The Keystone Kop of Kopyright

01/18/2012 2:58 pm EST

Focus: MARKETS

Igor Greenwald

Chief Investment Strategist, MLP Profits

An overreaching effort to rid the Internet of pirates has run aground, to the spitting fury of one media tycoon who should know better, writes MoneyShow.com senior editor Igor Greenwald.

The Google (GOOG) logo is blacked out today for seekers of enlightenment (or, more likely, gossip about Paula Deen.)

Wikipedia has made its English-language pages harder to reach for 24 hours.

Their ire, and that of millions of Americans mobilized via blogs and social networking sites, is directed at legislation before Congress targeting online piracy of copyrights and trademarks.

Specifically, the Stop Online Piracy Act (House) and Protect Intellectual Property Act (Senate) aim to shift the onus of fighting infringement from owners of copyrights to the proprietors of Internet pipes and hubs.

Sites could be blacklisted based on the government’s (or copyright holder’s) claims in a one-sided court hearing. Thereafter, if the action was brought by the government:

  • Every other site would be responsible for locating and removing every stray link to the offending content, including any posted by their users.
  • Internet search engines would have to scrub the accused sites from their results.
  • And service providers would be required to purge their alphabetic addresses from the global Internet address book known as the Domain Name System.

The proposed restrictions on access by the alleged pirates (or their “facilitators,” knowing or otherwise) to the ad and payment networks would be entirely superfluous at that point. But the authors of these bills at the Motion Picture Association of America (now starring ex-Senator Chris Dodd) and the Recording Industry Association of America are not known for treading lightly.

Mike Masnick of Techdirt has the nitty-gritty on SOPA/PIPA’s sweeping scope and dangerous precedents.

In essence, Internet operators would become responsible for isolating alleged pirate sites, including those promoted via social networks and user-generated content. Much like China censors content via its Great Firewall, the US would end up with its own list of prohibited sites, albeit (initially, at least) for reasons commercial rather than political.

Politics makes strange bedfellows, and the AFL-CIO has shacked up with the US Chamber of Commerce in support of the proposed restrictions. Both of California’s senators, deeply beholden to donors in the entertainment industries, and many of the Democratic colleagues that aren’t, are pushing for passage alongside conservatives like Orrin Hatch and Lindsey Graham.

Joining the bloggers and Silicon Valley tycoons on the other side of the barricades are the White House, whose recent memo on the issue strongly implies the threat of a presidential veto. Today, Florida senator and Republican golden boy Marco Rubio has backed away from the legislation, followed by Texas senator John Cornyn as well as New York’s two Democrats in the upper chamber.

With momentum for passage fading faster than DVD sales, we’re left with one angry multi-billionaire mogul raging impotently at his perceived oppressors.

News Corp (NWS) Chairman and CEO Rupert Murdoch has taken to Twitter (boy, has he ever) to call Google a “piracy leader” and slam President Obama for “selling out” to his high-tech “paymasters.”

Murdoch’s Wall Street Journal toed the same accusatory line today, to the confusion of many readers who thought it opposed increased regulation.

In truth, Murdoch has little to complain about: the notion that he might stop making highly lucrative movies if they continue to be available online for free is laughable, and certainly not reflected in the rising value of News Corp’s stock.

In fact, the shares are up 28% since I recommended them in July, at the height of the scandal about the serial misappropriation of private information (which certainly seems as worthy of protection as intellectual property) by senior News Corp employees.

The arguments that the new restrictions would only be used against the really bad guys ring hollow given the documented abuses arising from other recent attempts to legislate online piracy out of existence. At their core, the measures threaten aggregation of user content and social networks by making their proprietors liable for every potentially infringing post and link.

The carving up of the global Internet into national ghettos littered with roadblocks will ultimately threaten more high-paying American jobs than any copyright protection regime might save, even assuming an implausibly effective one. And it would set a terrible precedent for our freedoms, though the immediate threat might be remote.

It’s no accident that China’s Great Firewall blocks Google and Facebook, which could lead users to uncomfortable facts and help them make undesirable connections. In contrast, every Chinese citizen is free to read the Wall Street Journal, and learn why SOPA and PIPA are essential.

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