Internet Piracy Requires Market Solutions

What’s the Latest Development?

While highly publicized due to the SOPA/PIPA controversy, and for setting a law enforcement precedent, the shutting down of Megaupload will stop only a small fraction of illegal downloads. In fact, illegal file sharing has become an almost necessary part of the online ecosystem. The service BigChampagne, for example, tracks file sharing data which it then sells to entertainment companies, who in turn use the data to build advertising campaigns. Some firms pay as much as $40,000 per month for the tracking service.

What’s the Big Idea?

Even if piracy must be stopped, the US is not the worst violator of copyrights nor will its strategy of legal redress solve the matter. In China, 78 percent of software is pirated, compared to 20 percent in the US. And comparing the bandwidth consumption of the US and Europe shows that America’s Netflix, representing the legal alternative to piracy, accounts for almost exactly the same amount of bandwidth consumed by bittorrent users in Europe. The best way to contain piracy is by creating legitimate commercial alternatives. 

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