Visa, Copyright Infringement, and the Power of Alternatives
I saw this story from the Times this morning on Digg and just now happened onto the surface of an interesting resultant discussion on Alex's blog about the relative dangers of corporate vs. governmental regulation:
Cat and I have an ongoing discussion on whether corporate vs. governmental regulation is more dangerous. She leans towards the corporate being the lesser evil, where I believe corporate regulation (that is, companies deciding policy, disregarding lobbying) is the greater evil.
Visa just announced their intention to block payments to the Russian music download site AllofMP3. AllofMP3 insists upon its legality in terms of Russian copyright law—but has promised a change in its business model, hoping for more international acceptance (of course, this will come at a price, as the downloaders are quite happy with the current system).
But is Visa's extreme measure to block payments to AllofMP3 acceptable? As a digg poster commented, Since when has it been Visa's obligation to judge business morality? While I believe that businesses should have models of moral obligation, decisions such as these should be questioned by general consumers and more closely examined by relevant subscribers. Business policies, and corporate morality policies should be easily available, and digestible to consumers, subscribers, anyone who wants them, really—public accessibility is key. Archives of past business and policy movements should be equally accessible.
My personal position is that on strict philosophical grounds, companies and governments are in the position to, and in fact are expected to, make moral judgements. Industry not dumping toxic waste into rivers or bars not serving liquor to six year olds are two relatively simplistic cases where government and corporate regulation overlap. Both may be against government regulations, but in either case, even if there weren't regulations in place, one would hope that the public as a whole would demand some level of responsibility on the part of the businesses.
The problem is when governments and corporations make seemingly moralist decisions that alienate their users, either by preventing them from doing things which they believe harmless or simply forcing them to align by association with platforms with which they disagree.
Is AllofMp3.com legal? I don't know. I'm not a lawyer, and I don't know where the money goes once I send it to Russia. However, if I like cheap music and Visa is "Everywhere I Want to Be", then something doesn't add up.
This, however, is where governments and corporations differ, even if they are holding hands under the table. Visa is an independent entity, and as such is free to make reactionary, moralist decisions, even if misguided. And as soon as they alienate enough of their customers, you can bet there will be a new player on the market, with lower interest rates and better service to soak up the profits. Capitalism can be ugly at times, but in its ability to turn sheer greed into a positive impetus, it's magical.
To some extent, the same is true of government, for which we must be eternally grateful. However, there are a couple of major differences. First, it's hard to perform a wholesale change of government without bloodshed. If Sprint pisses me off, I can always switch to Cingular, but if George Bush pisses me off, the only things I can really do are complain, leave the country, or start a revolution, none of which manage to be particularly attractive or effective. There is impeachment, but historically that is roughly as common at the presidential level as revolution.
The other difference is that, truth be told, the first responsibility of an American business is to its own interests, while by the best definition we have, the first responsibility of the American government is to our interests. Now where the situation gets murky of course is that in order to protect its own interests, a company must also protect its customers interests. But that is a secondary objective, not the primary. So finally, here's the point. I don't think Visa is evil.
I think Visa is wrong.
In doing what they feel necessary to in some way save their own asses (and I don't want to hear the same people who preach how moral-less and greedy corporations are now all of a sudden decide that they are driven by some arbitrary moral agenda), be it from future regulatory action from the government, future lawsuits from the RIAA, or future backlash from customers that sincerely respect the value of copyright (doubtful), Visa has continued what could easily turn into a major miscue. Conservative policy and mediocrity are the bane of passionate users.
This isn't the first time credit processors have made a moral distinction. The vast majority of credit card issuers haven't served Internet gambling sites for almost as long as there have been Internet gambling sites. An entire industry has formed largely around this decision. Companies like FirePay and Neteller stepped in to fill the void (and make a substantial profit) almost immediately. And now, due to increased scrutiny by the U.S. government and, of comparable relevance, the fact that these two startups have grown into large, publicly traded corporations, they are on the brink of stepping down as the feeding tube for Internet gambling.
But what will happen? The gambling sites will not be starved by any stretch of the imagination. The current payment processors will either reconsider their stance or fade into the background, largely marginalized without the differential from traditional payment services (like Visa) created by the very black and white willingness and non-willingness to accept gambling transactions, and newcomers will step up to fill the void. No amount of legislation or threats of prison time or even death can keep an entire world of people from seizing an opportunity to make quick millions. Whatever the potential penalty, there will be a supplier — just not a publicly traded one.
The problem from Visa's point of view is that It's easy to fall into the trap that only a few people are hurt by any of these decisions. First, each group is much larger than one might think, and secondly, the disenfranchised groups add very quickly and tend to be vocal. It's much like the downfall of President Bush's approval rating. A chip at a time, one small group of Americans at a time, he lost support, all the while failing to realize or at least care that he was sliding down the side of a mountain from a pinnacle of popularity to the current widespread disapproval. That's what will happen to Visa if this trend continues. If Visa suddenly decided that drinking is bad and that Visa will not be accepted in establishments that serve alcohol, what do you think would happen to their membership?
This feedback loop is key to maintaining control over both government and private interests, but the public can only react to what is seen. And there are two equally important sides to this absorbtion of information — production and consumption. If either side is lacking, this massively parallel system of checks and balance breaks down. The tendency is that peoples' alarms are triggered and things change before it is too late. But admittedly, that works every time...until it doesn't.
Pay attention, and if you do nothing else — think.
The upside to all of this? I visited allofmp3.com and at first glance I have to respect the approach. The site design is adequate, but the interesting part, and the part I would like to see adopted elsewhere, is that you pay for what you get, in terms of quality. Well, lets say bitrate. You can judge the quality of the music for yourself.
For example, say I want to buy Diddy's new CD (I don't). If I just want to hear the tunes at a decent quality (128kbps), I can get the 19 songs for $2.42, or if I will tolerate still lower quality and don't care to have my own copy, I can listen for free. If on the other hand I must hear every nuance, I can pay $5.21 and get 320kbps (near CD quality). That's choice, and that's what I like to see. For comparison, in terms of data per dollar, allofmp3.com is still more expensive than a CD, with the cost of Diddy's CD extrapolated to PCM bitrates ringing in at just over $26 (based on the allofmp3.com 128kbps MP3 price), twice the cost of the physical CD on Amazon. Care to do the math on a "legitimate" online music store?