There is a really interesting post about intellectual property and the woes facing the entertainment industry by James Graham. Given that I have been meaning to write about this issue for a long time, I may as well use this as the opportunity to finally get round to it.
But first, a couple of notes on copyrights and patents. James Graham says:
Both global patent and copyright laws have been extended in recent decades. The original idea behind such laws appears to have been forgotten and pure greed has taken its place. Globalisation means that the earnings potential from a new idea has massively increased; yet at the same time we’ve artificially increased it further still, and long lives will extend this still further. To take one example, J.K. Rowling, a rich woman who can afford the very best in healthcare, is likely to have a very long life. Let’s assume she lives to 100, in 2065. The copyright on her books will stay with her estate until 2135. That means that her great-great-great grandchildren will still be profiting from their ancestor’s books. Is there really any justification for that?
I quite agree. The traditional justification for strong copyright laws is to encourage innovation. You come up with a great idea, and we’ll make sure nobody else can profit from it.
Sound enough at first. But how long should this monopoly last? Is “life plus 70 years” or even “life plus 50 years” justified? Is 50 years even justified? Hardly.
Copyright was big(ish) news in the UK last year when there was a push by artists such as Cliff Richard, Paul McCartney and Bono (where’s his “altruism” now?) to get copyright extended from 50 years. Coincidentally (or not), Cliff Richard’s and Paul McCartney’s most successful recordings are soon to enter the public domain.
And let us bear in mind that this was for copyright on the recordings. So the copyright extension would have meant artists earning even more money from something that they did once, over 50 years ago, regardless of whether or not they even wrote the song. If only the rest of us could earn so much money for so long from doing a job just once!
So do strong copyright laws encourage innovation? It is difficult to imagine that Cliff Richard entered the recording booth in 1958 thinking about the money he’d be making from it in 2007. He will have been most concerned about the money he’d make from it in 1958 and a few years after that. Nobody but the most egotistical and talented musicians would imagine raking it in for any longer than 50 years.
Having copyright lasting “only” 50 years didn’t stifle innovation in the 1950s and 1960s — the rock n roll and beat music booms happened regardless. And looking at the subsequent careers of these early innovators of pop music, it is difficult to argue that these strong copyright laws have done anything but stifle innovation. After all, why would you bother to make more great music if you are still making money from 50-year-old music?
That makes sense when you think about it. Copyright laws essentially ensure that an artist has a monopoly. And monopolies are detested because of their effects on social welfare.
Cliff Richard isn’t concerned about innovation. His only incentive is to get his grubby hands on even more money. What a relief that the government rejected the proposal in the end.
So what is the optimal length of copyright? A paper by Rufus Pollock suggests that it is approximately 15 years. A far cry from the life plus 70 years for some works, or the 95 years that Cliff Richard called for.
It is a similar story with patents. The justification for patents is more or less the same as that for copyright laws. But research (PDF) by James Bessen and Eric Maskin (who I wrote about a couple of weeks ago) suggests that protection of intellectual property should be more “balanced”.
The ideal patent policy limits “knock-off” imitation, but allows developers who make similar, but potentially valuable complementary contributions.
Empirical evidence backs this up, as an extension of patent protection into the realm of software in the USA in the 1980s did not lead to an increase in innovation.
An interesting point about Rufus Pollock’s research is that he suggests that copyright laws should be weakened as the costs of production and reproduction decrease. And the past decade has seen a massive reduction in the costs of production due to advances in technology — particularly the internet.
And it is the entertainment industry’s complete inability to adapt to this reality that has left it in the mess it is currently in. That will be the subject of my next post in the series.