There was a Ted Talk by Rob Reid recently posted titled The $8 Billion iPod. His talk attached some pretty remarkable figures to the economic cost of copyright infringement. Unfortunately, this was simply an attempt to confuse consumer and commercial piracy.
No consumer has ever been sued for having unauthorized songs or ringtones on their iPod. Copyrights are no different from any other property right in the following sense: If enforced as vigorously as possible, whenever possible, stupid results would follow. That is why we don’t enforce any private right whenever possible.
For example, when I was a teen, I made mix tapes by recording songs off of the radio. Was that infringing? Particularly as to the sound recording copyright, I assume that the answer was “yes.” But was there the slightest risk that I would be sued? No. No consumer has ever been sued for copyright infringement unless they were distributing works to others–never when making purely personal uses.
Rights in real property, personal property, and torts work the same way. If everyone sued over every tortious “assault,” neither our society nor judicial system could function.
Same with real property. For example, every morning and evening, my dogs and I commit legally action trespasses upon real property: I walk them around our neighborhood, both of them trespass onto a neighbor’s property in order to poop. I then compound the trespass by entering the property in question to retreive the poop. But look what happens: no one sues, no one calls the police, no one even gets mad — at least if I clean up the poop.
Sure, if I had way too much time on my hands, I could make a video about how I was so oppressed by the evil of private rights in real property that I couldn’t even safely walk my dogs without risking arrest. Woe is me….. Of course, the difference would be that TED would have no difficulty perceiving that I was an idiot. So it’s hard to understand why TED has difficulty recognizing that the expectation of maximum penalties in every instance of real property rights violation is ridiculous whether in the context of physical property or intangible property.
Consequently, the statutory damage math is basically fine. Statutory damages can be high because they are intended to deter commercial piracy even when the odds of getting caught are very low. Nevertheless, they need not be awarded excessively: nothing requires a jury to award more than $750/work even in the case of the most willful commercial mass piracy.
Moreover, if you adjust for inflation, (as all competent economists do), statutory damage awards decreased significantly when the 1976 Act moved from a per-infringement to a per-work system. If adjusted for inflation, statutory damage awards today are actually lower than they were in 1976. I blogged about this previously here.
The bottom line is simple. Somehow, innovation survived and flourished even during the 20th century, when inflation-adjusted statutory damage awards tended to be much, much higher than they are today.