The war over peer-to-peer software – often dismissed as irrelevant to anyone but teenage music pirates and slavering child pornographers – may turn out to be one of the bloodiest bloodless conflicts in recent memory. Its outcome could decimate the bedrock of the U.S. economy.
Imagine, if you will, that later this year the Supreme Court decides to take the stand on P2P technologies that big entertainment companies have been begging for. Let's say the Supremes rule that P2P companies like embattled software maker Grokster can be held liable when people use their product to infringe copyright. (This is, by the way, precisely the ruling MGM and various other content owners have asked the court to make in the Grokster case this spring.) Instantly, companies like Streamcast (maker of Morpheus, a file-sharing program) will go out of business. They'll be sued every time somebody uses their software to infringe copyright, and it won't take long before they're completely out of money. But the carnage won't stop there.
Anytime an innovator or manufacturer brings a product to market, the execs will have to ask their lawyers, could our thing be used to infringe copyright? If it could – and almost anything can, including web sites and e-mail – then the company will have to prepare to dodge lawsuits. It will have to have deep, deep pockets. It can't be a small, garage-style operation. This is when things will start to get dangerous. Many of the last century's best new inventions grew out of small companies with big ideas.
After a year of this sort of litigation, the United States will get a reputation as a country where technical innovation is so closely controlled by the government that it's impossible to invent anything anymore. Companies with lots of brains and no lawyers will take their operations overseas, where their inventions will build up foreign economies at the expense of our own.
Meanwhile, file sharing will move to unregulated nations and become bigger than ever. Entertainment companies will announce thousands more lawsuits against people who are using P2P. As the industry continues to sue kids, the elderly, the poor, and the bloggers responsible for popularizing media in the first place, consumers will grow disgusted with mainstream media products. People will be afraid to buy DVDs and CDs because they aren't sure how to use them without breaking the law. Hollywood and the major record labels will see their sales begin to drop.
Media and software innovators who have moved overseas will begin attracting talent. Filmmakers, musicians, and game makers – who want access to the latest technologies – will form enclaves in Europe and Asia and make startling, delightful new films and music that captivate the world the way U.S. pop culture once did. Software that would be sued out of existence in Silicon Valley will allow game designers to sample textures, gestures and patterns in ways that triple the realism of game play and attract U.S. consumers to products that can be bought only from Asian and European companies.
The U.S. media industry will become known as the source of B-grade games, movies, and music. When people go to British-owned Virgin Megastore to buy media, they'll avoid things created in the United States, unless they just want to be amused by movies with bad special effects and poor sound quality.
Digital cinema will bloom, and along with it, P2P networks will come into their own as the perfect distribution mechanisms. An innovative Chinese film studio will cut a deal with Bram Cohen, inventor of BitTorrent, to design a P2P network that allows fans to buy its films online and download them so quickly that they get nearly instant gratification. It's much faster than trekking to the store. Films distributed over this new P2P network will sell for five bucks a pop, and before long U.S. customers will be fattening the Chinese economy in their race to get the coolest pop culture on the planet in the fastest possible way.
Without its glorious Hollywood image and slick popular culture, the United States will become a less-than-beloved tourist destination. Foreign nations seduced by European and Asian pop culture will no longer be so easily persuaded that this is the most exciting and glamorous country in the world. Without its pop culture propaganda machine, the United States will become nothing more than a flagging military power whose cultural greatness is but a memory.
What is a nation that cannot share its culture with the world? Nothing. Nothing at all.