piracy and other problems

This page looks at illicit use of copyright, in particular piracy.

It covers -

• questions about the nature of IP piracy, online and offline
• academic, industry and government overviews of piracy
• global politics and national interest
• a victimless crime?
• prevalence and value
• responses by industry

     questions

What is illicit use of copyright and what is the economic value of that use?

The question is significant because of claims that "copyright theft" amounts to billions or trillions of dollars each year, imperils the viability of industries and necessitates responses such as Section 301 trade sanctions by the US or use of criminal rather than civil penalties. There is a valuable discussion of 301 in Aggressive Unilateralism: America's 301 Trade Policy and the World Trading System (Ann Arbor: Uni of Michigan Press 1990) edited by Jagdish Bhagwati & Hugh Patrick.

The International Federation for the Phonographic Industry (IFPI) - for example estimated piracy in 1982 at 11% of the total market in North America, 21% in Latin America, 30% in Africa and 66% in Asia. Its 2000 estimate (PDF) was that 36% of the disks and cassettes sold across the globe were pirated - around 1.8 billion items.

Software industry reports claim that for 1996 the software piracy rate was 96% in China, 91% in Russia and a mere 60% in India.

Tim O'Reilly asserted in 2002 that "Piracy is Progressive Taxation". One response is that illicit use involves a continuum of disrespect for the moral and economic rights of copyright creators/owners, ranging from one-off acts that breach fair use/fair dealing provisions in national legislation through to large-scale copying of disks, books, designer handbags and watches on a strictly for-profit basis.

Overall, policymakers and enforcement agencies (public and private) have tended to regard 'personal' one-off copying as a misdemeanour and there are no credible estimates of its incidence or economic impact. Workshops churning out unauthorised copies for sale - and the distribution chain engaged in 'trafficking' - are stigmatised as intellectual property pirates and involve large amounts of money.

The net is interesting because, at least for the moment, it has altered the rules for much copyright and has for example telescoped the continuum.

Two hundred years ago the decision by a reader to make a handwritten copy of a book generally did not have much impact on the publisher. In 2002 a personal copy of a sound recording can be added to a 'swapping' service for global access with a few keystrokes, something that allegedly does have a real impact on markets and has lead to proposals for substantial legal and technological restrictions. Uptake of broadband across the world is likely to lead to increased abuse of software and video.

Importantly, the 'liberation' of content through such services involves action by individual users - rather than a workshop (with bank account) that can be busted by enforcers for the rights owners. The net in effect has become the factory, leading the enforcers to concentrate - with varying success - on choke points such as internet service providers.

The following paragraphs look at some overviews, figures and issues.

     overviews

Perhaps surprisingly, there are no major academic overviews of contemporary copyright piracy.

There is substantial work about piracy of text and music publishing, particularly during the early years of copyright. Examples are John Feathers' Publishing, Piracy & Politics: An Historical Study of Copyright in Britain (London: Mansell 1994), Kathryn Temple's Scandal Nation: Law & Authorship in Britain, 1750-1832 (Ithaca: Cornell Uni Press 2003), Richard Cargill Cole's Irish Booksellers & English Writers, 1740-1800 (London: Mansell 1986), David Saunders' Authorship & Copyright (London: Routledge 1992), James Barnes' Authors, Publishers & Politicians: The Quest for an Anglo-American Copyright Agreement, 1815-1854 (London: Routledge 1974), Simon Nowell Smith's International Copyright Law and the Publisher in the Reign of Queen Victoria (Oxford: Clarendon Press 1968), James Coover's Music Publishing, Copyright & Piracy in Victorian England (London: Mansell 1985) and Adrian Johns' 2002 Pop Music Pirate Hunters (PDF). For the film industry see in particular Kerry Segrave's Piracy in the Motion Picture Industry (Indianapolis: McFarland 2003)

Coover and Segrave demonstrates continuities in enforcement - from "legislation, litigation and leg-breaking" at the beginning of last century to raids on CD factories and commercial importers in 2001.

The major industry bodies (highlighted below) and many government agencies have produced reports on the claimed incidence and significance of piracy and 'consumer theft'. Two examples are the 1999 report on Copyright Piracy in India by the Ministry of Human Resource Development and the 2000 Cracking Down on Copycats: Enforcement of Copyright in Australia report from the House of Representatives Standing Committee on Legal & Constitutional Affairs.

Unfortunately much of that work is distinguished by uncertain methodologies or special pleading and thus has not gained widespread acceptance.

Among academic research is the 2001 paper (PDF) by Shujen Wang on Global Film Distribution Revisited: Network, Technology & Space and Kenneth Ho's dissertation A Study into the Problem of Software Piracy in Hong Kong & China, Scott Palmer's lucid Indiana Journal of Global Legal Studies paper (PDF) on An Identity Crisis: Regime Legitimacy and the Politics of Intellectual Property Rights in China, Peter Yu's 2001 paper From Pirates to Partners: Protecting Intellectual Property in the 21st Century and Edgardo Buscaglia's US Foreign Policy & Intellectual Property Rights in Latin America (Stanford: Hoover Institution 1997).

Stan Liebowitz's sceptical 2002 paper Policing Pirates in the Networked Age and Record Sales, MP3 Downloads & the Annihilation Hypothesis (PDF) are also of particular interest.

We have included a separate profile on forgery and authenticity.

     global politics and national interest

In considering global figures it is important to remember that while global agreements such as the Berne Convention and TRIPS provide an overall framework there is no single copyright law that applies in every country - ie provisions in different national legislation vary significantly.

Not every country shares the same perceptions about copyright or a readiness (and capacity) to enforce infringements, particularly those online or that are perceived to coincide with the national interest.

William Alford's To Steal a Book is an Elegant Offense: Intellectual Property Law in Chinese Civilisation (Stanford: Stanford Uni Press 1995) illustrates different perceptions about originality, copying and global power relations. In some cultures, given the emphasis on creativity, copying is often regarded as inferior imitation. In others "the highest compliment one can be paid is to be copied".

Surveys have suggested that some consumers in South America regard appropriation of software as their patriotic duty - a blow against the Gringo - or a matter in which they have no choice, since intellectual property is not 'real', they could not afford to purchase that ticket to modernity and an example is provided by their government.

One US survey, for example suggested during the 1990s that around 70% of PC software in Argentina's national bureaucracy was illicit. The Software Piracy among Tertiary Students in Brunei Darussalam: an Empirical Study study (abstract) by Mohammad Mahbubur Rahim and Afzaal Seyal indicated that only 26% of surveyed students reported that they had never used illicit software (compared to 50% in the US and Canada).

Brunei is one of the world's richest states but (like China and, until a few years ago, Japan) regards itself as a developing nation. It has only recently established a copyright regime that respects content from more advanced economies.

That action is part of a long tradition. The US for example did not protect European authors and publishers until the 1880s (eg the 1891 Chace Act): major publishing houses such as Harper & Row made their fortune by pirating authors such as Dickens, Eliot and Thackeray, something that as Meredith McGill notes in American Literature & the Culture of Reprinting, 1834-1853 (Philadelphia: Uni of Pennsylvania Press 2002) was indeed considered an act of conspicuous patriotism. As a net exporter of intellectual property - see for example the International Intellectual Property Alliance's 2002 report (PDF) and 2000 report (PDF) - the US joined Berne in 1988 and now has a different view.

We have highlighted particular resources about copyright trade wars and IP geopolitics here. They include Philip Altbach, in Copyright & Development: Inequality in the Information Age (Chestnut Hill: Bellagio 1995), Paul Goldstein's cogent Comment (PDF), Michael Ryan's Knowledge Diplomacy: Global Competition & the Politics of Intellectual Property (Washington: Brookings 1998), Susan Sell's Power & Ideas: North-South Politics of Intellectual Property & Antitrust (Albany: State Uni of New York Press 1998), Suzanne Scotchmer's 2002 The Political Economy of Intellectual Property Treaties (PDF) and the thinner Hot Property: The Stealing of Ideas in an Age of Globalization (New York: Knopf 2005) by Pat Choate.

As a reminder that geopolitics does not only affect the Third World, consider the controversial 2001 report (zipped) from the Australian Competition & Consumer Commission (ACCC) on parallel import restrictions, arguing that Australians continue to pay higher prices for books and computer software than overseas counterparts, although prices for CDs have declined since the loosening of restrictions in 1998 and a flood of pirate copies has not eventuated.

The ACCC claimed that

despite recent falls in the value of the Australian dollar, Australians are still paying around 12% more, on average, for leading business software than their US counterparts.

Devotees of popular PC games pay around 20% more than those in the UK and 5% more than New Zealand players

On average, Australians paid around 44% more for fiction paperbacks than United States readers did in the 12½ [months] from July 1988 to December 2000. During the same period, Australians paid around 9% more than UK readers for best-selling paperback fiction

     a victimless crime?

We've encountered claims that copyright is a bad thing because it is "a fence around creativity". Unfortunately it is difficult to see what is creative about merely listening to a recording or otherwise passively consuming the results of someone else's creativity and labour.

Others claim that "illegal copying" is a moral imperative, equivalent to "refusing to go to the back of the bus" (a sentiment that might not be shared by victims of the Ku Klux Klan) or a brave attack on the "vampirism" of 'big media and little authors.

An essay by David Christy for example asserts that illicit copying

has nothing to do with "piracy" and everything to do with freedom to act for ones own benefit and the benefit of others without fine or arbitrary token permissions. This position is far more respectful of creators then the copyright industries have ever been and should not only be considered a right, but a duty. ...

copyrights ... threaten freedom of speech and other freedoms - and understand that illegal copying is not about underworld activities or inconsiderate people, but about freedom from untenable controls. Finally, please defy copyrights and consider civil-disobedience whenever able so as to cut the vine off at the root and protect freedom in the information age

Tim O'Reilly simply asserted that "Piracy is Progressive Taxation".

There is a more nuanced analysis in Copyright, Fair use & Transformative Critical Appropriation (PDF) by David Lange & Jennifer Anderson, echoing the 'appropriationist' ethic of the Two relationships to a cultural public domain (PDF) paper from Negativland, copyright gadflies who've elevated collage as a sacred activity.

Consumers complain that music recordings cost "too much", arguing that a blank CD costs under US$1. Recording companies respond that the plastic is cheap but that marketing is expensive. There is support for that claim in independent studies such as Entertainment Industry Economics: A Guide for Financial Analysis (Cambridge: Cambridge Uni Press 1996) by Harold Vogel and The Global Jukebox: The International Music Industry (London: Routledge 1996) by Robert Burnett.

Bradford DeLong queried some of the wilder criticisms of legal and technological protection, commenting that

If you argue that the musicians should not be allowed to protect their songs, then you can explain whether you think a CD store should be permitted to take anti-shoplifting measures, or tickets should be required at a concert, or you personally should be allowed to have a lock on your front door.

     prevalence and value

Figures about piracy and other illicit activity are problematical.

In Australia there is no central register of infringements and government agencies largely rely on industry statistics. Those statistics are often questioned but details aren't available, there are no large-scale independent studies and much of the criticism is at the level of assertion and name-calling. Court records suggest that there are a handful of civil prosecutions - generally by major software and music recording companies - each year. A discussion of damages is here.

Globally, bodies such as the Business Software Alliance (BSA), International Intellectual Property Alliance (IIPA) and International Federation for the Phonographic Industry (IFPI) have released a range of reports - often chock full of statistics but leaving the reader wondering about interpretation.

The 2002 BSA 7th Annual Global Software Piracy Study (PDF) for example claims that the "worldwide piracy rate jumped from 37% in 2000 to 40% in 2001, costing the industry about US$11 billion in lost sales". Vietnam headed the list of malefactors, with a "piracy rate" of 94% but it is worth noting the BSA estimate that 25% of business software programs in the US are illicit.

One critic mordantly commented that

I doubt that it is possible to accurately count the number of people in some of these countries let alone the number of illegal copies of software (and given that some lack copyright regimes, such software is not actually illegal)

Others have warned against conflating figures for piracy with those for one-off infringements and licensed back-up copies or other permitted uses.

The 2001 BSA report (PDF) claimed that global software piracy cost US$11.8 billion, complementing a Canadian Alliance Against Software Theft (CAAST) report asserting that business software piracy cost C$457 million in lost retail sales in Canada, with 38% of business software applications in Canada being 'pirate' copies (down from 41% in 1999).

Critics attributed much of the problem to poor asset management (a legitimate copy is loaded onto a new machine but the owner forgets to remove that copy from the old machine) and queried Business Software Association of Australia (BSAA) claims that illegal copying in Australia accounted for 33% of usage, after suggestions that the BSAA had extrapolated BSA figures rather than gathering local data.

The IFPI Music Piracy 2002 report (PDF) claimed that global sales of pirated music CDs nearly doubled in 2001 - to 950 million units - and that illegal music sales outnumber legal sales in 25 countries. 90% of all recordings sold in China were supposedly pirated.

IFPI estimated global sales of pirated recordings at around US$4.3 billion,although caution should be exercised in assuming that all revenue is forgone by industry majors.

A 2002 survey by Ipsos-Reid projected that 41.5 million people in the US, age 12 and over, have downloaded digital music files from an online filesharing service. A 2001 study from Parks Associates suggested that 81% of those aged 18 to 24 and 62% of the 25 to 34 year cohort in the US had downloaded music. There are, however real questions about whether use is recurrent and whether the use was illicit, since not all music online is illicit.

A 2000 Pew Internet Project report (PDF) claimed that 78% of US internet users who download music don't think it's stealing to save music files to their computer hard drives, with 61% saying they don't care if the music they are capturing is copyrighted. Some hard questions were posed by Paulina Borsook, who criticised the view that

somehow on the Net nothing created should be paid for: a mindset that holds that creators shouldn't be compensated for their work, that all human creation is the equivalent of a Web log by a hobbyist with a day job. Members of the Net community, whether born in 1954 or 1986, will pretty much always rally to oppose censorship. But don't expect those same Netizens to consider authorship of a work of art on the Net to be important - or to pay for online content ...

Jason Kottke suggested that fans "Steal This Site" (but leave his commercial content and other peoples' work alone). Eric Anctil's item Copyright & Book Piracy: The #bookwarez Phenomenon & Beyond notes claims by the Interamerican Publishers’ Group that around 50 billion book pages are illegally reprinted every year in Latin America, on the basis of ranging from photocopies to the reproduction of entire books.

The Group claims that in Latin America and Spain the publishing industry makes US$5 billion annually while book pirates earn US$8 billion per year, inferring an annual loss in royalties of about US$500 million. That is in an environment where the annual income for many people is under US$700. Senate testimony by McGraw-Hill claimed that in 1998 US book publishers alone lost US$125 million to book piracy in China. Projections for losses through piract of e-books range from US$1 billion to US$5 billion by 2010, depending on underlying projections about the e-book market.

The Software & Information Industry Association (SIIA) claimed in its 2001 report Doesn't Everybody Do It? Internet Piracy Attitudes and Behaviors (PDF) that in a survey of 1,004 business people

• 21% indicated that they have downloaded digital content from information services to which their employer does not have a paid subscription [it is unclear whether that breached any law]
• 81% stated that they would not violate copyright laws
• 48% agreed that "everyone who uses the net violates copyright laws at some point"
• 41% said that there should be stricter regulations to protect copyright laws at some point
• 61% claimed that they would never share downloaded software without appropriate licensing
• 38% said that all information on the net should be free
• 67% said that any newsworthy article, in print or via the net, should be fully accessible without a fee.

Using a set of anonymous user polls during 1996 the BSA claimed that 90% of users admitted illegally copying or using software at some time, with over 50% reporting that they were currently using unlicensed products. A 1999 report on business use claimed that prevalent violations were bringing software from home (40%), downloading unauthorized copies from the net (24%) and sharing programs with other employees (24%). 61% of SMEs supposedly had a software management program, compared to 88% of large enterprises.

     responses

Industry responses have essentially taken three forms -

• continuation of existing action to detect and prosecute pirate, 'gray' or illicit personal copying
• research into technological protection measures such as digital rights management (DRM) and electronic copyright management (ECMS) systems
• encouragement of stronger legislation regarding protection of content online and offline.

Two examples are the US Digital Millennium Copyright Act (DCMA) discussed earlier in this guide and the US No Electronic Theft Act (aka NET Act).

The latter is concerned with those who exchange unauthorized copies of software without other compensation, in particular those who engage in unauthorized copying/distribution of software exceeding US$1,000 in any 180 day period. It has been used in successful prosecutions of 'warez' sites and enthusiasts.

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