I have been dialoging with some friends who work with Chairman Lamar Smith about SOPA. I would like to share with you some of my thoughts on SOPA and respond to some of their concerns.

If you don’t know what SOPA is this video is a pretty good introduction.

Click here to view the embedded video.

Claim: SOPA only targets foreign websites.

The “inter” part is what makes the internet work. Congress has no idea how DNS servers work or what the technological ramifications of their law would be. Also, what makes a website foreign? My company Castle Media Group has servers all over the world.

SOPA does a lot more than block access to foreign sites. It is part of a very troubling series of laws. The way to stop piracy needs a more nuanced approach. Yet again Congress is trying to do open heart surgery with a chain saw.

Claim: SOPA won’t harm the internet.

I challenge SOPA supporters to find a single founder of the internet who backs this bill. As far as I know, the wizards of the internet reject SOPA to a man. In fact I challenge SOPA supporters to find one person who supports this bill who can accurately articulate what a DNS server is and how the DNS system works. The “Phone book for the web” definition the press uses is unclear and misleading.

Claim: SOPA will reduce online piracy.

SOPA has no solvency. Messing with DNS servers will do nothing to block unique IPs from sending data back and forth. So the result will be an encrypted, underground black market as full of pirated goods as the status quo. If this bill is passed, there would be technological workarounds in place before the bill even took effect. But the harms would persists for decades. Trying to get content off the internet with laws is like trying to get pee out of a pool with a net.

The harms of SOPA are huge. Laws regarding technology inhibit inovation since the laws persist long after the technological landscape has changed. If this bill was harmless, why would so many websites be protesting it?

Claim: 43 “digital piracy” sites generate an estimated 53 billion hits annually.

Be careful anytime anyone uses the phrase “hits” to talk about how much web traffic. A hit is a single server request be it a file, style sheet, a database query, a script, or an image. It is not uncommon for a single page view to generate dozens of hits and for a single website visitor to generate hundreds if not thousands of hits. I would estimate that every minute you spend on Facebook, Facebook gets 250 “hits.” Hits correlate to traffic about as much as RPM correlates with MPH in your car.

A much more valid metric is “page views” or “unique visitors.”

Claim: Online piracy costs America 200 billion dollars and thousands of jobs.

The number about lost revenue is misleading. First it may be based on bad information in the first place. If the estimators are using “hits” as a way of estimating traffic to pirated sites then their conclusions are based on faulty premises. The number is likely made up and not based on any sort of empirical research.

Secondly, the estimators fail to take into account the elasticity of prices. When a commodity is cheaper, people tend to consume more of that thing. Some commodities are more elastic than others. Energy is very inelastic. Entertainment is very elastic. So when entertainment is free, people consume a lot of that entertainment. You probably listen to more Pandora or FM Radio than songs you’ve purchased on iTunes for instance.

The higher prices are the more discriminating people become. Some movies you will wait to rent because you don’t think they are worth the price of a movie ticket, for example.

So to assume that if we could snap our fingers and remove all piracy that people would start paying for all the pirated content the currently consume is false. The money the industry claims to loose are based on growth rates that are completely unrealistic. $200 billion dollars? Really? The entire music industry is only a 20-30 billion dollar industry and the movie industry is not much bigger. There is no way they could have grown that big that fast in a piracy free world. Where on earth do they expect those 100 billion dollars to come from? Would consumers suddenly have more money to spend or would they just consume less media?

The Solution: Fewer Laws & More Innovation

The solution to piracy is technological not legal. Laws lack the flexibility needed to be effective. The Congress chases technology like a two year old child chases a squirrel. Technology adapts too quickly for the laws to do anything but harm law abiding citizens. The most effective enemy to Napster was the Apple iTunes store. Suing Napster (Which did not require SOPA by the way) did nothing the curb piracy. But the iTunes store makes buying legal content so easy that saving $0.99 to pirate a song is not worth the effort. I can listen to a song playing in a coffee shop, use an app to identify that song and then buy it all within three minutes and all on my iPhone.

This sort of inovation is why the music industry just announced growth in sales for the first time since 2004. The movie industry will see similar growth as they embrace “movies as an experience” and make it easier to legally rent internet movies on your TV. If Hollywood put half as much effort into usability as they put into lobbying, we would see a dramatic increase in sales and a decline in piracy. They need to make renting an online movie through your TV easy enough for my grandmother to do it.

Responding to technology should be like our response to speech. The answer to wrong speech is more speech not censorship. The answer to the wrong use of technology is more technology not regulation.

Nerds created the internet, the nerds can manage it. Congressmen should not regulate what they do not understand.

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