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The Curmudgeon on File Sharing

The Curmudgeonly Clerk is worried that the internet populace is working on nullifying copyrights through file-sharing software, and that this kind of 'lawlessness' will be bad for the rights of property in general. I see his point, but I think he's missing a key distinction.

Copyrights are not like normal property rights. If I own a tractor, then that tractor sits there as a physical object. This isn't true if I own the rights to a piece of recorded music. I own the right not because of any physical restriction (there can only be one tractor made out of the same material) but because of a legal incentive put in place to promote the production and distribution of music. The 'property' is in this case created wholly by fiat of the law.

The current structure for music made sense in the day when the distribution of music was a serious cost. The amount of music had to be limited to what would be of 'quality' because there was only so many discs that could be pressed, only so much space in the record store. This is no longer true. While the production cost of music may not have gone down, the distribution cost may now be very close to zero, at least in many cases, thanks to digital technology and the internet.

Allowing the old system of copyrights may therefore produce economic inefficiency. First of all, the record labels may be extracting improper rents from the 'property' that they own. But more importantly, one of the technologies that should be allowing a broader range of music out into the market is being stymied. With this new form of distribution, there is less need for restricting the pipeline of new musicians, and so we should be getting a more diverse range of music, and fewer Brittneys.

Do most people know this? Well, I'd argue that instinctively they understand some of it. But even if they don't, they can see what I would consider higher than necessary rents being made on 'property' that exists only by legal fiat, and many of them are voting with their feet--or more accurately, with Kazaa. Indeed, the RIAA's new policy of suing some of the music industry's best customers will, I predict, go down like a lead balloon.

While I'm as capitalist as anyone, I'm becoming more and more convinced that the anti-copyright forces aren't going to have an appreciable effect on rights of property per se, and are merely watching the dying gasp of a distribution network that is no longer necessary and kept alive by the hand of government.

Update:
Oh, and in response to one scenario of the Clerks:

Of course, a similar argument might be made regarding books. After all, if I were to check out a book from the library, reproduce it in .pdf, and make it freely available over the Internet, I also would not have precluded anyone from the use of the work. One might make the same case for various software that is routinely traded over the Internet as well. (As an aside, it seems to me that the relentless focus on the RIAA in the file-sharing debate skews its content and the views of the merits. Software, for example, is also much traded, and focus on it might render the debate more sober and clear-headed.) So Professor Solum's distinction strikes me as being potentially very far-reaching.

The big difference between books and music is that there is a particular advantage to consumers by supporting the use of a non-digital medium. To the extent that turning a book into a .pdf might reduce the number of actual books printed, it makes sense to maintain this incentive. (Books are easier on the eye to read, more portable than a PDF, etc.)

With the exception of cover artwork (not spectacularly important to most music listeners) and vinyl fanatics (and vinyl music isn't really that subject to piracy, requiring a pretty hefty fab-plant as startup capital), the same can't be said of music. Distribution of music via mp3 is functionally the same as distributing the same track via CD--it's just economically more efficient.

I think his focus on software is also a bit misleading, in that there's an awful lot of 'benign neglect' of software piracy in the world. There's a reason that MS doesn't prosecute every household that pirates XP from an office machine, or Adobe punishes every student who uses a cracked copy of Photoshop, even though they have perfectly reasonable ways of tracking much of this. The widespread use of this software increases their returns from network externalities: that kid using cracked Photoshop isn't going to suggest to his eventual employer that, hey, switching to Paint Shop Pro is just as effective for 80% of tasks and is a hell of a lot cheaper.

In the end, public 'copynorms' seem to me well-suited to a rational perception of what the social benefits of enforcing copyright actually are. If you respect them with regards to books, you get libraries, bookstores with coffeeshops, and convenient ways of reading things without having to load up Windows. If you respect them with regards to software, you get more software--this is enough to encourage at least marginal compliance with the law. But if you respect the law with regards to music and the RIAA, you get a bundle of fat, happy music executives overseeing a distribution chain more restrictive than necessary; smaller artists with more difficulty distributing their wares and getting noticed; and enough concentration of control to guarantee that Britney Spears has enough money for her next few boob jobs. Funnily, that's a tough case to sell to an educated adult, much less a teenager.

Update: If you track the links back from Prof. Solum and the Curmudgeonly Clerk, you'll get to a very good commentary from Balasubramania's Mania, but this should give you a shortcut if you'd like it.

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Venkat Balasubramani has made a point that, from my perspective, seems very commonsensical:More to the point: why does everyone insist... [Read More]

Comments

"the record labels may be extracting improper rents from the 'property' that they own." In theory competition should prevent this. Why doesn't it in this case ?
Why, exactly, should competition prevent it, and according to who's theory, Bateleur? Indeed, according to what theory? If there's failure here, it's not a market failure but a legal one. Competition does what it can to keep prices down: alternate products flourish within the scope available to the market. But again, this is a market whose rules are created by law: it can only function within the boundaries of the laws that define it.
I think that you may be in substantial agreement with the commentators in the tech press, most of whom are pointing out that the RIAA is being wrong headed and probably self destructive in trying to artificially maintain a business model that file sharing and the 'net have pretty much killed (thoughthe RIAA hasn't realized that yet). You seem to me to be elucidating the economic reasons why that business model is no longer relevant. Cheers, LRC

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