Against Intellectual Monopoly

publishers' associations, and the man who had invented the raids,
launched the Francis, Day & Hunter's new sixpenny music series. Expensive
sheet music never returned.29
The Birth of the Movie and of the Recording Industries
    A fact not heavily advertised by the MPAA is that the Hollywood film industry was built by "pirates" escaping the heavy hand of intellectual monopoly.30
After a long period of competitive fighting, in 1908, the major producers
of film and movie equipment - including the Edison Film Manufacturing Company and the Biograph Company - formed a cartel in the form
of the Motion Picture Patents Company (MPPC). Through this instrument, they demanded licensing fees from all film producers, distributors,
and exhibitors. They vigorously prosecuted "independent" filmmakers who
refused to pay royalties. In 1909, a subsidiary of the MPPC, the General Film
Company, tried to confiscate equipment used by the unlicensed companies,
disrupting their operations.
    To avoid the legal battles and royalty payments, the independents
responded by moving from New York to California.
    California was remote enough from Edison's reach that filmmakers like Fox and
Paramount could move there and, without fear of the law, pirate his inventions.
Hollywood grew quickly, and enforcement of federal law eventually spread west. But
because patents granted their holders a truly "limited" monopoly of just 17 years
(at that time), the patents had expired by the time enough federal marshals
appeared. A new industry had been founded, in part from the piracy of Edison's
creative property.31

    Roughly during the same period of time, the recording industry grew
out of a similar kind of "piracy." In fact, the 1909 legislation that gave the
MPCC the right to charge licensing fees to all moviemakers also began
regulating the recording industry by introducing statutory licensing for
recorded music. By doing so, Congress struck a compromise between
composers, who wanted complete monopoly over the performance of
their pieces, and recording artists, whose trade had grown briskly and
competitively during the previous two or three decades. Between 1878,
when Edison's first tinfoil phonograph was patented, and 1889, when the
Columbia Phonograph Company started to market the treadle-powered
Graphophone, recording music to be sold for commercial purposes became
possible. The development, following Henry Fourneaux's prototype, of the
player piano also greatly facilitated recording of music that would, otherwise, require an expensive ensemble to be performed. Although composers had exclusive rights to control sheet music and public performances,
there was no clear right to control over recordings of music - something that had not previously existed. This ended in 1909, when Congress
extended copyright to recordings but imposed statutory licensing; the
recording industry grew - all on the basis of recordings "pirated" from composers.
    Ironically, these parallel and contemporaneous stories teach us something about the principles guiding the fight for or against the enforcement
of "intellectual property rights." The reader may have already noted, in fact,
that Thomas Edison was sitting on both sides of the fence in this period.
When it came to movies, because he was holding strong patents on the main
tools used to tape and show movies, Edison had to favor a strong enforcement of "intellectual property." At the same time, though, his interests in the
recorded music industry argued against an extension of copyright protection. Demand for Edison's phonograph obviously increased as cheaper and
more abundant recordings of music became available, which was facilitated
by a weak enforcement of the composers' monopoly power.
Encrypted versus Unencrypted Sales
    The book, recorded music, and movie industries have been heavily influenced by the Napster experience, in which music has been given away for
free over peer-to-peer networks. Consequently these industries have made
a strong effort both to encrypt their products and to lobby the government to mandate encryption schemes. The Digital Millennium Copyright
Act, for example, makes it a federal crime to reverse-engineer encryption
schemes used to protect copyright. When it comes to competitive markets, the Napster experience is deceptive - the product distributed on Napster-like
networks is not only cheaper than the commercial product but also is also
better. An unencrypted