In many instances, there is no difference with respect to copyright law between digital information (including music, videos, and computer software) and traditional works. However, there are some instances where digital works present substantial new problems for copyright.

I.A. The Ease of Copying and Distributing Digital Works

Until digital works, the economic harm done by a copyright infringement was dependent on the cost of carrying out the infringement. To substantially affect the market for a popular novel, the infringement had to involve a large number of copies and a distribution network to deliver and sell the works. A few hand-made copies of a book would have little effect on the worldwide sale of a printed book. Even using a modern photocopier, it takes time and money to make duplicates of a book, and the result is a lower quality than the printed-and-bound original.

An infringer puts that time and money at risk. If the infringement is stopped by a court, the money spent printing the infringing copies is lost because those copies will be destroyed. If the infringer invested in duplicating facilities or for a distribution network, that investment would also likely be lost.

In contrast, a perfect copy of a digital work can be made and sent anywhere in the world with a few mouse-clicks or keystrokes on a personal computer and an Internet account provided by a school or costing only a few dollars a month. In United States v. LaMacchia, {FN1: 871 F.Supp. 535, 33 USPQ2d 1978 (D. Mass. 1994)} a college student set up a system for distributing popular software programs such as WordPerfect and Excel on a college machine available to him at no cost. It was alleged that his “scheme caused losses of more than one million dollars to software copyright holders.” {FN2: 871 F.Supp. at 536-537, 33 USPQ2d at 1979} The economic harm to a copyright owner that can be caused by an infringer in today’s digital world is not limited by the cost of creating and distributing duplicates of the original work nor by the quality of the duplicates since they are identical to the original work.

As Napster and other file-sharing systems (and Prohibition and the 55 mph speed limit) have shown, it is difficult for the law to deter behavior that doesn’t seem illegal, especially when you can’t go after the millions and millions of people who are breaking the law. (File-sharing using Napster was stopped only because it had a central directory that could be shut down by court order.) File-sharing system users don’t think of themselves as copyright infringers, and certainly not as worldwide distributors of illegal copies. The users feel that they were just sharing music that they liked with others who also like the songs. And the ease of doing it (and the many people involved) makes it seem acceptable.

The market for copyrighted works is a substantial part of our economy, and millions of people who just infringe a little can have a definite effect. As noted by the Senate Judiciary Committee:

The copyright industries are one of America’s largest and fastest growing economic assets. According to International Intellectual Property Alliance statistics, in 1996 (when the last full set of figures was available), the U.S. creative industries accounted for 3.65 percent of the U.S. gross domestic product (GDP) – $278.4 billion. In the last 20 years (1977-1996), the U.S. copyright industries’ share of GDP grew more than twice as fast as the remainder of the economy – 5.5 percent vs. 2.6 percent. Between 1977 and 1996, employment in the U.S. copyright industries more than doubled to 3.5 million workers – 2.8 percent of total U.S. employment. Between 1977 and 1996 U.S. copyright industry employment grew nearly three times as fast as the annual rate of the economy as a whole – 4.6 percent vs. 1.6 percent. In fact, the copyright industries contribute more to the U.S. economy and employ more workers than any single manufacturing sector, including chemicals, industrial equipment, electronics, food processing, textiles and apparel, and aircraft. More significantly for the WIPO treaties, in 1996 U.S. copyright industries achieved foreign sales and exports of $60.18 billion, for the first time leading all major industry sectors, including agriculture, automobiles and auto parts, and the aircraft industry. {FN3: Sen. Rep. No. 105-190 at 10}

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