SOCIAL SCIENCE RESEARCH COUNCIL • MEDIA PIRACY IN EMERGING ECONOMIES SOCIAL SCIENCE RESEARCHCHAPTER COUNCIL ONE • •RETHINKING MEDIA PIRACY PIRACY IN EMERGING ECONOMIES Chapter 1: Rethinking Piracy Joe Karaganis Introduction What we know about media piracy usually begins, and often ends, with industry-sponsored research. There is good reason for this. US software, film, and music industry associations have funded extensive research efforts on global piracy over the past two decades and, for the most part, have had the topic to themselves. Despite its ubiquity, piracy has been fallow terrain for independent research. With the partial exception of file sharing studies in the last ten years, empirical work has been infrequent and narrow in scope. The community of interest has been small—so much so that, when we began planning this project in 2006, a substantial part of it was enlisted in our work. That community has grown, but there is still nothing on a scale comparable to the global, comparative, persistent attention of the industry groups. And perhaps more important, there is nothing comparable to the tight integration of industry research with lobbying and media campaigns, which amplify its presence in public and policy discussions. Industry research consequently casts a long shadow on the piracy conversation—as it was intended to do. Our study is not envisioned as an alternative to that work but as an effort to articulate a wider framework for understanding piracy in relation to economic development and changing media economies. This perspective implies looking beyond the calculation of rights-holder losses toward the evaluation of the broader social roles and impacts of piracy. In so doing, it provides a basis for rethinking key questions raised—and often left hanging— by the industry studies: What role does piracy play in cultural markets and in larger media ecosystems? What consumer demand does it serve? How much piracy is there? What are losses? How effective is enforcement? How do software, music, and film industries differ in their exposure to piracy and in their strategies to combat it? Is education a meaningful strategy in anti-piracy efforts? What role does organized crime (or terrorism) play in pirate networks? Because such questions provide the foundation for the larger piracy debate and for the specific case studies that follow, they are the subject of the balance of this chapter. Global factors shape many of our answers, from multinational pricing strategies, to international trade agreements, to the waves of technological diffusion that are transforming cultural economies. But the organization of piracy and the politics of enforcement are also strongly marked by local factors, from the power of domestic copyright industries, to the structure and role of the informal economy, to differing traditions of jurisprudence and 1 SOCIAL SCIENCE RESEARCH COUNCIL • MEDIA PIRACY IN EMERGING ECONOMIES Chapter Contents policing. This report’s most original contributions, in our view, are its explorations of these differences and their impact on the 1 Introduction cultural life of their respective countries and regions. 2 What Is Piracy? 4 How Good (or Bad) Is Industry Research? What Is Piracy? 7 What Drives the Numbers Game? We use the word “piracy” to describe the ubiquitous, increasingly 8 How Much Piracy Is There? digital practices of copying that fall outside the boundaries of 11 What Is a Loss? copyright law—up to 95% of it, if industry estimates of online 14 Substitution Effects music piracy are taken as an indicator (IFPI 2006). We do so 16 Countervailing Benefits advisedly. Piracy has never had a stable legal definition and is 18 How Is Enforcement Organized? almost certainly better understood as a product of enforcement 21 The Confiscation Regime debates than as a description of specific behavior.1 The term 25 Selective Enforcement 29 How Effective Is Enforcement? blurs, and is often used intentionally to blur, important distinctions 32 Does Education Work? between types of uncompensated use. These range from the 35 What Is Consumption? clearly illegal, such as commercial-scale, unauthorized copying 37 Does Crime Pay? for resale, to disputes over the boundaries of fair use and first 40 Disaggregating Industry Exposure sale as applied to digital goods, to the wide range of practices of 41 Music personal copying that have traditionally fallen below the practical 45 Movies and TV Shows threshold of enforcement. Despite fifteen years of harmonization 48 Entertainment Software of IP (intellectual property) laws in the wake of the Agreement 51 Why Is Business Software on Trade-Related Aspects of Intellectual Property Rights Piracy Different? 56 Pricing (TRIPS), there is still a great deal of variation and uncertainty 63 Distribution in national law regarding many of these practices, including the 65 Looking Forward legality of making backups and breaking encryption; the extent 67 About the Chapter of third-party liability for ISPs (Internet service providers) or 67 References search engines linking to infringing material; the evidentiary requirements for prosecution; and the meaning of “commercial scale,” which under TRIPS has marked the boundary between civil and criminal liability. The massive growth of personal copying and Internet distribution has thrown many of these categories into disarray and prompted industry efforts to bring stronger criminal and civil penalties to bear on end-user infringement. The context in which most people use—and hear—the word piracy is the context 1 The most thorough excavation of the term, going back to the seventeenth century, is certainly Johns (2010). We take up this his- tory as well in the Coda to this report. The term does have recent definitions in international IP law—most notably in TRIPS, where it refers to the infringement of copyright and related rights (for example, the rights of performers, producers of phonograms, and broadcasting organizations). 2 SOCIAL SCIENCE RESEARCH COUNCIL • MEDIA PIRACY IN EMERGING ECONOMIES CHAPTER ONE • RETHINKING PIRACY created by these enforcement campaigns. We have continued to Acronyms and use the term because it is the inevitable locus communis of this Abbreviations conversation and because such discursive spaces are subject to drift and reinvention. One need look no further than the emergence ACTA Anti-Counterfeiting Trade Agreement of “Pirate” political parties in Europe organized around broad APCM (Brazil) Associação Anti-Pirataria digital-rights agendas. As the Recording Industry Association of de Cinema e Música (Association for the Protection of Movies and America recently suggested, piracy is now “too benign” a term to Music) encompass its full range of harms (RIAA 2010). BASCAP Business Coalition to Stop Counterfeiting and Piracy We have wanted, consequently, to avoid moral judgments in BSA Business Software Alliance exploring the “culture of the copy,” to borrow Sundaram’s (2007) ESA Entertainment Software more nuanced and inclusive terminology. One person’s piracy has Association always been someone else’s market opportunity, and the boundary GAO (US) Government Accountability Office between the two has always been a matter of social and political GDP gross domestic product negotiation. The history of copyright—so extensively excavated ICC International Chamber of in the past two decades2—is largely a history of struggles against Commerce (and later incorporation of) disruptive market innovations, often IDC International Data Corporation linked to the emergence of new technologies. Although there is IFPI International Federation of the Phonographic Industry much that is novel in the present circumstances, it is hard not to IIPA International Intellectual Property see the recurring dynamic among incumbents, pirate markets, Alliance and the new legal players who have begun to operate in the gap IP intellectual property between them. Its current form is familiar, at this point, to anyone ISP Internet service provider with an iPod. IT information technology MPAA Motion Picture Association of Some further parsing of terms is necessary. Since the America Berne and Paris accords of the late nineteenth century, OECD Organisation for Economic national and international law have distinguished between Co-operation and Development piracy and counterfeiting, drawing—sometimes loosely—on P2P peer-to-peer PRO-IP Prioritizing Resources and the distinction between copyright infringement and trademark Act Organization for Intellectual infringement. Traditionally, books were pirated and other Property Act RIAA Recording Industry Association of branded manufactured goods were counterfeited. The value of America the pirated good consisted of its reproduction of the expressive TRIPS Agreement on Trade-Related Aspects of Intellectual Property content of a work—the text rather than the pages and cover. Rights The value of the counterfeited good lay, in contrast, in its USTR Office of the United States Trade resemblance to more expensive branded goods. The two forms Representative of copying shared, broadly speaking, modes of production and VCD video compact disc distribution. Both required industrial-scale manufacturing. Both WTO World Trade Organization WIPO World Intellectual Property relied on clandestine distribution networks and often transborder Organization 2 A wave of historical inquiry on copyright emerged in the 1990s, with Goldstein (1994), Woodmansee and Jaszi (1993), and Rose (1993) among the most prominent. 3 SOCIAL SCIENCE RESEARCH