I have something of an unusual perspective on intellectual property infringement of the type that's called "piracy". First, I put that word in quotes because I dislike it. It is an inadequate and inaccurate description of the problem which both romanticizes and exaggerates it.
The word "piracy" in modern ears usually (especially in the sheltered civilized areas where real pirates, who still exist in some of the seas of the world, don't prowl) evokes a dashing, romantic imagery of swashbuckling action and cheerful rogues, most recently exemplified by the Pirates of the Caribbean movies. A more accurate image of the online pirate is of some random guy clicking "download" on a screen. There's no romance and for most of them little-to-no effort involved; it's a casual act worthy of at most a fleeting thought.
On the other hand, the word "piracy" carries with it the implications of violence – red-handed raiders finding some helpless victim and despoiling them of all their valuables, possibly leaving them all dead. Modern internet piracy hasn't a shred of violence in it, and the victims aren't despoiled, directly, of their valuables; they still have their possessions.
Thus, in neither case is "piracy" an accurate term. Neither, to be honest, is "theft", at least not as commonly depicted. A recent meme I saw passed around compared it to being a baker and having some guy come in taking your pies to use for his own business. That analogy, however, is *hideously* flawed to the point of dishonesty. If you're producing a physical product and someone comes and takes it from you, you are directly out money – you can't replace that object without buying or making another – and directly out sales opportunity (because you cannot SELL that particular product now that it has been taken).
Modern internet IP infringement activities do not take the original away from the owner; in fact, a large amount of it is based on taking a perfectly legal copy purchased from the owner and duplicating it. The duplication does not harm the original copy, nor remove it from use by the original owner. No one loses anything physical at all.
This isn't to say that these activities are either right – they're generally not – nor that they do not have the potential to cause the owners of the IP harm, because they do. But I find it acutely painful to hear it argued in terms that are clearly inaccurate to straight-up wrong.
Technically, these issues have been around long before the Internet became an important part of most peoples' lives; "pirate recordings" of band performances, or copies of movies, were around for a long time, and I encountered pirate, or bootleg, copies of foreign films in commercial stores more than once (and discovered that there wasn't anything that the FBI or other agencies could do unless the original rightsholder was willing to prosecute an overseas claim).
However, the old-style bootleg copies – onto cassettes and VHS tape – had the huge disadvantage (from the point of view of the bootlegger) or advantage (from the point of view of the IP holder) that the quality was invariably worse than the original, and decreased with every copy. This meant that while many people might see your show or hear your music through these means, you had a fairly good reason to believe that they'd still want the original, legal stuff if they could get it, because it would be noticeably better.
With modern digital copying, this is no longer true. The thousandth copy of a given song done by digital means will be exactly as good as the first copy. A copy of a copy of a copy is no longer guaranteed to suck.
I first encountered these issues in their modern context working for a company that (to make a long story which I may or may not tell later short) took its nice stable business model, deliberately torpedoed it, and attempted to create a clone of Napster with a few added wrinkles, ending up being sued by the Big Boys for something like two billion dollars. Until then, I wasn't clear on just how common this "downloading" of music and, later, movies was.
Ironically, I had anticipated this could be a problem a long time before. In 1991 or 1992, I sent mail to RCA Records and a couple of others detailing how music and image (and later film) transfer over the Internet could become an issue, OR the Next Big Thing, and urged them to start preparing for this change, maybe thinking about how they could offer their wares online as the bandwidth became available and computer and Internet connections became more widespread.
No replies were forthcoming; I suspect the letters were probably read to either gales of laughter or incomprehension and consigned to the circular file. I do occasionally wonder if any of the original recipients, a decade or so later, had a vague memory of reading something about this kind of thing before it became an issue.
Now, before we go further, I should make it clear that, in my view and that of the law, there's not much doubt that most such downloading (not done through legal services like, say, iTunes) is in fact illegal, and is certainly rude; you're copying something because you happen to want it and don't want to, or cannot afford to, pay for it. That isn't an interesting argument; legally, it's a settled one and there's no rebuttal to be had.
What is interesting to me is whether it is wise or worthwhile to spend much time and energy stopping it, which hinges upon what the factors are that drive it, and to what extent this sort of infringement actually (as opposed to theoretically) damages the IP owner, or even if it actually does damage them.
The latter question often causes some proponents of severe punishment for such infringement to splutter in rage (yes, even online, people can splutter in a sense). But it is in fact a very valid question and possibility. From the point of view of an IP owner (such as, for example, myself, a published author with a number of works that can be both legally and illegally obtained online), there are four divisions of possible downloaders;
1) Download the item and would never pay for it; they may be collectors for collectors sake (yes, there's a pretty large population of downloaders who seem to have as their main goal showing off that they got more stuff, faster, than anyone else, not that they would, or even COULD, read/watch it all), or they may simply feel that they have the right to read or watch whatever they want without paying for it. These people cannot count as "lost sales"; they would NEVER have bought your item, so the fact that they have a no-cost-to-you duplicate of it is not a lost sale; if you had prevented them from downloading it, you still wouldn't have gained a sale.
2) Download the item and may purchase it if they like it. This group is often simply discriminating shoppers, but a lot of online "sample" choices are too limited for them to feel comfortable making their (probably limited) purchase choices based on limited information. These can be at least as easily counted as potentially GAINED as lost sales. While some of these people will choose NOT to buy the item, they most likely would not have bought at all without the sample anyway, so for the most part any purchases of your item by these people was facilitated by the illegal download.
3) Download an item that they would have paid for if they couldn't have gotten it for free. This group is the "clear loss of sales" group. If you could prevent these guys from downloading your stuff, they would buy it; if you can't, they won't buy your stuff because they already have it.
4) Don't download and won't purchase. These people don't matter to either side; your product doesn't interest them at all and they won't get it in any event.
So, looking at that list, you can see that there really is only one category – number 3 – which can be clearly counted as "loss of sales".
More interesting, however, is the possibility of someone encountering your work for the first time through someone with an illegal download of it. Because – here's the ugly truth – the biggest enemy of you, the author (or musician, or whatever) is not the downloader who reads your work for free. It's obscurity. It's the fact that out of every 100 people who, if they knew about your work, would buy your work, you are probably getting the attention of one, or two, or MAYBE three. If you happen to be a Big Name, you MIGHT be reaching 25, or 50. If you happen to be J.K. Rowling, you just might be up to 80. Big-bucks blockbuster movies might reach this level, too.
But if you're like me, Mr. Midlist? One or two out of a hundred. Your enemy is the fact that no one knows that you exist. In that case, it is quite possible that you end up with more sales because of illegal downloading showing your name to people who do buy your stuff.
"That's ridiculous", I have heard a number of people say. "No one would pay money for something they could get for free."
Well, I can start with the direct anecdote: I've paid for a lot of stuff that I could get for free, or even that I had gotten for free earlier but that I bought once I could get it legally. So I have trivially disproved "no one".
More importantly, though, iTunes stands as a pretty much absolute disproof of this idea. Most, if not all, of what iTunes offers IS in fact fairly easy to find for free online. Yet people routinely buy hundreds of millions of dollars of music and movies and TV shows from iTunes. Why?
Convenience and value.
The sales of CDs took their biggest hits for those two reasons. Online downloading, especially once Napster appeared, was hellishly convenient. I didn't have to go outside my house and find the CD. I just clicked on the track and presto!, the song was there for me to listen to.
And CDs, in general, did not offer good value. Once burnable CDs became available, the general public realized that the cost of a CD itself was literal pennies, and for most people a CD isn't all valuable; most people have two or three tracks that they really like, a few more they think are pretty good, and the rest… not so much. So the cost of a CD was at least half wasted. A downloader can pick and choose the tracks they want and prioritize getting them based on how much he or she wants them.
iTunes recognized this instantly. Instead of $20 albums, the albums generally cost $10 (well, $9.99), and – far more importantly – the individual tracks can generally be purchased for $0.99, which is perceived as approaching nothing in cost even by people with relatively little spending money. Moreover, iTunes recognizes purchases on an album and reduces the price of that album by the amount already spent. Buy five tracks, the $10 album is now $5, and maybe you decide "what the heck, the rest of the album's probably worth $5", but you wouldn't have said it was worth $15.
The combination of convenience and higher perceived value convinced many people to buy what they could, if they desired, have gotten for free.
The flipside is demonstrated by the Baen Free Library, which began by offering books for free download that were still on sale. The assumption by many people in the industry was that this would torpedo book sales – that whatever books were put in the BFL would see their sales tank permanently.
Instead, the opposite was generally true, most spectacularly in the case of On Basilisk Station, the first volume in the Honor Harrington series. Its sales had dropped to very sluggish levels prior to the BFL being started; after the BFL released it, On Basilisk Station shot back up to the top of Baen's charts and remained there for a long time, not only selling briskly but supporting a brand new, low-cost hardcover reissue.
It's also unwise, in my view, to prosecute/pursue people for downloading or similar infringement if they're doing it as private individuals with no profit involved (i.e., they're not trying to sell your stuff). This will be bad publicity, making you look like a big bad guy stomping on the smaller victim, even if you have a perfectly good legal justification to do so. This effect gets worse the higher up you go; the MPAA/RIAA and their associated megacorps like Time Warner just look like big bullies every time they do this.
And – honestly speaking – I'd be a lot more sympathetic to their position if they had not (as a group) made tremendous efforts to (A) prevent anything from ever entering public domain again, as it should, and (B) prevent huge swaths of people from being able to access their products legally at all.
(A) is really a tragedy and outrage. The entire point of copyright and other IP law was to encourage the creation of new material by allowing the creator a limited period in which he or she had exclusive rights to profit from their creation – topping out originally in the USA (Copyright Act of 1790) at 28 years total (14 years with a second 14 year period if renewed). By this original standard, things like the original Star Trek and Star Wars would be public domain by now.
Public domain is important to creators and the society in general. We are richer for having Shakespeare, Verne, Wells, Austen, and many other creators' work available for all to read, work with, borrow from, and enjoy without limit. It was never the intent of those creating IP law that it would enable corporate entities to withhold such IP from the public essentially forever, yet this is exactly what it is being used to do. (there are in some ways even worse abuses being made in the area of trademark, which is being used to provide what amounts to copyright protection without any of the even theoretical limits on time)
(B) is accomplished through multiple means, but perhaps the most familiar is region coding. All that region coding accomplishes is to make it difficult for someone living in region X to use material produced by Region Y. This isn't even about sales, as such; if the material in Region Y was made available without issue to region X, the people in Region X would buy the material. But for various business reasons, companies have promoted the creation and limitation of these business areas and thus they have created an artificially-frustrated demand for those products – one which will be served by the downloaders.
DRM is also another version of (B). It prevents people from being able to use the product in the way that heretofore was perfectly normal and treats the customer as a potential criminal, causing them to – quite rightly – resent the entire concept of DRM. Similarly, the behavior of companies such as Amazon demonstrating that in their view you aren't, technically, buying the material but sorta renting it really causes a violent reaction against paying anything but the most trivial fee. In my case, for instance, if I'm not going to actually own a book, or a piece of software, there's no way I'm paying double-digit dollars for it, let alone (as is common with some software packages) triple or quadruple figures.
This isn't of course to say that it's right that the downloaders do what they do. But it is to say that a company – or government – that chooses to ignore this issue is helping to promote it, to create justifications for it in the minds of the public, and – in creating extreme punishments for what the public views as a relatively trivial crime – generate contempt and disregard for these laws and related ones.
This could easily be remedied, of course. Baen Books has been a successful leader in this area specifically because they recognized that obscurity was the enemy and ease of access was their weapon against obscurity. Their ebooks come in multiple formats and have no DRM. They are trying to revive the Baen Free Library (temporarily severely reduced due to the necessities of doing business with Amazon – long story). They will go after people who are selling their authors' work illegally, but have even released huge collections of their authors' works with explicit permission to copy (as long as all attributions are retained). This has gained them tremendously in publicity, in respect, and – it would appear – in sales.
If other companies would follow that lead, I suspect that they would find that "piracy" would become much less of a problem… and business would be booming.