How To Foil Internet Pirates

When needlepointers use the Internet to get cross-stitch patterns for free, you know copyright theft is getting out of hand. The Los Angeles Times recently reported that needlepointers are downloading patterns from various illegal Web sites instead of paying for pattern books. Needlepoint designers and their publishers are predictably outraged, while many of the downloaders say they don't understand what the fuss is all about. "Why shouldn't friends help each other out and save a little bit of money?" asks one.

Purloined music from Napster Inc.. Stolen movies from Scour Inc. It's beginning to seem that no intellectual property is safe from the casual theft that the Internet makes easy. People who would never swipe a compact disk from a store think nothing of doing the same at the keyboard of a personal computer. Some justify their theft with nonsensical slogans like "Information wants to be free." Others have never thought through what they're doing, or just can't resist a freebie. The danger is that piracy via the Internet will lose its stigma entirely, and copyright laws will become as ineffective as Prohibition. If the people who create copyrighted works can't get paid for them, they will stop producing them. Then only altruists, aesthetes, and cranks will create "content," and we'll all be the poorer for it.

Fortunately, the situation is not yet desperate. There are several things that can be done to make sure that copyright law and intellectual property survive the Internet Age. Here are a few:

-- Embrace technology instead of fighting it: Napster Inc. and other illegal file-swapping sites on the Internet caught on in part because an arrogant music industry made it impossible for fans to download songs legally. The major labels took advantage of their control of the distribution system to charge high prices for music while paying relatively small royalties to the talent. They forced fans to buy albums when they wanted singles. And they withheld or underpromoted artists' work after gaining rights to it. Now the labels need to move ahead as quickly as possible with download services that open the door to their music archives at a price. These services will embed computer code into songs so that the recipient can't pass them along to other people. Music execs justifiably worry that hackers will crack the security, as they already have with digital video disks of movies. The answer is to respond with better security. It's a tiresome battle, but it's better than avoiding the Internet altogether.

-- Allow some copying: Too much protection of copyrighted works is as bad for creativity as too little: Culture is all about building on what has come before. That's why copyright law has always permitted limited copying for personal use and quotations of snippets for reviews, education, research, and news reports. In its zeal to protect copyright holders, Congress went overboard in the Digital Millennium Copyright Act of 1998. It prohibited all attempts to gain access to copyrighted material that is encrypted--effectively blocking even legitimate kinds of copying. The law needs to be fixed before it ensnares innocent victims.

-- Give the market time to work: Copyright defenders worry that there are so many sources for pirated works that it would be impossible to stamp out all of them. But you don't need to vanquish all of them to make a big dent in the problem. Web surfers will gravitate to the handful of for-profit sites that offer the biggest selections and are easiest to use--in essence, the America Onlines of the download world. The good part is that those big, conspicuous sites will be inclined to honor copyrights. Why? Because if they don't, it will be a snap for the courts to fine them or shut them down.

Copyright owners will survive the Internet, just as they survived radio, photocopiers, and the VCR. While there's no 100% solution to Internet piracy, the steps outlined here should go a long way toward making the problem manageable and keeping the creative juices flowing.

Before it's here, it's on the Bloomberg Terminal.