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.

Filed Under: behavioral economics, classical economics, copyright, economics, free

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


    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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