Op-Ed: SOPA Is a Threat to NYC’s Growing Tech Industry

| January 13, 2012 4:00 AM | Updated: Jan. 18, 2011 7:30AM

Brad Burnham of Union Square Ventures opposes the Stop Online Piracy Act (SOPA) for a multitude of reasons, including a belief that it will subvert the value system of the Internet. On Jan. 18, Burnham will give Congress a piece of his mind. Flickr/Esthr

Brad Burnham is the co-founder of one of New York City’s largest venture capital firms for the tech industry, Union Square Ventures, which helped produce the likes of locally-based companies Kickstarter, Foursquare and Etsy. On Jan. 18, Burnham will testify against the entertainment industry-backed Stop Online Piracy Act (SOPA) before the U.S. House Committee on Oversight and Government Reform. He and another NYC tech entrepreneur, Reddit co-founder Alexis Ohanan, along with other leaders in the tech field, will lay out an argument against this controversial bill.

SOPA essentially allows the Justice Department and copyright holders to seek court orders against websites that aid in copyright infringement.

Those who oppose SOPA believe the bill threatens the very infrastructure of the Internet (as in, they think it could bring the Internet down); poses severe risks to content-sharing sites like Facebook, YouTube and Twitter; and would make it extremely difficult for entrepreneurs to start innovative tech companies of the sort that are drastically altering the city’s economic landscape and influencing major initiatives, such as Mayor Michael Bloomberg’s push to build an applied sciences school.

In the op-ed below, Burnham describes why he believes the bill is a particular threat to New York City, and why his opposition to SOPA is not merely an expression of his and other NYC tech professionals’ economic interests, but also his belief that people are essentially good.

SOPA poses a true threat to the New York City tech industry, which is home to over 400 Internet startups, supplies about 119,000 jobs and is aiming to rival Silicon Valley through Cornell University and Israel-Technion’s planned applied sciences and engineering school. Because New York has been so successful in attracting a disproportionate share of Internet companies, it will suffer a disproportionate share of the harm.

This image from the NYC-based website Kickstarter shows that people on the Internet donated $69,326 to fund a project featured on the site. According to Burnham, Kickstarter demonstrates that Internet users are -- in general -- generous creatures. Image from Kickstarter.

I have always believed that the entertainment industry’s effort to stop people from illegally downloading content on the Web by asking search engines and Internet Service Providers to make it more difficult for their users to find pirate sites — which illegally offer copyrighted content — was the wrong way to solve the problem. But I could never put my finger on why I felt so strongly about it. After all, the entertainment industry argues that they are only targeting the worst pirate sites and are only asking for help because those pirate sites are offshore and out of the reach of U.S. authorities.

At a recent dinner, Joi Ito, the head of the Media Lab at MIT, described the Internet as a “belief system” and I suddenly understood. The Internet is not just a series of pipes. Its core architecture embeds an assumption about human nature. The Internet is designed to empower individuals, not control them. It assumes that if individuals are empowered, they will do the right thing the vast majority of the time.

Services like eBay, Craigslist, Etsy and AirBnB are online meeting places that facilitate consumers selling and bartering directly with one another, and as such are inherently built on the assumption that most people are honest. Other services like Tumblr, Twitter, YouTube, WordPress and Soundcloud are all sites that allow people to share content, and thus assume people will be generous with their ideas, insights and creations. Wikipedia has proven that people will share their knowledge. The success of companies like Kickstarter, Kiva and Ashoka, which enables the general public to fund other peoples’ create endeavors, shows that people will even be generous with their money.

This does not mean that there are not bad people out there.

All of these companies spend a lot of time and money to battle spam and fraud. The companies are simply betting that there are many more good people than bad. The architecture of the Internet shares this assumption. It could have been designed to prevent bad behavior. Instead its design empowers good behavior.

Those who support SOPA do not share this essentially positive view of human nature. I recently suggested to a friend at Viacom that one possible solution to the online piracy problem would be to have web browsers launch a pop-up with a warning. Something like “THE ATTORNEY GENERAL OF THE UNITED STATES HAS DETERMINED THAT THIS SITE HOSTS UNAUTHORIZED COPYRIGHTED MATERIAL. DOWNLOADING MATERIAL FROM THIS SITE MAY BE ILLEGAL.” If that warning included a link where the user could find the content and purchase it legally at a fair price, I believe it would make a big dent on piracy.

My friend disagreed. He said that users would just see the warning as confirmation that they were in the right place. He cited other examples of moral failing suggesting that he believes that in general people will take advantage of others if given the chance.

I think something else is going on.

I believe that those who illegally download content are making a moral calculation and coming to the conclusion that the content industry immorally perpetuates an artificial scarcity in order to maximize its profits. So-called pirates understand that content is a non-rival good, that unlike an apple, they can consume it without diminishing anyone else’s ability to consume the same thing. They know that the content owner paid nothing to reproduce or distribute the content on the Internet. They also know that the artists who created the original content get a tiny fraction of the revenue. So pirates are making a moral judgment that the content owners are pricing their product to extract unjustifiable profits and they feel morally justified taking the content they find out there on the web.

It’s not really important whether you agree with me, that the vast majority of people are good, or with my friend, that if given the chance many people will steal.

What is important is that SOPA, the legislation the content industry is currently pushing through Congress, will not allow me to architect a service and build a relationship with consumers that reflects my core beliefs about human nature.

I am sympathetic to the content industry’s struggles with piracy, but my belief system tells me the answer is to capitalize on the great strengths of the Internet to create a healthy and profitable relationship with their users — not to sue them. No matter how strongly I believe that, however, I do not think I have the right to tell them how to run their business. Apparently, they do not feel the same way about our businesses.

The current legislation in Congress does not just create an administrative burden, it requires service providers who have built wonderful businesses on a deep conviction about human nature to change their relationship with their users in a way that subverts their core values.

Unfortunately, this legislation may pass. The content industry has invested heavily to get it through. Legislators need to hear from every one of the employees at the city’s 400 Internet startups and from every entrepreneur and every user who understands that the Internet is more than a set of pipes. They need to hear that innovation and economic development comes from empowering users, not constraining them.

Click here to learn about SOPA Opera, an app that shows you which legislators support and oppose the bill.

  • Catherine

    Absolutely excellent commentary – you hit the nail on the head in discussing integrity, empowerment, and inspiration online. Thank you for this, Thirteen!

  • Glenn

    I’m really puzzled as to why normally thoughtful folks like Lieberman, McCain, Grassley, Phil Graham and (my own senator) Dick Durbin are behind SOPA. The only conclusion I can reach is that it’s too complex an issue for them to understand.

    So what’s next ? Shall we shut down any highway system that is used by inter-state criminals ?

  • mark

    While Mr Burnham makes some great points and admirably holds the human race in high regard I find many of his assumptions ridiculous. He wants his free lunch – and wants to eat it too.
    Starting at the beginning: He feels like this legislation will hurt his industry, particularly in the NYC area where his venture capital company profit’s. Well of course he doesn’t want anything to affect the bottom line of his investments. I get that. He’s looking out for No. 1 and that IS human nature. Nothing nefarious or odd about it. He wants the most bang for his buck. That IS human nature.
    About the whole ‘belief system is the internet”. Kind of drinking his own KoolAid on that one. The idea that people will inherently do the right thing is nice to say but if he sees a way to maximize his profits [see above] then he’s going to do it himself. This is just silly. History proves him wrong: We need to look no further than what happened in the music industry when Napster came along. As soon as it was knocked down another site just like it popped up. People may not be inherently bad but they can be inherently dumb about things they just never really had to think through. They only vaguely saw it as wrong as in ” wow this music is all FREE??” [really? hmm] COOL! The cat was out of the bag. Go check the stats on how that wonderful experiment in “they will do the right thing the vast majority of the time” worked out. Two things are interesting here: 1.] When the music distribution model was shot in the head by illegal digital downloads, the only part of the music industry that had and power responded in a stupid way by going after end users. That went bad and looked worse. While all that played out in plain site the ones that – to use Mr Burnham’s words – “suffer a disproportionate share of the harm” were content creators and artists closer to the bottom of the food chain. Often the ones who are influenced the least by outside forces and who are foraging new trends, developing all the kinds of wonderful new ideas that people like Mr Burnham like to capitalize. Again I say “Hmm”
    2] Mr Burnham goes on with the classic flawed rational “They know that the content owner paid nothing to reproduce or distribute the content on the Internet.” Really? in one sweeping statement he has said all marketing and distribution efforts – a HUGE undertaking for artist and his/her publisher endeavoring to get their work in front one eyes and ears – costs nothing. Nothing on the part of the creator, and nothing on the part of the publisher. Wow, there is so much about creating and getting new ideas to market that he has NO idea about! The ‘b’ part of which he goes on to say in the next sentence: “They also know that the artists who created the original content get a tiny fraction of the revenue.” So I guess that’s a good reason to screw them out of even that ‘tiny fraction’ then I guess? Look, if the ‘tiny fraction’ that in particular for emerging creators is all they can get then then why give them a chance to even have that? What nonsense. If you replaced ‘content creators’ or ‘artists” with any one of his beloved startups and talked about how they are the life blood of new ideas would he write the same article? This is like the old argument that someone made to me that “blank CD’s only cost about a buck [that's how long ago this all started] I can’t believe ‘they’ want $16.00 for this jazz CD.” Like the cost of the CD is what it takes to get that content to market?
    I can’t claim I have seen everything in the SOPA bill but content has long been marginalized is lieu of online providers and online users rights. We need something as a bit of a backstop to everything being free. There is no free lunch because at the end of the day . . . we all have to eat.

  • joey

    very well said, we just can’t afford to lose the internet.

    • Old Geezer

      Dear joey,
      If you think something like SOPA will shut down the internet, you are out of touch.

  • PJ

    I haven’t looked at the bill to know all of the details, but in general I believe it is a good idea to have some protections for the artists and their creations. Their are obviously some protections already. As stated on Wikipedia.org, “Napster… was originally founded as a pioneering peer-to-peer file sharing Internet service that emphasized sharing audio files, typically music, encoded in MP3 format. The original company ran into legal difficulties over copyright infringement, ceased operations and was eventually acquired by Roxio. In its second incarnation Napster became an online music store until it merged with Rhapsody on 1 December 2011.” So it appears that the entertainment industry is looking for some legal vehicle to make it easier to do what they have already done with existing laws, and that is to shut down sites and punish those who provide pirated copies for free (thus reducing revenue). All well and good. Mark had excellent reply. And while I’m sure Mr. Burnham has more than enough money so that he can purchase his music and movies (as opposed to obtaining free copies over the internet) and does so, he can take solace in the fact that there are plenty of sidewalk vendors in NYC with pirated copies of whatever movie anyone wants. When I moved to NY several years ago, The Simpsons movie was about to be released in the movie theatres. There were television ads stating “ONLY in theatres beginning this Friday” (or whatever day it opened). Well it wasn’t only in theatres, because right in front of my building there was street vendor selling copies of the movie for $5. I think there are already laws on the books against that, but it still happens all the time with no enforcement. I think some would say, and in fact I have heard them say, leave the poor schmuck alone. So what if he sells 10 copies and makes 50 bucks… FOX and those actors won’t miss the $130 from 10 ticket sales at the theatre. Which would be true if only one guy was doing that. But there are hundreds doing it in NYC alone. And what about all the other cities? And all the illegal foreign copies? And the illegal downloads? All of it adds up to millions, if not tens of millions of dollars. That lost revenue, or more accurately, unrealized revenue, gets made up for in the selling price all of us legal obtainers pay. If the current version of SOPA is flawed, fix it. But better protection for the artists and copyright holders is needed, and stronger, more easily enforced laws against the pirates are needed. p.s. I am not an artist and have not published any works that would be protected by this bill.

  • JackSprat

    Yeah, it’s funny how “censorship” and “free speech” are the “issues” for Google and Union Sqaure Ventures and Facebook, etc. and “copyright” and “intellectual property” take a backseat. But when a company like “Froogal” sets up shop Google immediately files a lawsuit over “trademark infringement.” Their “intellectual property” seems to be extremely important. Others, not so much.

  • fiona

    That’s an excellent summary of why I illegally download, even though I am scrupulously honest in all other regards. I feel the content owners are ripping everyone off. I would be happy to pay a fair price for the content I download illegally. Meanwhile, I also buy a lot of content, so that is how I balance out the costs. I consider that I am, in the end, paying a “fair price”.

  • http://www.infogathere.com information technology jobs

    Thanks for the auspicious writeup. It actually was once a enjoyment account it. Glance complex to far introduced agreeable from you! However, how could we keep up a correspondence?

  • Barry

    How can there be an intelligent discussion based on complete ignorance? Clearly you never read any of the proposed pieces of legislation. If you had, you might have suggested some wording changes here and there and let the bill move one. No one deserves to have any personal property stolen. The fact that you think there’s some arbitrary “okay” level of theft and fraud says a lot about you and disproves your thesis that people are basically good. Further, you made many, many damning assertions about a draft law to protect the rights of individuals without providing one bit of evidence, not one iota, not one tiny example, to back up your empty assertions. Nice work!

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