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Summary:

SOPA and PIPA supporters still have faith in their shelved bills, citing the jobs they’ll save as making the bills worthy of salvage. However, the Internet economy is a potential job creator the likes of which Hollywood — already its own worst enemy — could ever be.

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Although the Stop Online Piracy Act and Protect IP Act have been shelved, their staunchest congressional supporters are still criticizing the opposition, claiming the bills would save thousands of jobs. However, these claims look like little more than empty rhetoric.

The entertainment industry — profit-hungry and change-averse — is already its own worst enemy. Meanwhile, the Internet economy that bills such as SOPA and PIPA threaten to derail is a potential job creator the likes of which Hollywood could never be.

The movie industry is dooming itself

It’s true that movie studios, often cited as the driving force behind the two controversial bills, are losing money to online pirates, but that doesn’t tell the whole story. As my colleague Ryan Lawler explained in a Thursday post, the movie industry’s determination to maintain its existing distribution methods are driving consumers to seek out pirated content. We live in an increasingly Internet-centric (read “on-demand”) world, but not an anarchical one. Many consumers would gladly pay for the movies they want to see, but forcing them to watch those movies either in the theater or on DVD forces their hands.

When consumers choose to watch pirated content or to not watch at all, studios lose money; when they lose money, they cut production and cut jobs. But this downward revenue trend seems entirely reversible if movie studios get creative and figure out a way to leverage consumers’ appetites for video on-demand. Just look at the shift in Internet traffic volume from BitTorrent to Netflix once the latter started streaming movies. If Hollywood really wants to save jobs, it needs to step into the 21st century.

In TV, reality is king but benefits aren’t

It’s difficult to take any complaints about job losses in the television industry too seriously, either. Sure, networks have been better about embracing the Internet than have movie studios, but many also cling to archaic notions such as primetime programming and ever-more-expensive delivery models such as cable and satellite providers.

And when television networks spotted an opportunity to cut costs with reality television, they pounced on it. According to Media Life, reality television went from practically zero percent of the big five networks’ primetime programming in 1996 to 20 percent entering the fall 2011 season (although it peaked in 2006-07).

The result of the reality overload wasn’t necessarily a lack of jobs, but a lower class of jobs. Interchangeable reality television participants make far less than do cast members on scripted programs, and despite its decade of saturating the airwaves, reality television writers are still fighting to unionize like their Writers Guild of America brethren. As is, many are without standard benefits such as overtime pay and health care.

Given all that, it’s not hard to make the argument that it’s profits, not jobs, driving Hollywood and a handful of congresspeople to support bills such as SOPA and PIPA.

The Internet: Big, growing and hiring

On the contrary, the Internet is spawning scores of startups to go along with behemoths such as Google and Yahoo. And, by and large, they’re hiring. What’s more, the Internet economy is growing like mad and spurs economic activity from servers to data centers to iPads.

According to research from McKinsey & Company, “The Internet accounted for 21 percent of the GDP growth in mature economies over the past 5 years. … If Internet were a sector, it would have a greater weight in GDP than agriculture or utilities.” The report’s authors cite a McKinsey survey finding the Internet creates 2.6 jobs for every job it destroys, as well as “a detailed analysis of the French economy” finding the Internet added 2.4 jobs for every job it made obsolete.

Legislation such as SOPA and PIPA not only threatens content-based companies such as Google, Reddit, Dropbox or Wikipedia, but, theoretically, anyone who deals with copyrighted content in any form. The recent cases such of Veoh (which was innocent) and MegaUpload (which looks guilty) illustrate what’s capable in terms of shuttering companies under existing law. Do we really want to give rights-holders even more power to chill innovation across the web under the threat of even swifter, but still potentially ungrounded, retaliation?

Not even all copyright holders are on board with SOPA and PIPA. During a panel discussion at CES, Casey Rae-Hunter of the Future of Music Coalition made a great point about how many musicians and independent artists rely on file-sharing sites to access files when they need them or to share works with possible collaborators or partners. That’s why, he said Fractured Atlas, the Writers Guild of America West, and other organizations representing the opera and theatre industries also opposed the bills.

Protecting intellectual property and saving jobs are laudable goals, and if Congress is serious about achieving them, SOPA and PIPA will look far different when they eventually re-emerge. That’s because padding the entertainment industry’s bottom line at the expense of the growing Internet industry is not the way to achieve either.

Image courtesy of Flickr user Charleston’s TheDigitel.

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  1. I’m not firmly convinced that the current administration wants private sector growth. Why enact legislation or refuse to act on trade deals that would stimulate a large amount of growth? I seriously have no answers to anything that is currently going on. The only sense that one could make out of it, is that they feel as if the government should run everything, which hasn’t worked out well, to this point.

  2. Probably most people don’t give much thought to it one way or another when they’re Googling for something, “oh look this guy in has it for $1 on his website, I’ll buy from him” Google doesn’t really care whether they are linking to a site with stolen material or not so it’s up to the individual to try to enforce their copyright.

    Google won’t take down links to stolen material because it’s “too hard”? Sorry I don’t buy it. I think it’s more about internet industry profit margins then about anything else.
    Stealing is stealing, some people try to justify it by telling themselves that it’s ok to steal from somebody because “they can afford it” or “they’re too greedy anyway”. Bottom line is if you post copyrighted material on the internet without permission, you are engaging in criminal activity. If you provide a link to stolen material, you are aiding and abetting criminal activity. It really is that simple. It all comes down to the question of what kind of person you want to be. Do you want to be a person that takes things away from others or do you want to be the kind of person that makes a positive contribution to the world?

    1. I would like to make a positive contribution to the world through sharing and innovation. These goals, and future progress, cannot be established if people hold on to archaic methods. If the government, and media elite, believe the only way to save their business is through control and fear tactics, they are doomed to fail.

      MegaUpload is really no different then YouTube, but from my reading MegaUpload didn’t offer a viable path to assist with copyright material. YouTube, Google, on the other hand helped to create an extremely efficient method of this.

      Also, Google is opposed to piracy, so don’t spread such rhetoric. They don’t believe the power hungry MPAA and RIAA should be in control of an entity as strong as the Internet, which I imagine the majority of civilization would agree with.

    2. Some people try to justify horrible written legislation by telling themselves that it’s ok to conflate infringement with stealing because it furthers their agenda.

      It is factually incorrect that posting copyrighted material on the internet without permission is a criminal activity. In same cases it’s completely legal, like fair use, in others cases it’s a tort. Criminal copyright infringement is more than just posting something online without permission. The idea that linking to infringing material is ‘aiding and abetting’ is completely insane. How is a layman supposed to know what is and is not infringing? They can’t. So obviously an attempt to paint linking as criminal will curtail a hell of a lot more activity than just criminal copyright infringement because who would risk jail to link their friends a gigaom article on the off chance that there’s an unlicensed photo in it. That’s your idea of aiding and abetting. Insane.

      If you ever need to follow up an argument with ‘it really is that simple’ you can be certain it’s a horrible argument. Nothing about copyright is simple. Fair use is an affirmative defense, after all, so the only way to know for sure what is and isn’t legal is an actual trial.

      It really does all come down to what kind of person you want to be. Do you want to be a person that supports draconian legislation that tramples on people’s rights because you believe it will make you a little more money or do you want to be the kind of person that makes a positive contribution to the world?

      1. I believe there’s actually a distinction b/w criminal and civil law — criminal infringement has a mens rea requirement, whereas civil law doesn’t (i.e., you can be sued for infringement eve if you’re ignorant of what you’re doing). So, fair use aside, infringement is generally illegal infringement from a civil-law perspective.

    3. Peter,

      I couldn’t agree more on the criminality of it, which is why I never illegally download or post anything (heck, I still buy CDs). But the reality is that affordable distribution via the Internet is the will of the people, and studios need to get on board with it. They’d love to hold onto their outdated but highly profitable methods — just like the movie industry did back in the day around production before technology freed up the means to production to independent filmmakers and distributors — but they do so to the detriment of consumers and themselves.

  3. BTW, American Federation of Musicians (AFM), American Federation of Television and Radio Artists (AFTRA), Directors Guild of America (DGA), International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists and Allied Crafts of the United States, Its Territories and Canada (IATSE), and the Screen Actors Guild (SAG) also support PIPPA. It’s not just about big business, there are thousands of artists, photographers, authors, musicians and composers driven out of business by theft of their copyrighted work.

    1. Common knowledge test, is never apply when a company brings a suit to bear. At what point exactly should a major company stop being paid for work that it has already done and actual create something new? After 10 years 20 or 75? Energy can neither be created nor destroy mass equals energy. Copyright laws need to be reformed, major right holds should have to pay taxes on their holding like landowners. Google will take down most links if you just ask them. If a system is broke the first positive contribute you can make is to not support it.

    2. “driven out of business by theft of their copyrighted work”

      Where’s the evidence of this? The fact that infringement took place and they went out of business doesn’t automatically imply one caused the other. Even if it was the infringement that caused it that does not imply that stronger enforcement is the answer.

    3. It’s not as if Hollywood is too concerned with actors, though, right? One of the first things I learned about entertainment law is that contracts promising a cut of net profits are generally a sham, because the way studios do the accounting, there’s rarely a net profit. A creative online distribution method that increases views and for low distribution costs might actually improve that situation.

    4. Do you have hard data to back this up? Do you have studies that demonstrate one causes the other? Correlational studies mean nothing.

      Lots of people use umbrellas when it’s raining. That doesn’t mean umbrellas cause the rain.

      Maybe try to figure out WHY people are download content illegally instead of trying to throw them in jail. What is causing this new behavior? “It’s free” isn’t a good argument. “It’s easier than going to walmart and buying a DVD of a terrible movie that costs too much” might be getting you somewhere.

      If the MPAA would spend a fraction of the money and energy spent on lobbying and lawsuits to instead create a well designed online service that offered current content from all studios at a reasonable monthly rate (with different plans and a la carte options), I feel like piracy would become a non-issue.

      I am currently spending more money on music than I ever have. I have subscriptions to MOG, Slacker, Pandora One, and Sirius XM. I like these services. I don’t feel like I’m getting ripped off. There is nothing this convenient in the movie and TV industries. iTunes comes the closest, but there isn’t a good way to get it onto my TV without buying in to the entire Apple ecosystem – something I’m not willing to do.

  4. Billionaires created SOPA – – and fought against it – – Hollywood, MLB, NFL, NBA
    in favor – – Zuckerberg, Brin & Page (Google), David Filo and Jerry Yang (Yahoo) etc., opposed
    http://www.billionairechronicles.net/billionaires-split-sopa

  5. Alan Carl Brown Sunday, January 22, 2012

    How many jobs are associated with something is not important. If it were, we could get rid of all laborsaving devices and reach that nirvana.

    We our standard of living because we’ve invented ways to create much more with the same amount of labor. Which is the same as accomplishing the same thing with far fewer jobs.

    Whenever more wealth is created this way, both the innovator and the customer have more money to spend on other things, things that also involve human labor. Which is why we do not have 80% unemployment when the farm mechanized.

    Eliminating jobs is not the cause of high unemployment. Bad policies that create unsustainable bubbles throw far more people out of work for long periods than the steady march of innovation..

  6. Given that the RIAA and the MPAA’s clients are reporting record profits, I don’t buy all this piracy bull crap.

    I get ALL my content on-line, through iTunes, off of the web, by paying for my downloads (Louis C.K. $5 show which earned him a million bucks profit instead of a crummy $10k for the night.)

    That’s what has the RIAA and the MPAAs clients scared. The producers will realize that it costs nothing to discover and get content off of the internet and very little to distribute it so you don’t need the record and movie studios anymore.

  7. tetracycloide Monday, January 23, 2012

    “It’s true that movie studios… are losing money to online pirates.”

    It is true? Is there actual evidence for this loss other than that infringment clearly exists? The GAO couldn’t find enough evidence to support that position as of April 2010. What’s changed in that time? Nothing of which I’m aware. The fact of the matter is that actual losses have never been demonstrated and they don’t automatically exist a priori.

  8. When it comes to watching movies, we rarely go to the theater. Sometimes we rent a movie from Netflix or Blockbuster. We pay so little I can’t imagine how Hollywood is making much profit from us. We also subscribe to HBO and most of the movies we are interested in are eventually there. The library is also a good source for finding DVDs. So what I am saying–Hollywood isn’t making a lot of money on us.

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