DOJ Lawyer Explores 'Copyright Freeconomics'; Suggests Copyright Needs To Change

from the surprising... dept

One of the more frustrating things about debates on copyright is how many more established lawyers in the government seem to refuse to recognize the reality of what's happening in the market and instead prefer to rely on disproved ideas such as that without strong copyright protection, we get less output or that there is no way to "compete with free." So it's a bit of a surprise to see a recent paper from John Newman, a Justice Department trial attorney discussing the nature of what he calls "copyright freeconomics."
Innovation has wreaked creative destruction on traditional content platforms. During the decade following Napster’s rise and fall, industry organizations launched litigation campaigns to combat the dramatic downward pricing pressure created by the advent of zero-price illicit content. These campaigns attracted a torrent of debate, still ongoing, among scholars and stakeholders — but this debate has missed the forest for the trees. Industry organizations have abandoned litigation efforts, and many copyright owners now compete directly with infringing products by offering licit content at a price of $0.

This sea change has ushered in an era of “copyright freeconomics.” Drawing on an emerging body of behavioral economics and consumer psychology literature, this Article demonstrates that, when faced with the “magic” of zero prices, the neoclassical economic model underpinning modern U.S. copyright law collapses. As a result, the shift to a freeconomic model raises fundamental questions that lie at the very heart of copyright law and theory. What should we now make of the established distinction between “use” and “ownership”? To what degree does the dichotomy separating “utilitarian” from “moral” rights remain intact? And — perhaps most importantly — has copyright’s ever-widening law/norm divide finally been stretched to its breaking point? Or can copyright law itself undergo a sufficiently radical transformation and avoid the risk of extinction through irrelevance?
I honestly don't think there's too much new or surprising in the report, though I'd argue that part of the problem is an improper definition of "classical economics." Though, I've long felt that the "behavioral economics" crowd tries to distinguish itself by setting up strawmen about what "classical economics" says -- and this report has a bit of that. That is, I don't think that the use of "free" in economics breaks classical economic models, unless you set up the model incorrectly, which I think Newman does a bit in this paper, leaving out additional variables beyond "cost" that go into the equation. That said, that's a nitpick: the overall point does actually stand. Free economics can well be described in classical economics or new behavioral economic models showing how free fits into a perfectly reasonable market, rather than destroying it. And, in the end, Newman seems to come to the same realization even if we disagree about how it fits into classical economics: free isn't horrifying, it's a part of the economic landscape, and there are ways that can be viewed as a good thing, and this report generally supports that view.

The other interesting bit of the report is Newman's suggestion that an interesting proposal for changing copyright laws that might actually make traditional "maximalists" and "minimalists" both happy is to increase more moral rights for copyright -- and allow copyright holders to effectively choose if they want to enforce the "economic" rights to exclude by going after statutory damages, or, alternatively, enforce the "moral" rights to protect their reputation. His argument is that this might fit better with the nature of content creation today:
Because some creators and distributors are now realistically motivated solely by non-pecuniary incentives while others are motivated by pecuniary ones, yet both groups often create the same “types” of works, segregating rights based on type of work (as does the current legal structure) is likely an inefficient means of incentivizing authorship and dissemination. Instead, copyright law could be altered such that copyright owners may choose to enforce one of two bundles of utilitarian-based rights: either the pecuniary-focused rights (reproduction, distribution, et al.) or the social-status-based rights (attribution and integrity). This structure would operate somewhat similarly to the current remedies structure, under which copyright owners can choose to pursue either actual damages (and/or lost profits) or statutory damages. Importantly, it would allow creators and distributors—who are in the best position to do so—to self-segregrate based on primary incentive type. Thus, such an enforcement structure may well be a much more efficient means of stimulating creative output than our current set of copyright laws.
I'm not convinced that this is really such a wise course of action, and I'm a bit nervous about expanding moral rights for a whole host of reasons. But it is an interesting thought exercise to wonder if a limited set of moral rights might limit crazy cases with ridiculous statutory damages -- giving copyright holders an alternative for what they're really after in at least a segment of copyright lawsuits.

But what's more interesting is that a DOJ lawyer would be exploring this topic at all. While Newman is explicit that these are his views alone, and do not represent the DOJ in any way, I think it's a good sign to see that at least one DOJ lawyer is grappling with this topic, rather than taking the traditional "the law is the law" view in which "free" is clearly bad and destructive towards the economy. Hopefully more of this kind of thinking and economic explorations filter through to others in the government as well.


Reader Comments (rss)

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    Atkray (profile), Oct 3rd, 2012 @ 11:03am

    Understatement

    "But what's more interesting is that a DOJ lawyer would be exploring this topic at all."

    That is not more interesting, it is aliens from space have landed unbelievable.

     

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    NoahVail (profile), Oct 3rd, 2012 @ 11:15am

    Not long now

    I give him until 2pm tomorrow before he finds himself out of work, his car on fire and on several gov watchlists.

     

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    Chris Brand (profile), Oct 3rd, 2012 @ 11:23am

    Moral rights

    I think that it's very easy for a lot of moral rights to become economic rights. For example, 'would you be willing to waive your "right to integrity" so that we can use your music for this campaign ad if we pay you $X ?'.

    The one moral right I don't have an issue with is attribution. Indeed, I've said before that I'd happily support a "forever" attribution right in return for a shortened term for economic rights. There are still issues with an attribution right, mostly when some part of a work is used, but I don't think those are insurmountable.

    In reality, though, we often hear the argument that "why should it be ok to put your name on somebody else's work 70 years after they die ?" used as an argument to increase the duration of the economic rights granted by copyright law. Do any countries have different durations for economic and moral rights ? That might be a useful first step.

     

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      Crosbie Fitch (profile), Oct 4th, 2012 @ 12:53pm

      Re: Moral rights

      Moral rights are natural rights. Copyright is a privilege (a legally created 'right'). Or more precisely, copyright is a right - it's the people's natural right to copy, annulled in the majority, to be left, by exclusion, in the hands of a few (hence "copyright holders") - annulled.

      Shakespeare cannot waive his right to be attributed as the author of his work. 1) He's dead. 2) He couldn't do it if he was alive (see inalienable). 3) Attributing any work of Shakespeare as 'by Fred Bloggs' is a lie - fraud.

      People being taught that copyright is a right has had the side effect of giving rights a bad name.

      See http://culturalliberty.org/blog/index.php?id=292

       

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    GMacGuffin (profile), Oct 3rd, 2012 @ 11:40am

    Unintentional Pun?

    These campaigns attracted a torrent of debate, still ongoing, among scholars and stakeholders...

    From Newman's tone, I'm wondering if he caught that at all.

     

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    Anonymous Coward, Oct 3rd, 2012 @ 11:55am

    These campaigns attracted a torrent of debate,..........



    Ha, Haaaa..

     

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    Anonymous Coward, Oct 3rd, 2012 @ 11:55am

    even if these are only his thoughts and not those of the DoJ, it's took bloody long enough to get to here! had some sense been applied years ago and politicians been more concerned with their electorate than greedy execs in greedy industries, perhaps we would have seen even greater progress than we have available (but unused) at this moment!

     

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      Violated (profile), Oct 3rd, 2012 @ 1:54pm

      Re:

      The main problem there was that the MPAA and RIAA were running a propaganda campaign. Simple terms like "thieves" are powerful concepts in weak minds where they also turn out a vast array of false economic reports seemingly showing the decimation to the industry.

      The little fact that the income from the movie and music markets have been doing very nicely well highlights that they are liars.

      So here we are simply saying "Look what is going on, look at how the world has changed, then only fix REAL PROBLEMS". I can say politicians are not very good at that one, reflective by SOPA, PIPA, ATCA and more, but they may well get there in the end as the world transforms around them.

       

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    Gwiz (profile), Oct 3rd, 2012 @ 11:57am

    And — perhaps most importantly — has copyright’s ever-widening law/norm divide finally been stretched to its breaking point? Or can copyright law itself undergo a sufficiently radical transformation and avoid the risk of extinction through irrelevance?

    It's good to see the idea of copyright reform being brought up more and especially from unexpected sources. Not really sure how any can claim that Mr. Newman "just wants shit for free" on this one.


    On a side note:

    Though, I've long felt that the "behavioral economics" crowd tries to distinguish itself by setting up strawmen about what "classical economics" says...

    I never fathomed that there might be any sort of factional divide amongst economics geeks. I thought that kind of stuff was reserved for the Star Wars vs. Star Trek type of geeks.

     

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  • This comment has been flagged by the community. Click here to show it
     
    identicon
    bob, Oct 3rd, 2012 @ 12:13pm

    This blog is the one that's inflexible.

    Uh, hello, the current system is quite compatible with free content-- if by "free" you mean stuff that was freely released by its creator. Creators give stuff away for free all of the time and they've been experimenting with all of these freeconomic stuff for hundreds of years.

    If anything, the current copyright system supports freeconomics and clever licensing schemes like the GPL. In fact, the strength of copyright makes all of these alternative experiments possible.

    You should be honest about what you mean by "free". You mean that big corporations are going to be able to take, take and take again from the creator and call it "innovation". This is all just a smoke screen to allow the 1%ers at Big Search to take all they want.

    It's easy for them to find folks with tenure to go along with the scheme. I'm not surprised they've found someone with civil service protection to believe in it too. These folks always pretend that money just falls from the sky every other Friday. They don't understand just how hard businesses have to work to make sales. They don't understand that free can only work if there's something else for sale, something that will cross-subsidize it.

    Sheesh.

     

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      identicon
      Anonymous Coward, Oct 3rd, 2012 @ 12:19pm

      Re: This blog is the one that's inflexible.

      You know what bob, I'm usually the guy who rips apart each and every one of your comments line per moronic line, but today I seriously am not going to bother.

      You know why? Because at this point, even people new to this site can see that you're like that freak on the corner harping on about the end of the world and voices in his head and pointing at random passers by and declaring them part of the government orchestrated (paid for by Big Search) conspiracy against you.

      "Sheesh." Yep, that about sums up my feelings and thoughts on ALL of your comments. All I'm saying is on Lion Day, you aren't going to make it. If you do, sigh. There's no justice in the world.

       

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        Baldaur Regis (profile), Oct 3rd, 2012 @ 1:00pm

        Re: Re: This blog is the one that's inflexible.

        "Lion Day", that's a great riff! boB will make it though, because he's going to open up his ever-flapping gob and bore the fucking lions to death.

         

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          Anonymous Coward, Oct 3rd, 2012 @ 2:55pm

          Re: Re: Re: This blog is the one that's inflexible.

          If you haven't heard of it then go listen to the Titus Podcast. Not only is it hilarious, as well as informative, but it preaches (in the non-religious way) about the merits of "Lion Day".

          I doubt he'd bore the lions to death. I'm thinking more the lions would hear his him prattling on and their brains would invoke a self-aneurysm to spare them any further suffering. Only way bob would survive.

           

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      silverscarcat (profile), Oct 3rd, 2012 @ 1:24pm

      Re: This blog is the one that's inflexible.

      bob, go to the zoo and jump in the lion pen.

      That is all.

       

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        identicon
        Anonymous Coward, Oct 3rd, 2012 @ 7:23pm

        Re: Re: This blog is the one that's inflexible.

        Or pet the vine snake.

         

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        identicon
        Anonymous Coward, Oct 3rd, 2012 @ 10:20pm

        Re: Re: This blog is the one that's inflexible.

        Ahh, another fine 'tardian star telling people to go kill themselves.

        You should try foad, it works too.

         

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          identicon
          Anonymous Coward, Oct 4th, 2012 @ 4:37am

          Re: Re: Re: This blog is the one that's inflexible.

          If we did a comparison between number of times someone on your side has told someone to die and number of times someone on the 'tardian side has done the same, your side would still be winning at about 100 to 1.

          So don't play that card, moron.

           

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      Cory of PC (profile), Oct 3rd, 2012 @ 2:11pm

      Re: This blog is the one that's inflexible.

      And I can feel the headache coming already...

      "Creators give stuff away for free all of the time..."

      *raises finger and opens mouth* ... Well, I've been doing that since 2009, but I REALLY doubt every creator gives their stuff away (and the key word is "every")

      "You should be honest about what you mean by 'free'."

      Oh yeah, and do you mind telling us what your definition of "free" is, or don't you trust the Big Dictionary? ... Sorry, I got to take a moment to laugh. Also I'll give you a dollar if you say "Google" once. Go on, try it!

      "
      These folks always pretend that money just falls from the sky every other Friday."

      But for me... do I have to say it? And honestly do you think that people are seriously dumb enough to NOT know how a business is run outside of high school? ... Wait, I forget I'm talking to bob here... never mind, go about your crazy ranting. Next time I'll see you, I'll be on hand with some popcorn.

       

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        Ninja (profile), Oct 4th, 2012 @ 3:53am

        Re: Re: This blog is the one that's inflexible.

        Yeah, it's become a worn out techdirt troll. Although sometimes he says something insightful, maybe when he takes his medicine properly.

        He ignores that it's clearly about coexisting with the fact that every digital good can be downloaded for free in the intertubes and still make a load of money. With that I'm sure he disagrees.

         

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    Anonymous Coward, Oct 3rd, 2012 @ 12:42pm

    The licenses exist within the current copyright system for those people who want to make a work freely redistributable.
    The problem exist in trying to enforce the economic model, pay per copy/use. The degree of control over any means to make sure that every copy/use is paid for threatens privacy, and even the existence of computers whose use is not monitored and controlled by the publishers.
    As has been shown by various reports on this site, this level of control over copies is not required as people will pay for reasonaly priced copies of works if treated as fans and not thieves.

     

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    ECA (profile), Oct 3rd, 2012 @ 1:11pm

    MORAL RIGHTS?

    What Moral?
    The right of a person to be paid for a service provided??
    they played 1 time, recorded it, and sold it 1,000,000 times.

    WHO here gets paid for a job 1,000,000 times?
    Do you consider that a recording is a representation of the individual ACTUALLY playing in real life?? Then give me Better speakers.

    This is worse then going to a LIVE show..and after all the GOUGING, paying $100 to get Nose bleed seats, in an arena that cant hold 1/2 the people that WANT TO SEE the show. and the artists only get $1 per person.(more then from the CORP that gives them $0.45 per record)(but you can sell 1,000,000 records)

     

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      nasch (profile), Oct 7th, 2012 @ 8:42am

      Re: MORAL RIGHTS?

      What Moral?
      The right of a person to be paid for a service provided??


      No, that would be an economic right. Moral rights are things that don't involve money, such as attribution.

       

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    Violated (profile), Oct 3rd, 2012 @ 1:31pm

    realization

    I can't see this as a bad thing even if Napster happened all of 14 years ago and only now is a crack starting to appear in heart of the DoJ.

    The only realization that John Newman has made is that this is the World we live in now, where despite the rabid protests of the old organizations as their control slipped away, then the World we have here now is here to stay and it is just impossible to turn history back to pre-Napster.

    We then move on to the second stage where we look and see that the free sharing world is not so harmful and there are some good aspects to be gained. The ease of creation and free distribution has led to a bloom of new content to a level never before seen in human history. Destroying content locks allows people to enjoy media in the way they desire which goes to increase their enjoyment. Freely sharing culture, knowledge and entertainment is good for society. Then that which is copied can never be lost except by lack of worth.

    Then we at last conclude that the established laws are just not serving either the copyright holders or the consumers in this modern market. He did correctly identify that statutory damages are a big problem like in the case of Jammie Thomas-Rasset being dragged through cruel and unusual in terms of millions in fines, which this mother of 3 could never pay, all for sharing a few songs she had downloaded.

    It is clear to see that it would serve the interest of all just to have gave her a small fine and to send her home. Quick and efficient with results for the media owners in that she has been ordered to stop or risk contempt of court. All of a few minutes in court also means small lawyer bills and court time can then be spent on more important cases.

    It is fine for John Newman to theorise his own fix when this simply shows his realisation of the problem. We also do need the ideas of many before we do come to conclude what needs to be fixed and how.

     

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    PT (profile), Oct 3rd, 2012 @ 1:58pm

    "Or can copyright law itself undergo a sufficiently radical transformation and avoid the risk of extinction through irrelevance?"

    Seriously, I think that horse has already bolted. Disney and Sonny Bono opened the barn doors and the RIAA set off firecrackers. The pool of jurors willing to convict will get smaller and smaller as the older generations die off until copyright law is about as relevant as laws banning oral sex.

     

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    Anonymous Coward, Oct 4th, 2012 @ 4:38am

    "These campaigns attracted a torrent of debate"

    I see what he did there.

     

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    Thomas (profile), Oct 4th, 2012 @ 6:44am

    One must remember..

    that lots of attorneys "working" for the DOJ previously worked for the RIAA/MPAA and may still be getting "benefits" from their former employers. (Assuming they are not still employed by RIAA/MPAA). Thus their proposals are more likely to benefit the RIAA/MPAA rather than consumers. Consumers have very few true advocates within the DOJ these days; the RIAA/MPAA pays better than the government.

     

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