Millions of Americans oppose SOPA and PIPA because these bills would censor the Internet and slow economic growth in the U.S. Now our little cheat site does too

This Is Basically What SOPA Is Doing

The Senate will begin voting on January 24th. Please let them know how you feel. Sign this petition urging Congress to vote NO on PIPA and SOPA before it is too late. Click Here To Sign.

SOPA is a bill that was introduced by the House Judicial Committee on October 26, 2011. Its purpose, as stated in the text of the bill found in H.R. 3261, is to “promote prosperity, creativity, entrepreneurship, and innovation” within the multimedia complex. Passage of the bill would broaden the ability of and embolden law enforcement agencies and copyright holders to combat and reduce copyright infringement on the Internet. It is currently pending in the House of Representatives.

The purpose of this post is to explain why the stance of X-Tream Cheats is in firm opposition to the passage of SOPA. Here are three reasons:

1. SOPA would prevent the natural and necessary replacement of old distribution mechanisms with new and efficient ones.
2. Content producers are actually enjoying larger audiences and revenues more now than before the advent of the Internet era, so SOPA would actually undermine the protection of artists, not strengthen it.
3. SOPA would grant broad authority to individuals, allowing a single judge to shutdown entire sites rather than the offending content.

Liberty at Risk?

Then there is the little matter of freedom of speech. The risks to freedom of speech outweigh the benefits that might come from SOPA.

If SOPA should pass, a copyright holder may accuse an overseas website of copyright infringement by filing a petition. Think of it as Warner Brothers seeing a file-sharing site in China that hosts Harry Potter movies and them asking for the website to be taken down. The petition would then go before a judge, and if the judge agrees with the copyright holder, the United States Department of Justices (DOJ) would block the website to people in the US.

The system is presented as having checks and balances because a judge will review cases before granting a take-down. The problem is:

• A takedown can occur for a single piece of offending content.
• A whole company (website) is taken down, rather than just the offending content.
• The takedown occurs because a single judge says, “Take it down.”
• The definition of “overseas” website will become increasingly fuzzier as sites become international.

Imagine the DOJ attempting to take down the Hearst newspaper empire 50 years ago. Hearst was distributed, with hundreds of newspapers in cities across the country. Stopping all Hearst newspapers would have taken months and would have caused a constitutional crisis. It would have been unimaginable to request a take-down to the Hearst Empire because of a single offending piece of copyrighted content.

By passing SOPA, such a weighty decision could be made with a virtual snap of the fingers, thanks to the nearly lack of enforcement costs. More and more people continue to get their news from sites on the Internet rather than from newspapers or TV.  If SOPA passes, it would give the DOJ the ability to block major sources of news almost instantly.

A Brief History of Innovation

The purpose of providing a bit of a historical background is to not only provide perspective, but—additionally—to emphasize the pattern of innovation. Innovation leads to efficiency, especially as it pertains to the business model of content distribution within the multimedia industry. It forces established companies to contend with emerging ones by enhancing their current technologies, resulting in competition and better quality for consumers. In short, pioneering companies working with new business models stand to gain in both reputation and profitability.

When artistic expression was first exhibited, it came in the forms of cave paintings, spoken-word stories and songs in real time. As civilization evolved, so did the methodology of artistic expression, such as, oil paintings on canvas, sheet music and written text.

The invention of the printing press allowed artists (or authors, in this case) to share and distribute their work to thousands of readers. This ability to reproduce the printed word at scale was followed by the recording of music (i.e., the phonograph and 78-rpm records) and imagery (i.e., the motion picture).

Early on, it was recognized that copying was inherently unfair, so copyright laws were created. The purpose of these laws was to protect the content producers of books, music and films. The last century has brought a boom in content-delivery businesses, with the formation of today’s great publishing houses, record labels and motion picture studios. These businesses brought multimedia to the masses, allowing anyone to consume and own content. Initially, copying content was difficult for individuals, necessitating a direct relationship between consumer and industry. This difficulty has relentlessly and continuously evaporated.

The system of content distribution remained stable until the early 1980s.  Around this time, the video cassette recorder (VCR) and audio cassette recorders gained popularity and enabled individuals to record television programming and transfer music from vinyl albums to cassettes in the comfort of their own homes.

The Motion Picture Association of America (MPAA) predicted the VCR would be the end of the movie business, with the head of the MPAA Jack Valenti stating with no lack of hyperbole:

“I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to woman home alone.” 

Luckily for the movie industry, Congress did not ban the VCR (or the cassette recorder, for that matter). The convenience of renting a video at the local store ultimately trounced any losses from people copying movies in their homes. The home video market ultimately became a cornerstone of movie studio revenues throughout the 1980s and 1990s.

Innovation Today

Fast forward to the emergence of the Internet and then to our present day in 2012, and one can hear SOPA repeating the VCR outcry. This time, though, it’s aimed at web-copying and distribution of books, music and movies. Major book publishers, the Recording Industry Association of America (RIAA), record labels and movie studios are asking Congress to help prevent the copying and distribution of copyrighted content on overseas websites. They argue that businesses are losing money because of illegal copying on sites, such as thepiratebay.org and megaupload.com.

Take a look at the following graph:

The RIAA’s interpretation of the graph might be, “The music industry used to generate $15B a year in 2001, but is only generating $8B now. Therefore, digital sales are not making up for lost CD sales and this must be because of copying.” Such an assertion, though, would be wrong. In actuality, they’re losing money for an entirely different reason.

The advent of digital music distribution is a bit like the advent of the computer vs. the typewriter. The U.S.typewriter market used to be huge. Typewriter sales reached a peak in the mid-1950s. Just one company, Smith-Corona of Syracuse, N.Y., sold 12 million typewriters in the last three months of 1953. Now, a grand total of about 400,000 typewriters are sold each year in America.

If one looks deeper into the music industry revenue loss between 2001 and 2011, one finds that the losses are occurring at music companies, not with artists. See the graph appearing after the legend for music labels and artists showing the change in UK music industry revenues from 2004 to 2008:

• Revenue to music labels (red) is decreasing fast.
• Live music revenue to artists (green) is growing fast.
• Royalty (online, broadcast) revenue to artists (yellow) is increasing .
• Recorded revenue to artists (black) is declining.

The sum of artist revenues is actually increasing over time!  As music distribution becomes more liquid, artists are making much more money on live performances (maybe because it is so much more “valuable” to the average music fan in the digital age).

The revenue being lost with digital distribution is not artist revenue, but it is music label revenue. Much of this lost revenue used to support physical processes. Ten years ago, many people used to work in record stores and CD printing factories. These jobs don’t exist with digital distribution. There used to be several Tower Records stores in the area where I live. These facilities have disappeared, just as typewriter manufacturing facilities did 20 years ago. Simply put, physical distribution has been replaced with cheaper, more ubiquitous and available content. Gone are the days of getting in the car, heading to the nearest retailer and waiting in line, thanks to the very little marginal cost for digital distribution.

More about SOPA and PIPA

Members of Congress are trying to do the right thing by going after pirates and counterfeiters but SOPA and PIPA are the wrong way to do it.

1. SOPA and PIPA would censor the Web

The U.S. government could order the blocking of sites using methods similar to those employed by China. Among other things, search engines could be forced to delete entire websites from their search results. That’s why 41 human rights organizations and 110 prominent law professors have expressed grave concerns about the bills.

2. SOPA and PIPA would be job-killers because they would create a new era of uncertainty for American business

Law-abiding U.S. internet companies would have to monitor everything users link to or upload or face the risk of time-consuming litigation. That’s why AOL, EBay, Facebook, Google, LinkedIn, Mozilla, Twitter, Yahoo and Zynga wrote a letter to Congress saying these bills “pose a serious risk to our industry’s continued track record of innovation and job-creation.” It’s also why 55 of America’s most successful venture capitalists expressed concern that PIPA “would stifle investment in Internet services, throttle innovation, and hurt American competitiveness”. More than 204 entrepreneurs told Congress that PIPA and SOPA would “hurt economic growth and chill innovation”.

3. SOPA and PIPA wouldn’t stop piracy

To make matters worse, SOPA and PIPA won’t even work. The censorship regulations written into these bills won’t shut down pirate sites. These sites will just change their addresses and continue their criminal activities, while law-abiding companies will suffer high penalties for breaches they can’t possibly control.

There are effective ways to combat foreign “rogue” websites dedicated to copyright infringement and trademark counterfeiting, while preserving the innovation and dynamism that have made the Internet such an important driver of American economic growth and job creation. Congress should consider alternatives like the OPEN Act, which takes targeted and focused steps to cut off the money supply from foreign pirate sites without making US companies censor the Web.