Thursday, September 30, 2010

Counterfeit: A Fresh Way Of Looking at the Phenomenon of 'Illegal Downloading'

The music phenomenon of “file sharing” can profitably be analyzed under the concept of “counterfeiting”.

Let us take the example of a digital download purchased through iTunes by Al. This is a legal purchase. Think of a dollar bill legally pressed by the mint. Now if Al takes that song and copies it for Bob, there are now two “bills” in circulation: one counterfeit and one legal. Note also that the real item loses value because of the higher quantity/availability. There is a reduction in value of all outstanding bills issued, because of the counterfeit.

If Bob puts that same song into his iTunes account or … worse yet … loads it onto his iPod, Apple is helping him “use” his counterfeit item, just like someone went to a bar which advertised “we take counterfeit currency.” This is the case for any player that does not check the ownership of the track, which is all of them because there is no way for them currently to accomplish this task.

Even worse, if Bob (the one with the illegal copy) takes the download and with his favorite music locker service has the cloud service copy the item into the cloud, there are now *three* copies, one legal and two counterfeit.  That locker service has given the illegal user even more power over what he gained illegally.

The music industry’s problem, of trying to stop illegal downloading, is much the same as the U.S. Mint’s problem of stopping counterfeiting of currency. But there is no secret lair to “bust” where the bad guys are sitting at the printing press counterfeiting bills. The printing press, in this case, is billions (potentially) of personal computers worldwide. So, forget about the printing press, you have to fight counterfeiting at the user end, i.e. the bar or restaurant where the counterfeit “bills” are being accepted. (Which is a strategy used by money counterfeiting enforcement also.)

A bar or restaurant might scan every bill and upload it to a central FBI database that checks for counterfeit. Banks do this now with most cash deposits. iTunes, and the other places which accept counterfeit “bills” indiscriminately with real ones, can quite easily check with the Digital Content Exchange to see if the user’s song is counterfeit or not.

It takes less than a second.  But it's not being done. Why?

The answers are legion.  But the bottom line is, music listening services are trying to compete against a system that does nothing to reject counterfeits.   No wonder they're not paying the artist very much. And those who don't trust music listening services to always be there, are keeping an illegal copy on their hard drives, because the companies that maintain music files, and allow them to be played, refused to distinguish between a paid for copy and an illegal copy.

The same problem applies to movies, books and games.

Edited October 22, 2015.

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