Warez Trading Presentation at Fordham

By Eric Goldman

I gave a talk last week at the Fourteenth Annual Conference on International Intellectual Property Law & Policy at Fordham Law School. I was on a panel about criminal copyright infringement. Here’s a rough transcription of my remarks:

Criminal copyright infringers can be divided into two types:

* commercial infringers

* non-commercial infringers

Typically, commercial infringers are in it for the money–they are running businesses for profit using someone else’s intellectual property. Counterfeiters are a classic example. Commercial infringers have the potential to respond to criminal sanctions. If criminal sanctions not only deprive them of their profits and then cost them something more (cash or, more significantly, their personal liberty), commercial infringers may make rational calculations and may be deterred by the negative payoffs.

I’m more interested in the non-commercial infringer. What type of person willfully infringes copyright for no commercial gain?

The principal class of non-commercial infringer is called a “warez trader.” Warez traders aggregate and distribute copyrighted works as a way to build their own personal reputation within the subcommunity. Their goal is to publicly distribute hard-to-find copyrighted works faster than other traders; doing so brings them adulation within the community.

Because warez traders are driven by ego, they do not respond to typical deterrence incentives. If anything, enhanced sanctions only increase the perceived impressiveness of their actions by making the digital assets that much scarcer.

So criminal copyright infringement has a low capacity to deter warez traders. As a result, the official government response has been to bust and lock up warez traders one-by-one. Basically, the government is fighting a war of attrition. The consequence is that about 120 United States warez traders have been convicted or pleaded guilty, with a few more internationally.

But wars of attrition are costly. The government incurs significant enforcement costs, the traders prosecuted incur significant personal costs (possibly beyond the culpability of their behavior), and other people may be chilled from socially-beneficial non-infringing copying by the fear of being busted next.

Worse, I think the war of attrition is ultimately unwinnable. I think that, so long as digital assets are scarce and risky, there will continue to be people who will be attracted to the trading of such assets–even if we successfully busted every single warez trader currently in the scene.

Unfortunately, I don’t have any brilliant solutions. If our goal is to stop warez trading, individual busts are the only way that has any meaningful effect. But I continue to wonder if this is the best policy approach, or if we may be overstating the harm caused by warez traders and undercounting the cost of busting them.

I expect to have more to say about criminal copyright infringement and warez trading soon. Meanwhile, if you want more on this topic, see my earlier articles about warez trading:

Warez Trading and Criminal Copyright Infringement

The Challenges of Regulating Warez Trading

Critique of the No Electronic Theft Act