Professor Glenn MacDonald is wrong on piracy
The “dying and inefficient business model” at whose legitimate legislative efforts Professor Glenn MacDonald is so quick to scoff comprises nearly 95,000 businesses in the United States that support approximately 2.2 million mostly middle class workers (many of them in unions) and contribute more than $15 billion annually in federal and state taxes. Presumably, many of his students in “Economics of Entertainment” take that course in the hope of one day being a productive and well-paid member of the entertainment industry and not in order to participate in an academic post-mortem.
As one such denizen of the entertainment industry, it perplexes me that Professor MacDonald focuses on the relevance of copyright to the cost of re-production rather than on the cost of production. Movies and TV shows cost millions – sometimes tens or even hundreds of millions – to produce. Unless production costs can be recovered with a reasonable profit, there is no economic incentive to create. Cost recovery and profit, in turn, depend on controlling and monetizing distribution. And that depends on copyright which gives creators exclusive rights over the reproduction, distribution and performance of their works. Without those exclusive rights, the creation of new and original works is made much less likely. Such a blow to our cultural life strikes me as a bad thing per se.
One would think that Professor MacDonald, as an economist, might have something to say about the impact of widespread, industrial scale theft of created works on the economics of the entertainment industry. I find it hard to imagine that theft on such a scale in other industries would impel the professor to blame the victim. Were Apple to be the victim of massive patent and trademark infringement that gave rise to the manufacture and distribution of tens of millions of counterfeit iPads, will the Professor conclude that Apple’s is a dying and inefficient business model?
The Stop Online Piracy Act in the House and the Protect IP Act in the Senate may not pass in their current form but even their opponents recognize and agree that Internet piracy is a global scourge that must be addressed in a way that does not ignore the scale and international scope of the problem. Such recognition is not the dementia of dying industries; it is a clear-eyed assessment of what marketplace fairness governed by the rule of law entails.
Daniel M. Mandil
Senior Vice President
Associate General Counsel