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The MPAA and RIAA just added another legal weapon to their arsenal when President Bush signed the Prioritizing Resources and Organization for Intellectual Property (PRO-IP) Act into law. We all lose as consumers, and again as investors.
It's hard to please Hollywood and Sunset Boulevard. The Digital Millennium Copyright Act (DMCA) wasn't strict enough, and the No Electronic Theft Act (NET) too toothless, though together they turned millions of ordinary citizens into underground felons. The PRO-IP bill removes a few pesky requirements like filing a correct copyright claim, and now the court can impound your computer if you're under investigation for intellectual property issues. Public Knowledge spokesman Art Brodsky points out why this is bad for the common people: "Let's suppose that there's one computer in the house, and one person uses it for downloads and one for homework. The whole computer goes," he told Reuters.
Now, PRO-IP isn't entirely evil. It also makes life harder for counterfeiters and for those who profit from illegal imports and exports. The pharmaceutical industry loves it, and so do Detroit's auto parts manufacturers. I'd much rather have real, FDA-vetted prescription pills from Pfizer (NYSE: PFE ) or Merck (NYSE: MRK ) than some unknowable concoction sold under the real drug name by fly-by-night pirates. And I'd rather have an Autoliv (NYSE: ALV ) airbag in my car than a rebranded helium balloon attached to a bicycle pump. There's a time and a place to clamp down on copyright, patent, and trademark enforcement.
We, the people
But the entertainment industry is a major backer here, and many provisions seem custom-designed to catch digital pirates. As much as I love my Walt Disney (NYSE: DIS ) investment and the great entertainment the company has created over the years, it's also part of a boneheaded industry that can't deal with the digital revolution.
The Supreme Court has long held the opinion that intellectual property laws should work to the "benefit [of] the public or community at large" rather than the "exclusive profit or advantage" of inventors and creators. The point was to create a framework to get us to invent and create more -- not a way to protect corporate interests at every turn.
"Hippie! Commie pinko! Go back to your commune!"
Hold your horses there, cowboy. I am still an investor writing for investors. Disney, Warner Music (NYSE: WMG ) , and their colleagues could handle rampant piracy in a much more delicate manner and turn today's massive problem into free distribution and dirt cheap marketing. Yes, there are ways to make money when others copy your dearly beloved content for free. The PRO-IP Act is a step in exactly the wrong direction, though.
The House of Mouse seemed to be on the right track two years ago, when ABC president Anne Sweeney had an epiphany. A meeting room full of ABC executives were shocked to see a commercial-free DVD with the previous night's Desperate Housewives finale, and "the implications hit us hard. So we understand piracy now as a business model. It exists to serve a need in the marketplace to, specifically, consumers who want TV content on demand," she said, "and it competes for consumers the same way we do -- through high quality, price, and availability."
Fight fire with fire. So people like pirated movies and free MP3 downloads because they're free (or cheap) and because they're often available long before the legal copies hit the streets? OK. Give away your best content online, then. Wrap it up in money-making advertisements and ask for a reasonable subscription fee to skip the commercials. Or find other, even more convenient content channels: My cable box gives me access to this week's Housewives from ABC or last night's CSI from CBS (NYSE: CBS ) with a few button pushes on the remote. General Electric (NYSE: GE ) is lagging a bit, so we have to wait a while for a fresh Heroes episode. ABC is following through on Sweeney's vision, but the left hand is clearly not on speaking terms with the right hand.
That, my friends, is the way to go. Make it easy, make it cheap, and make it good, and we'll all flock to the screen, or the radio, or the rock show, in droves. Scare tactics like suing the pants off your biggest fans? That's the real anti-American road that should be less taken. How are we supposed to invest in innovators when they're not allowed to compete fairly against the big boys?
Thanks a lot, Prez. You just helped corporate bullies to press "pause" on the future. Again.