Bit Rate

Why Stealing Digital Stuff Is Still Stealing

4/08/2012 9:19 AM

An idea has taken root in certain quarters that downloading pirated copies of, say, HBO’s Games of Thrones or Lionsgate’s The Hunger Games from the dark alleys of the Internet doesn’t actually hurt anyone.

In this formulation, helping yourself to digital forms of intellectual property for personal use is a victimless crime, and not equivalent to the theft of physical goods (see The Infantile Thief).

“[D]ownloading or copying something doesn’t represent the loss of anything tangible at all, which is what makes ‘intellectual property’ such a misnomer,” GigaOm’s Matthew Ingram writes in “Why it’s wrong to call copyright infringement ‘theft’” (pointed out by a reader commenting on my previous post). “If I take your car or your coat, you no longer have them — that represents real theft.”

There’s no real harm done in stealing digital works, according to Ingram, because many content thieves “likely would never have paid money for them in the first place.”

Ingram cites a recent op-ed in the New York Times by Rutgers Law School professor Stuart Green, who similarly argues that “we should stop trying to shoehorn the 21st-century problem of illegal downloading into a moral and legal regime that was developed with a pre- or mid-20th-century economy in mind.” According to Green, studies show “lay observers draw a sharp moral distinction between file sharing and genuine theft, even when the value of the property is the same.”

So no harm, no foul — right?

Wrong.

Green and Ingram, in fact, improperly apply a pre-Internet legal standard of thievery (i.e., “theft” covers only physical goods, not intangible things) to our digital age.

A more compelling analysis of why stealing intellectual property is harmful — in both in economic and societal-good terms — comes from D.C.-based think tank Phoenix Center for Advanced Legal & Economic Public Studies.

“The theft of IP reduces social well-being, even if we count the benefits to the thief and assume theft requires no resources,” write the authors of Social Well-Being and IP Theft: A Dynamic Economic Analysis. “In effect, theft acts as a distortionary tax on sellers, and this distortion is not remedied by merely returning the proceeds of the theft as a lump sum transfer to consumers.”

The stealing of digital goods results in wages and output falling among producers of intellectual property, the authors demonstrate: “These harms occur because theft deprives producers of sales, reducing the apparent returns to capital investments.”

And not just content producers are harmed — it’s everyone. “Indeed, it is consumers that are hurt by theft in the long run, as the incentive to invest in IP is diminished,” according to the paper’s authors, T. Randolph Beard, George Ford, Lawrence Spiwak and Michael Stern.

Green acknowledges this point: “Illegal downloading is, of course, a real problem. People who work hard to produce creative works are entitled to enjoy legal protection to reap the benefits of their labors.” But his problem with characterizing illegal downloading as a form of stealing (and the punishment that implies) is that “we ordinarily can’t know whether the downloader would have paid the purchase price had he not misappropriated the property.”

That’s immaterial, Beard et al. argue. “[T]he fact that people steal copyrighted material… is socially significant because some (though not necessarily all) of them do not buy it as a result. It is by this means that their activities can produce social losses.”

Meanwhile, what kind of twisted logic is it to claim that stealing is OK because someone wasn’t going to buy it anyway? Your Honor, I downloaded all the Harry Potter movies because I wanted to watch them but I didn’t want to pay anything — so I wasn’t actually, you know, doing anything criminal. It defies common sense.

Civilizations have held for millennia that the punishment should fit the crime. Penalties for shoplifting a candy bar aren’t the same as grand theft auto. So, is stealing a movie from The Pirate Bay less of an offense than stealing a DVD from Walmart — just because it’s easier to do the former, and a lot of people seem to think that is not really stealing? Maybe, maybe not.

Whatever your perspective on that may be, the main question is “how to develop an effective mechanism to prevent IP theft,” the Phoenix Center paper authors contend. They don’t discuss whether that’s new technology, new business models, new SOPA-style legislation to stop foreign pirate websites, or something else. In any event, they say, “we should at least immediately discount the argument that on-line theft of IP causes no harm and therefore no foul.”

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