites by 3.5% while the heaviest users of the blocked sites increased their paid streaming clicks by 23.6% … Our results suggest that website blocking requires persistent blocking of a number of piracy sites in order to effectively migrate pirates to legal channels.

Essentially, the CMU researchers are saying that blocking only one pirate site probably doesn’t create enough friction in the marketplace to change consumer behavior. But blocking many simultaneously leads to a significant increase in legal consumption, particularly among the worst offenders. That seems pretty reasonable to me, but Copia only offers The Pirate Bay example to suggest to readers that piracy enforcement is futile.

Masnick’s biases in the copyright space are well-known, and so it should surprise no one that his outfit produces papers that breeze past data and arguments that are inconvenient. When correlation works for his argument, he embraces it, saying that two music services in France going out of business “suggests” HADOPI was unnecessary. But when correlation works against his argument, he dismisses it, saying that the increase in music revenue in France during the same period “cannot be directly attributed to HADOPI.” And of course he cites an analysis of HADOPI regime by Rebecca Giblin, which I have elsewhere shown to be as similarly biased as is Masnick’s own work here.

I’m a big believer in innovation. Everyone is. But patronizing suggestions that creators should “innovate” away their problems is an unhelpful contribution adding nothing to discourse about solutions to piracy. And contrary to Copia’s commitment to “ideas in abundance,” their paper represents a lack of imagination.

Content owners ARE innovating. They also want their product protected against massive theft. It’s not a matter of either/or—it’s a matter of both/and.

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