Market Asymmetry and SOPA

The recent public backlash against anti-piracy legislation (SOPA and PIPA) framed the fight not around terms of attacking foreign piracy, but as an issue of free speech. The inability for pro-SOPA/PIPA camps to effectively inform the general public on the economic benefits, not to mention the inability to position SOPA as an issue fundamental to the freedom of exercising copyright, was central to negative public sentiment.

Anti-SOPA propaganda smothered any actual facts on the benefits of the legislation, but beyond the somewhat clumsy steps committed during this disinformation waltz, another story emerged around a vast market asymmetry: that between content availability (consumption of which is generally around 90% pirated) and the ability for the content owner to capitalize on their creation.

SOPA dealt only with foreign sites (or “Rogue Sites”) infringing upon copyrighted works, providing the ability for US content owners to fight piracy and protect their right to control and monetize content. This legislation was crafted to address some of the many shortcomings of the Digital Millennium Copyright Act, which has been decidedly pro-ISP since its inception and has helped accelerate piracy in tandem with the expanding availability of content on the web. Safe Harbor quickly became an opaque curtain, behind which aggregators leveraging the crowd could amass high value content without worrying too much on its provenance nor ownership.

Given the imbalance between a toothless DMCA, which provided no clear path toward dealing with infringers in a constructive way (especially non-domestic), and the advantage of Safe Harbor and the ability to rapidly scale content acquisition on emerging platforms, it’s no surprise the size of this asymmetry – and there is little public support to address it.

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