WikiLeaks, Sex Tapes, and Information Valuation Theory

The recent WikiLeaks disclosures have been in the news lately, and leaked photos and tapes of naked celebrities always seem to be in the news. I want to focus on a small sliver of the pie: how should we think about the value of the leaked information/documents/pictures, and the value of keeping it all secret.

There are many normative theories for the protection of trade secrets. One of them (the best one, I argue), is that trade secret laws are there to encourage less protection of secrets. The idea is that without the remedy provided by trade secret laws, companies will overprotect their information in ways that are inefficient. Thus, the law is there to make sure that companies only expend reasonable precautions to protect information, and if the secrets are lost, then they can obtain a remedy to compensate.

A negative corollary of this theory is that where remedies are insufficient then we will see much more protection of the secrets. Anecdotal evidence supports this. Consider the protection of the formula for Coke, or the thickness of the walls of the Pentagon as examples.

What, then, should we make of the value of WikiLeaks and sex tapes?  Let's start with sex tapes. Conventional wisdom holds that many who make illicit photos do so knowing that the publicity, even "bad" publicity of a sex tape can help boost careers. Indeed, many believe that the celebrities themselves were behind such leaks, despite mock protests.  

If true, this supports the general theory. Celebrities don't see much harm in the release of these tapes, and thus don't go to great lengths to protect them. 

But what of WikiLeaks? After all, these are sensitive government documents, right? Doesn't the government view these as ultra-secret? I wonder about that. First of all, the purported leaker is a an army private working in a field office. If true, how is it that ultra-sensitive documents are so easily accessed and copied by a relatively young soldier working in a field office? I wouldn't expect national secrets whose disclosure would leave no recourse to be so easily available.

Of course, this is not to say that leaks never happen. Spying goes on. But compare, for example, the Valerie Plame leak by Scooter Libby. That information, also of apparent national security, was protected all the way up to the Chief of Staff to the Vice President. I also suspect that Libby would not have known it but for rules that require the executive to get certain information (not that such rules are a bad thing). If it were up to the departments in charge, I suspect that critical information would not be shared so widely.

The conclusion is that this information, for the most part, is just not that valuable, despite protestations to the contrary. Embarrassing, perhaps, but not really valuable. Viewed this way, the documents are the equivalent of government sex tapes. Supporting that theory are recent statements by Robert Gates (h/t Dan Filler): 

Let me just offer some perspective as somebody who’s been at this a long time....Now, I’ve heard the impact of these releases on our foreign policy described as a meltdown, as a game-changer, and so on. I think those descriptions are fairly significantly overwrought. The fact is, governments deal with the United States because it’s in their interest, not because they like us, not because they trust us, and not because they believe we can keep secrets....Is this embarrassing? Yes. Is it awkward? Yes. Consequences for U.S. foreign policy? I think fairly modest.

Of course, Gates could just be downplaying the cost to the U.S., but what he says goes against what others in our government are saying.

Note that my take is agnostic about whether WikiLeaks disclosures (or sex tape publications, for that matter) are right or wrong, or good or bad.  I do think, however, that the ease with which information is obtained and distributed says something about how the owner values it.

To be sure, you can blame sex tapes on celebrities who aren't smart enough to protect their tapes. Even so, a celebrity really worried about the potential costs of a release, will not make one, or will lock it in a safe - consider all the celebrities who do not have scandalous photos leaked. Further, how often do you see celebrity cell phone numbers published - even those with leaked photos and tapes? Somehow, these folks are able to protect that information. Finally, diplomatic cables are not sex tapes, and the government is not a ditzy celebrity. These folks know how to protect information, and how that information is protected can be quite telling.