PIPA and SOPA: Bad for Business

by Jon on January 17, 2012

The United States Senate is about to debate PIPA (the Protect IP Act), which is a terribly-conceived law which would empower the US Attorney General to restrict access to “rogue” websites containing copyright infringements, create legal processes for the owners of IP to order search engines and advertising networks to stop supporting the websites in question, along with the hiring of new federal agents to investigate copyright violations.

United States Capitol Building

Flickr Image of Capitol Building by Kevin Burkett

Intellectual property ownership is the legal foundation that has made the modern technology and entertainment industries possible. If you create something novel, you ought to be able to reap the benefits of your invention. But public policy needs to be thought of holistically: the overall costs and benefits to everyone in society need to be considered. Reasonable, noncommercial use of copyrighted content needs to be protected. When it comes to commercial use (such as on a social network), the law shouldn’t be so onerous that it impairs innovation.

If organizations like the MPAA had its way, we probably wouldn’t have an Internet today. Fortunately, the Internet happened out of their view for too long–and then exploded too quickly–for them to do anything about it. Their history with other digital technology is informative: consider how they tried (and failed) to ban the use of VCRs to record your favorite shows for later watching (the Supreme Court ruled that noncommercial private recording was fair use). Or how they tried (and succeeded) at forcing special licensing fees on Digital Audio Tape (DAT) technology, which effectively killed it off.

It’s no wonder that companies like Google are opposed to PIPA, because it will force the creation of a complex corporate bureaucracy for processing copyright infringement claims that can be linked to technology for de-listing sites from their search engine, or restricting the placement of ads on offending sites. Along with the challenges of supporting and enforcing the system required by PIPA, it’s likely to spur an expensive technological-arms race; consider how hard it is for Google to stop search-engine spam. Certain copyright owners (such as those represented by the MPAA) would prefer that companies like Google incur the costs of policing and competing with pirates.

However, it isn’t just large companies like Google that are harmed. If the cost to Google is an inconvenience–the cost to startups is completely devastating. An entire startup website could be shutdown by the law simply because one copyright-holder decides to pursue the remedies allowed under PIPA. Bloggers and activists could be shut-up by powerful corporations, or by organizations such as the Church of Scientology which hasn’t been shy about silencing poorly-funded activists with legal challenges.

Entrepreneurs and investors will avoid markets where it appears that a large media company might have the power to shut you down, or where hackers could exploit the government’s technology to have the same effect. This is because small companies will lack the resources to content with the legal, technical and bureaucratic hassles that the law will create.

Years ago, the head of the MPAA compared the VCR to the Boston strangler, suggesting that the VCR would kill the film industry. Instead, it expanded it by creating new ways to sell movies, and opening up new markets for indie filmmakers. It seems that little has changed since this time: the backers of this legislation fear any form of innovation. If any strangling is happening, it’s by the backers of this bill and the still-nascent Internet industry.

PIPA will require a technological-industrial integration to police content, along with a centralized government authority that undermines the Internet domain name system (DNS). If Internet freedom, American innovation and fair use of copyrights are important to you, now is the time to let your senator know that PIPA is a horrible idea.

Thank you for reading this article. Please follow me on Twitter to hear more from me on innovation, games and entrepreneurship. If you'd like to learn how games can transform your business, also check out my book, Game On: Energize Your Business with Social Media Games.

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Despre PIPA si SOPA | Dan Virtopeanu
January 18, 2012 at 2:13 am

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Leo O'DonnellNo Gravatar January 18, 2012 at 8:59 am

I completely agree.

Stepping up on Soapbox

Laws of this nature, usually sponsored by intrenched business interests, do not tend to offer a positive effect on a capitalist economy. These laws stifle new business models and inhibit channels where IP holders with less valuable IP can create more value for themselves.

This is especially the case for the music industry where the income is concentrated in a small handful of artists and distributors. Proponents of SOPA and PIPA like (or should I say love) to talk about how piracy is hurting the little guy, but their own balance sheets speak for themselves.

Artists like Rihanna, Ke$ha and Katy Perry are where the money is (please check out: http://www.buzzfeed.com/daves4/12-extremely-disappointing-facts-about-popular-mus). Record labels are very reluctant to invest in talent through A&R activities and when they do they are looking for 360 deals that earn them a percentage of all band related sources of income.

Some of this has been inevitable. In days of olde, you sold an album and earned money on all of the songs (good and bad); now folks just purchase the songs they’re interested in, so even if you lock down the IP, income would be down. It may not seem obvious, but the 60 year (give or take) popular music recording bubble has burst. It is time to give the industry back to the musician.

I do agree that sensible IP governance needs to be in place, but like so many gun advocates like to say – guns don’t kill, people do – so prosecute the offenders and, if you’d like some help, make it easy for Internet business to assist without threats and punishment.

Stepping down from Soapbox

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