Some positives, some negatives

Netanel does a good job at convincing readers that the marginal benefit of increased copyright protection does not outweigh the cost imposed on freedom of speech and the cost of  discouragement in the creation of new works. If authors are granted exclusive rights as an incentive to create, then the continuing expansion of copyright protection beyond its traditional scope makes little sense. People or businesses that rely on copyright as a dominant incentive do not base their decisions considering profits decades after the original work is created. Furthermore, copyright industries are not capital intensive in the sense that recoupment costs have to occur over long periods of time (e.g. a utility company or a railroad). In copyright industries, even works that cost hundreds of millions of dollars tend to recoup their cost and become profitable (if they’re ever going to) within a couple of years after their creation. Movies like Ironman will get made regardless of whether not there’s an exclusive license to the character for 10, 20, 30, or 40 years; in a relatively short time, these hit movies recoup the cost of production and marketing (Iron man did this in its second week). The point is that the incentive for authors or corporations to create, when it comes to copyright at least, is generally satisfied fairly soon after the work’s creation or publication.

If this is the case, then even a slight cost to freedom of speech or discouragement in creation seems to make the trend of expansion in copyright protection unwarranted. Copyrights are needed in order to eliminate free rider problems that discourage creation, but once this problem is eliminated and the incentive purpose is satisfied we may be far better off, as Netanel points out, “with an open contest of multiple use, editions, and interpretative recastings than an heir’s or corporation’s perpetual veto (205).

There may some benefits allowing heirs or corporation to retain longer and stronger protection of copyrighted works. Movie studios can make more sequels or invest in developing works of better quality that ultimately benefit consumers and society as whole. But these types of arguments do not seem to relate to the original incentive to create; their validity in supporting the expansion of copyright protection is therefore questionable. Additionally, there seems to be no empirical evidence that works based on copyrighted materials are actually better than works based on material that falls into the public domain, at least after a certain period of time has passed.

Copyrights should not function as barriers to entry

Copyrights limit the ways in which others can use copyrighted work. As a result, copyrights naturally create at least some barriers to entry. However, the barrier to entry effect is a secondary, not a primary function, required to incentivize the creation of works. Exclusive rights are the incentive authors receive as reward for their work and may be seen as the necessary evil required to encourage creation in the first place.

This view forces me to disagree with Vikas point that copyrights “may serve an important function as barriers to entry…by requiring the creator to think strongly about the value of the work he is creating” before he creates it and distributes it in the market. It seems that this is precisely what Netanel wants to avoid. Creativeness and speech may be chilled if we force every creator to navigate the copyright maze or figure out whether his work is valuable enough to create and distribute in the first place. Authors are usually not good at predicting the value or success of their works in the market place. The author of Gone With the Wind probably expected the book to be somewhat successful, but probably not to the extent that the book eventually became. The better approach would be to allow as much creation as possible and then let the market sort out which works are valuable. Although this may lead to a problem of information overload or too much creation, we now have the technological tools that will keep improving to help us sort through all the works. For example, if I create a bad novel and post it online, it will get few or no hits, while all the good novels will receive more hits. With search engines and other services that rate the quality of online content, people can bypass all the useless works or works that they don’t want. It is better to have as much creative work out there rather than forcing people to over screen their works for fear of copyright infringement. People should take reasonable care to ensure that one is not infringing, but the problem now is that it is so unclear when and how one may use copyrighted work than it is almost not worth the risk of using copyrighted material. In the process, the public is deprived of valuable works and speech is chilled. Copyrights role as a barrier to entry should be minimal and only to the extent that it fosters, not deters, creation.

Netanel addresses a Public Choice dilemma but offers no Solutions

Netanel provides legislative and judicial solutions to the issues he raises in previous sections the book. Some of his solutions are less workable than others but if implemented correctly could alleviate some of the problems. Unfortunately, his solutions seem unworkable until the public choice dilemma is resolved. Netanel addresses the problem in p. 182 but does not address how successful rent seeking by special interests can be countered society as a whole. Without resolving the problem posed by interests groups, Netanel’s legislative and judicial solutions seem somewhat unrealistic.

Public choice views Congress’s decision to push for stronger copyrights as the result of interests groups working to overcome the “free rider” problem. In viewing government action as the product of interest group politics, one can apply a public choice analysis to see that as the importance and value of copyrights became an evident and substantial aspect of certain corporations or interests groups, particularly in light of the new distribution medium provided by the internet, these entities had large economic incentives to overcome the first mover problem. In other words, the benefits of lobbying for a strong copyright regime became great for the copyright industries while the costs of such a regime were dispersed through consumers or users lacking comparable political power. As Netanel points out, the public, which is most affected by this legislation is unorganized relative to the lobbying groups of copyright industries. The public, Netanel says, “consists of a large number of discrete individuals, each with a small, highly diffuse stake in the regulation at issue” that prevents it from forming strong organized groups that can press Congress for more balanced copyright legislation (p. 184). Netanel seems recognizes this key dilemma but glosses over it even though the challenges posed by the problem seem insurmountable.

As I mentioned in an earlier post, because of the almost increased access to existing and new works via the internet, the public at large does not even feel the cost that stronger copyright protection is imposing on the creation of new works or on free speech. Thus, while the internet provides big incentives to copyright industries to gain more concession from Congress in copyrights, the public, feeling that there is access to almost too many works via the internet, is oblivious to the effects of these concessions.

Netanel seems to get this, but rather than providing solutions on how society can overcome its organizational problem and effectively counteract copyright industries’ pressure on Congress, he goes straight into his legislative and judicial solution relying, on blind faith, that either Congress or the Courts will somehow change their ways. Recent history suggests that this will not happen. Netanel’s solutions, although venerable, look somewhat idealistic.

Comments

[Vikas Didwania]

You are right to point out that I ignored in my post the difficulty authors may have in ascertaining the possible future value of a work they are creating. The demand will be notriously difficult to figure out. But isn't that the case with any new product being introduced into the market? I mean, these major corporations will do market studies to gauge interest, but in the end most products fail. Only some succeed. And the successful products must subsidize he failures. That's certainly true in the music industry, but it's probably also true in the restaurant business or the footwear business, etc.

We have the term "starving artist" for a reason. It is difficult to be a breakthrough artist. But some people are more risk-seeking (or risk-averse) than others. Lawyers, of course, are notoriously risk-averse. Artists not so much. In any case, removing the copyright barrier won't change (I don't think) the number of works that will be successful. It just means that artits will have more failures (as an absolute number and as a percentage). I think the benefits are little while the costs are high. There are tools that allow people to sift through information, but I just don't think they are sufficient. People still feel overloaded and simply use poor metrics.

And even if there were very good technological tools, I think a little paternalism (a "nudge" as Sunstein says) might be useful. People may have a tendency to acquire only the information they agree with, and this is made easier with the proliferation of information. If people instead are presented with lots of information with which they disagree, then maybe we can avoid the polarizing effects of the Internet. And that would be good for society as a whole.

[Ruben Rodrigues]

Vikas, aren't barriers to entry... by their nature... bad? I can't help but feel that a more appropriate response to a polarizing work of expression is to counter with one's either equally polarizing or retorting/debunking work (Competition! Yay!). The copyright-as-barrier scheme you suggest posits that an author seeks to capture a wider swath of the market by creating non-polarizing content (I think). I'm not sure I agree that there's a connection between non-polarization and market success, but assuming there is, it really makes me question such a barrier... since it presumably leads me to believe there is substantial social loss: works are not being created that people want. I guess you'd argue that this loss is offset by less polarization... but my hunch is that polarization happens anyway (there'll always be markets for polarizing content, and the internet's group-think mentality has little to do with copyright). Thus, limiting copyright would help reduce what you've termed barriers... and limits (ala fair use, or Netanel's broader proposals) would help recapture the social loss from copyright's barriers. We're back at square one, though I guess I'm working with different underlying assumptions.

I should've probably left this comment on your post... but it was only after I read Mario's that I really started to understand (I think) your argument.

[Chang Won Choi]

I agree with you in that most of the proposed reforms that have been discussed by various commentators, including Netanel, have very little chance of being passed by the Congress and it is equally unlikely that the courts will step in the strengthen the First Amendment values within the copyright system. So where does that leave us? We could think of incremental reforms that may have slightly better chance of being implemented or we could hope that some other special interest group, such as Google, might rise up and create a balancing force against the powerful media industry.

But I wonder if it is would be possible to effect a reform through the executive branch. It appears that the US Copyright Office plays a fairly minimal role in the overall system. I rarely seen any paper describing in depth the role that the US Copyright Office plays (maybe because I have not taken a copyright class) and I wonder why that is the case. I guess it could be because you don't need to register with the copyright office any more in order to get a copyright. But in the case of patents, it appears that the US Patent and Trademark Office has acted somewhat as an advocate for the public (or at least the research and development industries) by making substantive changes to its own regulations to deter so-called “patent trolls” and also advising the Congress in calling into attention the problems (or at least giving more weight to the criticisms) and giving advice on how to reform the patent system. If I am right in that the executive branch, through administrative agencies, can act in the role of defending public rights, I wonder if we can somehow empower the Copyright Office to push for reforms or if we can give more power to the Copyright Office such that it can make regulatory changes to give more power back to the public.