Is Piracy is a Product of Market Failure?

Internet law columnist Michael Geist, writing for the Toronto Star, comments on a new global study on piracy backed by Canada’s International Development Research Centre that suggests “piracy is chiefly a product of a market failure, not a legal one.”

The media piracy study — in an effort to analyze infringements regarding music, movies, and software — was launched five years ago by the Social Science Research Council. Institutions in South Africa, Russia, Brazil, Mexico, Bolivia, and India were identified to better understand the international media market and related piracy issues. The resulting 440-page report is the most thorough analysis of media piracy to date.

The report sets the record straight on several popular piracy myths. For example, it states there are no links between piracy and organized crime, there is no evidence indicating that anti-piracy education programs have any impact on consumer behavior, and tougher legal penalties do not necessarily provide a deterrent to piracy.

The report also suggests that piracy is primarily a result of market failure, not legal failure. Geist writes: “In many developing countries, there are few meaningful legal distribution channels for media products. The report notes ‘the pirate market cannot be said to compete with legal sales or generate losses for industry. At the low end of the socioeconomic ladder where such distribution gaps are common, piracy often simply is the market.’”

Apple Negotiating Unlimited Music Downloads

Apple is in talks with record companies to provide iTunes users with more flexible access to purchased music on multiple devices. Apple and the record labels are eager to strike a deal that will maintain demand for digital downloading in the midst of popular streaming services such as Pandora.

According to anonymous sources reportedly sitting in on the discussions, a deal would provide iTunes users with a permanent back-up of purchases and allow downloads to iPad, iPod, and iPhone devices from the same iTunes account (moving a step closer to access to Internet-stored content).

In addition to addressing stalled digital download sales, Apple is also weighing options for its MobileMe service for storing images, video, and other media online. Apple’s new $1 billion data center in North Carolina is expected to serve as a hub for iTunes and MobileMe services.