Jesse Kline: The copyright battle pits freedom against Big Government control

Jan 31, 2012 – 12:03 PM ET

United Artists

United Artists

The Internet used to be the Wild West, a place where communities developed organically, where free speech and free markets reigned supreme. But now the government has come in, guns blazing, trying to take control.

I was disappointed to see my colleague Terence Corcoran advocating the idea that cyber-libertarians are actually collectivists in disguise and that Big Government regulations are needed to save free markets and innovation in the digital age (“The Internet’s collectivist blarney,” Financial Post, Jan. 28).

Mr. Corcoran’s story goes like this: Google and a handful of other tech companies organized a populist revolt against the Stop Internet Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA) — which were before the U.S. Congress — in order to keep “the Internet free of the constraints of copyright.” And in a world where intellectual property can be copied and distributed at little to no cost, the abrogation of private property rights “threatens to turn markets and commerce, the backbone of cultural economic activity, into chaos.”

But if Google is such a threat to innovation, why is it consistently listed at the top of Fast Company‘s annual list of the world’s most innovative companies? The answer is that Google has embraced the realities of the service-based economy and has continually innovated, or purchased innovative companies, which have allowed it to produce a series of products that are embraced by consumers.

Compare that with “old media” companies in the film, recording and newspaper industries. Craigslist developed an innovative online classifieds system, newspapers rejected it; Netflix developed a unique movie distribution system, video rental stores would have none of it; and the music industry spent years trying to sue its way back to prosperity, before Apple launched iTunes and showed everyone that there was still a market for music, even in a world where pirates were giving it away for free.

This is a process known as creative destruction. When new products are developed, companies are forced to compete, or risk losing their market share to new entrants. It’s the reason why people are walking around with iPads and cellphones, instead of being stuck inside with land lines and computers the size of whole rooms. It is by this process that free markets make all our lives better.

But instead of embracing innovative new technologies, “old media” companies have consistently turned to big government to try and protect their markets. In 1998, the U.S. government enacted the Digital Millennium Copyright Act (DMCA), a draconian piece of legislation, which — like most statist attempts to regulate free society — has produced numerous unintended consequences.

The essential bargain was that website operators and hosting providers would not be held liable for the content that others put on their sites, so long as they complied with the notice-and-takedown system, whereby websites would immediately take-down offending content once they were informed of a copyright violation. In some ways this makes sense. How could sites like Youtube and Facebook adequately ensure none of the content users posted to their sites contained copyrighted material? How could we hold large hosting providers like GoDaddy responsible for the millions of websites hosted on their servers?

But this created a new set of problems, as the Internet has fundamentally changed the way we interact with our culture. In the era of two-way Internet communications, we are no longer passive consumers of cultural content. People don’t just play music, they mix it and create videos of them dancing to it. Copyright laws like the DMCA serve to stifle this sort of expression.

Take, for example, the case of Stephanie Lenz, whose Youtube video of her toddler dancing in the kitchen was taken offline after Universal Music filed a copyright claim, due to a Prince song that was playing in the background. It took a lengthy court battle to get a simple home video put back online.

SOPA and PIPA would have doubled down on this model, removing the legal indemnity Internet companies currently enjoy, while providing the means for government and corporations to censor entire websites. These were censorship bills, created under the guise of copyright legislation. Talk about using a hammer to swat a fly off someone’s head. Everyone, regardless of political ideology, should be worried when the government gives itself the power to censor others.

That being said, there is certainly a need for copyright laws to protect intellectual works and give content creators a financial incentive to continue producing. But copyright laws have to balance the rights of content creators with those of consumers, and the U.S. already has strong copyright laws. Making them any stricter will only serve to stifle innovation in digital technologies and hinder our ability to communicate with one another. Make no mistake about it: Copyright is a government-granted monopoly that requires heavy-handed intrusions on individual liberties in order to protect. We need some laws to encourage innovation in cultural and artistic works, but making them too strict will stifle innovation in other areas.

The essential question that must be addressed going forward is whether government regulation is needed to protect industries that have failed to innovate. From a free-market perspective, I think the answer is clearly no. To quote Harvard Law professor Larry Lessig, “In a free society, with a free market, supported by free enterprise and free trade, the government’s role is not to support one way of doing business against others.” The pressure “old media” companies have been putting on government is corporatism at its worst.

The Internet is proof that communities can operate and self-regulate without the need for the state. For years, Western governments took a hands-off approach to the Internet and we witnessed a level of innovation not seen since the industrial revolution. It was called the Wild West because it was a bastion of free speech and free markets. But governments can’t stand things that can’t be controlled. And in recent years, we have seen Western governments trying to enact laws, like SOPA and PIPA, designed to give them more control over cyberspace. Laws that would censor speech, control trade and track our every move. Far from “collectivist blarney,” this is the ultimate battle, pitting freedom against the forces of Big Government control.

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