Cato Unbound on Copyright

Copyright is doomed:

Another important consideration is that the digital is larger than the online. According to one recent study 95 percent of British youth engage in file sharing via burned CDs, instant messaging clients, mobile phones, USB sticks, e-mail, and portable hard drives. [5]

Such practices constitute the “darknet,” a term popularized by four Microsoft-affiliated researchers in a brilliant 2002 paper.[6] Their thesis is simply that people who have information and want to exchange it with each other will do just that, forming spontaneous networks which may be large or small, online or offline. By being interconnected they can always keep the most popular material available. Attempts to curb open file-sharing infrastructure may only drive activity towards smaller and darker networks.

One early darknet has been termed the “sneakernet”: walking by foot to your friend carrying video cassettes or floppy discs. Nor is the sneakernet purely a technology of the past. The capacity of portable storage devices is increasing exponentially, much faster than Internet bandwidth, according to a principle known as “Kryder’s Law.” [7] The information in our pockets yesterday was measured in megabytes, today in gigabytes, tomorrow in terabytes and in a few years probably in petabytes (an incredible amount of data). Within 10-15 years a cheap pocket-size media player will probably be able to store all recorded music that has ever been released — ready for direct copying to another person’s device.

In other words: The sneakernet will come back if needed. “I believe this is a ‘wild card’ that most people in the music industry are not seeing at all,” writes Swedish filesharing researcher Daniel Johansson. “When music fans can say, ‘I have all the music from 1950-2010, do you want a copy?’ — what kind of business models will be viable in such a reality?” [8]

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Love the explanatory definition

in a few years probably in petabytes (an incredible amount of data)

Heh. I guess that's about as good a definition of "petabyte" as we need right now.

Probbaly he's right, but it

Probbaly he's right, but it is not a development I particularly welcome. For all the theorizing of really, really smart economists like David Levine, I've never heard a plausible theory about where exactly the money to fund, say, a $300 million dollar project like the Lord of the Rings movies is supposed to come from without monopoly. I am not in the least convinced that "putting ads on the side" or whatever the going theory is will cut it. I can see how music can work without copyright (low costs of production) or books (lots of people write for the fun of it, including me here, right now). How will projects with major fixed costs survive?

I still pay $9 to see movies

I still pay $9 to see movies in a movie theater even though I could just bit-torrent it or wait to buy or rent the DVD for much less. I have a decent home theater system, but the social experience of watching a movie in a theater, especially movies and theaters with crowd participation (heckling, cheering, laughing, clapping, booing) is an experience worth paying for.

Still, it might just be the case that large-scale, big budget movies are on their way out. Oh well.

I still pay $9 to see movies

I still pay $9 to see movies in a movie theater even though I could just bit-torrent it or wait to buy or rent the DVD for much less.

And would you pay $9 to see a movie in a theater if Bob's House o' Flicks, newly possessed of a legal copy of the movie, could show it for a fraction of the cost? The cinema model depends on copyright.



That's a good point, and one touched on in Tim Lee's response to the original article:

The starkness with which the copyright debate is often framed reflects a misunderstanding of the function copyright served in the 20th century. Copyright is commonly conceived as a system of restrictions on the copying of creative works. But until recently, it would have been more accurate to describe copyright as governing the commercial exploitation of creative works. From this perspective, the inevitable legalization of non-commercial file sharing looks less like a radical departure from copyright’s past, and more like an incremental adjustment to technological change. It will require the rejection of some misguided policy developments of the last decade, to be sure, but in a sense it will simply restore the common-sense principles of 20th-century copyright law.

The cinema model may depend on some version of copyright, but it doesn't necessarily depend on prohibitions against non-commercial file sharing. It's a lot easier to enforce a law against commercial use of copyrighted material than it is to enforce a law against non-commercial use.

Micha beat me to it

That "brave new world" isn't off into the future. It's here. Any major movie is available on torrents a few hours after it premieres anywhere in the world, though it may not be high quality. High quality versions are available a couple of weeks later.

Yet, I still went to see Indy 4 in the theater for $9.50. Why? I wanted to see it with my friends, see it on the weekend it premiered, and see it on a gigantic screen.**

Even if people stop seeing movies in the theater and $300 million dollar movies become unprofitable... so? It's not the end of the world. Producers will have to rely more on classical elements rather than big explosions and special effects. And special effects technology is becoming cheaper every day. If 10 years ago, you'd have told me that I could make realistic photos combining body parts from multiple people or creating hybrid faces or changing contexts on my computer, I wouldn't have believed you. But it happened.

Similarly, the stuff I see on youtube is incredible. If the $300 million movies stopped being created by for-profit studios today, I'd say the same quality of movies would return on youtube in 10 years.

** I also rushed straight from work and realized I was dying of thirst at the theater and ended up paying $5.50 for a drink. Yeesh. Also, the movie sucked beyond belief. Spielberg + Lucas = ass.

In fact, the unprofitability

In fact, the unprofitability of $300+ million special effects blockbusters in a world of widespread file sharing and piracy would likely have the effect of encouraging faster development of special effects software that can be used at home or by a small group of amateur hobbyists, rather than requiring large teams of professional graphics design artists. If anything, the paradigm of copyright protection may have stifled the development of this kind of easy-to-use technology. Which leads me to my next post on Kevin Carson's Freeman article...

Is this new?

People have been saying this for a long time. The key property of intellectual property is its nonrivalrousness.

Nonrivalrousness + high bandwidth + cryptography = copyright becomes unenforceable.

But what makes intellectual

But what makes intellectual property unenforceable is not its non-rivalrousness, but its non-excludability. (By definition, rights to non-excludable forms of property cannot be enforced, once they are created and distributed.) The non-rivalrous property is what makes this unenforceability a good thing; if it were the case that IP was both rivalrous and non-excludable, then there would be a much bigger problem, akin to clean air or water. It seems that IP fits all the characteristics of a public good. And libertarians should be adept at describing how problems associated with public goods can be solved or at least mitigated in non-monopolistic ways.

It's not a new phenomenon, but it is becoming increasingly true with advances in file-sharing software, portable storage devices, and other technological advances. Pro-copyright forces have to keep on coming up with more and more draconian legal protections, but they are fighting a losing battle.

Slightly Off Topic

This comment is more about how to adapt your business model to the landscape of new technology than it is about intellectual property as a concept.

But I enjoyed this article in the same vein as Chris Anderson's new "Free" business buzz.


Just post the article in a new blog post. Very few people read the comments. I encourage this for all articles you find interesting.

Too business oriented

I thought that might be out of character for a DR main page article, so I put up this instead.

Doug Lichtman Says it Better than I Could

From his reaction essay

Fleischer is not merely interested in allowing alternative models like free peer-to-peer distribution to compete with traditional approaches; he wants to take away the traditional options and leave intact only his favorite alternatives. And why? Not for any articulated policy rationale about why creators ought not be allowed to choose their own business approach or why consumers are harmed by dueling models of creation and distribution. No. Fleischer’s defense is simply that peer-to-peer and the related technologies are here, and cool, and new, and can be brought into the fold only by making some careful changes to how copyright law articulates rights and responsibilities.

That sentence sounds to me like a call to actually update the law and make sure that the copyright system’s approach to third-party liability, statutory damages, fair use, and the definition of rights all actually work given the new challenges and opportunities. To Fleischer, however, any such adjustments are inappropriate. To write new rules, he tells us, would be to graft an “imaginary grid” over a naturally “chaotic” infrastructure.

I see IP as a utilitarian tool. To the extent it promotes innovation and growth, keep it. If it doesn't, don't. I (like most economists) am simply unconvinced optimal protection is zero, while agreeing current laws are absurdly restrictive.