But the law of copyright is clear when it comes to physical goods. The consumer has rights too, and one of those rights is to treat physical copies of copyrighted works the same way as normal everyday physical items. It's one of the limitations that society has seen fit to impose on the rights of copyright holders; in exchange for their monopoly on the right to make copies of their works, the customers get the right to borrow, lend, resell or otherwise alienate themselves of the product. You'll find the doctrine called 'exhaustion of rights' or 'first sale', and in US Law, it's to be found in 17 USC 109.
What's happening here is that with the internet switched on and the mass trade in digital goods, the copyright holders have been spending years making the analogies with physical goods that require capital and cost money to reproduce ('You wouldn't download a car') and now the physical items analogy is being applied to the rights that everyone else has too.
It works that way with cars, houses, and even physical books.
Do you think a ban on selling used cars would result in more new cars being sold? I don't. For one, not everybody can afford a new car. For another, people generally use the money (or trade-in value) they get from the old car to buy a new one.
Why should digital goods be any different?
Because I paid you for it. I bought it off you, just the same as if someone later re-sells a desk I made for them I can't demand further payment.
Or, alternately, do you believe that resale of a thing you made should benefit only you? Is that in perpetuity, or how long should this last?
It's kind of like "saving" money on milk by walking out of the store without paying for it. Whether you're taking possession of a finite physical good, or increasing the legally regulated supply an intangible one, you're doing something that - by law - triggers an obligation to pay another person money.
Disregarding the obligation by making a copy and retaining possession of the money which, by right, you now owe another, is where specific and definable deprivation enters the picture.
When people who understand what they're talking about refer to "theft" in relation to the unauthorized duplication of intangible goods, this is what they mean.
The problem with that analysis is that the amount of money you didn't give to the artist is the same regardless of whether you downloaded a copy. In fact, the vast majority of people in the world didn't pay the creator of the media.
And even for physical items, compensation to the initial holder is not what's relevant. If you take a gallon of milk and sneak out of the grocery store, but leave enough cash on the shelf in its stead, I think you will still be found of shoplifting, and I personally agree with that assessment. Likewise, if someone breaks into my house and takes my sculpture and leaves a million dollars of cash, that's still theft. What constitutes theft of a physical object is precisely that the item was taken not on the terms of the property holder.
And yet, demand for that media was nevertheless satisfied. So all the costs in creating it were invested with no hope of return. That may have been stupid move on the part of the author, but if the money dries up, how long do you think these people are going to go on investing their own time and resources for free?
"What constitutes theft of a physical object is precisely that the item was taken not on the terms of the property holder."
Exactly. And the same goes for intangible property. Indeed, that's the whole point of IP law: to create a situation where it's impossible to avoid a formal negotiation with the property holder without breaking the law.
A quantity of one was satisfied at a price of zero. That's a pretty trivial spot on the demand curve. It tells you nothing about the demand for that same good at nonzero prices.
There's a word for it, and it does not reflect well on the intellectual integrity of the people who use it. That's fair warning.
Back to the topic: I was speaking in generalities, but if I were to get as specific as you just did (by assigning a specific quantity of one), I wouldn't draw any sweeping conclusions before doing the intellectually honest thing by asking what happens when the quantity = n?
If, say, n = 1,000,000, then the effect is not so trivial. Moreover, the producer typically cares about the price point at which the number of sales and the value of each sale combine to produce the greatest possible revenue. While this point is not only non-obvious, it is likely to vary over time. So setting the price can be tricky. But one thing you can be sure of is that it's not zero. Moreover, all demand satisfied at the zero point is removed from the pool in which the ideal price / volume relation can be found, given that volume is a function of demand.
In other words, the optimal price in a leaky will pool will invariably be lower than one in a pool that doesn't leak. And that's how demand destruction lowers the commercial potential of a property with near-zero marginal cost.
I didn't say that the effect of zero-price downloads is trivial. I said that you cannot conclude anything about the quantity of a good that would be demanded at, say $10, by observing that there is some quantity demanded at a price of zero. This was a direct response to your sentence "And yet, demand for that media was nevertheless satisfied."
> Moreover, the producer typically cares about the price point at which the number of sales and the value of each sale combine to produce the greatest possible revenue.
Greatest profit, actually, but you're pretty close. But I don't see your point. I'm not suggesting that all media creators should price their content at zero (although that certainly is a valid strategy that can and has worked).
> Moreover, all demand satisfied at the zero point is removed from the pool in which the ideal price / volume relation can be found, given that volume is a function of demand.
Not exactly. I have purchased media legally after having downloaded the very same media illegally, and it wasn't because I lost my downloaded copy. But anyway, this claim still ignores my point, which is that the fact that there is nonzero quantity demanded at zero price tells you very little about how much is being removed from the pool at non-zero prices. To use an obvious example, a person with zero disposable income can download an album for free despite it being impossible for him to purchase it at any non-zero price. Or to use another obvious example, I can download music at least 50 times faster than I can listen to it, and certainly faster than I could afford to pay for it. If I were to download a terabyte of music this week, that tells you essentially nothing about how much music I would be capable or willing to buy legally if I were unable to pirate music.
But again, that's not the point. Indeed, asking about the amount of dilution assumes the dilution is taking place, and moreover, when it comes to artists and/or formats with established track records, demand prediction isn't a game of wild guesses. The ability to estimate, if not predict, demand is essential to the budgeting and capitalization of programs. So if you're aware that dilution is taking place at scale, you can approximate what you would have taken in w/o having to deal with the skim.