July 2008
FISA and Border Searches of Laptops (10 July 2008)
Cybersecurity Advice for (Possible) President Obama (24 July 2008)
Control as a Motive for Content Owners (29 July 2008)

Control as a Motive for Content Owners

29 July 2008

The traditional argument against file-sharing, as often expressed by the RIAA and the MPAA, is simple: people are obtaining (copyrighted) content without paying for it; this deprives the creators of the revenues to which they’re entitled, both by law and a respect for property. Put that way, it seems simple and obviously right; the arguments against them tend to be about availability, price, and the like, or perhaps a rant against pre-Internet business models. All that said, sometimes there’s more going on.

A recent news story tells a different tale. Warner Brothers fought mightily to keep The Dark Knight from appearing on file-sharing networks before the official release date. What mattered was not so much the appearance of the film, but the timing. Why?

Timing, it turns out, is crucial to studio profits. For good movies, an official release ensures maximum curiousity and hence attendance; for a bad movie, the official opening without precursors ensures that people will not have heard the negative buzz before buying tickets.

This is not new, of course. Studios have long manipulated release dates, viewings by critics (never see a movie where there were no pre-release showings for the media), foreign release dates, etc. That last week I could go to Belgium for the PET Symposium and see ad posters for Le Chevalier Noir is no mark of new-found egalitarianism by Warner Brothers; rather, it reflects careful calculation that this was the way to maximize profits. But the buzz is crucial:

Studios fear a reprise of the "Hulk" piracy debacle. A rough, early version of Ang Lee’s 2003 summer movie made its way to the Internet two weeks before the film’s scheduled premiere, provoking negative reactions from the comic-book film’s devoted fans, whose opinion carries far more weight in determining the success of this film genre than that of mainstream film critics.

"A lot of people decided not to go near it. Hollywood argued, correctly, that many more people would have gone to see it, had online buzz not been so critical of the movie," said Eric Garland, chief executive of BigChampagne Online Media Measurement, which monitors file-sharing networks and is a consultant to the entertainmentindustry.

The argument about file-sharing in this case is no longer about the lost revenue from those who would otherwise have paid to see the movie. Rather, it’s about controlling dissent: they don’t want people who didn’t like the movie to say so publicly, before lots of people pay for the privilege of seeing a bad movie.

The -sharing debate is much more nuanced in this situation. While property owners have the right to use their property in the way that’s most profitable for them, it’s no longer a question of consumption without compensation. Rather, it’s a question of controlling information flow, and that’s a different kettle of fish entirely. One gets the feeling that if it were legal and practical, the studios would limit unfavorable online discussion of their movies — remember the "veggie libel laws sponsored by the food industry or SLAPP? Fortunately, the American tradition and legal system are hostile to such things.

The lesson here is that one should look beneath the covers of all arguments about the harm done by file-sharing. The traditional claim has been that each downloaded file represents a lost retail sale. That claim is false in both directions. Some people would never have purchased the product (and hence represent no loss of revenue); in other situations, single copies in the "wrong" hands will represent a greater loss of revenue, but only because of information flow. In this situation, downloads in the absence of blogs and the like would have very little effect. The real issue, then, is this: should the studios have a monopoly on market perceptions? Worse yet, should the government, by means of copyright law, help enforce this monopoly? In ACLU v. Reno (96-963), Judge Dalzell wrote

It is no exaggeration to conclude that the Internet has achieved, and continues to achieve, the most participatory marketplace of mass speech that this country — and indeed the world — has yet seen.
Copyright law is no excuse for reversing that.