The Economic Effects of Sopa/Pipa

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So there's two bills in Congress right now. One is called SOPA, the other is called PIPA. SOPA stands for the Stop Online Piracy Act. It's from the Senate. The Stop Online Piracy Act (SOPA) is a United States bill introduced by U.S. Representative Lamar S. Smith (R-TX) to expand the ability of U.S. law enforcement to fight online trafficking in copyrighted intellectual property and counterfeit goods. Provisions include the requesting of court orders to bar advertising networks and payment facilities from conducting business with infringing websites, and search engines from linking to the sites, and court orders requiring Internet service providers to block access to the sites. The full title is "To promote prosperity, creativity, entrepreneurship, and innovation by combating the theft of U.S. property, and for other purposes." And the other bill is called , is called PIPA. It is short for PROTECTIP, which is itself short for Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property. The PROTECT IP Act is aproposed law with the stated goal of giving the US government and copyright holders additional tools to curb access to "rogue websites dedicated to infringing or counterfeit goods", especially those registered outside the U.S. The full title of bill is “Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011”. And what SOPA and PIPA has to proclaimed goals:

First is protecting intellectual property of content creators. According to Rep. Goodlatte, "Intellectual property is one of America's chief job creators and competitive advantages in the global marketplace, yet American inventors, authors, and entrepreneurs have been forced to stand by and watch as their works are stolen by foreign infringers beyond the reach of current U.S. laws. This legislation will update the laws to ensure that the economic incentives our Framers enshrined in the Constitution over 220 years ago—to encourage new writings, research, products and services— remain effective in the 21st century's global marketplace, which will create more American jobs." Rights holders see intermediaries—the companies who host, link to, and provide e-commerce around the content—as the only accessible defendants. The second goal is protection against counterfeit drugs. Pfizer spokesman John Clark testified that patients could not always detect cleverly forged websites selling drugs that were either mis-branded or simply counterfeit. SOPA & PIPA are aimed to raise the cost of copyright compliance to the point where people simply get out of the business of offering it as a capability to amateurs. Now the way they propose to do this is to identify sites that are substantially infringing on copyright -- although how those sites are identified is never fully specified in the bills -- and then they want to remove them from the domain name system. They want to take them out of the domain name system. Now the domain name system is the thing that turns human-readable names, like Google.com, into the kinds of addresses machines expect -- 74.125.226.212. Now the problem with this model of censorship, of identifying a site and then trying to remove it from the domain name system, is that it won't work. And you'd think that would be a pretty big problem for a law, but Congress seems not to have let that bother them too much. Now the reason it won't work is that you can still type 74.125.226.212 into the browser or you can make it a clickable link and you'll still go to Google. So the policing layer around the problem becomes the real threat of the act.

Now to understand how Congress came to write a bill that won't accomplish its stated goals, but will produce a lot of pernicious side effects, you have to understand a little bit about the back story. And the back story is this: SOPA and PIPA, as legislation, were drafted largely by media companies that were founded in the 20th century. The 20th...
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