The difference between Intellectual Property and Property Property…

…Is that Intellectual property is nothing more than artificial scarcity of an otherwise superabundant good.

Five Rochdale men have been jailed for using iTunes music gift vouchers to launder money in an internet scam.

The men used stolen credit card numbers to buy £750,000 worth of vouchers to sell at cheaper prices through eBay.

Obviously, this is fraud, in that they used other people’s credit cards, and theft in that the gift vouchers themselves were taken through fraud. That they’re scammers in this respect isn’t at issue. But it is a great example of how property in physical objects is fundamentally different from property rights assigned in non-psychical/incorporeal objects.

So, take the vouchers themselves, the plastic cards with a code on. These are real, tangible objects, and they’re scarce. There’s a limited number at any one time. That means, if you own a £10 iTunes voucher, and I take it, you are down one iTunes voucher. You’ve been deprived of it, you can’t use it, I can, you didn’t want me to have it, so that’s theft. Same applies to any physical good. If something is scarce, or limited, we need a system to regulate who controls what and how much of it at anyone time, my preferred system, obviously, being private property rights.

There’s a different matter when goods (or maybe even services, but I can’t think of an example of such a service) are superabundant, like air. Unless you find yourself at a bottom of a lake wearing concrete tennis shoes (should have paid your taxes, bitch), you’re never going to find yourself with an air shortage. If I come round your house, fill a jar with, er, your air, take it home and breath it, would you care? You probably would think I’m insane (if you didn’t already), but would you cry theft?

Computer files, too, are potentially superabundant. A computer file can be copied infinite times, spread to infinite users, but the each time this happens, each owner does not “lose” anything, as you would if I stole your iTunes voucher, or whatever. If I copy your file of Harry Nilsson’s Coconut, you’re still at liberty to listen to it, your copy hasn’t been damaged, or taken in anyway, but I also have a copy, and can enjoy it. There’s been no “theft” of any scarce object, and neither of us are deprived of anything*.

The same applies if I borrow a CD from you and copy it. Between us, there’s absolutely no deprivation of property, no destruction of value, or misappropriation. It’s win-win, as explained by this ear-destroying tune.

Ok, so that makes sense between two music fans. But copying songs between friends isn’t the main concern for those with a vested interest in keeping Intellectual Property rights as draconian as possible. No, it’s the starving artists that are the concern. You thieves with your downloaded copy of The Fame Monster are ensuring Lady Gaga can never afford to have that penis removed, right?

There’s a lot of studies out there that demonstrate this to be nonsense, and that pirates spend more on music, that concerts and merchandise account for most of the money, etc, and these are all well and good from a utilitarian viewpoint, but I’m not much of a utilitarian.

The real issue is copyright holders, which in practice tends to be the giant labels rather than artists- and for reasons that will become clear soon- that push for more and more draconian laws to punish their own customer base for enjoying their damn purchases, the most obvious example being the Digital Economy Act.

Why do conglomerate recording labels love Intellectual Property rights? Well, isn’t that clear? The same reason Car companies love import duties on foreign cars. The prevention of competition, and the ability to distort the market to their advantage. By claiming a monopoly “right” to distribute certain music, they have ensured that no competition will get in their way. In other words, it’s a form of protectionism, wrapped up as “property rights”. It allows them to prevent other people using their own property in a way that suits them, using the force of the law to do so. IP rights are property rights? Yeah, right. Since when did property rights involve restricting what the owners of other property do with their own?

What intellectual property “rights” do, however, is try to enforce an artificial scarcity on non-scarce goods. By using the force of law to declare that “only X has the right to decide who can have copies of Coconut”, we’re destroying value by preventing that song being in the hands of all those that would enjoy (get utility from) listening to it. The same principle applies to all forms of intellectual property, but, again, this is merely covering copyright. The real question is; how the hell did we manage to associate legal rights and privileges, enforceable only through the force of the state, with genuine property rights? And, why are so many libertarians falling for this trap?

Back to the original example. It’s claimed that £750k of music has been stolen. No. Those computer files aren’t really valuable at all, the value that was stolen was merely the damn plastic cards. Equating gaining a few, infinitely copy-able files as being equivalent to the theft of £750k in cash is obvious nonsense.

*That I may have accessed your computer illegitimately to get the file, by hacking or what have you, is besides the point for the moment.

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