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Sunday, November 15, 2009
Is Copyright Violation the Same as Stealing?
Ever since the rise of printing press, the producers of content have sought to have their work protected from those who would choose to copy and profit off their intellectual contributions, or even simply consume it without paying royalty.
In the twentieth century, the advent of the personal audio/video tape recorders and photocopiers brought new battlefronts for copyright holders to contend with.
When computers showed up on the scene, software programmers sought ways of preventing their work being copied from one computer to another.
In the twenty-first century, pretty much everything is on computers--and if it's not yet, it will be soon.
Now that everything is on a computer, "stealing" as defined by some, is as simple as clicking the button on your computer screen that says "copy".
But is this a rational definition of the word "steal"? I mean, I used to think so. But there's a few things that need to be said about the differences between stealing material goods and "stealing" digital goods.
We've all heard the classic open door analogy, in regards to software piracy. That, downloading say, a game off the internet, is no different than walking into someone's unlocked home and taking things off the shelves. Except that it is really different, if you think about it.
In one scenario, we are physically entering the private dwelling of someone. We're intruding on their privacy in the most offensive of ways, and we're taking their physical possessions away from them. We are depriving the other party of their privacy and physical safety, and we're outright depriving them of their property.
In the other scenario, we are downloading digital bits across a wire and saving them onto our computer. It's worth nothing, that by doing this, we haven't violated the privacy of the content creator. Nor are we depriving them of their content. The only thing we are depriving them of is the potential lost royalty.
Maybe if I couldn't obtain it by downloading it for free, I would have considered buying it. I don't know. Probably not.
Also, when I steal something from your home, you're probably going to pay to replace the stolen goods, or you're going to pass that cost on to your insurance company. By stealing from you, I've imposed a real financial burden on you.
The financial burden I place on software developers by stealing from them is less clear. Economists refer to it as "lost opportunity cost": the cost they incur by not having an opportunity to sell it to you. Anti-piracy folks will insist that this is exactly analogous to the stolen goods from your house. But it's not. They're just not being honest about it.
Digital goods are referred to by some economists as having zero marginal cost. Meaning, outside of the initial investment to produce them, the cost of shipping a unit of X digital good is zero. If I pay $10,000 to build X digital good, that is a fixed cost which is not dependent on how many people consume it. If one thousand people download it for $100 each, my average cost per unit is $10 with a profit of $90 per unit. If a million people download it, my average cost per unit is $0.01 (one cent!) and my profit margin is $99.99 on a $100 product.
This is the magic of a zero marginal cost business. Making it somewhat different than you jumping into a car coming off the end of an assembly line and driving off with it, without paying--another fabulously inappropriate analogy copyright holders have used. There's real fixed costs for each and every car that need to be recovered in order to be profitable.
Microsoft estimated years ago that more than 60% of all global installations of it's Windows operating system are illegal. That's right, the majority. I don't know how this trend is holding up, but it's clear, given Microsoft's tens of billions a year in profit, that having a majority of everything it produces "stolen", hasn't stood in the way of it being one of the most profitable companies in history. It hasn't stood in the way of making it's founder, Bill Gates, the world's richest man, either.
Other than the lost opportunity cost--which is not a real cost in any case, but rather a prediction for potential revenue--the direct cost of someone stealing Windows to Microsoft is zero. In fact, that's probably under-stating it in the sense that by stealing Windows, you are increasing Microsoft's install base, and therefore increasing the size of it's market.
Think about it: if you're Microsoft, would you rather have someone steal Windows, or install Linux? If someone steals Windows, you still might be able to make money off them in other ways, such as if they go and buy Microsoft Office--like many do. I know plenty of family members and friends who have illegal copies of Windows, but they still went to Best Buy and purchased Office so their kids could do their homework. And even if they stole Office, many of them still leave the MSN homepage that Microsoft sets as default in place, which brings in millions in ad revenue for Microsoft.
So Microsoft still makes money off you--even if it's fractional amounts--if you steal their software.
The direct cost to you walking into my house, and walking out with my TV is: whatever it costs me to replace the TV. Pretty big difference.
I think we've blown the hell out of this analogy. So when you talk to your children about stealing software, stop using the open door analogy. It really doesn't make any sense.
Which sort of brings us full-circle to the question: is copyright violation stealing?
No. The answer is no. It is what is is, and what it is... is copyright violation. But it's not theft. Theft is different. We established this. Creating a facsimile of something is not the same thing as depriving someone of something.
Posted by Mike Brock on November 15, 2009 | Permalink
Comments
So Microsoft still makes money off you--even if it's fractional amounts--if you steal their software.
Posted by Mike Brock on November 15, 2009
I never thought I'd say it but I agree with Brock on something.
One point you might have raised is that in almost all, if not in all cases, the EULA does not give you ownership of the software but only usage rights. Ownership remains with the software vendor so even if you buy software you really don't own it which brings us into an intellectual property debate.
Posted by: The Stig | 2009-11-15 11:14:40 AM
However you slice it, the taking of property without consent is theft. I have created something and offer it on these terms. The rights of the creator are being violated in the scenarios you describe. Even at a simply contractual level, the purchaser of software is agreeing not to give away the product. Allowing others to copy software you have purchased is breach of contract, if nothing else.
The fact that the loss to the producer is often low - provided it's a large enough firm with a large market share to begin with - does not change the nature of the issue.
The argument of near zero marginal cost omits the need to cover fixed costs. It's true that past a certain point in the number of units sold, the producer is making almost pure profit. But what if a product doesn't reach that break even point? It's true Microsoft makes a lot of money even though much of its product is stolen. If no one pays for its products it would go bankrupt in short order. Your example also focuses on an industry leader with large economies of scale, which matter even in an industry with near zero marginal costs. What about small producers? What if they don't reach their break even point? What about the incentive to produce a blockbuster product? No one will take extraordinary risks without the expectation of extraordinary returns.
Describing theft and copyright violations are being essentially different things, rather than the latter being a type of the former, is playing semantics.
Posted by: Publius | 2009-11-15 11:27:46 AM
Even at a simply contractual level, the purchaser of software is agreeing not to give away the product. Allowing others to copy software you have purchased is breach of contract, if nothing else.
Posted by: Publius | 2009-11-15 11:27:46 AM
The question that arises is why do we treat software different from hardware. The EULA agreement that comes with every Microsoft product, and every other software vendor for that matter, specifically prohibits the user from reselling or transferring the software. Imagine if a car manufacturer tried to do the same thing. Another point using a car analogy is a company like AMG can buy a M-B, modify it and then sell it under the AMG name. Try taking Windows, modifying it then try to sell it under your name and see what Micrsoft does.
Posted by: The Stig | 2009-11-15 12:25:43 PM
Stig,
The EULA issue is important. I"m glad you raised it, as it raises another important difference between theft and copyright violation. When you "buy" a copy of something, you're not buying anything, but a contractual license.
For example: Apple sells it's OS X operating system for $129. But when you pay $129, Apple's license makes clear that you own nothing. You may install the software on an Apple computer. If you install it on computer other than an Apple, you are apparently "stealing" from them. Even though you gave them money.
Moving along.
"However you slice it, the taking of property without consent is theft."
I'm not sure we're talking about property per se. We've decided that words (and in this case--code) is property. But it's a weird kind of property.
Every time you use a copyrighted program, your computer is forced to copy it into RAM to run it. But that's an allowed copy. But suddenly it may be stealing if you back it up onto a CD or DVD, based on the license.
You may think this is a stupid example. But Apple, in it's lawsuit against Psystar, which sold computers with Mac OS X loaded on them, is also suing for the copyright infringement they claim happens when a computer boots up and copies the software from the hard drive into memory.
So with software, you can steal it, and then re-steal it every time your turn on your computer. Magic!
The argument of near zero marginal cost omits the need to cover fixed costs. It's true that past a certain point in the number of units sold, the producer is making almost pure profit. But what if a product doesn't reach that break even point? It's true Microsoft makes a lot of money even though much of its product is stolen. If no one pays for its products it would go bankrupt in short order.
You seem to think I am endorsing piracy. I don't. The point I'm making is that copyright violation being the same as theft is a little bit arbitrary.
There's also an aura of inevitability in all this. Since all prices tend towards their marginal cost, through competition, the only way that copyrighted digital content maintains it's price is through artificial pricing.
Companies like Google, Red Hat, and even more recently Electronic Arts, who accept this trend, are the software companies of the future.
Posted by: Mike Brock | 2009-11-15 1:45:58 PM
I completely agree with you Mike. One more thing that should be noted is that with computers, everything is a copy. There is no way to view a web page without copying the material to your computer.
I would, however, like one thing explained to me:
In Ayn Rand's book "Capitalism," she states that, "An idea as such cannot be protected until it has been given a material form." Yet, in The Fountainhead, Howard Roark says that a man's ideas are his property and is portrayed as morally justified in destroying the product of other men's labor in order to protect the moral rights of his idea. This doesn't make sense to me.
Posted by: Jesse Kline | 2009-11-15 1:56:11 PM
IP is THEFT:
http://mises.org/story/3682
Posted by: JC | 2009-11-15 3:26:04 PM
It's definitely stealing. Taking someone else's hard work without permission is stealing. It's like your boss refusing to pay you for your 'untangible' work. It's a load of crap.
Work your butt off, spend millions in capital and labor, and have someone take it for free. Do that. See what your opinion is like after that.
I'm going to paraphrase John Locke here, where he said that we have full rights to our hard work. This is what we're fundamentally talking about. You can't believe in rights, freedoms or any morality related to it, if you think my hard work can be mooched off of by social parasites.
Posted by: Chris | 2009-11-15 4:08:20 PM
Work your butt off, spend millions in capital and labor, and have someone take it for free. Do that. See what your opinion is like after that.
I do it every day. I work for an open source software company.
I also run two major open source software projects. I have never charged anybody for use of this software. However, I make money indirectly off the services we offer around the software.
Posted by: Mike Brock | 2009-11-15 7:18:24 PM
Those who are full of selfishness and greed will defend the copyright notion because of the love of money!
But it's wonderful that they cannot copyright the air and water they use that allows them to live and make money?
And the open source concept is a great idea especially in Third World countries where many people don't have the money to pay the exorbitant prices charged by the greedy ones
Posted by: John | 2009-11-15 8:02:13 PM
Music and movies have been copied and shared between people ever since the video or tape recorder was invented.
If that was stealing, then those who manufacture those machines should be sued.
They make it possible.
It is up to the companies to encrypt the material if they want to stop copying.
Don't toss the responsibility in my lap...
Posted by: Willy | 2009-11-16 7:50:52 AM
It is up to the companies to encrypt the material if they want to stop copying.
Then we're left with things like the anti-cicumvension provisions of WIPO, which call for it to be made illegal to do anything to get around said encryption.
iTunes DRM on it's movies requires periodic re-authorization by the iTunes servers to retain access to movies which you've purchased. If Apple's servers were to go down, or were taken down, you would suddenly be left with worthless digital files, unless you used some sort of hack to decrypt them.
The MPAA and RIAA's position on this has simply been: it's a license, not ownership. If you buy a digital movie for $19.99 and the vendor who sold you the movie goes out of business, then you can no longer play the movie legally, because the contract has ended by the contracting party going away.
This is one of the most egregious usages of copyright law, if you ask me. Basically, with the use of DRM we're being sold digital goods that are wholly dependent on the seller running an unlocking server in perpetuity.
It would be akin to BMW selling you a car, and having to get BMW to send a signal to your car every few days "unlocking" it's computer and allowing it to be used. If BMW went out of business, the signal would no longer be sent, and your car would become an expensive driveway ornament.
And if BMW *did* do that, under current US copyright law (the DMCA), trying to crack the software in the car so you could drive it would be criminal.
Of course, this example isn't far off from how the cellphone industry works. Apple's iPhone is a hardware device which must be authorized by Apple's servers before it can be used. Even if you buy it full price, for like $1000.
Using unlocking software to gain use of the phone, without Apple's authorization, turns out to be a violation of the DMCA anti-circumvension provision.
So the marriage of software and hardware actually ends up bringing the bullshit licensing-style "ownership" to hard goods as well. In the 21st century, you scan spend thousands of dollars on electronic wares and actually not "own" it, without signing any contract up front and after they take your money.
With computers being inside of virtually every bloody thing human being's make now, copyright and intellectual property start seeming tyrannical.
Posted by: Mike Brock | 2009-11-16 8:10:23 AM
What a joke. This argument reminds me of the Simpsons episode where Kearny refers to shoplifting as "a victimless crime like punching someone in the dark."
Look, we are in the West or moving to an economy base on IP. Fools like the above writer coming up with silly justifications for his theft are cancerous to the long term viability of that economy.
Posted by: Mike Nolan | 2009-11-16 1:55:02 PM
Mike Nolan,
Thanks for coming out!
Posted by: Mike Brock | 2009-11-16 2:55:15 PM
Given the quality of our education system, I can't imagine what an economy based on IP would look like!
(Probably a lot like an economy based on credit-from-thin-air.)
Posted by: Andrew Poelstra | 2009-11-16 5:08:09 PM
Its almost impossible to not have something illegal on your pc. One other thing I would like to mention is the media itself. It has changed quite frequently over the last 50 years. Vinyl, cassettes, VHS, cd, dvd, blueray, and digital. Why should I have to pay to upgrade the media if I don't own the data? What I mean is, in the case of music and movies, if I bought a cassette and they become obsolete, why can't I just take the cassette in and exchange it for a cd, paying just for the meduim, which is what, about 50 cents? I have already paid for the music. But no, they have to charge you again. In order to upgrade my music collection, its 20 bucks a disc. As to computer software, there really is no reason to steal anything. There are free versions of just about everything. Can't afford MS Office? Get Open Office, its free (and I like it better anyway). Anti-virus? Free. For home use anyway, AVG for free, and Avast are two good anti-viruses, no charge. Need Photo-shop? $700 bucks you say?? Get the Gimp, free. All this is near as good or better, as software you pay for, especially for the casual user. My point is you don't have to support the big dollar guys, there are usually free alternatives to just about all software. But having said that, some times there is a feature you have to have, and the only one that has it, charges for it. That's business, they should be allowed to make a buck for their efforts. I'm sure I'm glossing over the economics somehow, but I hope you get my point.
Posted by: Steve Bottrell | 2009-11-16 5:47:30 PM
Basically, with the use of DRM we're being sold digital goods that are wholly dependent on the seller running an unlocking server in perpetuity.
Posted by: Mike Brock | 2009-11-16 8:10:23 AM
Microsoft by some accounts have banned about one million X-Box Live users who modified their device in the last few weeks. Microsoft claim it was to stop piracy though one security firm said Microsoft were banning anyone who had reflashed the FPGA that runs the X-Box.
Posted by: The Stig | 2009-11-16 6:18:45 PM
Stig,
I'm fine with Microsoft blocking access to Xbox Live. It's a service they provide. It isn't a physical product they sell.
I would have a problem of they remotely disabled the hardware itself--as other companies have done. To me, that's a total violation.
In fact, using a service like XBox Live as a carrot to encourage legitimate use is far more preferrable way for companies to fight piracy than relying on IP law; if you don't have legit hardware, you can't access the service. Fine. Seems fair enough.
It's another thing, however, if you prosecute someone for modifying their Xbox. Which is possible under the DMCA anti-circumvention laws.
Posted by: Mike Brocm | 2009-11-16 6:41:37 PM
I would have a problem of they remotely disabled the hardware itself--as other companies have done. To me, that's a total violation.
Posted by: Mike Brocm | 2009-11-16 6:41:37 PM
I don't have a gaming system so I really don't know much about the X-Box or Playstation systems. One report I read indicated that Microsoft had done more than simply ban people from X-Box Live but had also done something to the HD which stops the installation of new games and disabled Windows Media Player. The thing is that this is being done based upon the server recognizing a hardware mod not detecting pirated software.
Posted by: The Stig | 2009-11-16 7:20:30 PM
The question asked is: Is copyright violation the same as stealing?
Short answer: Yes. Long answer: Yes, it is a type of stealing, but it's different from other kinds of stealing.
Virtually no criminal code has only one offence listed for "theft". Laws make distinctions between different kinds of theft.
For example, in Canada there's "Theft over $5000" which has stiffer penalties than "Theft under $5000". This created the perverse effect where you could get a lesser sentence for stealing an old broken-down beater from a poor family that depends on the vehicle and a higher sentence for stealing a new car from a rich person who owns dozens of cars. The "effect" of the theft on the poor family is greater, so shouldn't that be reflected in the punishment? That's why the government recently introduced the new offence of "vehicle theft".
Similarly, if I leave my door unlocked and someone comes in and steals something of low monetary value but high sentimental value, shouldn't that be reflected in the punishment? I don't just want the thief to reimburse me for the monetary value of the item. I want the thief punished for violating my personal space, the sanctity of my home, my peace of mind, etc, etc.
But if someone downloads a piece of software without paying for it, the only loss to the copyright holder is the actual value of the software. It isn't a personal violation. There isn't a sentimental value. I didn't violate the sanctity of the copyright holder's home in the process. It is theft, but it isn't the same kind of theft.
That's why my personal opinion is that illegal downloading should be handled through civil law rather than criminal law. In other words, if I download a piece of software without paying for it, and the copyright holder catches me doing it, I should be required to reimburse the copyright holder for the value of the software. If it's a $20 game, I should be required to give them the $20. If it's a $1,000 high-end video production application, then I should be on the hook for $1,000. I don't see the value of putting that kind of small-time downloader in jail, but I do see the value in making sure the downloader is liable for the amount of money they have deprived from the copyright holder.
I do think it's a different matter when we're talking about illegally uploading or disseminating intellectual property. In that case, because it's virtually impossible to gauge the value that the copyright holder has lost (because we don't know how many copies of the software has been distributed, for example), then the most prudent choice is to use criminal law.
Similarly, I do not think that simply circumventing DRM should be a crime. The crime comes from what you do with the property after you have circumvented DRM. If you distribute it to others, that is the crime. But if you merely use the product for your own use, not a crime.
Analogy: In Canada, it is NOT a crime to pick a lock. It is a crime to pick a lock WITH THE INTENT TO COMMIT A CRIME, like trespassing or illegal entry or theft, etc.
So, if simply picking a lock is not a crime, why should simply bypassing DRM be a crime?
Posted by: Anonymouse | 2009-11-20 1:54:09 PM
Devil's Advocate Mode: I just noticed a slight flaw in my own argument.
Hypothetical situation: Let's say some creep hacks into a woman's computer and makes a copy of her personal photo library, with the intent to look at the photos on his own computer. He does not intend to sell the photos.
Clearly, this is a violation of the woman's privacy.
But, it's hard to claim that this is theft. After all, the woman still has the photos. He has not deprived the woman of her ability to look at the photos herself, because they still reside on her computer.
It seems to me that it's clearly a copyright violation. He has clearly made copies of intellectual property that he did not pay for.
However, how on Earth could a court determine the monetary value of the photos? The photos are not commercial software.
IP is a damned tricky beast...
Posted by: Anonymouse | 2009-11-20 2:25:10 PM
copying software is just that. copying. stealing a physical item is stealing cause the original owner doesnt have it anymore. Example, if i could walk outside and magically duplicate anyones car i wanted and the original owner wasnt affected and drive off with my duplicated car, would that be stealing? no it would be copying.
http://en.wikipedia.org/wiki/Theft
"In criminal law, theft is the illegal taking of another person's property without that person's freely-given consent."
Posted by: Jason | 2009-11-27 11:36:48 AM
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