SOPA and the disingenuous MPAA

by Cosmo Houck

I haven’t written about SOPA yet, primarily because there are a lot of people who are more qualified than I am, and they’ve been pretty clear about what a bad bill it is. However, on the 10th the MPAA published a blog post in reaction to a Julian Sanchez piece for Cato that I find offensive enough that I have to say something.

Before that though, how about some background for the people out there who have no idea what I’m talking about.

SOPA stands for the Stop Online Privacy Act. Sounds pretty innocuous right?

It’s not.

There are a lot of problems with the bill. For a more complete rundown, check out this post over on Lifehacker, or this FAQ from Cnet. For a letter berating Congress for not knowing how the internet works, go here.

A brief synopsis: SOPA allows the possibility that courts can censor lots of websites you use everyday (things like Wikipedia and YouTube), but will almost certainly be very bad at stopping online piracy. Additionally, it could undermine DNSSEC, which provides end-to-end encryption of domain names.

You’d think with all of that collateral damage, the bill would at least hold out the promise of seriously clamping down on online piracy. You’d be wrong. The consensus is that it would fail abysmally. Websites blocked under SOPA would still be accessible through their numeric internet address (Cnet’s is

So to summarize: it wouldn’t adequately address the problem it’s trying to fix, due to vague language it could potentially be used to censor sites like Facebook and YouTube, and it undermines a key internet security standard. If you think that sounds objectionable you’re not alone.

So who’s pushing for this? Well, it’s primarily the big content creation organizations: the MPAA, the RIAA, and the Chamber of Commerce at the forefront. Those organizations also happen to have outspent tech companies in lobbying efforts over the past half decade. They (understandably) want people to stop pirating their content.

That’s fine. Most people willingly acknowledge that piracy is a problem. However, in pressuring Congress to help address that problem, the cadre behind SOPA has continually made up statistics and information. That’s not ok.

Here’s an example Julian Sanchez debunked three years ago. Over and over again, people were told that online piracy costs 750,000 jobs per year and between $200 and $250 billion dollars. The sources? The dollar figure came from a 1991 Forbes sidebar declaring that “’counterfeit merchandise’ is ‘a $200 billion enterprise worldwide and growing faster than many of the industries it’s preying on“’”. Never mind the age, if you’re thinking that “counterfeit merchandise” includes a lot more than online piracy, you’d be right.

That experience with IP watchdogs’ fallacious numbers is what led Mr. Sanchez to weigh in over at Cato on Jan 3, where he does a rock solid job debunking some of the current numbers floating around—for instance, an estimated cost of piracy in the U.S. from the MPAA is $58 billion annually. That, it turns out, is the product of some shady mathematics—it’s more like $6.1 billion. And of that $6.1 billion, SOPA would only address the $446 million of it that occurs in the United States—which Sanchez pithily points out is approximately the amount grossed by Alvin and the Chipmunks: The Squeakquel.

Furthermore, Sanchez goes on to make the point that the missing $446 million is not actually being taken out of the U.S. economy; as the GAO notes:

(1) in the case that the counterfeit good has similar quality to the original, consumers have extra disposable income from purchasing a less expensive good, and (2) the extra disposable income goes back to the U.S. economy, as consumers can spend it on other goods and services.

Furthermore, for consumers who would have bought the good if they hadn’t pirated it, it does not represent money taken out of the economy so much as money redistributed within the economy; they’re going to take that disposable income and spend it on something else. This is not a good thing, but arguments about how much pirating is hurting the overall economy tend to overstate the situation. Of course, most people who pirate stuff wouldn’t ever purchase it legitimately. As Mr. Sanchez nicely states, that represents a scenario in which “The downloader enjoys the benefit, and the producer loses nothing.” This becomes the crux of the issue.

I’ve gotten a bit carried away; if you recall I want to talk about the MPAA response to Mr. Sanchez. They begin with obviously inflammatory language that deliberately misrepresents the point:

Julian Sanchez, a research fellow at CATO and former Washington editor for Ars Technica, a tech blog with a long history of challenging efforts to curb content theft, recently wrote a post on Cato@Liberty, which once again offers tired arguments about why the theft of intellectual property is not such a bad thing.

Of course, that is not at all what Mr. Sanchez was doing—unless using accurate figures and contextualizing internet piracy constitute arguing that “it is not such a bad thing”. Thinking about reasonable ways to prevent piracy, and avoid overreaction, is not advocating piracy. I suppose that language is to be expected, however, from a rabid organization uninterested in dialogue.

More egregious is the false equivalence the post draws between theft and online piracy. Reprehensibly the post suggests that piracy equates to credit card fraud or shoplifting. This is patent nonsense—especially within the context of the MPAA.

Let’s focus on Alvin and the Chipmunks again; the approximate production budget was $75 million (I’ve seen lower estimates, but let’s go with the high one). The cost to digitize the movie and make it available online is essentially negligible. This is the beauty of the internet: it drives costs down to essentially zero.

This is among the many reasons that piracy is not “theft”. When someone shoplifts a product, they both a) deprive another shopper of that product and b) deprive the producer of the money it costs to make/distribute/market that product. When someone pirates a movie, there are still an effectively infinite number of copies of that movie for the movie company to distribute. This is a point that Matthew Yglesias made much more clearly than I can:

If I steal your car then you don’t have a car anymore, whereas if I duplicate a digital media file we both end up with it. The harm in the duplicating is supposed to be that by duplicating content that Fox Filmed Entertainment owns the copyright to, I’m depriving Tom Rothman of some revenue that he might have gotten had I instead gone out and bought a copy of the content for myself. That’s fair enough for Rothman to feel sad about, but it’s a totally different kind of thing. I didn’t buy DC’s animated film of Batman: Year One, and I didn’t pirate a copy either; I watched it at a friend’s house. The difference between watching a movie with your friend and copying your friend’s Blu-ray is that one is legal and one is illegal. But in both cases you watch the movie without paying the copyright owner, and in neither case have you stolen anything from anyone.

This is an important distinction, and a wholly necessary one to understand the sort of extraordinary claims the MPAA post makes against Julian Sanchez. It is not true that “Extending [his] argument, shoplifting has no economic impact since shoplifters can spend the money they “saved” on other products, a perspective which runs counter to treatment of crime in other “costs of crime” studies” for reasons sane people can readily understand: copyright infringement does not equate to theft.

This is NOT to say that copyright infringement should be condoned, but rather that we should orient it properly—because without that, we’ll end up with shitty legislation that unnecessarily curbs speech in an attempt to protect an industry that has proven almost willfully resistant to adaptation.