Patrick quoted the G&M columnist as assuming that file sharers are correct in their view that no technical theft has occurred if the owner still has the original property.

'Tain't so -- the concept of Theft of Service is well-known to the law, and its application to digital materials is analyzed here. Excerpt on the reasons for such laws:

Someone who rides a train without a ticket, connects an unauthorized wire to an electrical grid, or stays in a hotel without paying is not taking anything away from the railroad, the utility, or the hotel. Nor does he impose significant extra costs on the service provider. It would cost only pennies less to run the train with the seat empty; the cost of a few electrons is trivial; and most hotel costs are fixed in the short term. Clearly, using such services without payment is not the same as conventional theft.

Nonetheless, any thoughtful person would agree that “theft of service” should be condemned, and the laws of all states and the federal government do indeed address the issue.

Theft of service, or, to phrase it more benignly, free riding on a service, causes three kinds of harm:

(1) Damage to consumers. Production of railroad tickets, electricity, hotels, and many other services is characterized by high fixed costs and low variable costs. To make the service viable, each user must be assessed a share of the fixed costs. A free rider imposes few marginal costs on the provider, but by refusing to pay his share of the fixed costs he forces all other users to pay more.

In some cases, the effect on other users is more direct. For example, in cable Internet connections a finite amount of bandwidth must be shared by all users, so the free rider is directly taking capacity from his fellow customers and degrading the performance of their systems.

(2) Creation of a dynamic of destruction. As the number of free riders grows, so will the resentment of those who pay. These will likely respond by becoming free riders themselves. Ultimately, if the number of payers (now known as “suckers”) becomes insufficient to support the services, the system will crash, and there will be no railroad, utility, or hotel, to the detriment of all. It is a Prisoner’s Dilemma problem; each individual would prefer to have everyone else pay while he free rides, but if everyone adopts this strategy then everyone will end up with nothing. So societies, not being totally stupid, establish rules requiring everyone to pay their share.

(3) Justice for service providers. Taken en masse, free riders appropriate to themselves the investment made by the service provider, which is indeed indistinguishable from conventional theft of property, and offensive to any sense of Lockean justice. If shoplifters strip a store one item at a time, each individual transgression is small, but the ultimate effect is the same as if a small gang had done it with a moving van.

Note that Point #3 is not vital to the power of the argument for outlawing theft of service. One can hate the service providers, regard all property as illegitimate, and advocate a shift away from capitalism to socialism without changing the conclusion that theft of service is destructive of the interests of individual consumers and of society as a whole, and even of the long-term interests of the free rider.

The crucial point is that the matter is not one of consumers versus service providers. From the standpoint of self-interested consumers, providers are only mechanisms by which they (the consumers) can pool their resources to obtain useful services. The interests of providers must be protected both because of this instrumental function, and because these interests create incentives for providers to police the system, something consumers cannot do for themselves.

Consumers are also aware that if a community tolerates theft of service, then investors will not create the infrastructure vital to economic development. Nations exist in which theft of service is the norm, and investors cannot recover the cost of their provision. Such places lack the infrastructure needed for economic development and are called: “poor.”

posted by James DeLong @ 11:11 AM | Internet: P2P, Search Engines...

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