SOPA Update 5: The Aftermath

What a week it has been for that little anti-piracy bill known as SOPA.  Together with her sister bill in the Senate, PIPA, these two bills took a considerable drubbing.  They appear, for all intents and purposes, to be completely dead in their current form.  House Speaker John Boehner declared that further votes on SOPA had been delayed indefinitely and Representative Lamar Smith, the chief sponsor of SOPA, said on Friday that he was pulling the bill “until there is wider agreement on a solution.”

How did we get here when a week ago these bills had super-majority support?  Unless you’ve been living totally off the grid, momentum started to build against them when President Obama threatened a veto if SOPA went forward with the most controversial provisions that would allow private companies to shut down any website using a court order if the target site linked to a site that linked to a site with infringing content.  The President railed against this as a serious impediment to free speech and a major giveaway to special interests.  Yet despite his opposition, with over 60% of Representatives and more than 80 Senators potentially in favor of their respective bills, there was a possibility that SOPA and PIPA could have survived.

The President’s move brought some attention to the issue, but the real game changer was  the Internet blackouts led by Wikipedia on Wednesday.  Suddenly everyone was talking about SOPA.  An administrative assistant stopped me in the hall to ask about it, saying that she and a number of other people had been discussing it earlier.  Moreover, all those who couldn’t find the simple information they’d come to expect from Wikipedia began inundating their representatives with calls.  Democracy in action!  It was beautiful.  Suddenly, supporters of the bills scattered away from it like roaches from a flashlight until it was pulled by its sponsors.  But the fight isn’t over.

The dying media industries whose business models have been upended by the Internet and the new technologies are not going to give up this fight easily; not when there is so much money at stake.  As I explained earlier, this bill is less about piracy than it is about political economics.  For those unfamiliar with the term “rent-seeking,” this as an example of the age-old practice of mustering government power to protect one’s position in a way that economically benefits a few at the expense of the many.  SOPA could potentially be used to shut down sites that offer content in ways that, while legal, aren’t as profitable for studios and record labels as the compact disc or DVD.  The old revenue model, as explained in exquisite detail on the latest podcast from the Planet Money team at NPR, is gone and a whole new (and highly profitable) system is replacing it.  The only problem is that these profits are in the heretofore neglected areas such as live concert tours, licensing and merchandising.  One thing to note, other than scalped or counterfeit tickets, live concerts are pretty difficult to pirate online.  Furthermore, economists will point out that the people who would be willing to take the time to download a pirated copy of a movie or music album are probably people who would not have bought the product legally because they did not value the work as highly as the price attached.  I won’t bore you with an explanation of deadweight loss, but it is a significant economic factor to consider.

The bottom line is that SOPA was a badly written bill that needed to die.  Few will publicly mourn its passing, but that doesn’t mean that copyright infringers are free to continue their nefarious ways, either.  At the same time that people were marching in protest of SOPA, the Feds were storming the homes of a massive piracy ring centered around the website, Megaupload.  There are probably other operations gathering strength as we speak, because if we’ve learned anything, it’s that whenever you take down one piracy site, another springs up to take up the slack.  That’s the thing about piracy, it’s really freaking profitable.  But it also shows that there are plenty of perfectly good laws on the books right now for going after and stopping infringers.  What effect could a law that’s designed to stop online infringement have against the biggest source of illegal content, counterfeit DVDs sold on every street corner in China and India?

As if that weren’t enough to keep track of, a new bill designed to curb infringement but without the massive threats to Internet freedom comes in.  Known as OPEN, or the Online Protection & ENforcement of Digital Trade Act, the bipartisan bill sponsored by Ron Wyden and Darrell Issa (the guy responsible for car alarms) makes several welcome changes that should have been no-brainers for SOPA, including a changed mission and focus to sites “dedicated to infringing activity.” but should still be considered a starting point.  The biggest difference is the shift from using courts to enforce take-down requests to the International Trade Commission.  Why would handing the reins over to a non-US site be a good thing? There are plenty of reasons, but I’m exhausted.  I’ll talk about it more if it gets off the ground.


About Justin Kwong

An attorney in the Twin Cities and adjunct professor at William Mitchell College of Law where I teach a seminar on the law of virtual worlds.
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2 Responses to SOPA Update 5: The Aftermath

  1. Lawrence San says:

    Excellent post, much more balanced and thoughtful than I’ve seen elsewhere. You say “profits are in the heretofore neglected areas such as live concert tours” (in reference to the new revenue model that needs to take over) but I’m not sure that “neglect” is exactly the issue. Historically, live performances are one of the few activities where musicians keep much of the money, instead of the big labels taking it. For lesser-known independent musicians it may be their only source of revenue. I suspect the big labels don’t “neglect” it; perhaps they simply don’t know how to get their hands on that money.

    By the way, I looked around your site but couldn’t find any contact information — basically, a link to email you privately — which I found a little frustrating. It could be useful for alerting you to a grammatical error or something of that nature. It’s probably here somewhere, but perhaps you could make it more prominent.

    • Justin Kwong says:

      I updated the About Me page to include my email address. Thanks for the comments. With regard to record labels, I suppose neglected was the wrong word, and it seems that it is more and more a historical reference anyhow. According to the Planet Money folks, labels used to ignore concert revenue (e.g. Katy Perry’s contract didn’t take a cut of it at all), but they don’t anymore, for obvious reasons. I’m not an entertainment lawyer, but I guess the all-inclusive “360 contracts” are the new way to go for maximum revenue capture…

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