The Economics of Situated Users

So if Joe Liu is late to the party, I'm at the afterparty.

I enjoyed Julie's wonderful essay and the many comments. Julie is on to something that many of us think -- that there is something missing, and something important, in how copyright thinks of its users.

Here's how I'd state some of what Julie is talking about. I see the copyright law is preoccupied with battles between distributors, with the occasional authorial interest thrown in. It is sometimes reminiscent of 1960s antitrust -- a law trying to protect favored, yet dying, entities, with little or no attention to user welfare. Consequently, the public is often disserved by the law's preoccupations.

But where I may part company slightly, is in two areas. First, I think I agree with Larry S. -- on first reading, the concept of a "situated user" yielded, to my perhaps too-rational choice-infected brain -- a unclear way of thinking about these problems. For me, the contribution of the "situated user" essay is to capture real user interests missing from copyright's calculus. So while Julie points us in the right direction, but I would use different tools.

What tools? In short, I think the economic criticism of copyright's approach to users is powerful and (at least to me) clearer. There are two basic reasons. First, if you think consumer welfare matters, what a user or consumer wants to do ought presumptively be what users want. Second, economic doctrine is not so narrow as to be unable to capture the user interests Julie discusses.

Consider the following economic critiques of copyright's approach to users:

1. Copyright often neglects the user as our best proxy of what serves the public interest. For example, the best steward of IP within the users' control is often (surprise) the user. That's the instinct behind the first sale doctrine, for example, but the point is deeper. What the user decides to do with property in their control, I think we should presume, is what will in the aggregate be in the public's interest. (Note to Jim -- this, I think, is also the strongest argument for the principle of NN). That's a rebuttable presumption -- rebutted, in the main, by collective action problems. Mass copying might, for example, ultimately hurt users. But that what the user wants to do is good should be the presumption.

2. Copyright is also too insensitive to the link between users' freedoms and innovation (as Fred has already said). Decentralized innovation and product development has a far better track record than centralized. Copyright ignores the extent to whichusers' interests can be necessary to decentralized innovation.

3. In addition to the non-transformative uses discussed above, Copyright is also insensitive to a range of productive uses that seem to only marginally affect the central problem of market failures for authorship. This is related to point #1 -- that what the user wants to do is usually good for all of us. But it reminds us that have long thought that, for example, the economic case for the broad derivative work doctrine is weak and perhaps non-existent.

Stated otherwise, I have more faith than Julie that the economic user is a useful and not narrow concept, and that a better economic view captures more than simply the fact of consumption.

Tim Wu

Comments

[Jim Speta]

Of course I agree with Tim's faith in the economic user model. But, Tim, you say: "What the user decides to do with property in their control, I think we should presume, is what will in the aggregate be in the public's interest. (Note to Jim -- this, I think, is also the strongest argument for the principle of NN)." Well, that's fine and uncontroversial. But I'm not sure it helps us. Indeed, isn't that largely begging the question of defining whether a user has "property"? (Doesn't it, in fact, basically deny the theory of intellectual property?) This isn't a Coasian world, and transactions costs as well as collective action problems are involved. Calabresi/Melamed, etc. Indeed, we're not even at the allocation of rights stage (i.e., the Coasian, Calabresi/Melamed point); we're at the definition of rights stage. A rough Demsetzian analysis that ends up in a place near to Julie's paper would say that de minimis uses (from a value over transactions costs perspective) ought to be protected. Why I say this is approximately the same place is that it protects individual (private), noncommercial, probably nonpublic uses. (I'm setting aside transformative and critical uses here.) True, that doesn't help the constraints that arise from secondary liability and DRM, which I think is Julie and Fred's most powerful point. But, and this is different from the old ATT world, in copyright markets there are enough different content providers that we should see the kind of experimentation and permission of decentralization much more frequently, even if we don't always see it. Or so I hope.