MPAA & RIAA: If People Can Sell Foreign Purchased Content Without Paying Us Again, US Economy May Collapse

from the a-bit-of-an-exaggeration dept

We've written a few times about the upcoming Kirtsaeng case before the Supreme Court concerning first sale rights. If you don't recall, the 2nd Circuit appears to have wiped out the first sale doctrine for content purchased outside the country that you want to resell within the US. As we noted, there are significant worries about how such a ruling could really harm innovation. At issue was a guy who bought textbooks abroad and resold them in the US (for less than the cover price that the publishers wanted students to buy). The courts basically found that because the textbooks were made outside the US, they weren't "lawfully made under this title," which is some clumsy phrasing that's at issue here.

Of course, thanks to our copyright maximalism, under Kirtsaeng, if a product is made outside the US and then imported, US copyright law appears to apply to almost everything that's copyrightable... except that first sale rights go away. If that seems dangerous, you get a sense of how important the Supreme Court's ruling in Kirtsaeng can be, hopefully by bringing back some sanity, and showing that if you legally purchase some digital content you have the right to resell it.

It appears that the RIAA and MPAA are pretty scared about this possibility. They've filed quite the amicus brief in the case claiming that buying goods overseas and selling them in the US is the equivalent of piracy. No joke:
Copyright protection is essential to the health of the motion picture and music industries and the U.S. economy as a whole. Like the sale of “pirated” copies, unauthorized importation of copies of protected works made overseas and intended only for sale in a foreign market can undercut or eliminate the economic benefit that Congress intended to provide under the Copyright Act.
Oh, and it gets worse. You see, if that darned first sale is allowed on foreign goods, why (*gasp*) the MPAA and RIAA might actually have to deal with people buying goods in one market and selling them elsewhere. Horrors!
Extending the first sale doctrine to copies made abroad for distribution in a foreign market could impede authors’ ability to control entry into distinct markets, limit their flexibility to adapt to market conditions, or undermine territorial licensing agreements. If accepted, Kirtsaeng’s view of the first sale doctrine could thus prevent U.S. copyright holders from obtaining the economic reward Congress intended to provide under U.S. law to motivate investment in creative activity.
Now that's an interesting interpretation of copyright law. The RIAA and MPAA are arguing that if they can't block people from importing the versions they sell overseas, it will somehow motivate less investment in creative activity. Really?

Here's the real problem: the RIAA and MPAA want to have their cake and eat it too. If products bought abroad and then imported into the US don't get first sale rights, then it seems only reasonable that they shouldn't get US copyright protection either. Part of the deal with copyright protection in the US is that as part of it, you accept that buyers have first sale rights that allow them to resell what they legally purchased. What the RIAA and MPAA are attempting to do here is to take away the public's right to resell what they've legally purchased, because it might interfere with one aspect of their preferred business model.

Of course, what this really comes down to is that the RIAA and MPAA absolutely hate the idea that they might have to compete in a global market. They more or less admit this in the brief, suggesting that prices are cheaper elsewhere in the world because copyright law sucks in other places... and allowing cheap goods into the US means that they don't get the "separate benefit" of expansive US copyright law:
When copyright owners distribute tangible copies of creative works in a foreign market, they recoup the economic benefit made possible by the copyright law of that country, which may be substantially less generous or well enforced than U.S. copyright law. They do not realize the separate benefit Congress intended them to derive from their U.S. copyright. If those copies are imported into the United States without permission, the copyright owner might never obtain that full benefit.
Boohoo. You sell into one market, people buy, they sell into a different market. Every other business in the world has to deal with exactly that. Why should the RIAA/MPAA get special treatment?

Oh, and of course, they rush to play up how much "harm" this would do if they can't overprice content in the US (what this is really about) by trotting out the same debunked stats about just how important they are -- even to the point of suggesting that allowing people to resell goods they legally bought elsewhere would have deleterious consequences for the entire US economy.
Those harms, in turn, could have deleterious consequences for the U.S. economy as a whole. As of 2010, the motion picture and television industry supported 2.1 million jobs and nearly $143 billion in total wages in the United States.... In addition to the major motion picture studios, the industry supports a nationwide network of nearly 95,000 businesses throughout the 50 States. Id. The music industry employed over 25,000 paid employees as of 2004.... The industry supports many smaller businesses such as retail stores, distribution companies, recording studios, and music professionals. The retail trade alone generates over $7 billion from the sale of sound recordings... Maintaining robust copyright protection is thus crucial to preserving not only the health of these creative fields themselves, but also their substantial contributions to the national economy.
That the actual evidence suggests something quite different is, of course, not mentioned. That the overall music and movie industries have been growing quite nicely, even as copyright is more and more ignored, is not mentioned. That more content is being produced and more money is being made... is not mentioned. Inconvenient facts are not allowed.

The filing at one point gets so snarky that it claims that those arguing the other side are using the word "arbitrage" as a euphemism (for what?!), rather than as an accurate description of what happens to normal economies that can't set up protectionist tariffs on importation of goods.

The whole thing shows the same myopic thinking of the RIAA and MPAA -- that anything that threatens their chosen obsolete business model simply must be illegal. Because having the courts and Congress prop up old business models must be better than actually innovating and (*gasp*) letting people resell what they legally bought.

Filed Under: copyright, economy, first sale, foreign works, kirtsaeng
Companies: mpaa, riaa


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  1. icon
    Ninja (profile), 21 Sep 2012 @ 3:29am

    Re: Re: Re: Re: Re:

    ignore what it costs to create the product to start with, assuming someone else actually paid for it, and then concentrate only on the costs to reproduce the physical delivery, without considering what is being delivered

    We, the consumers, couldn't care less about your costs. There are movies made with less than $10k that earned millions. With $8k I can build a small studio at home and record as many songs as I want, it's not rocket science. Maybe if you didn't pay shitloads to your ceos the profits would be higher ;)
    And as I noted in other comments we are talking about the first sale doctrine, not some massive large scale scheme.

    That money has to come back somehow.

    It's amusing how you simply ignore models that would bring a lot of money in ;) You see, the artists and the fans don't care how the middleman makes their money. Live with that.

    At that point, producing it is a meaningless business exercise - it's a loss.


    Then please go ahead and go out of business already, we'll be happy, won't shed a tear and won't miss you. While I don't doubt that the middlemen might be taking losses the music sector is thriving. Nobody cried when the ice cutters or the buggy whip sellers went out of business. Except for the ones in the business themselves.

    So what happens? Either they stop selling the product in the lowest price countries (why allow the market to get flooded with cheap imports), they raise the price in those countries the point that nobody can afford to buy it, or they stop making content entirely.

    Oh please, by all means stop selling, we'll have content in spite of you. And stop making content, we don't care either, there are plenty of good people out there doing content and not being morons like the MAFIAA.

    You only have to look at the erosion of the industrial base in the US to understand: Lower wage countries are willing to do the work and ship stuff to the US, and they can do it cheaper than Americans can. The result? The rust belt, the empty factories, and every job including phone support being offshored.

    Now that indeed is an issue for physical, scarce goods. I for one know that the textile industry in the US is pretty much loitered (unused) and yet they produce much better quality stuff. It's an issue in Brazil too. However it is NOT an issue in the music/movies/games industry. If you want to sell a lot, stop suing your costumers and start offering decent prices so you'll get your money returned in the quantity of sales, not the individual amount.

    Indeed, it's not fun to see what the crappy Chinese goods are doing to the economy as a whole. But the MAFIAA has absolutely NOTHING to do with it or you too can outsource the production to the Chinese. And again it's good to point that we are talking about the first sale doctrine, that applies to goods bought for PERSONAL consumption. So this discussion is meaningless, there's no issue here at all.

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