(Illustration by William Reisner)

Why rush to change copyright law?

Imagine, if you will, an industry that is being threatened by a new technology. The technology makes it possible for copies of copyrighted works to be made and distributed to consumers without their paying anything to the copyright owners. Those copyright owners call for new and improved copyright laws that would regulate the harmful new technology. They say that, without these new laws, their industries will be destroyed, incentives for making these works will be eliminated, and consumers will ultimately pay the price in the form of fewer copyrighted works. Question: Are these copyright owners right?

To answer this question, it would help to know a bit more about the industry and technology in question. The industry I am describing above is the vibrant sheet music industry of the late 1800s, and the technology is the cutting-edge technology of the player piano. Faced with this new technology, the owners of copyrights in musical works feared their livelihoods would be destroyed. Instead, the music industry flourished, albeit in new form. In fact, the invention of the player piano and the subsequent invention of the phonograph opened new markets for recorded music and expanded the size of the music industry well beyond the copyright owners’ fondest dreams.

Faulty predictions about the impact of new technologies on copyright industries are nothing new. In fact, they are the rule rather than the exception. Several decades after the introduction of the player piano, the music industry complained that radio would destroy the market for recorded music. The industry made identical arguments after the invention of consumer audio tape decks. Publishers claimed that the photocopier would destroy the publishing industry. Perhaps most famously, Jack Valenti, then president of the Motion Picture Association of America, testified before Congress in 1982 that “the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone.” Yet, nearly two decades after the Supreme Court refused to ban the sale of the VCR, the movie industry in the year 2000 made more from home video rentals than it did from box-office, pay-per-view, and television revenue combined.

These historical examples are relevant today because the same predictions are now being made about digital technology and the internet. The copyright industries, and particularly the music industry, argue that new technologies, like peer-to-peer file sharing, are destroying their industries. Accordingly, they have called for increased copyright protection, and Congress has largely obliged. In 1998, for example, Congress enacted the Digital Millennium Copyright Act, which gave copyright owners a right to control access to copyrighted works via technology and banned the distribution of technologies that circumvent such controls. The industry has sought to limit the dissemination of peer-to-peer file-sharing software, by suing companies like Napster, Grokster, Aimster, and Kazaa. The industry has also pushed for further, even more dramatic changes to our existing copyright laws.

These proposed changes to existing copyright law are a very bad idea.

They are a bad idea, first, because it isn’t yet clear that we need them. Our existing copyright laws may well be up to the task of adjusting to new technology. In fact, the Recording Industry Association of America recently began filing regular, garden-variety copyright lawsuits against consumers who share music over peer-to-peer networks, and this has led to a substantial reduction in unauthorized file sharing. Moreover, the evidence tying file sharing to reduced sales has been surprisingly equivocal, suggesting that file sharing is not yet having a large impact on music industry revenues. So the need for new laws has not been established.

Second, the proposed changes are bad because they may hinder the development of new technologies, which may in turn create new and expanded copyright markets. The examples above indicate that new technologies often lead to the creation of entirely new markets and business models. Because the possible harms of a new technology are easy to see and the potential benefits sometimes difficult to imagine, a very real danger exists that regulating too soon may limit the dissemination of new technologies and freeze existing markets in a way that deprives consumers of potential benefits. Imagine, for example, if the movie industry had succeeded in keeping the VCR from the market.

A far better approach would be to resist the pressure to change the law and wait to see how technologies and markets shake out. Of course, it’s also possible that this time, the copyright industries are right and digital technology may pose a significant threat to the copyright industries, one that our existing laws are not equipped to deal with. After all, even a stopped clock is right twice a day. Yet, given the copyright industry’s track record in making predictions about the future, it would be wise to be skeptical about such claims.

Professor Liu’s research focuses on the impact of new technologies on copyright law and markets. He has been on the faculty of BC Law School since 2001. Before joining the faculty, he clerked for the Honorable Levin H. Campbell of the US Court of Appeals for the First Circuit and served as vice president and general counsel to a venture-backed internet startup.