Committee for Economic Development on Digital IP Policy

Report Raises Questions About Fighting Online Piracy [via Slashdot] A discussion of the threat of too stringent IP protection.

Record companies and movie and television studios have fought copyright infringement on many fronts, hoping to find ways to prevent their products from being distributed free on the Internet. But critics warn that many of the new restrictions that the entertainment industry proposes – like enforcing technological requirements for digital television programming that would prevent it from being transmitted online – would upset the balance between the rights of the content creators and the rights of the public.

“We are sympathetic to the problems confronting the content distribution industry,” said the report, “Promoting Innovation and Economic Growth: The Special Problem of Digital Intellectual Property.” “But these problems – perfect copies of high-value digital works being transmitted instantly around the world at almost no cost – require clear, concentrated thinking, rather than quick legislative or regulatory action.”

From the CED report’s introduction:

The social value of a public domain, the balance between imitators and innovators, and the historic deference given to the rights of first sale and fair use are of great importance when considering what to do about digital piracy. There can be no question that prosecuting those who break the law is both valid and important, but many anti-piracy proposals go much further than that. Many of the proposals would require consumers to add hardware or software to their computing devices that would add to cost and reduce interoperability regardless of the machine’s use. This would slow the use of digital technology and its contribution to long-term innovation. Moreover, many proposed outright prohibitions on access to digital material explicitly denies users the prerogatives they have traditionally enjoyed under the doctrines of first sale and fair use. Thus, the risk in taking action on digital piracy is that we make choices that move the finely crafted historical balance away from the imitators and users and towards innovators. Finally, we are concerned about proposals that direct the government to anoint one particular technological solution to a social problem; this reduces incentives for future innovation and gives no one the incentive to solve the piracy problem at minimum social cost.

As the DCC report notes, the ultimate solutions to the problem of digital piracy are new business models. Just as player pianos and radio expanded the market for music and radio and television led to greater interest in televised and broadcast sports, there is every reason to expect that digital technology will expand the market for entertainment by reducing the cost of producing and disseminating it. Moreover, we must bear in mind that these are the issues confronting the marketers of digital product, who are often not the creators of it — the difference between a publishing house and an author. The publishing house is a business model for distributing the author’s work — the economy depends less on this specific manner of distribution than it does the work of authors who provide the economy with creative input.

The DCC’s recommendations are carefully considered and should be given serious consideration. The moral issues raised by widespread theft and the economic burden theft imposes on some businesses are of great concern. But they are not sufficient cause to take actions that could slow the rate of societal innovation so crucial to long-term economic growth.

And from the Executive Summary:

  1. Because quick legislative or regulatory solutions for the problem of digital copyright protection pose risks to innovation and economic growth and are likely to have unintended consequences in a period of rapid technological change, we should move slowly. Our first concern should be to “do no harm.” […]

  2. The development and testing of new business models for the distribution of creative content should be given the highest priority by the content industries. We should not turn to law or regulation to protect any particular business model.

  3. Existing solutions to the issue of unauthorized uses, such as enforcement and education, should continue to be explored.

  4. We recognize the need for digital rights management (DRM) systems that will allow creators to be rewarded for their efforts. We are skeptical about government-mandated DRM, and we recommend that manufacturers not be required to build in mandated copy protection technologies. But DRM systems provide a useful “speed bump” for consumers by inhibiting unauthorized uses of materials. During this period of consensus building about “safety valves” in intellectual property law, we encourage continued experimentation in private DRM systems .[…]

  5. Market-based economic tools that provide incentives for copyright-holders to facilitate follow-on innovation should be considered — including measures to provide earlier dedication of copyrighted materials to the public domain.

Some light reading for the day……. [Donna’s thoughts]