The Fair Market Value of Pirate Booty

Photo titled: "Look at that Booty" by Theodore Scott, on Flickr

What is the cost of a song? To the average consumer the amount might be equal to the sum needed to purchase a song on iTunes, which is roughly $.99 to $1.19 per song. For movies, that price can range between $4.99 and $29.99. It could be argued that this is the value that both the public and entertainment industries find to be a fair price for the privilege to listen or watch another’s work. Under §504, a copyright infringer can be liable for damages up to $30,000 per infringed work with a statutory minimum of $750 per work. The disparately between the market price for copyrighted material and statutory damages begs the question of whether the statutory damages as set out in 17 U.S.C. §504 accurately reflect those actual harms felt by media industries.

Those damages would seem to make sense in certain scenarios. The competition a software distributor would face as a result of a piece of code being copied and placed in the market can have large monetary repercussions for the holder of the copyright. The same could be said of the unauthorized use of a work in an advertisement or motion picture. In both circumstances the unauthorized use deprives the creator of potential revenue that could very well be in the range of $750 to $30,000 and as Harvard Law Professor Charles Nessons states these are likely the types of damages envisioned through the proscribed statutory damages.

When the infringer is an individual obtaining a copy for personal use, the statutory minimums make less sense. Even the statutory minimum of $750 for a pirated song seems excessive, leading critics to argue high statutory damages levied on small infringers do not accurately reflect actual loss and approach the realm of unconstitutional. District Judge Gertner had a similar contention when she reduced an award against Joel Tenenbaum from $675,000 to $67,500 upon her characterization of the use as menial.

The recording and motion picture associations counter that the industry has suffered innumerable damage as a result of software sharing services such as Limewire, and the Pirate Bay. The Recording Industry Association of America alleges annual losses of approximately $12.5 billion, with 71,060 in lost U.S. jobs. The Motion Picture Association of America states that protecting intellectual property from copyright infringement is necessary to protect the 2.4 million individuals employed in the motion picture industry. These losses came contemporaneously with the shift in the entertainment industry from tangible means of delivery to digital methods through the internet.

Is it then that the entertainment industry is relying on copyright law to maintain the status quo in a rapidly changing market? More importantly should purported losses from this changing economic landscape be placed on the shoulders of those individuals such as Joel Tenenbaum who violate copyright through pirating 30 songs for personal use? Although it is undeniable that Tenenbaum was guilty of copyright infringement, it is disputable whether the damages levied adequately reflect Tenenbaum’s contribution to the losses the entertainment industry purports to suffer.

This creates quite the predicament; there is a need to have a means of protecting intellectual property, as there is a livelihood devalued through rampant copyright abuse. However, at the same time, there is an industry desperately trying to hold onto its former profits through using federal copyright law as means to restrict how the market operates. Certain record companies have discovered alternative ways to obtain profits while at the same time allowing for free public access to copyrighted works. Social music networks such as Imeen, allow free streaming of music funded by advertisements. In a similar fashion, cable television networks such as FX and USA offer their shows free online accompanied with advertisements. Another method being used by Universal is “Comes with music” phones, which allows free access and downloads of music that are transferable from phone to phone. Universal gets money not from advertisement or music sales but through a percentage of phone sales.

The digital age has ushered in a new dawn of experiencing media. The internet allows for willful copyright infringers to sidestep the arm of American courts through relocating domain names and servers, whilst saturating the web with misappropriated material. There is the occasional large damage award levied on those most responsible for industry losses such as Limewire and the Pirate Bay, but these suits do little to deter infringement. The same could be said of the occasional hefty judgment against single individuals. While considerable damage awards receive sensational media attention, decreased record sales show that these disproportionate awards do little to restore the entertainment industries profit. This is not to say that the law should be altered simply because there is a losing battle. Rather, when the circumstances facing an industry have dramatically changed, the law must evolve to account for these changing circumstances.