August 26, 2004 · Richard Posner
…the Justice Department is conducting criminal investigations of file-sharing networks. This development illustrates a point I made in a previous posting (a Lessig point) about the relationship of substitution between law and technology. The Grokster decision last week, if it holds up, will facilitate circumvention of copyright law by file sharing, by placing the sellers of the software for such sharing beyond reach of the copyright law. The liability of the sharers themselves is not affected; and already as we know hundreds of them have been sued by the recording industry. But copyright law also authorizes criminal sanctions. The Justice Department has not yet indicated an interest in prosecuting individuals who download just an occasional copyrighted song. But it is sometimes possible to deter unlawful behavior by a very slight threat of prosecution. Economists have the useful concept of an “expected cost.” If there is a 1 percent probability that you will incur a $100 cost, the expected cost is $1 ($100 x .01), and if you’re risk averse, you will spend up to $1 to avoid it. If the expected cost is an expected cost of punishment, it may be very great even if the probability of punishment is slight: many kids will stop downloading copyrighted songs if they think there is a 1 percent probability that they will be sent to prison for 6 months. So we can think of what the DoJ is doing (whether you like it or not) as the law pushing back against technology–trying to defeat technological circumvention of law by jacking up legal sanctions, in this instance possibly to a higher level than the RIAA can achieve with its civil suits.