Economic
and Game Theory
Why Napster is Right
References
by Michele Boldrin and David K. Levine
top | general | research | classes | links | DavidSome of the clearest (and most obnoxious) statements about copyright come not from the music industry, but from the motion picture industry in the form of Jack Valenti. Of him we can only say that if he did not exist, it would be necessary to invent him. You can find his clear and not terribly bright statements about the ill-social consequences of improving copyright protection for consumers here.
If you are easily amused, you should read the RIAA statement comparing giving music away for free on the internet to piracy.
A counterpoint to Valenti and the RIAA is
the following:
"the primary objective of copyright
is not to reward the labor of authors, but
'to promote the progress of science and useful
art.' To this end, copyright assures authors
the right to their original express, but
encourages others to build freely upon the
ideas and information conveyed by a work.
This result is neither unfair nor unfortunate.
It is the means by which copyright advances
the progress of science and art." Justice
Sandra Day O'Conner, 1991 decision (488 US
340,349).
The Sony Bono law, which passed Congress without a dissenting vote, extended the length of time before copyrighted material reaches the public domain by many years. While a case (albeit one we believe is implausible) could be made for extending copyright protection for material that has not yet been produced, there is no economic argument at all for extending the protection for already existing works. This is simply a free gift to existing holders of copyrights at our expense. Apparently one of the major reasons this law was passed was to protect Disney's copyright on Mickey Mouse. That the Sony Bono law should be a Mickey Mouse law seems entirely fitting.
The SDMI is an effort to control the distribution of music on the internet by technical means. Book publishers have also been active in trying to encrypt their material for sale over the internet. There are two problems with this: first encryption reduces the value of the material to the consumer significantly. Lotus Software's attempts to encrypt their spreadsheet software eventually drove them out of the market entirely. It is not terribly surprising that ebooks have not taken off, given that encryption makes them practically without value. Second, the technical problem of developing encryption techniques that cannot be easily broken is daunting, to say the least. Bear in mind, that the user of the material not only has the encrypted material, but, in order to use it at all, has the decryption key. Even supposing that the encryption algorithm cannot be reverse engineered, and can only be guessed at, it is not all that hard to break a cipher when you already know the key. If you are interested in encryption (or just want to crack something) you might take a look at this Russian site. Russia also seems to have, and very detailed indeed, Russian copyright laws.
An interesting discussion of copyright law can be found here. There is a useful discussion of the law as it is now and might apply in the electronic era, along with some sensible suggestions for improvement. An account of the origin of the copyright law in England, first as a monopoly granted by the crown to support censorship, then as a restriction on this monopoly by parliament, can be found here. There is also online information about the history of USA copyright legislation
The official site of the U.S. Copyright Office is obviously a good source of information, at least about the dominant viewpoint. The text of the copyright law is available, and, as far as we know, not copyrighted.
Our neighbors in Canada are debating the issue of reforming copyright laws quite actively.
If you are interested in the socio-economic as well as technical aspects of information generation and transmission in the age of the web, First Monday is a good starting point. They have an creative proposal for doing away with the copyright system in the Street Performer Protocol. The essay also has an excellent summary of the technical problems in enforcing existing copyright laws for digitial material. An interesting essay about what a future without copyright might look like can be found here.
There is an extensive economic literature on patents. However, patentable ideas differ from copyrightable creations in several respects: discovering ideas through reverse engineering products is more difficult and expensive than simply copying a book or piece of music. Patentable ideas build on other ideas to a much greater extent than do artistic creations. Moreover, the expression of patentable ideas can be changed substantially without significantly affecting their economic value. For these reasons, while we do not particularly support the patent system as it is currently structured, patents will have to be a subject for another essay.
By contrast to patents, relatively little has been written by economists about copyright. One remarkably insightful anticipation of what we argue here, can be found in an old (1934) article by Arnold Plant, which we reproduce here: It originally appeared in Economica, which is not available on line. Another article about copyrights which takes the opposite point of view is
"The Effects of Increased Copyright Protection: An Analytic Approach," by Ian E. Novos and Michael Waldman, The Journal of Political Economy, Vol. 92, No. 2. (Apr., 1984), pp. 236-246.
They argue that increasing copyright protection is a good thing. However, their argument is deficient in two respects: first, they assume that copyrighted material can be given away by downstream users at some cost, but that they cannot sell it. Second, they assume that with perfect copyright protection a monopoly would not exclude any users. This latter assumption, is of course, what gives rise to their results. If monopoly was inefficient with perfect copyright protection, then reducing copyright protection would force the monopolist to lower price and would increase the number of users. It is this latter effect that we think is most important, not the discouragement of marginal quality improvements or the fact that material of only marginal social value may not be produced.
References