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Cato Institute Digs Into MPAA's Own Research To Show That SOPA Wouldn't Save A Single Net Job
House and Senate leaders abandoned plans to move on SOPA and PIPA on Friday — the surest sign yet that a wave of online protests have killed the controversial anti-piracy legislation for now and maybe forever.
SOPA sponsor Lamar Smith, the Republican chairman of the House Judiciary Committee, said his committee won’t take up the bill as planned next month — and that he’d have to “wait until there is wider agreement on a solution” before moving forward.
Senate Majority Leader Harry Reid, meanwhile, said he was calling off a cloture vote on PIPA he’d scheduled for Tuesday.
Reid tried to put on a brave face, saying in a statement that he was optimistic that progress could be made in the coming weeks. But there's no mistaking what happened. Many of the Senate bill’s co-sponsors have since come out against it, leaving Reid a no-win choice: Go forward with the cloture vote he'd planned for Tuesday and lose, or send the bill off into back-burner purgatory.
PIPA sponsor Patrick Leahy got the message — and he wasn’t happy about it.
In a steaming response to Reid's announcement, the Vermont Democrat said Internet thieves in China and Russia "are smugly watching how the United States Senate decided it was not even worth debating how to stop the overseas criminals from draining our economy.”
And he didn’t stop there. Leahy said “the day will come when the senators who forced this move will look back and realize they made a knee-jerk reaction to a monumental problem.”
The double-barrel decisions to punt on the bill capped an extraordinary week of public pressure — and an extraordinary reversal of fortunes for Hollywood, whose lobbyists seemed to think they were on cruise control to passage of bills aimed at protecting their content from online thieves.
Over the weekend, the White House expressed concerns about the legislation. Over the next several days, co-sponsor after co-sponsor jumped ship. And Thursday night, the four remaining GOP presidential candidates all said they’d oppose the bills as currently drafted.
The sudden shift left Smith and Reid no choice but to punt. And the tech interests who fanned the flames of protests were quick to celebrate the decisions.
"Hallelujah!” tweeted Gary Shapiro, president and CEO of Consumer Electronics Association.
“Dems, Sen. Reid has just saved u from a lot of embarrassment/loss of support,” tweeted Gigi Sohn, co-founder of Public Knowledge, which had helped organize protests.
Reid insisted talks would continue between the warring sides — Hollywood and content providers are on one side and Silicon Valley and the tech community on the other.
"We made good progress through the discussions we've held in recent days, and I am optimistic that we can reach a compromise in the coming weeks," Reid said.
"There is no reason that the legitimate issues raised by many about this bill cannot be resolved,” Reid added. “Counterfeiting and piracy cost the American economy billions of dollars and thousands of jobs each year, with the movie industry alone supporting over 2.2 million jobs. We must take action to stop these illegal practices.”
And at least until Reid pulled the plug on the vote Friday, Leahy was said to be negotiating a compromise bill to strip out provisions that required search engines to block pirate sites and to lessen a clause allowing copyright holders to sue.
"I admire the work that Chairman Leahy has put into this bill,” Reid said. “I encourage him to continue engaging with all stakeholders to forge a balance between protecting Americans' intellectual property and maintaining openness and innovation on the Internet."
The decision to delay the vote strikes a fierce blow to Hollywood, which has been lobbying the Hill hard for months to pass anti-piracy legislation.
But it also signals the burgeoning strength of the tech industry, which said the legislation threatened the very openness of the Internet and would thwart innovation.
Like Leahy, Reid tried to reframe the debate in terms of American jobs and income.
“We live in a country where people rightfully expect to be fairly compensated for a day's work, whether that person is a miner in the high desert of Nevada, an independent band in New York City or a union worker on the back lots of a California movie studio,” Reid said in the statement.
But with members wary of another Internet backlash — and with attention turning to the presidential race — it’s hard to imagine a scenario in which the bills reach the floor of either chamber this year.
Smith, more than Reid, seemed to acknowledge the long road ahead.
"I have heard from the critics and I take seriously their concerns regarding proposed legislation to address the problem of online piracy,” he said. “It is clear that we need to revisit the approach on how best to address the problem of foreign thieves that steal and sell American inventions and products."
http://www.politico.com/news/stories/0112/71720.html
SOPA sponsor Lamar Smith, the Republican chairman of the House Judiciary Committee, said his committee won’t take up the bill as planned next month — and that he’d have to “wait until there is wider agreement on a solution” before moving forward.
Senate Majority Leader Harry Reid, meanwhile, said he was calling off a cloture vote on PIPA he’d scheduled for Tuesday.
Reid tried to put on a brave face, saying in a statement that he was optimistic that progress could be made in the coming weeks. But there's no mistaking what happened. Many of the Senate bill’s co-sponsors have since come out against it, leaving Reid a no-win choice: Go forward with the cloture vote he'd planned for Tuesday and lose, or send the bill off into back-burner purgatory.
PIPA sponsor Patrick Leahy got the message — and he wasn’t happy about it.
In a steaming response to Reid's announcement, the Vermont Democrat said Internet thieves in China and Russia "are smugly watching how the United States Senate decided it was not even worth debating how to stop the overseas criminals from draining our economy.”
And he didn’t stop there. Leahy said “the day will come when the senators who forced this move will look back and realize they made a knee-jerk reaction to a monumental problem.”
The double-barrel decisions to punt on the bill capped an extraordinary week of public pressure — and an extraordinary reversal of fortunes for Hollywood, whose lobbyists seemed to think they were on cruise control to passage of bills aimed at protecting their content from online thieves.
Over the weekend, the White House expressed concerns about the legislation. Over the next several days, co-sponsor after co-sponsor jumped ship. And Thursday night, the four remaining GOP presidential candidates all said they’d oppose the bills as currently drafted.
The sudden shift left Smith and Reid no choice but to punt. And the tech interests who fanned the flames of protests were quick to celebrate the decisions.
"Hallelujah!” tweeted Gary Shapiro, president and CEO of Consumer Electronics Association.
“Dems, Sen. Reid has just saved u from a lot of embarrassment/loss of support,” tweeted Gigi Sohn, co-founder of Public Knowledge, which had helped organize protests.
Reid insisted talks would continue between the warring sides — Hollywood and content providers are on one side and Silicon Valley and the tech community on the other.
"We made good progress through the discussions we've held in recent days, and I am optimistic that we can reach a compromise in the coming weeks," Reid said.
"There is no reason that the legitimate issues raised by many about this bill cannot be resolved,” Reid added. “Counterfeiting and piracy cost the American economy billions of dollars and thousands of jobs each year, with the movie industry alone supporting over 2.2 million jobs. We must take action to stop these illegal practices.”
And at least until Reid pulled the plug on the vote Friday, Leahy was said to be negotiating a compromise bill to strip out provisions that required search engines to block pirate sites and to lessen a clause allowing copyright holders to sue.
"I admire the work that Chairman Leahy has put into this bill,” Reid said. “I encourage him to continue engaging with all stakeholders to forge a balance between protecting Americans' intellectual property and maintaining openness and innovation on the Internet."
The decision to delay the vote strikes a fierce blow to Hollywood, which has been lobbying the Hill hard for months to pass anti-piracy legislation.
But it also signals the burgeoning strength of the tech industry, which said the legislation threatened the very openness of the Internet and would thwart innovation.
Like Leahy, Reid tried to reframe the debate in terms of American jobs and income.
“We live in a country where people rightfully expect to be fairly compensated for a day's work, whether that person is a miner in the high desert of Nevada, an independent band in New York City or a union worker on the back lots of a California movie studio,” Reid said in the statement.
But with members wary of another Internet backlash — and with attention turning to the presidential race — it’s hard to imagine a scenario in which the bills reach the floor of either chamber this year.
Smith, more than Reid, seemed to acknowledge the long road ahead.
"I have heard from the critics and I take seriously their concerns regarding proposed legislation to address the problem of online piracy,” he said. “It is clear that we need to revisit the approach on how best to address the problem of foreign thieves that steal and sell American inventions and products."
http://www.politico.com/news/stories/0112/71720.html
Post edited by Shane on
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Carl Franzen January 20, 2012, 6:11 PM 5655 120
Leaders in Congress on Friday effectively killed two pieces of anti-online piracy legislation following the increasingly vocal protests of tens of thousands of websites and millions of Internet users.
That’s right, the Stop Online Piracy Act (SOPA) in the House and the PROTECT IP Act (PIPA) in the Senate are, for all practical purposes, dead in the water.
Sure, Senate Majority Leader Harry Reid (D-NV) and Rep. Lamar Smith (R-TX) used the word “postponed” in their announcements, saying that Congress would only take a breather, but would certainly not give up for good on its goal of passing some sort of legislation designed to combat overseas “rogue” websites hosting pirated American content.
But whenever Congress decides to re-engage the online piracy fight — and it could be a while, given just how acrimonious the debate over the bills became in the last week — it’s almost certain that SOPA and PIPA won’t be revived in any recognizable form.
Rather, Congress is likely to start fresh on a whole new piece of anti-piracy legislation, perhaps using the alternative OPEN Act, a bill proposed by stalwart SOPA and PIPA critics Sen. Ron Wyden (D-OR) and Rep. Darrell Issa (R-CA).
Issa savored the victory on Friday, posting a note on his website reading: “THIS JUST IN!! YOU GUYS STOPPED PIPA (SOPA’s Senate counterpart)! Internet mutiny paired with calls from people across the country certainly must be responsible for Harry Reid’s decision to ‘postpone Tuesday’s vote on the PROTECT IP Act.’ For now, we can take a breath of relief. But we’ve still got our eye on both SOPA & PIPA.”
Behind the scenes, Hill staffers from both sides of the aisle confirmed to TPM that the entire piracy debate had become so “toxic” that virtually no lawmakers were likely to be ready to re-engage it anytime soon.
That’s an amazing turnaround from where things stood a short while ago, toward the beginning of the year, when SOPA and PIPA were broadly supported by a bipartisan coalition and backed solidly by Hollywood and the recording industry, who had sought the legislation to curb the ease with which their works were pirated online by overseas websites such as The Pirate Bay.
More to the point, the bills — both of which sought to give the U.S. Attorney General the power to obtain court orders to force American companies to sever ties with foreign websites — were still fairly obscure when 2012 began.
SOPA and PIPA weren’t even known to most of the world outside of a few select committees in Congress, the boardrooms of a few companies, and among a short-list of committed copyright wonks and techies online.
It’s worth exploring just how things changed so fundamentally in such a short time.
The clearest turning point was surely “Blackout Day,” Wednesday, January 18, which saw coordinated online protests on by upwards of an estimated 115,000 websites, coupled with physical protests by hundreds on the ground in five cities.
“When people on the outside make their voices heard, it becomes incumbent to address their legitimate concerns,” one Hill staffer told TPM.
And so although some students might have been frustrated by their inability to access Wikipedia for 24 hours, the blackout of the free encyclopedia and the numerous other websites that joined it — including Reddit, and to lesser extent, Google and Craigslist, which altered U.S. their homepages with censor bars but still made them accessible — made it clear that there was an abundance of critics to the bills, and that their criticisms were impossible to ignore.
The protests proved even the more cynical of observers (including yours truly) decidedly wrong, showing just how speedily the Web could mobilize around a political issue and how focused it could be, prompting the New York Times to declare Blackout Day to be “A Political Coming of Age for the Tech Industry.”
But after speaking with various people involved in the debate — including those in Congress, those on the side of the Web companies who criticized the bills, and those in online advocacy groups — TPM has learned that there were several other pivotal moments as well.
“There was sustained effort for the past three months,” said Tiffiniy Cheng, co-founder of Fight For the Future, an online advocacy non-profit that was founded in mid-2011 with a grant from the Media Democracy Fund, itself a fund-raising and distribution organization founded in 2006 “on the belief that freedom of expression and access to information are basic human rights.”
Fight for the Future played an early leading role in coordinating the various websites and groups opposed to SOPA and PIPA into a cohesive coalition.
That coalition, which ended up including upwards of 70 different companies and advocacy groups — From Tumblr to Demand Progress to Don’t Censor the Net — first took shape as a coalition in November 2011 under the banner “American Censorship,” just in time to rally opponents ahead of the House Judiciary Committee’s first hearing on SOPA.
At the time, the “American Censorship” website encouraged opponents of SOPA to “censor” or “blackout” their own logos in opposition of the bill by using a few lines of code the group offered online. Several notable websites followed suit on November 16, the day of the first hearing on SOPA.
“There were 4 million people on AmericanCensorship.com during the markup hearing,” on November 16, Cheng told TPM. “That was a pivotal moment. Sites like Boing Boing and Mozilla and many other websites, an Internet grassroots, began waking up. It was an amazing day.”
Further, Cheng said that “Congress tried to ignore,” the initial protests to the bills, but it became clear that the tide was slowly starting to turn in the opponents’ favor during a markup hearing on SOPA in mid-December 2011.
At the time SOPA’s primary sponsor, Rep. Smith, also the Chairman of the House Judiciary Committee which was conducting the markup, expressed confidence ahead of the hearing that lawmakers would swiftly vote to move the bill forward.
But that didn’t happen. In fact, quite the opposite — a small core of SOPA opponents including Reps. Darrell Issa (R-CA), Jason Chaffetz (R-UT), Zoe Lofgren (D-CA), Jared Polis (D-CO) and others introduced 55 amendments to the Smith’s bill in an effort to address the complaints of the Web community, or at least slow the progress of SOPA down.
In the end, the hearing lasted an arduous 15 hours spanning over two days, at which point Chaffetz finally convinced Smith to adjourn the hearing and consider holding additional hearings on the potential cybersecurity ramifications of SOPA. Nobody knew it at the time, but that was to be the last time lawmakers formally considered SOPA.
After the SOPA hearing was adjourned, Congress went on recess, giving opponents more time to rally. And fortune worked in their favor too, with the International Consumer Electronics Show (CES) being scheduled during the recess, giving Issa and Senator Ron Wyden (D-OR), another strong opponent of the bills, time to attend to the show and spread the word to thousands of techies from around the U.S. and the globe.
The reason why the Web community picked SOPA as its rallying point, as opposed to the PROTECT IP Act, which had been introduced in the Senate far earlier by Sen. Patrick Leahy (D-VT) in May 2011, is interesting also.
Sources close to the Internet companies that were staunchly opposed to the legislation from the getgo told TPM that they expressed their concerns when PIPA was first introduced, but that PIPA’s backers had basically pulled a bait-and-switch on them.
As one source put it: “We were told back in May ‘Oh, don’t worry, we’re not going to take care of them now, we’ll take care of them later, on the House side.’”
Indeed, Wyden put a hold on PIPA just days after it was introduced, freezing in it its tracks. Sources close to the Web companies told TPM that they continued to pester Congress for negotiations, but they never happened.
Hill staffers involved in the debates recall the conversation with the Web companies differently, “Each side will say the other is to blame,” one staffer told TPM.
But when the Internet companies and their representatives finally caught sight of SOPA when it was introduced in October, their jaws dropped, because it did not address their concerns in the slightest.
“We were like ‘What the f***?’,” one source close to the Web companies told TPM.
Another turning point in the fight, according to those involved, was the entrance of former Senator Chris Dodd (D-CT), who after retiring from the Senate in early 2010, took a job as the CEO of the Motion Picture Association of America in March 2011.
He then went on a full-throated media blitz — cable news, major newspapers — attacking critics of the bills as unreasonable, even threatening, in so many words, that Hollywood would abandon its historic support of — and donations to — the Democrats and President Obama in the 2012 election cycle.
“Candidly, those who count on quote ‘Hollywood’ for support need to understand that this industry is watching very carefully who’s going to stand up for them when their job is at stake,” Dodd said in an exclusive interview with Fox News. “Don’t ask me to write a check for you when you think your job is at risk and then don’t pay any attention to me when my job is at stake.”
“Who says that out loud?” wondered one source close to the Web companies who spoke to TPM.
“What was the connection between Dodd’s former political career and the bills getting as far as they did, on the calendar for a vote, in the case of the Senate?” asked another.
However, Dodd, who is by law formally prevented from lobbying Congress for another 70 days or so, gave an interview to the New York Times on Thursday in which he appeared to raise the white flag, calling for the bill’s supporters in Hollywood and opponents in the tech community to meet and hammer out their differences in a White House summit.
In the interview, Dodd candidly acknowledges how his organization was taken aback by the mass online protests against the bills.
“This was a whole new different game all of a sudden,” Dodd told The Times. “This thing was considered by many to be a slam dunk.”
Hill staffers described Dodd’s interview with The New York Times as yet another turning point.
“The Chris Dodd interview was a sea change,” one Hill staffer told TPM, saying that after that, it was fairly clear the MPAA, which had been one of the staunchest supporters of the bills, would be willing to give up on them.
One thing all sides agreed on was that the “bullet in the head,” to SOPA and PIPA was the statement put out Thursday by Senate Minority Leader Mitch McConnell (R-KY) calling upon Sen. Reid, in his capacity as Majority Leader, to cancel the vote on PIPA that had been scheduled for Tuesday, January 24 (which Reid ended up doing on Friday morning).
After McConnell’s statement, it became clear that PIPA would not have the 60 votes necessary to clear cloture. In fact, staffers counted only about 25 or 30 “yay” votes, as they told TPM.
Still, the four Republican presidential candidates all coming out against SOPA in Thursday’s debate in South Carolina was an extra “icing on the cake,” according to sources close to the Web companies.
A list-ditch overture by Senator John Kyl (R-AZ) to salvage PIPA and make it more palatable by pulling a provision that would have forced search engines to remove links to websites accused of piracy ended up going nowhere, according to all of our sources.
And so it was that Reid announced on Friday morning that the vote on PIPA would be indefinitely postponed. Smith’s statement postponing further action on SOPA was soon to follow.
But even with SOPA and PIPA dead, opponents to the bills aren’t letting their guards down.
“We’re ready to try and keep any effort from going forward where the copyright lobby is trying to block, censor us, or cut off our PayPal accounts,” Fight for the Future’s Cheng told TPM.
As for going forward, Cheng’s group and the Web companies are tentatively interested in supporting Wyden’s and Issa’s OPEN ACT, an alternative bill that narrows the definitions of pirate websites and shifts the responsibility for fighting them over to the International Trade Commission. But some say that focusing on pirates to begin with might not be the right approach.
“Where we need to start is actually getting a ‘User’s Bill of Rights’ together for communication and sharing of culture,” Cheng said. “We need to defend way people communicate online. Once we get that in place, then we can go forth from there.”
Cheng said her group is working on drafting a Internet User’s Bill of Rights at the moment.
from the let's-dig-in... dept
One of the things we've noticed in the debate over SOPA and PIPA is just how the other side is really lying with statistics. We've done a thorough debunking of the stats used by the US Chamber of Commerce to support both bills, as well as highlighted the misleading-to-bogus stats used by Lamar Smith in his support of the bill.
But every day, more bogus stats are rolled out. Julian Sanchez, over at the Cato Institute, has decided to dig into one specific bogus number, the supposed claim of $58 billion in "losses," and to show how the numbers don't hold up to any scrutiny. In fact, using the details of where the numbers came from, Sanchez makes the case that SOPA won't save a single net job for the US economy. Read on to find out how.
First off, the $58 billion comes from an absolutely laughable report for the Institute for Policy Innovation, done every year by Stephen Siwek at a firm called Economists Incorporated. We've challenged this ridiculous number in the past, but not to the level of detail that Sanchez has here. He starts out by bringing up (as we have many times), Tim Lee's excellent debunking of the ridiculous "ripple effects" that Siwek/IPI always use, despite them being a trick to double, triple, quadruple, etc count the same dollars:
In IPI-land, when a movie studio makes $10 selling a DVD to a Canadian, and then gives $7 to the company that manufactured the DVD and $2 to the guy who shipped it to Canada, society has benefitted by $10+$7+$2=$19. Yet some simple math shows that this is nonsense: the studio is $1 richer, the trucker is $2, and the manufacturer is $7. Shockingly enough, that adds up to $10. What each participant cares about is his profits, not his revenues.
It turns out that the $58 billion comes from this process, making use of a dubious multiplier on a different MPAA report that claimed merely $6.1 billion in losses for the US movie industry, multiplied to about $20 billion -- as the portion of the "losses" that come from movies. But, as Sanchez notes, that number itself is highly questionable:
That original $6.1 billion figure, by the way, was produced by a study commissioned from LEK Consulting by the Motion Picture Association of America. Since even the GAO was unable to get at the underlying research or evaluate its methodology, it’s impossible to know how reliable that figure is, but given that MPAA has already had to admit significant errors in the numbers LEK generated, I’d take it with a grain of salt.
Okay, but even if we assume that $6.1 billion is accurate, Sanchez explains how that's not even what's at stake with SOPA, since the $6.1 billion is a global number:
Believe it or not, though, it’s actually even worse than that. SOPA, recall, does not actually shut down foreign sites. It only requires (ineffective) blocking of foreign “rogue sites” for U.S. Internet users. It doesn’t do anything to prevent users in (say) China from downloading illicit content on a Chinese site. If we’re interested in the magnitude of the piracy harm that SOPA is aimed at addressing, then, the only relevant number is the loss attributable specifically to Internet piracy by U.S. users.
Again, we don’t have the full LEK study, but one of Siwek’s early papers does conveniently reproduce some of LEK’s PowerPoint slides, which attempt to break the data down a bit. Of the total $6.1 billion in annual losses LEK estimated to MPAA studios, the amount attributable to online piracy by users in the United States was $446 million--which, by coincidence, is roughly the amount grossed globally by Alvin and the Chipmunks: The Squeakquel.
Okay. So now we're down from $58 billion to... $446 million. That's less than 1% of the original number. But, still, you might say, $446 million is a fair chunk of change (and the $58 billion doesn't just include movies, but other content, like music and software). So perhaps something like SOPA still makes sense to protect a few jobs? Nope. Again, Sanchez points out how this ignores reality:
As one expert consulted by GAO put it, “effects of piracy within the United States are mainly redistributions within the economy for other purposes and that they should not be considered as a loss to the overall economy.” In many cases--I’ve seen research suggesting it’s about 80 percent for music--a U.S. consumer would not have otherwise purchased an illicitly downloaded song or movie if piracy were not an option. Here, the result is actually pure consumer surplus: The downloader enjoys the benefit, and the producer loses nothing. In the other 20 percent of cases, the result is a loss to the content industry, but not a let loss to the economy, since the money just ends up being spent elsewhere. If you’re concerned about the overall jobs picture, as opposed to the fortunes of a specific industry, there is no good reason to think eliminating piracy by U.S. users would yield any jobs on net, though it might help boost employment in copyright-intensive sectors.
In other words, we're right back where we started. The whole thing is based on the bogus assumption that money not spent on movies (which, again, have been making a ton of money lately) somehow disappears from the economy. But that's simply not true. So, really, why is it that anyone in the press, or in elected office, is allowed to quote that bogus $58 billion number without it being challenged?