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[Gnu-arch-users] [OT] copyright and economic incentive

From: Tom Lord
Subject: [Gnu-arch-users] [OT] copyright and economic incentive
Date: Sun, 23 Nov 2003 10:46:09 -0800 (PST)

Here is a proposal for how to reconcile the role of copyright in
creating economic incentive with the difficulties to copyright of
digital information:

Perhaps the primary reason for system of copyright is to provide
economic incentive for authors and inventors doing creative work.[1]

To paraphrase the conclusions reached in the letters of Jefferson,
Madison, and others as well as a great deal of other thinking on the
subject:  copyright is a mechanism by which the state may grant 
an economic monopoly regarding some creative work with the aim of
securing for the writer or inventor a sufficient portion of the
economic rewards from the work to, overall, keep the "well-springs of
creativity from drying up."[2]

The nature of digital information and, moreover the Internet, force us
to reconsider for (at least) practical reasons, the traditional form
that such monopolies take.  In the 17th century, it was practical to
keep anyone from setting up a printers shop in the state of Virginia.
In the 18th century, it was practical to require all printers in the
state of New York to be licensed by the state.  It was practical at
those times and for most of two centuries following to construct the
monopoly in terms of such rights as reproduction and distribution.

Recent events demonstrate that if such monopolies are not already
impractical, they will be unambiguously so within our lifetimes.
The "right to copy" is no longer something the state can control.

One right that remains is the "right of attribution":  an exclusive 
right to attach the name of an artist or inventor to his creations.

It is no more practical than preventing copying and distribution to
enforce that all copies of a digital work be properly attributed.
However, there are economically important subsets of the uses of
digital inventions where the right of attribution can be enforced:

For example, let's suppose that a movie-house operates using digital
projection equipment.   The movie-house can make the promise, on its
tickets, that all movies shown are properly attributed (or that they
have at least made a reasonable effort to ensure that).   When
movie-goers see the credits role by, they have been given a warranty
as to the accuracy of those credits.   That warranty is quite
verifiable and enforceable and moreover, it extends the reach of an
"exclusive right of attribution" given to film-makers.

Similar systems work for music, software, books, and so forth.

The "right to attribution" supports not just warranties promising
accurate attribution, but warranties promising fair compensation.
Our movie house could promise that not only are the credits on the
film accurate, but that a certain percentage of the box-office take is 
given to an agent designated by the copyright holder.

Consumers in such a situation have a choice, as do voters.  If there
are two movie-houses, one promising "fair trade", the other not (and
perhaps offering cheaper tickets and more comfortable seats) -- which
will they pick?  And if it requires a license to operate a commercial
movie-house, voters might leave that choice up to consumers, or might
require that all movie-houses be "fair-trade" movie-houses.

Goods which are consumed privately have a similar choice, but with a
different balance.  For example, while voters could certainly regulate
a ".com" that offers music downloads, requiring that they observe
fair-trade practices, they can not practically regulate a P2P network.
People who want to watch a movie but don't want the "movie theater
experience", and computer users who want to run a program but don't
care about "registration and support" are other examples where "fair
trade", fair compensation for properly attributed authors and
inventors, relies almost entirely on the good will of the consumer.

Those are examples of the famous "free rider" problem but, from the
perspective of using copyright to create economic incentive, I am not
convinced that the free rider problem is any problem at all.   Recent
examples have demonstrated software vendors vulnerable to free riders
on their distributions (e.g., Red Hat) nevertheless can become
profitable;  music vendors whose model is superficially superfluous to
P2P networks (e.g. iTunes) can succeed as well.   The potential
monopolies arising from "right of attribution" don't have to maximize
the potential return to provide a sufficient incentive.

How does the "right of attribution" and business models turn into 
business plans and action?  _That_ is the question for copyright of
digital information in the 21st century.

One idea is to create organizations whose function is to manage and
audit attribution, and to distribute the returns from fair-trade
transactions.  For example, a collective of film-makers might create a
non-profit organization that certifies trade partners as honoring the
right of attribution and providing fair compensation, then returns
some of that money to film-makers and invests some in new production.
It seems to me that the free software community could be similarly

Another idea is to create trade organizations.  For example, a set of
competing manufacturers constructing "just in time" networks with
their suppliers might form a compact: to each only do business with
suppliers whose software systems are purchased along fair-trade
principles.  From the manufacturers perspective, this sacrifice of one
point of competition (to choose from the lowest price suppliers
regardless of the software practices of those suppliers) has the side
effect of ensuring a fairly distributed investment into technology
that increases the productivity of the consortium as a whole.  With
the support of voters, perhaps even tarrifs and special taxes can be
imposed on competing manufacturers who do not join such consortiums.
(Such tarrifs and taxes are not the usual "government subsidy" of an
industry: they don't attempt to obliterate differences in regional
efficiencies -- they benefit the taxed equally to the untaxed.)


[1] Aside from economic incentive, two other reasons for copyright 
    are commonly given:

    a) "favor of the sovereign": the king likes this or that 
       printer better than others, and gives him exclusive 
       right to publish the ancient writings of Pliny the Elder.

       Of course, this reason has no place in a democratic society and
       any resemblance to the current trend of extending copyright
       terms in the US _may_ be just a coincidence :-).

    b) "normative propriety": some people think that what a writer
       writes or inventor invents is as much if not more-so "his
       property" than his land or possession.  This theory fails to
       explain, then, why copyright laws (or constitutional clauses)
       are needed at all or why copyright has (in theory) limited

[2] I forget who said that.

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