Lip Service: Last Hours #17

‘When You Pirate MP3s, You’re Downloading Economics’

“People have a right to share copies of published works.”
Richard Stallman


“According to conventional economic theory, goods with zero marginal costs should be public goods to be given away without cost rather than be sold as a commodity.”
Michael Perelman

Economics…twitch…marginal costs…cough…public goods…splutter. If you’re starting to feel a little queasy you will undoubtedly sympathise with the situation I have been in for the last year and a half: voluntarily - I repeat, voluntarily! - researching the economics of intellectual property…swoon. If you do not think you can stomach the rest of this column, you are, of course, excused from the table. Feel free to peruse the rest of the zine for something more radical in comparison. In contrast to the abundance of worthy content in this issue, I am painfully aware of how desperately I am vying for your attention. Should you choose to stay seated however, I will regale you with an equally radical belief - that economists and peer-to-peer file-sharers have a lot in common.

The title of this column, as some might have already observed, is a play on an anti-RIAA (Recording Industry Association of America) poster currently swarming the Internet. “When you Pirate MP3s, You’re Downloading Communism” the poster proclaims, and has recently been detournéd to declare: “When you pay for MP3s, You’re Rockin’ Out with The Man’” (both versions can be viewed at www.modernhumorist.com). Without wishing to bore you with all the ins and outs of copyright law and its crusade against peer-to-peer- file-sharing it will suffice to say that whilst intellectual property rightholders have succeeded in successfully bringing an end to the previously radical utopias of Napster and Grokster, they have been unable to thwart its underground offspring - the BiTtorrent protocol, which accounts for roughly one third of all Internet traffic at any given time. Whilst the copyright industries continue to assert their belief that downloading is illegal, ringing this point home with some exemplary court cases, distributed file-sharing networks have become too pervasive to police effectively. As a result the UK Government has recently announced plans to ban persistent peer-to-peer file-sharers from the Internet altogether (three strikes and you’re out!), in a similar vein to the ‘communications’ ban placed upon notorious ‘hacker’ Kevin Mitnick upon his release from solitary confinement. Kevin Mitnick got (and served) almost five years, and was prohibited from using a computer for another three. (All his skills are related to computers, and he has been prohibited from lecturing on the subject) (Schneier 2000:382). The Government proposed policing of peer-to-peer filesharing will not be unbdertaken at the corporation’s expense - Internet Service Providers will have to monitor subscribers' internet use and give users two chances before disconnection. They will be emailed once, suspended a second time and then cut off completely if they do not change their file sharing behaviour (www.out-law.com/page-8868).

In response to the hard-line advocates of ‘downloading is illegal’ a cyberactivist/libertarian response is often found emanating from the peer-to-peer community and many a pub-table debate. As I’m sure many of you have already mooted this point at some time in recent years, you will be familiar with arguments to the tune of ‘I can get away with it, so why should I stop?’, and ‘if they didn’t charge so much for it, I wouldn’t have to download it illegally.’ Drawing support from the likes of John Perry Barlow (former lyricist for the Grateful Dead turned political activist) and Richard Stallman (pioneer of the concept of ‘copyleft’ software, and main author of several copyleft licenses including - the most widely used free software license - the GNU General Public License) such responses normally argue that copying is the ‘natural law of the Internet’ and that we have a ‘right’ to share copies of published works. Whilst it remains true that the Internet is - in its very nature - a distributed copying machine - one that facilitates acts of mass copyright infringement - in the face of legal arguments to the contrary, the cyberactivist attempting to argue for a hypothetic right inevitably gets tagged a communist. It becomes hard to argue for theft, and harder still when the industry gets its minions to do its bidding - ‘Would you go into a CD store and steal a CD? It's the same thing, people going into the computers and logging on and stealing our music. It's the exact same thing, so why do it? (Britney Spears, ‘What the Artists and Songwriters Have to Say,’ Musicunited.org, 2003). Why do it, indeed Britney? The cyberactivist may still feel it is his right to do so, but where does this ‘right’ find its validity? Where should the natural law of the Internet seek its legitimacy? In the natural law of economics, silly!

Economics - in its modern parlance - concerns itself with the allocation of scarce or rivalrous resources. Intangible property is non-rivalrous – whereas tangible property is inherently rivalrous. For example, take this issue of Last Hours firmly in your hand. It is inherently rivalrous - a scarce resource because only one person can read your copy at any given time. It cannot be in two or more places at once, yet MP3s, on the contrary, are inherently non-rivalrous. A copy of an MP3 can be in more than one place at any given time, coursing through the capillaries of the Internet without depriving the original owner of their ‘copy’. To Britney’s questionable logic, Stanford Law professor Lawrence Lessig offers a fine retort: ‘if you go into Tower Records and you pick up a CD and walk out you might be chargeable with a misdemeanour, probably a $1,000 fine. According to the RIAA, if you download the same songs off the Internet you could be liable for $1.5 million and damages…which one is the really harmful activity? Taking from Tower Records actually deprives Tower Records of some money. But downloading from the Internet, its arguable whether it harms anybody.” (Punk Planet, Issue 74, July & August 2006).

This is the crux of the radical economic argument I wish to put forward, although Lessig did not take it to its logical conclusion. The natural law of economics - supported by Nobel Economic Laureates Kenneth Arrow and Paul Samuelson – dictates that “goods with zero marginal costs should be public goods to be given away without cost rather than be sold as a commodity.” Simply put, when the marginal cost (the cost of producing one additional unit) nears zero, the good - whatever it is - should be given away for free. Here - you may be surprised to hear - economic man advocates the giving away of MP3s, given that the cost of copying one additional unit is near zero (arguably only an unquantifiable amount of electricity is required to copy an MP3, given that you already own the computer required to copy it). If it costs the industry near-zero to make that unit, then it costs them near-zero if you steal it! Of course, this is of no surprise to the cyberactivist, railing against industry over-inflation of that near-zero marginal cost, inability to adjust to the online-market, and their desire to protect the totalitarian distribution networks they have monopolised on since the 1960s. Of course, these vast distribution networks are of no use to the new distribution network we affectionately call the Internet. There are no more Tower Records from which to take. Economics dictates that the reduced marginal cost of delivering music online permits the Recording Industry to charge somewhere between 0-5p a track. Any more is just naked profiteering, and requires a sympathetic legislature to protect industry self-interest. Alas, as Michael Perelman observes: “when the sacred laws of economics suggest something that might not be in the best interests of business, economic theory is swept aside” and law, read government, read business, becomes the real root of the problem, and market populism – the belief that markets are more democratic than anything else – reigns supreme.

Whilst, I have only touched on the underlying problems at hand, I hope you appreciate the simple, circular-logic to be found in this unlikely alliance. It is no longer a case of ‘us’ against the ‘industry’, if ‘we’ have the economists on our side. Whilst ‘we’ - the file-sharing multitude - radically endorse economic law in our active resistance, the economists invest legitimacy in our ‘right’ to share copies. We are not pirating MP3s…we’re downloading economics.

Chris Lever

Huge thanks go out to Laura Hughes for providing the illustrative interpretation of this column, though I'm still not sure what it's supposed to be? It could be hands...it could open bird mouths...but I have concluded it's Hardt & Negri's 'Multitude'!