Sunday, March 25, 2012

Pirates Are Not Content Distributors

This is the next post in a series exploring criticisms of file sharing (part one, part two.) Before continuing, I need to repeat something from my last post: I'm not defending myself or trying to provide a rebuttal to the criticisms of the anti-piracy crowd. I'm giving you the information you need to bring a pirate back to the pay table.


Everyone sitting here reading this knows how valuable the VCR was to both consumers and Hollywood. In retrospect, we're all amazed that the VCR battle got so intense that they actually held congressional hearings over it. It seems simple and obvious now, but 35 years ago, they had the exact same battle over the VCR piracy that we are having over internet piracy.

We've all heard about the craziest thing Jack Valenti said in front of congress in his attempt to make VCRs and home recording illegal. But when you look at everything he said, it's eerie how closely his complaints back then mimic the complaints now:

“Unless Congress recognizes the rights of creative property owners as owners of private property, it is going to be eroded in value by the use of these unlicensed machines. Nothing of value is free. The VCRs only mission is to copy copyrighted material that belongs to other people. The fifth amendment forbids the taking of private property without just compensation. The permission of the copyright owner is required for the use of their programs in all markets. We cannot live in a marketplace where this one unlicensed instrument is capable of devouring all that people had invested in and labored over, laying waste to the orderly distribution of the creative content.”
“86.8 percent of all VCR owners erase or skip commercials. If you are an advertiser it destroys the reason for free television. As one VCR owner wrote in his diary, why buy prerecorded movies? You can record the same thing from a premium pay channel much cheaper. There is also less need for VCR owners to go out to the movies. In economic terms, people are deriving value, benefit, utility from the ownership of a home taped copy of a video film production while there is currently no equivalent benefit payment for the producers in the economic exchange.”
 “If 56 of the 93 movie recordings made by 250 households are saved for the shelf and for additional playback -- then the number of movies collected in a year by the Nation's 2.4 million VCR households would be 6,537,216. At a prerecorded purchase of $50, they would have a retail value of $3.2 billion. Mr. Chairman, things like that could make grown men cry.”

It boggles the mind how much Valenti's comments parallel today's piracy discussions. He even pulls a bogus “lost sales” statistic out of his ass to show the economic harm VCRs cause to Hollywood. [note: Valenti's math looks wrong. Should be 65 million recorded movies, not 6.5 million] Valenti even complains that we can't live in a marketplace where the consumer can control distribution. He also complains that when people record a show at home, the creators don't get compensated. And when people have copies at home, they won't buy movie tickets or pre-recorded movies. Does any of this sound familiar? Those were incorrect arguments then, and they're incorrect arguments now.

If you read his full testimony, it's laughable to see what else he complains about. Skipping commercials, time-shifting, creating a permanent collection, etc. We can all sit here now and realize that Valenti was wrong. The VCR was not only harmless to Hollywood, but turned out to be an extremely profitable enterprise for them once they embraced it. But if you transplant yourself back to the time of those hearings, you'd be hearing the same criticism from today, “This isn't your movie, you don't get to decide who gets a copy.” And yes, I will gladly concede that the internet has made copying infinitely more easy than the VCR ever did. But the critics and I probably disagree on how relevant that point is to the discussion.

I'm not pointing all this out to say that I'm more advanced than the anti-piracy crowd. Nor am I trying to say that the critics “just don't get it.” There are a lot of smart and passionate people who think file-sharing is horrific. I just think that it's misguided to think that the internet piracy discussion today is all that different from the VCR piracy discussion over 3 decades ago. And if we can see how wrong the industry was then, we should be able to see how wrong they are now.

Next post: Samples, wallet voting and deserving to get paid.

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