Economist: Copyright Is An Antiquated Relic That Has No Place In The Digital Age

from the modern-mercantilism dept

For many years I’ve been pointing out the basics of economics concerning concepts like “free” and the importance of marginal cost to pricing in an efficient market. After one such recent post, I got an angry email from a college professor who has worked in the entertainment industry for many years, telling me that clearly I had never taken an economics class. That, of course, is not true. I took a great many economics classes, and learned the economics I talk about here on the site from some of the best economists around. Either way, I do wonder what this same individual would say upon reading well known (and greatly respected) economist Dean Baker’s latest column about how The Pirate Party has got it right on copyright:

Near the top of the list of the Pirate Party’s demons is copyright protection, and rightly so. Copyright protection is an antiquated relic of the late Middle Ages that has no place in the digital era. It is debatable whether such government-granted monopolies were ever the best way to finance the production of creative and artistic work, but now that the internet will allow this material to be instantly transferred at zero cost anywhere in the world, copyrights are clearly a counter-productive restraint on technology.

As every graduate of an introductory economics class knows, the market works best when items sell at their marginal cost. That means we maximize efficiency when recorded music, movies, video games and software are available to users at zero cost. The fees that the government allows copyright holders to impose create economic distortions in the same way that tariffs on imported cars or clothes lead to economic distortions.

The major difference is that the distortions from copyright protection are much larger. While tariffs on cars or clothes would rarely exceed 20-30 per cent, the additional cost imposed by copyright protection is the price of the product. Movies that would be free in a world without copyright protection can cost $20-$30. The same is true of video games, and the price of copyrighted software can run into the thousands of dollars.

Baker goes on to suggest some alternative means to fund such creative works in a world without copyright, including ideas like “artistic freedom vouchers” that would give people a refundable tax credit on supporting creativity, on the condition that any of the creativity funded by such money would not be able to protect it with copyright for a period of time. I find such program interesting, though I do wonder if they’d even be necessary. As we’ve been seeing over and over again, all sorts of interesting new business models are springing up that have nothing to do with copyright. As there is demand for creativity, I fully expect more and more such models to continue to show up as well. What I fear is that the focus by those who benefit excessively from the monopoly rents and protectionism of copyright, will lead to cutting off innovation or killing off interesting and more efficient business models, before they have a chance to evolve.

Contrary to what some like to say about me, I am not convinced that copyright should be done away with completely. I do think that it needs significant reform. I just want that reform to be based on actual evidence and understanding of basic economics rather than faith and the demands of those who have benefited excessively from it, over those who have been held back because of it.

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Comments on “Economist: Copyright Is An Antiquated Relic That Has No Place In The Digital Age”

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Ed C. says:

I just want that reform to be based on actual evidence and understanding of basic economics rather than faith and the demands of those who have benefited excessively from it, over those who have been held back because of it.

The same should be said about all policies. But that’s just not how government works.

I-Blz says:

I have a bitova problem

The problem with everything digital being 0-cost is that producers have to make money indirectly all the time, then; they can never make money off the thing itself. Take The Witcher 2, for instance. Great game, years of effort put into it. Not a dime would go to CD-Projekt if it was 0-cost.
SO, I think, while copyright shouldn’t last for more than maybe 5-8 years, I think it should be there in some form, so that, at least initially, the developer and publish can at least make some direct money off of it

bob (profile) says:

What a nightmare!

1) My favorite quote from the proposal:

“Recipients of the AFV (creative workers and
intermediaries) would be required to register with the government in the same way
that religious or charitable organizations must now register for tax-exempt status.
This registration is only for the purpose of preventing fraud ? it does not involve any
evaluation of the quality of the work being produced.”

First, registering just to be eligible to earn money is a practical pain in the neck.

Second, he says that the government will only prosecute fraud, not regulate the content? What constitutes fraud? I know one artist who staged a happening where he went out into a field and turned on a light bulb. Is that all one has to do to make this all legit? Come on.

2) Where will the money come from? You’re only fooling yourself if you think a “tax credit” won’t cost you anything. People with a tax credit for $x don’t pay $x in tax. That means the other tax payers must chip in $x or the government must cut $x in services.

3) Only rich people can use tax credits. You need to have other income to offset the credit. This means only rich people can participate.

4) The other wonderful schemes he talks about depend upon copyright. I think it’s wonderful that Amanda Palmer raised $100k, but it’s by using a super paywall called Kickstarter. How do you think the Kickstarter funders are going to feel if one of them just makes a zillion copies for their friends? Someone will feel ripped off. I know that we’re all singing kumbaya around here, but if it becomes common for everyone to get free copies of stuff after the Kickstarter round closes, then no one is going to invest.

Oh, I’m sure there will be some strange charity cases, but for the most part copyright will play a role in these projects or they won’t happen.

TtfnJohn (profile) says:

Re: What a nightmare! & What a challenge!!

1) While registering to raise money, which seems to be where he’s going with this is a bit of a pain it does link up nicely with his reference to fraud which would include things like raising money for a non existent project which never appears. And the person raising the money knew that from the start. It strikes me as a bit complicated as, in a way, someone raising money in sites like Kickstarter have to register with Kickstarter anyway so that if enough evidence exists to start a fraud investigation the information is there for the supeonaing.

2) Plenty of working and middle class people can and do make use of tax credits. Keeping in mind that these credits rarely amount to 100% of the donation, investment and so on. To many it doesn’t need to be much, it’s just something that attracts them. While I may have a tax credit of $100 of that all I’ll see is $20 at the end of the day and I know that. For that reason I hate tax credits but as that’s all that’s available I’ll use them.

(3) So its not just rich folks or big business (or worse for you Big Search) that take advantage of tax credits. Most of them prefer out and out deductions or exemptions.

(4) Any a government that offers these things and can’t figure out that it means less revenue deserves to be fired. Something we Canadians do quite regularly.
Remember that “locations” be they cities, provinces, states countries often offer tax incentives that amount to 100% off the revenue side of the books rather than the 20% or less, effectively, that the voucher system would cost. Movie and sound studios often get large reductions in things like property taxes to set up shop in some cities, too.

(5) Just because you can’t imagine a world without copyright doesn’t mean that the the other proposals are dependent on it. Humanity got along very well without copyright until about 300 years ago and should it disappear we’ll get along nicely without it. For now, copyright might help but as the artist in each case is required to release the work(s) free of charge if I read the proposal correctly about the only use for copyright would be the creative commons type license requiring that it stay free.

Now please explain to me just how Kickstarter qualifies as a pay wall. It doesn’t prevent anyone from accessing “content” it helps to fund and aid in the creation of “content”. So please explain how you see the “zillion” copies being passed about as a rip-off should that ever occur. Only you could expect to control a project for a $20 investment in it, bob. You seem to feel that investing in a Kickstarter project gives you some exclusive access to the content created and that just isn’t how it works. So once again could you tell me how Kickstarter qualifies as a paywall by funding creation and broad access to “content” rather than restricting access to “content” qualifies it as a paywall.

You have valid points here until you dive back into that wading pond head first and blow them all up.

Not everyone who would invest in an arts project there are interested in a large or any monetary return. Even with copyright there is no guarantee of a return of any kind. Even if you can’t see it you’re wrong there too. Many lose money, self published, recorded or what have we. Still wrong, there bob.

As you obviously so love “Kumbaya” so much (a spiritual that is neither naive or cynical) may I suggest you raise some money on your favourite not-a-paywall-but-somehow-a-paywall Kickstarter after you’ve assembled your friends here into the Freetard Campfire Choir and Chorus and see what you can do. I’d just love to hear the high quality recording, sound and arrangement of what you come up with.

So there’s your challenge, bob, instead of criticizing anything and everything how about you try your hand at creativity yourself. Not for money but just to show yourself and us that you can actually do it. I’ll buy the first copy. Deal?

I’ll keep busy rehearsing St Patrick’s “Breastplate” while I wait.

:Lobo Santo (profile) says:

I have a bitova problem

A few ways to make money today from your game:

Saleable extra content,
customer financed servers,
“collectors edition” with irreplaceable physical objects,
branded game-themed merchandise,
many other things which aren’t coming to mind at present.

Just because you cannot conceive of how somebody could possibly get along without their wheelchair does not mean nobody will ever invent crutches, leg-braces, or gene-therapy.

Anonymous Coward says:

What a nightmare!

The validity of this tax credit scheme doesn’t have anything to do with the numerous legitimate criticisms made against copyright. Just because the proposed solution doesn’t work well, doesn’t mean there isn’t a problem to be solved.

As a musician surrounded by musicians, artists, and programmers, I can honestly say that while our views on copyright vary pretty widely, not one of us would stop creating things if copyright went away.

Robert (profile) says:

As an aspiring musician, the only use for copyright I would ever want is to stop someone from claiming they wrote what I wrote. If they perform it, I’d like them to have me in the list of credits. That’s it.

If I make no money and someone covers or even says “hey, can I have just the music without your singing [ assuming I take lessons again and regain a decent voice ]” or just take the instrumental pieces and make a fortune rapping over it, so be it. As long as I get credit, that’s what I am after.

If I want to earn money and make a career so I don’t have to develop software full time, then I would work with the performer or studio or fans directly means for fans to purchase something and get something they value in return.

I like cycling, jamming, cooking, gardening, etc.. any of those I’d be open to as a package idea. I also build electronic stuff at home. That would be more expensive as I’d have to put it through safety testing.

The point is, I would not use copyright laws to control copies. I’d use bitTorrent and when you want a free copy of the music or whether you purchased a package and want the free download, I’d just link to the torrent files. I’d probably have to write some software to keep track of seeds and reliability and all that. You can’t like to a wrong file because someone mis-seeded. And why should I make direct downloads and pay extra for hosting and bandwidth when I can utilize bitTorrent or P2P for that very purpose?

My music would have value still, even if the majority to contributed financially were actually not paying just for the music itself.

This goes for anyone, I don’t believe the value approaches zero. Economics can’t explain everything. As brilliant as Keynes was, his theories were not 100% accurate. You cannot predict or fully understand human behaviour. If people only took what was free, why is iTunes doing so well? Because people will pay if you make it easy AND give them a reason.

$0.99 IS worth it for a copy of a song if it means something to the consumer. But so is $25 or $50 for a package that gives them so much more and they connect with the artist.

You have to have fun! It has to be real. If you can’t connect, like Neil Peart, they you need other ways to entice people to buy, especially if your music is drowned out by the millions who create and share online.

How many of you understand Neil Peart just can’t interact with fans in a personal manner? He struggles with interviews. But what can Neil do if he was a solo artist? Um… I don’t play drums but if he had a package that included his music and drum lesson video, little tricks or practice techniques, not even necessarily personalized (because that would be too much work for him), I’d buy it. Seriously, drum practice exercises from a percussion hero? Hell yeah.

Copyright for controlling copies of musical works is pointless. Copyright for credit where credit is due or for even enforcing licensing for someone profiting off of your work, is what it should be limited to. Abolishing it entirely isn’t really necessary. Reform sure as hell is though.


A Dan (profile) says:

What a nightmare!

To 1, 2, and 3, you are correct. I am also not a fan of his proposal. I tend to believe economies will function better if the government is not needed.

To 4, there is no reason why Kickstarter couldn’t work without copyright. There would probably be no tier of “a download of the album”, but that’s not a necessary tier. Most of the money will probably be made on the physical items or exclusive intangibles for sale anyway. And people still want their favorite artists to create things and earn a living.

Richard (profile) says:

I have a bitova problem

The problem with everything digital being 0-cost is that producers have to make money indirectly all the time, then; they can never make money off the thing itself.

The problem here is that (300) years of brainwashing have persuaded you that taxing the copying process is the same as “making money off the thing itself”. It isn’t.

Making money off the thing itself means being commissioned to create it. Anything else is secondary – including making money off copying.

Anonymous Coward says:

Copyright is absured.

Why are ‘creations; who’s creators have long since died still under copyright?

Why are arts that, years ago were supposed to be in public domain, still under copyright because retroactive copyright extensions?

These are question the monopolists have to answer for, and will answer for soon.
At least in Europe.

Josh in CharlotteNC (profile) says:

What a nightmare!

First, registering just to be eligible to earn money is a practical pain in the neck.

Its not registering “just” to be eligible, its so that the tax credit can be claimed by your supporters. There doesn’t appear to be anything stopping someone from not registering and just requesting non-tax-exempt donations (like via Kickstarter).

What constitutes fraud?

What constitutes art? Just because you don’t like something, or don’t think its art, doesn’t mean that it isn’t.

Only rich people can use tax credits.

That’s not so much of an issue with the procedure, but a failing in the tax system. And again, there’s still nothing stopping someone from donating and not worrying about the tax credit portion.

Someone will feel ripped off.
then no one is going to invest.

And again, you are worrying about the wrong things.

People who are giving money to artists are not only doing it to get a monetary benefit, or to get some product. We are doing it to support the artists, to support their work, and to support art in general.

Why is it so difficult to understand that not all actions are entirely based on a monetary benefit? Yes, I work and get a paycheck – but I get more out of my job than just a paycheck, I get the knowledge that I’m helping to secure my employer’s computers, and thus our customer’s information and billions of their dollars and investments. And I realize that coming from someone who works at a bank, this sounds weird – but it’s not just about the money.

Ed C. says:

Still don't get it.

The way it is now, creators get just a tiny sliver of the pie, as does the public. The vast majority of the benefits go to the media corps and retail shareholders. Expanding copyright laws are only shaving the slivers even thinner, ultimately giving more control to the corps by taking away from everyone else.

The point of services like kickstarter is that either the project is completed so that everyone can benefit, or no one benefits at all. And getting a free (as in speech) product everyone can see and talk about as part of the project is free (as in lunch) advertising for the group, which in turn makes it easier for the group to raise more funds for even bigger projects. For instance, several game projects have already gotten over $million–a million that goes directly to the people who actually made the game, not funneled though a bloated bureaucracy like EA.

Snipes says:

The idea of copyright

I think we need to take a hard look at what the founders of this country said about copyright. They grave congress the responsibility “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”If we look at that statement it is clear that our country has strayed very far from what they intended.

You will first notice that their goal was promoting Science and “Useful Arts”. From this one can infer they were intending these copyrights to protect things that were instruments of social progress, not forms of entertainment. This is reinforced by their later use of ?Writings and Discoveries?. One can say it is only because they did not have sound and image recording technology, but you?ll notice that they did not include paintings here.

Next comes that they secure them for ?limited Times?. I find it difficult to believe that this term is intended to mean, the entirety of your life plus an additional 75 years after you die. The whole concept of extending copyright beyond one?s life is contrary to the first principle of promotion of the creation of these works. The author or inventor cannot be induced to create additional work after they are dead.

Finally (for now) we see that they intended the rights of works to be controlled by ?Authors and Inventors?. This statement would seem imply that the entire concept of transferable copyright is a farce. Works can be invited by groups of people working together and those groups should be able to hold joint rights. However, the concept of a group witch acquires the rights to a work and then exercises those rights as if they were their own is contrary to what is envisioned here.

Ed C. says:

Still don't get it.

Or to put it more simply, your paying to see the project completed for your own benefit. Your benefit includes benefits for the creators, such as publicity, that allows them to get better funding for their next project. Would you prefer they try to get the maximum return on your investment? Or would you prefer to pay more only to have your money spent on services they could otherwise get for free, and the cozy feeling of owning an exclusionary copy?

Dark Helmet (profile) says:

What a nightmare!

Since no one else bothered to point this out to you yet, calling Kickstarter a paywall is idiotic. You seem to think that every time someone pays for something, that’s a paywall, which is stupid.

A paywall is when you erect a digital barrier around a good that already exists to extract payment. Kickstarter projects are the EXACT FUCKING OPPOSITE.

They extract payment to fund the creation. How can you possibly not see the damned differnce?

Anonymous Coward says:

“Economist: Copyright Is An Antiquated Relic That Has No Place In The Digital Age”

This is incorrect. For IP and other anti-competitive laws to be antiquated suggests that they generally had a socially beneficial purpose at one time. IP laws were nefarious from their very origins, there may have been short periods of time when they may have slightly served a public good, but, overall, their origins and continued existence has been nothing but a public burden.

antimatter3009 (profile) says:


Replace ‘campaign contributions’ with ‘votes’ and you have a perfect description of how the system was designed to work. And really, contributions are votes, just indirectly.

If the people who supply the votes (ie the population) demanded their Reps push policies based on evidence, policies would be pushed based on evidence. But we don’t. Fault ultimately lies with the voting populace, as it always does in the representative system.

Ed C. says:


Not entirely true. In today’s political system, a candidate who runs on votes, principles and facts almost always gets outvoted by a candidate with better financing. It’s not necessarily that the money-backed candidate has to lie and cheat to get elected, he simply has the money get his “facts” out to the public.

If you want to balance the scales in elections, drastically slash the cost of campaigning. I’d start with the media. They make a ton of money from campaigns, and spend a lot to keep it that way. How else do you think they managed to get 15 copyright laws in twice as many years? Or get activist appointed into courts and law enforcement? For the sake of the country, the current relationship between media and government cannot be allowed to continue.

Anonymous Coward says:


This is not true. Politicians pander to the voters every few years where all sorts of promises are made. Once elected, there is no recourse for not following through on the promises during that term. They may be voted out, but the next politician can do the same thing. The system is designed in such a way that the people get a say every few years and that say doesn’t really matter much when it comes time to make actual decisions on laws that matter.

Robert (profile) says:


That’s if people know who created the original work.

A friend of mine had no idea Bryan Adams wrote “Heaven” when he heard the dance version by some female artist. Imagine if you showed up on her blog, loads of obsessed fans unknowingly attributing the song’s creation to said female artist, and tried to explain it was from Bryan Adams. You would be ostracized.

So true, on Bryan Adam’s website those same fans of said female artist would be ostracized or on some other website, say Billboard. But it isn’t foolproof.

Many people think “I Write The Songs” was actually written by Barry Manilow. It was Bruce Johnston of the Beach Boys.

What would help is if the performing/covering artist attributed the creation to the original author.

John Nemesh (profile) says:

I have a bitova problem

It’s called Value Added sales! So you spend, say, $5 million developing a game. Anyone can CURRENTLY get these products for free, right now! So how does a company make money? You add value!

I remember buying “The Hitchhiker’s Guide to the Galaxy”, an Infocomm text adventure game. In the box was: A piece of fluff, a pair of “Ju-Junta 2000 Peril Sensitive Sunglasses” (made of cardboard), and a couple other bits. It probably cost Infocomm a whopping 50 cents to include these little items…but it was FUN! Someone who pirated the game (and yes, there way piracy before the internet!) didn’t get these little treats!

I remember the old “Ultima” games included CLOTH maps! Sweet! (wish I still had those!) Other games included VERY nice manuals, with all kinds of original artwork.

Also keep in mind, that by BUYING the game, you KNOW you are getting the official version of the game, free of bugs and/or malware. You also spend considerably less time in acquiring the game. In the end, your experience as a paying customer is BETTER than the experience the pirate has playing the same game!

This doesnt only apply to games! Look at all of the “Collector’s Edition” movies that have come out lately…not just the ones with an extra disc of behind-the-scenes content, but the ones like “Wizard of Oz”, that came with a watch, soundtrack CD, and other goodies. Yes, I can download the movie for free, but I will miss out on the EXPERIENCE of the Collector’s Edition box set!

Also, in the case of movies and music, you have a SIGNIFICANT difference in quality! I am of the opinion that MP3 quality audio should be TOTALLY free…think of it as a preview copy. If you LIKE the music, you could then pay for a high resolution copy.

On pirated movies you can see even more of a difference. Most pirated movies are compressed to hell and back to get the file size down to a reasonable level…and the picture quality suffers as a result! The movie you buy looks WAY better than that torrent you downloaded!

In the end, the content providers need to come to terms that people are consuming their content without paying ALREADY, and no amount of legislation, legal suits, or intimidation techniques are going to change this. They need to offer the pirates a legitimate reason to spend their money, and the content by itself just isn’t compelling enough! Add some value though, and watch the money roll in!

Ed C. says:

I have a bitova problem

Mostly right, except that many games are no longer “free of bugs and/or malware”. You often need to download patches or a newer release to get what you paid for (a working product!), and DRM is among the absolute worst malware out there. Not to mention that some hackers actually fix bugs when the company refuses to. Of course, I still wouldn’t trust any warez. The “scene” was overrun by scammers who remove DRM “malware”, only to insert their own crap.

Mike (profile) says:

What a nightmare!

I think it’s wonderful that Amanda Palmer raised $100k, but it’s by using a super paywall called Kickstarter. How do you think the Kickstarter funders are going to feel if one of them just makes a zillion copies for their friends? Someone will feel ripped off.

Actually so far Amanda Palmer has raised ~$700K.

I am one of the backers of that project, and I fully expect that the album she’s planning on producing will be available on the internet for free, and you know what? I don’t care. I didn’t back the project solely to get the album and artwork. I backed it because I really like what Amanda Palmer does and I wanted to support this next creation of hers.

The fact that tons of other people will get to experience what she creates because I helped fund her is a positive for me, it doesn’t make me feel ripped off.

Chargone (profile) says:

What would the world be like with fact based laws?

*thinks* well, maybe that and a second one for, say, ‘business specific laws’ or ‘activities that require licenses’ or what have you. but it would still be closer to the size of a US comic book (you know, those insane ones that charge you through the nose for, if you’re lucky, 20 colour pages that barely advance the story at all) than an encyclopedia.

Chargone (profile) says:

I have a bitova problem

also, once you have a game or two out and thus the quality and nature of your product is a known quantity, the fixed cost of making a given game can often be covered by things like kickstarter and such, at least in part.

provided you’re not making generic, over priced, pointlessly hardware straining for no visable gain, shooter number N anyway.

(it’s also insane how much you can cut the cost of a video game by Not Including Voice-overs! enough that including them adds so much that a story that would otherwise have hundreds of branching paths which react to the players actions (and can even be generated semi-randomly to fit how things are going) is reduced to maybe 3 fixed paths which merge as much as possible. i’ve certainly read very good explainations of this issue even if i’m not explaining it well.

seriously, the whole thing’s like paint on the spaceshuttle’s external fuel tank most of the time.)

Anonymous Coward says:


This is such a know fact and I wonder why nobody took the law making process out of congress yet and put it in the public hands.

Lobbyists realized they could do it a long time ago, they been doing it for decades now, they draft the laws and chose the people they want in power and pamper them, the public didn’t care and now we are controlled and regulated by idiots that only care for themselves and nobody else only their interests are valid ones and we let that happen.

It doesn’t really matter who you put there, nobody is going to be an expert on all things they can’t they are human, they are not gods, so they depend on others to do the research and the people doing it are not the ones that have the best interest in the public good, this is the real problem that is why elections are ineffective to affect change because people didn’t draft the laws they want, they didn’t plot the course for what ends they want and our leaders are not leaders at all but followers that are manipulated by other powerful interests.

The only solution workable solution is not voting them out, is not a revolution that ends up with the same system in place, but to bring the law making to the public so everybody start to plot a course and that course gets hammered by the public by all sides until it fits a larger group of people not only that of a minority.

Of course that means lobbyists will be a thing of the past in that scenario, spin doctors on the other hand will have full time employment for years to come trying to convince the public to draft some law the way they want it.

The law making today is not being done democratically that is the problem, that is why the MAJORITY of the people complain about.

Every citizen should have their GITHub copy of their own laws and be able to propose amendments, people should be able to track the most popular ones and then put all that in a package to candidates who will act on those things or be replaced, this is how people should do things.

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