Piracy fight pits new media against old, and new is winning

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Piracy fight pits new media against old, and new is winning
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Hollywood spends big money in Washington to shape the debate on issues like Internet piracy. Last week, it should have learned why it's ultimately going to lose.

For one thing, the old-media movie studios, TV networks and music labels now face organized opposition from their new-media brethren. Wednesday's Internet blackout -- in which popular sites like Wikipedia went dark and Google placed a black stripe across the logo on its home page -- was a masterful political move that caused members of Congress to rethink their support of Hollywood-sponsored legislation.

More importantly, the unruly nature of the Internet works against anyone trying to protect an old-media business model. The Digital Millennium Copyright Act didn't eliminate piracy when it passed in 1998, and neither the shutdown of Napster, the record industry's file-sharing nemesis, in 2001.

Each time the pirate sites get squeezed, they morph into new forms.

They'll do it again after Thursday's seizure of Megaupload.com, a site that authorities say was a haven for people stealing copyrighted material. And they wouldn't be deterred by the Stop Internet Piracy Act, or SOPA, which was the subject of the Internet-blackout protest.

"These things don't work," says David Levine, a professor of economics at Washington University who studies intellectual property issues. "Previous bills did almost nothing to deter piracy. The real problem is that this kind of bill has very little effect on the illegal users, the pirate sites, but it has a lot of effect on legitimate users."

SOPA, and a similar Senate bill known as the Protect Intellectual Property Act, would require U.S. companies to disable links to alleged pirate sites, and bar credit card companies from processing payments to them. Content owners could sue anyone they believe to be facilitating copyright infringement.

In short, everyone from Google to Facebook would worry about which seemingly innocuous link might land them in court. Innovation would be stifled.

At the same time, it's unclear what public purpose SOPA would serve.

At the most basic level, copyright law exists to protect and encourage creativity, the theory being that authors and musicians and actors won't create new work if they cannot profit from it.

Little evidence exists, however, that Internet piracy is deterring the George Clooneys and Miley Cyruses of the world from being creative.

Koleman Strumpf, a professor of economics at the University of Kansas, says the amount of new music released per year has more than doubled since 2000, which is roughly when file-sharing became a threat to the recording studios' business model.

Record companies may make less money, but the Internet has made it easier for new musicians to find an audience. Even established bands view online music as a way to build enthusiasm for their lucrative concert tours.

"Whatever else has happened over the last 10 years, people have not stopped making music," Strumpf says.

Until last week, Hollywood's arguments seemed to have a lot of fans in Congress. The Senate bill was voted out of committee unanimously last May.

The Internet blackout, though, caused a rash of second thoughts. Procedural votes were postponed in both the House and Senate and a few co-sponsors, including Sen. Roy Blunt, R-Mo., withdrew their support.

In Hollywood's hands, a good pirate story can easily be turned into a black-and-white depiction of good vs. evil.

The online piracy issue, though, needs to be drawn in shades of gray, with implications for freedom of speech and Internet innovation. For Hollywood, that lessens the chances for a happy ending.

Read more from David Nicklaus, who is the business columnist for the Post-Dispatch. On Twitter, follow him @dnickbiz and the Business section @postdispatchbiz.

Copyright 2012 stltoday.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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David Nicklaus

Looking for intelligent discussion of our fast-changing economy? You've come to the right place. Pull up a chair, pour yourself a tall glass of iced tea and join the conversation with business columnist David Nicklaus, who's been observing the St. Louis business scene for more than two decades.

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