Rick Cotton, NBC Universal general counsel, had the following to say: “Society wastes entirely too much money policing crimes like burglary, fraud and bank-robbing when it should be doing something about piracy instead.” He adds that “Our law enforcement resources are seriously misaligned. If you add up all the various kinds of property crimes in this country-everything from theft, to fraud, to burglary and bank robbing, all of it-it costs the country $16 billion a year. But intellectual property crime runs to hundreds of billions a year.” (quoted from “Page-view Syndrome” John C. Dvorak, PC Magazine January 2008 Page 62).
While I suspect that intellectual property crime does not do hundreds of billions of dollars of damage a year, Cotton does raise an interesting point. To be specific, this is the matter of how society should expend its resources in protecting what is of value.
Because of financial and political realities, societies will have limited resources to spend combating crime and protecting what is valuable. From a utilitarian standpoint, the way to determine how to spend resources is a matter of assessing costs and benefits. Put succinctly, society should spend its resources in ways that protect the greatest overall value. It is a matter of rational economics-you want to get the most for your expenditure. The question then arises as to the way the value is to be measured.
One way to do this is by monetary value. This has the advantage of being clearly quantifiable and it also makes intuitive sense to use money as a measure. After all, we will generally measure our expenditures in terms of money. For example, the salary cost of the police and the costs of security measures.
If Cotton’s numbers are right, then we are making a mistake. After all, if property crimes of the non intellectual sort cost a mere $16 billion and intellectual property theft inflicts hundreds of billions of dollars in damages, then we are making a serious mistake. We should be spending more resources on protecting intellectual properties and less on preventing burglary, fraud and bank robbing. However, his claims can be disputed.
One obvious concern is the accuracy of the numbers. Calculating the damage done by intellectual property theft is a tricky matter relative to calculating the theft of tangible goods. If, for example, someone had stolen my Xbox 360, games and accessories when I bought it, I would have lost $550 worth of property. This is because that is what I paid. If people are distributing electronic versions of my book, then I would be losing revenue from sales, but it would be difficult to calculate my loss. To do so, I would need to know how many people had the bootleg copies. I would also need to know how many people would have actually bought the book if they did not get a bootleg copy. Obviously, these numbers would be rather difficult to determine. I don’t claim that his numbers are wrong-just that I am amazed at his apparent certainty.
The most important concern is the matter of value. In terms of money, there is not just the matter of the overall value but also of the relative value and the nature of the harm. Even granting that the crimes Cotton mentions do less overall monetary damage, they almost certainly do more relative damage. To be specific, the injury someone suffers when they are the victim of fraud or have their house stripped of valuables is proportionally worse than the damage done in the case of intellectual theft. After all, the industries that claim to be hardest hit by intellectual property theft seem to still be making massive profits. If they are hurting, that is a pain I think the rest of us would be glad to suffer. Also, there is the nature of the harm done. If someone steals my possessions, I can no longer use them. If someone steals my book, I do lose income but the damage is less. Of course, if my livelihood depended entirely on my book, then the damage would be more serious. But, as noted above, the companies seem to still be making adequate profits.
While money provides a measure of worth, it is not the sole measure of worth. By policing thefts, fraud and robbery society maintains order and protects individuals from harm to both their property and their physical well being. After all, while people generally do not steal intellectual property at gun point or by breaking into a house that is often what happens in the sort of crimes that Cotton seems to regard as less important. Thus, Cotton is in error.