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The Costs of the Digital Piracy Culture
Allen Ng
University of Wisconsin-Parkside

Abstract
Modern computer technology has caused a fundamental
shift in society. Alongside the promises of a brighter
future, a culture of flagrant digital piracy is growing.
This paper examines the costs of that culture and who’s
paying them. Clear definitions of the involved concepts
and stakeholders are presented as well as the types of
costs, many of which extend beyond the monetary.
Analysis of current and future trends is made and the
culpability of both producers and consumers is discussed.

Key Words:

Ethics, Intellectual Property, Piracy,

Society.

1. Introduction
Pandora’s Box has been opened. For better or worse,
we have woven the computer into the very fabric of our,
now global, society and there is no going back. Modern
technology has brought about the first truly fundamental
change to society since the Industrial Revolution. Then,
as now, the societal adoption of “the new” led to shifts in
the way we define concepts such as “value”, “prudence”,
“fairness” [1].
However, now, unlike then, our
integration of this new technology into our lives has not
only produced a wave of cheap products spurring intense
consumerism, but we have fundamentally altered the
human experience. The transistor has changed the world
and what it means to be human. Never before has it been
possible to connect with, literally, anyone else on the
planet—instantly. Never before has it been possible to
even dream of compiling a record of all human
knowledge and being able to find answers within it.
Near the shores of this New World of limitless
knowledge and global collaboration, sail the digital
pirates. Like their maritime cousins, digital pirates take
from a system to which they do not contribute and
defraud others of their just bounty. Unlike pirates of the
sea-going variety, however, digital pirates often convince
themselves that there is no cost to their actions—that
theirs is a victimless crime.
The ease with which digital media can be distributed
and stored is partly to blame for this. It is difficult to

attach guilt to one’s own actions when all they did was
click a mouse button. This disconnection from the
consequences and costs of digital piracy is characteristic
of the culture of piracy that is emerging. In this paper, we
will examine what those costs are and who’s paying them.

2. Review of Literature
One of the primary difficulties in attempting to
properly account for the costs of digital piracy is the lack
of clear definitions. Richard Stallman suggests that this
may, in fact, be precisely what copyright holders want [8].
US copyright law recognizes four main types of copyright
infringement: unauthorized duplication, creation of
derivative works (not covered by Fair Use),
misappropriation, and distribution [4]. Accusations of
infringement can be mitigated by either showing
independent creation, first sale of physical property, and
Fair Use [4]. Additionally, the doctrine of de minimis
non curat lex, "the law does not care about trivial
things"[4], was apparently created during a more rational
age and has since fallen out of fashion. The Fair Use
Doctrine was also conceived during a more rational age,
but to some extent is still employed today. This concept
relies on four main tests [13][6]:
1. The purpose and character of the use, including
whether such use is of a commercial nature or is for
nonprofit educational purposes;
2. The nature of the copyrighted work;
3. The amount and substantiality of the portion used in
relation to the copyrighted work as a whole;
4. The effect of the use upon the potential market for or
value of the copyrighted work.
US copyright law provides for several types of
remedies for demonstrated infringement. These are:
injunctions to halt infringing activities, impounding
infringing materials or products, and ordering monetary
restitution for real damages and/or costs and fees [12].
An equally important aspect in addition to properly
identifying the involved concepts is properly identifying
the involved parties. Who has a stake in all this?
Obviously the companies that frequently are the copyright
holders have a significant fiscal stake in the copyright
landscape. So great is their interest, and so vast their

resources, that they frequently set aside their competitive
stances to unite against their common foe—the
consumers. These unions, such as the Business Software
Alliance (BSA) and the Recording Industry Association
of America (RIAA) are formed to represent the industry
as a whole and seek "more government enforcement and
increased penalties against piracy" [2]. In addition to
commercial interests, governments have a significant
vested interest in the copyright debate. Governments with
the capacity to do so (such as the United States) often use
piracy statistics during trade negotiations to impose other,
often unrelated, legislation on other nations. [8] Another
significant stakeholder are the research and academic
institutions that often created the copyrighted material in
the first place.
We now turn our attention to the cost of all this. The
BSA claims that “business software losses [in Singapore]
were estimated at nearly $86 million in 2005”. [9] We
previously mentioned the tendency of rich and powerful
governments to punish lesser nations for not complying
with their copyright laws. "Countries whose laws,
policies, or practices are deemed to adversely affect U.S.
producers or products may be subject to investigation,
trade sanctions, or other penalties." [2] This, despite the
inherited wisdom of our Founding Father, Thomas
Jefferson. “...it may be observed that the nations which
refuse monopolies of invention, are as fruitful as [those
that don't].” [7] Their attentions are not limited to
foreign nations. The No Electronic Theft (NET) Act
added criminal penalties for digital piracy. [4] Nor are
the costs limited to just the monetary. Amazon’s 1-click
patent case threatens to stifle innovation just when the
technology is becoming capable of bringing it about. [5]
Our sudden infatuation with “Intellectual Property” is
threatening to spill over the digital border and into the real
world. Metabolite vs. LabCorp’s patent infringement
case is not over digital recordings or video games, but
over the right to treat illness in patients. [3] Clearly, there
is more to consider here than the RIAA’s bottom line.

3. Analysis and Trends
Without a doubt, consumers must accept a significant
portion of the responsibility for this culture of piracy.
Consumers as a group have begun ignoring the laws and
ethics of the society of which they are a part, focusing
only on what they want without regard to the costs. If this
culture of digital piracy, begun in this generation,
continues, the next generation will grow up in a world
where taking things that are for sale without paying for
them is simply the smartest way to shop. It doesn't take
much imagination to picture the world to which this will
lead us. Members of a society can not ignore the laws
that govern their collective behavior; to do so leads to
chaos. Further, in our consumer society (aspersions of

which are omitted for brevity) the sole requirement of
citizenship is consumption. In that type of society, the
citizens absolutely can not ignore their responsibility to
vote with their dollars. However, easy credit has made
the votes cheap and this makes the producers very happy.
The remainder of the responsibility must then lie with
the producers. Like an unwanted uncle who comes to
visit when there's a special occasion involving free food,
the term "Intellectual Property" has been riding the
coattails of the digital revolution. It has been suggested
that this term is not only incorrect, but purposefully
obfuscating. [8] Just as the consumers have been
ignoring the responsibilities of ownership, the producers
have begun ignoring their responsibilities towards their
customers. Rather, their attentions have been focused on
one thing—control. Instead of utilizing new technologies
to develop improved products (another must for a
consumer-based society), they are seeking to restrict the
very freedoms these technologies could provide. This
control is an act of corporate piracy; it is taking by force
something that does not belong to them. Consumers must
pay for products; ideas belong to all mankind. Take as an
example the source code for a piece of software. This
code represents a set of instructions for what you would
like your physical device, which you legally and
rightfully own, to do. "Intellectual Property" advocates
would suggest that this code can be owned. Imagine for a
moment though that every recipe, household "how-to", or
"something my grandfather taught me" could likewise be
owned (and are they not simply sets of instructions?).
According to the Church-Turing thesis, any well-defined
set of instructions performed by a human is
computationally equivalent to the work performed by a
computer. [10] If source code can be owned, then so can
thoughts. Is this what the digital revolution has brought
us? One must now pay for the things that they know?
"Intellectual Property" advocates would like to suggest
that thought control is not the result of their efforts, but
their actions would suggest otherwise. [3] Rather, they
claim they are "incentivizing" investment in order to
promote innovation. Not only is this not necessary—who
invested in the wheel, the book, or penicillin (or any of
the many glorious accidents that had useful results)?—it
distracts from the simple, time-tested solution. If the
intent is truly to promote innovation, then we must once
again begin funding pure research.
Like blood in the water, the declining education levels
of consumers is inviting producers to, rather than produce
high quality products, convince people to be satisfied with
inferior products. For example, consider the quality of
the music on which the RIAA is so desperate to collect.
In the 1980's, mainstream radio stations were not playing
Jerry Lee Lewis, Bobby Darin, or Harry Belafonte. Yet,
turn on a mainstream rock station today and the playlist is
likely to sound like a Top 100 countdown of 80’s rock
(just Google "80's rock" for comparison). This trend

suggests that there isn't any new music of comparable
quality currently being produced. [11]
The mutual contract we call society is being violated
by both producers and consumers. Companies have
already begun responding with more and more restrictive
technologies. [14] Over time, more and more control will
be given to the producers and the consumers will give it
because how else will they be able to upgrade their cell
phones every 3 months?

4. Conclusions
Pandora’s Box has been opened. For better or worse,
we have woven the computer into the very fabric of our,
now global, society and there is no going back. The
question we must now ask ourselves is: were we—are we
—ready for the capabilities we are bestowing upon
ourselves? The laws that are being applied to piracy cases
(and thus, establishing precedent) were penned in the days
of horse and buggy (or may as well have been); no one
alive then could have imagined the New World we now
live in. The laws, indeed the entire infrastructure of our
society, must be updated to account for this wider
experience. And they will be. They will be updated by
those capable and willing to participate in the process.
Unfortunately, while the consumer is happily plugged into
his WoWBox 360, playing pirated games, the producers
are crafting the new laws on his behalf in absentia. The
consumer-citizen will one day wake up in a Brave New
World where his life has not been enhanced by
technology, but restricted by it. The true cost of the
digital piracy culture is not digital at all.

12. References
[1] J. Mokyr, The Lever of Riches: Technological
Creativity and Economic Progress, Oxford, Oxford
University Press, 1990.
[2] I.P. Png, On the Reliability of Software Piracy
Statistics,
SSRN,
http://ssrn.com/abstract=1099325,
September 1, 2008, retrieved Feb 25, 2010.
[3] L.B. Andrews, The Patent Office as Thought Police,
http://www.kentlaw.edu/islat/pdf/PatentOfficeasThoughtP
olice_CHE.pdf, February 16, 2006, retrieved Mar 25,
2010.
[4] Copyright infringement, Wikipedia, The Free
Encyclopedia,
http://en.wikipedia.org/w/index.php?
title=Copyright_infringement&oldid=342956453,
February 9, 2010, retrieved February 11, 2010.
[5] Amazon.com, Inc., Method and system for placing a
purchase order via a communications network,

http://www.google.com/patents?vid=USPAT5960411,
Sep 12, 1997, retrieved Mar 25, 2010.
[6] Fair use, Wikipedia, The Free Encyclopedia,
http://en.wikipedia.org/w/index.php?
title=Fair_use&oldid=339841354, January 25, 2010,
retrieved February 11, 2010.
[7] T. Jefferson, Thomas Jefferson to Isaac McPherson,
http://presspubs.uchicago.edu/founders/documents/a1_8_8s12.html,
Aug 13, 1813, retrieved March 25, 2010.
[8] R. Stallman, Did You Say “Intellectual Property”?
It's
a
Seductive
Mirage,
http://www.gnu.org/philosophy/not-ipr.xhtml,
2004,
retrieved March 25, 2010.
[9] U.S. Trade Representative, 2007 report on Singapore,
http://www.ustr.gov/assets/Document_Library/Reports_P
ublications/2007/2007_NTE_Report/asset_upload_file129
_10979.pdf, [uploaded November 10, 2007], retrieved
March 25, 2010.
[10] C. Petzold, The Annotated
Indianapolis, Indiana, 2008, p. 189.

Turing,

Wiley,

[11] R. Munroe, xkcd, http://xkcd.com/339/, retrieved
March 25, 2010.
[12] Copyright Infringement and Remedies, Copyright
Law
of
the
United
States
of
America,
http://www.copyright.gov/title17/92chap5.html, retrieved
March 25, 2010.
[13] Limitations on exclusive rights: Fair use, Copyright
Law
of
the
United
States
of
America,
http://www.copyright.gov/title17/92chap1.html#107,
retrieved March 25, 2010.
[14] ONLINE SERVICES PLATFORM Q&A, Ubisoft
Support,
http://support.uk.ubi.com/online-servicesplatform/, retrieved March 25, 2010.


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