The internet has dramatically altered distribution for all manner of information goods, and has greatly reduced the friction and cost of sharing content to nearly zero. The flow of communication, data, and commerce online travels through a vast array of applications and services controlled by countless entities. Such Interconnectedness is made possible because all of these entities adhere to similar technological standards for communication, and because the organizations responsible for the backbone of the web act as agnostic conduits upon which packets can flow freely (the extent to which this will remain true is debatable, but the topic of net neutrality we must save for another time).
Jonathan Zittrain’s 2006 Harvard Journal of Law and Technology piece emphasizes the importance of the passive nature of the online network of gatekeepers and distributors to the growth and development of the internet as we know it. Zittrain focuses on legal battles with ISPs and applications, and the liability that service providers face for piracy and copyright infringement. What Zittrain fails to mention are the ways in which the growth of the internet has facilitated offline counterfeiting, trademark infringement, and copyright violations.
The U.S. District Court Decision in Viacom v. YouTube refers to the case of Tiffany v. eBay, where Tiffany, Inc. sought damages from eBay because as much as 75% of the Tiffany merchandise sold on eBay was counterfeit. The case was dismissed as the court held that generalized knowledge was not sufficient to compel action on the part of eBay, lending legal creedence to the defense assertion that online marketplaces are only an agnostic platform for connecting third parties, and therefore not responsible for the actual nature of the physical goods changing hands.
While eBay was able to dodge responsibility in the case of Tiffany, pressure continues to mount to crack down on counterfeit trade online. Industry organizations, particularly the Software & Information Industry Association (SIIA) have increased pressure a great deal in recent years, even offering rewards up to $1 million for reporting software piracy. The Anti-Piracy Year-In-Review 2009 from the SIIA, the association removed 90,000 online listings for illegal software, representing over $75 million of potential sales. While this may seem significant, to put these numbers in perspective, the Adobe, the software company best known for Acrobat, Illustrator, and Photoshop (and perennial favorite target for software pirates) booked 2010 revenues of $3.8 billion.
The CEO of Adobe, Shantanu Narayen, explains that for desktop software of the nature that Adobe sells, piracy rates can reach as high as 80% to 90% in emerging markets. Narayen sees the transition of Adobe’s products from the desktop to the cloud as a major advantage in combating piracy, as web based applications are not locally stored and require authentication for usage. Surprisingly, for at least some companies, it seems as though the movement of content into the cloud represents a way to combat piracy rather than to facilitate it.