Recent protests concerning congressional action over the proposed Protect Intellectual Property Act and Stop Online Piracy Act legislation demonstrate that the digital age has escalated the classic “tragedy of the commons” problem.

The tragedy of the commons, an idea introduced in 1968 by Garrett Hardin, considers problems associated with common ownership. Garrett Hardin, “The Tragedy of the Commons,” 162 Science 3859, 1243-48 (1968). As illustrated by Hardin, the tragedy of the commons arises when a group of herders allow their cows to graze on common land. Each herder benefits from each additional grazing cow in an amount greater than the damage he suffers, because the cost of damage to the common land is distributed among the group. Damage can be limited by dividing the commons into privately owned parcels so that each herder bears the benefits and costs of her actions.

The “digital commons,” however, poses a unique set of problems. Unlike Hardin’s tragedy of the commons, the resources in a digital commons are physically inexhaustible — with virtually an infinite number of digital copies available on demand. Digital commons users not only consume mass quantities of traditional content (e.g., music, movies, books) but also add their own content. Social media, for example, thrives on user-contributed content. Yet user-created content typically includes or transforms traditional content in ways that may infringe the copyright in traditional content.

The digital commons is not controlled by the traditional gatekeepers — publishers, editors and producers — because they no longer decide who can distribute content. Moreover, the gatekeepers do not generally control the means of distribution within a digital commons — users or third-party platforms do. “Fencing” off content by trapping it in media (e.g., CD, DVD) no longer limits distribution when anyone can walk through the fence by copying to a hard drive and sending over a network. The danger to traditional revenue is enhanced because the transaction costs of pursuing infringers through traditional legal remedies are counterproductive and alienate consumers.

For example, the Recording Industry Association of America (RIAA) filed more than 30,000 lawsuits between 2005 and 2008, with a total reported cost of $64 million and a total recovery of $1.4 million. See David Kravets, “File Sharing Lawsuits at a Crossroads, After 5 Years of RIAA Litigation,” Wired, Sept. 4, 2008; Mike Masnick, “RIAA Spent $17.6 Million In Lawsuits…To Get $391,000 In Settlements?,” Techdirt, July 14, 2010. Some argue that the economic loss to the RIAA was minor when compared with the public relations disaster. Sarah McBride & Ethan Smith, “Music Industry to Abandon Mass Suits,” Wall St. J., Dec. 19, 2008, at B1.

Attempts to erect digital fences such as digital rights management and encryption schemes merely led to an arms race between encryption and cracking. Content providers sought protection under the Digital Millennium Copyright Act, which criminalizes, among other things, the distribution of circumvention tools. See, generally, Universal City Studios v. Reimerdes, 111 F. Supp. 2d 294 (S.D.N.Y. 2000), aff’d sub nom; Universal City Studios v. Corley, 273 F.3d 429 (2d Cir. 2001).

More recently, content providers promoted legislation to put more teeth into copyright remedies. A furious backlash from the Internet community seems to have put the legislation on indefinite hold based on what some in the Internet industry say is a perceived threat to free speech and due process. Amy Schatz, “What Is SOPA Anyway? A Guide to Understanding the Online Piracy Bill,” Wall St. J., Jan. 18, 2012, at B1. Content owners, on the other hand, characterized the protests as one-sided misperception of the intent of the legislation. Cary H. Sherman, “What Wikipedia Won’t Tell You,” N.Y. Times, Feb. 8, 2012 (late edition), at A27.

In this atmosphere, desperate content owners have turned to alternative methods of monetizing or protecting their content.

First, some producers offer free content on forums such as YouTube or Facebook and display advertising while the user consumes the content, obtaining advertising revenue to supplant traditional revenue streams.

Second, some producers or artists offer free content online, hoping to increase ticket sales for live performances by increasing public familiarity with, and affection for, the content (where a “premium experience” can be physically “fenced in” with tolls collected at the gate). However, some publishers refuse to embrace this method because tour revenue, particularly in the music space, goes to the artists.

Third, digital rights management schemes continue to be implemented for certain content such as publishing, although they may be effective only at a low price point that discourages cracking and copying. Other markets, such as many popular music-selling services, have shifted to digital rights management free files.

Finally, subscription streaming services rely on subscription or advertising fees for income. These services offer aggregation of content at a price that discourages piracy and pay content owners portions of the subscription fee commensurate with their popularity on the service. However, many content producers and artists believe the revenue streams do not fairly compensate them. Anil Prasad, “The Economic Reality of Streaming for Musicians.”

Content producers and Internet service providers recently created the Center for Copyright Information (CCI) in an attempt to tweak traditional remedies through an educational approach. In April, CCI announced its “Copyright Alert System,” which uses a six-strike infringement notification alert scheme with links to educational material about avenues for purchase and technical mitigation measures (e.g., Internet speed throttling). CCI Copyright Alert System, www.copyrightinformation.org/alerts. This approach is in contrast to the “hands off” approach of the safe harbor provisions of the Digital Millennium Copyright Act, which grant immunity to ISPs under certain conditions (e.g., responding to copyright takedown notices). See 17 U.S.C. 512 (2006). For recent DMCA developments, see Viacom International Inc. v. YouTube, Inc., No. 10-3270, slip op. (2d Cir. April 5, 2012).

The above solutions may not be satisfactory to all stakeholders because they typically lead to high transaction costs — e.g., negotiations with large numbers of individuals, monitoring and, in many cases, lawsuits to stop infringing behavior. Alternatives, such as deeming “noncommercial” derivative works to be noninfringing, may satisfy content users but leave content owners out by failing to compensate them for the value of their intellectual property. See Lawrence Lessig, “Reclaiming a Commons,” Keynote address, The Berkman Center’s “Building a Digital Commons” May 20, 1999, draft available at www.lessig.org/content/articles/works/lessigkeynote.pdf.

Compulsory licensing — already partially implemented — may provide a solution that is acceptable to all stakeholders. Compulsory licenses have already been established for select types of creative works and are administered by public/private partnerships such as SoundExchange and the Copyright Royalty Board. Royalties are collected based on user submissions and are distributed among content owners and other stakeholders. Performance rights organizations such as American Society of Composers, Authors and Publishers and Broadcast Music Inc. have historically relied upon user submission of play counts to disburse collected royalties. Despite these efforts, it is reported that 23.8 percent of Internet traffic is pirated. Jennifer Martinez, “One-fourth of Web Traffic is Pirated,” Politico, Jan. 1, 2011, . An updated system may be needed for the digital commons.

For example, noncommercial content use may be metered by “tagging” content and having ISPs monitor usage. Since all Internet traffic must pass through an ISP, ISPs may be in the best position to monitor usage of tagged content and report usage to the Copyright Royalty Board or another collection entity. Blanket or tiered license fees collected by ISPs can be distributed according to metered usage. For one proposal, see Neil Weinstock Netanel, “Impose a Noncommercial Use Levy to Allow Free Peer-to-Peer File Sharing,” 17 Harv. J. L. & Tech. 1 (2003). Of course, privacy concerns will need to be addressed, for example, by the anonymous collection of data. In exchange for opening up the digital commons for subscription-based noncommercial use, content owners may seek additional remedies against commercial infringers. By involving all the stakeholders in negotiations, a system of fair use in exchange for fair compensation may satisfy both content owners and content users.

No one appears to be satisfied with the current system. Content users believe that their freedoms and privacy are being compromised, and content owners are not satisfied with the ability of traditional copyright enforcement mechanisms to preserve the value of their intellectual property. Solving the tragedy of the digital commons may require discarding traditional notions of copyright law in favor of a system that will provide a sustainable and viable future for content owners, content providers and content users alike.

Jeremy A. Cubert is a partner in Dickstein Shapiro’s intellectual property practice in Washington, where he focuses on biotechnology patent prosecution and litigation, licensing and copyright law. Jon D. Grossman is a partner in that practice, where he concentrates in the areas of patent law, copyright law and licensing work with a specialization in issues concerning computer software. Alexander S. Perry is an associate in that practice.