It would be irresponsible of Faultline to position the new US plan to protect intellectual property, unveiled this week, as more of the same and unlikely to make any difference, but there is very little original thought being displayed among the 30 recommendations.
The truth is that it attacks counterfeiting as much as internet piracy, and these are neither the same, nor illegalities which are fostered by the same groups.
If US drugs, such as Viagra, are so expensive, and yet not difficult to make in offshore laboratories, then it is hard to say that the problem is counterfeiting as much as it is profiteering by patent holder Pfizer, a question that becomes moot as the patent will expire in the next three years. In fact many of these problems expire over a small period of time. Pfizer charges something like $12 per pill and makes $1 billion a year on this one drug, and yet it lost one of its patents in Europe due to obviousness. Another point of view might easily see that obvious inventions cannot get through the complex drug approval mechanisms in the US and elsewhere, without companies like Pfizer. So perhaps this is more about a bureaucracy which other companies are not equipped to take advantage of than genuine invention.
If you were an old man in China, and you wanted Viagra, chances are you wouldn’t think much of Pfizer’s racketeering price levels, since a month’s supply would be around 13% of your monthly salary. You would think even less of it when a local pharmacy down the road offered to make counterfeit pills and charge around $1 per pill. Quite interestingly Viagra was invented by two British Pharmaceutical researchers who were looking for a quite different drug, and yet this is held up as an example of US inventiveness. Instead it is US control of the process whereby invention is licensed, which is not the same thing at all.
What’s this got to do with digital media? Well that’s just it, nothing. Video and music piracy have an effect on the wellbeing of US content companies, but the reasons for music piracy are very removed from pharmaceutical counterfeiting, and the two areas need to be addressed separately.
However there are some similarities. If Viagra was cheaper then no-one would want the counterfeits. In the same way that if Levi Jeans were cheaper, no-one would buy counterfeits. And this is also true for music, if tracks were cheaper, people would not pirate music, and this has been virtually proven by the introduction of iTunes, which pioneered cheap, single track purchases. Music is now purchased in the $billions online, and although piracy continues, things are relaxed enough among record labels that DRM free MP3 versions of all songs are now widely distributed once again.
The confusion arises because there IS counterfeiting widely seen in China and India in the distribution of DVDs. Most poor countries have it. But think of counterfeiting as just a form of customer complaint, telling labels and studios that prices are simply too high. In music, people have found that they can, these days, own 10,000 music tracks. And yet in the past, particularly when vinyl records were common, most people owned just 50 or so songs they liked, which were distributed on 50 or so albums which they were forced to buy to get them.
So for music, CD counterfeiting replicates the condition that labels put in place, but at a time when music consumption has gone through the roof. People now listen to music everywhere, on their iPods and phones, but they spend roughly the same percentage of their salary on music and music players as they always did.
For jeans or pills this is different. People only wear the same number of jeans in a week and only take a Viagra pill once or twice, and that amount has not changed because these are not digital content, they have real cost of manufacture and delivery and a built in frequency of consumption. People can have one extra pair of jeans, but not 10,000.
If you extend this whole experience to HIV and cancer drugs it gets more serious. People die because they cannot afford them, while the pharmaceutical industries get richer and richer. These businesses would not be threatened if they charged less for their products, but would prosper as more people could afford them. In the digital media industries we have experienced falling prices for the past 50 years for digital devices. In the pill industry they have only gone up, as medicine has got to grips with more and more of the things which ail mankind.
The problem here is that we want everything both ways. US companies want to keep all the intellectual property, and deny it to native Chinese companies. And yet they want their products made in China, where people are not paid very much. When it comes to selling these products in China, which cost so little to build, the local Chinese people are expected to pay the same as the West, even though it is their exploitation by the West that keeps them poor.
Before we hear Faultine getting accused of being communists, all we are saying is that this is all a matter of balance. Piracy is best harmed by charging reasonable amounts for products. Charging $10,000 for a course of HIV pills is self defeating, if no-one can afford them, except counterfeiters, who only buy them in order to make cheap copies.
Imagine this entire equation turned on its head as it may be in 20 years, with Chinese companies taking control of the process of how intellectual property is owned, and then owning most intellectual property. They might turn to the rich Americans and Europeans and say they can pay full price and that China demands that the full force of new US anti piracy laws should be brought to bear on any US citizen who copies Chinese products.
The more that there is no relationship between price of products and price of manufacture, we enter a form of extortion. And this situation is not solved by the US blindly backing the music labels, drugs companies and Hollywood.
For those who have not read the plan, in summary it was put together by Vice President Joe Biden, working alongside Intellectual Property Enforcement Coordinator Victoria Espinel under the cronyism “Piracy is theft, clean and simple.” We don’t agree it is that simple.
The plan contains 30 core recommendations, most of which are aimed at non-US locations except perhaps the first, which is about the US government doing more to stop buying counterfeit or pirated goods. It also calls for transparency in how the US develops a policy, and wants information sharing and coordination across agencies both home and abroad. It wants to share best practice in the US with partners abroad, with a particular focus on bringing China to book.
Biden sees foreign based web sites as the big problem and wants to make sure the US has a legal reach to close them down. Hence not much new, and no new understanding of why the problems exist in the first place, just blind acceptance that US companies have a god given right to make money abroad, but not the other way around.