Software Piracy

The problem with digital goods is that the fake is as good as the real.

There is large scale piracy, such as the Sam Goody Records case; There are software loan scams, and the selling of  worthless old computers with hard disks full of  valuable programs. There are fly-by-night computer dealers who move their hardware the old fashioned way, with "free" software. There are Secret FTP sites where crackers place full copies of commercial software for their friends to steal, and sites which promote the exchange of illicit digital information, like copyrighted pornographic images and popular music.

The threat of  institutionally sanctioned piracy inhibits public libraries from loaning music, movies, and software, because of the problematic concept of "fair use." Interlibrary loans often results in the xeroxing of papers.

There is also small scale piracy. Software loans, cassette recordings of rented movies, and so on. It is easy to confuse the legitimate video cassette recording of broadcast to shift the time, with the building a "library" of Star Trek episodes. It is just an ethical  bug when selling old books and playboy magazines seems the same as selling your star trek library. I can tape the radio, why can't I tape my records to preserve the vinyl? Why not duplicate a great cassette for my friends! This is such a cool educational game, I want all my kids buddies to have the benefit of it as well. Lets start a software exchange club. Wink! Wink! 

All of these incentives for sharing information are not balanced by the threat of punishment. Once easily copyable software is out there, it tends to spread and increase its own supply.  Is the FBI going to invade a house looking for illegal possession of Disney movies? Small Scale piracy is rampant, in sum, because there is little incentive for individuals, or nations, to care.

How would our solution fix the Piracy problem? Because the public will have an incentive in keeping the value of their investments up! Most people who “share” software and music tapes are not xeroxing dollar bills and stock certificates all the time, and if they do, they cannot pass it off! They also know what a currency crash really means. Libraries would be able to serially loan infoprops without increasing the supply. And because the government has an interest in keeping the value going up to collect its capital gains, it will be more strongly on board too. Given a broad base of public ownership, any underground LaMacchian movement to strip the licensing mechanisms out of software and cause a market crash would be as difficult to sustain as, say, a call to end real estate deeds.

Foreign Piracy is more difficult. During the 1980’s  self-examination by the US over its relationship to China and its "most favored nation" (MFN)  trading status, there were two major issues. First, China abuses the human rights of its citizens. Second, China  has no respect for our intellectual property. They copy books, records, software, movies and laugh at us for paying $15 for a disk which costs a dime to manufacture. The army is reportedly protecting the big copy plants. 

In the MFN discussions, the copyright issue got a clear upper hand over the human rights issue.  That loss of income to Microsoft, Warner, Disney, etc. hits America in the pocketbook, whereas putting down anti-government protests is an internal affair. 

We might think China's problem  is an cultural issue which arises in the far east, except Japan doesnt have the same problem. We might decide that  it the evil of socialism which rejects "property,", except the problem is rampant throughout the  free-market South American countries. Furthmore, consider Norway and Sweden, countries which both practice some socialism, but neither has a known problem in software piracy. 

On the other hand,  consider Israel. Western in outlook, market economy, law-abiding  citizens, and a close ally, it is not the place you would expect widespread piracy of US software!  Yet, according to the 1997 report from the IIPA, “The production of pirated CDs [ in Israel] is now at a volume matching that of more notorious pirate countries.” 

What is is that Israel has in common with China and Latin America which would account for its piracy problem? 

In the discussion of MFN, the fact that Copyrights are Human Rights was not discussed, perhaps because in America, we have extended this human right to corporations, and now don't associate copyright with bards and storytellers. To deny a human the ability to benefit from their own creative ideas is to deny a very basic economic freedom. Unfortunately, to insist Israel pay legally for US made software simply would simply move  the Billions in  foreign aid  from Washington through Tel-Aviv back to Washington - Redmond that is!

As for the proposed solution:  Serialized securities are stronger than currency because the legitimacy can be verified prior to cashing. Once a significant piece of stored value was in PURL's, it is unlikely that a foreign power would be able to flood the market with faux stocks without military response.