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Is Cultural Production Really Driven by Copyright Protection?

By Hanno Kaiser

Arguments about the merits of increased copyright protection usually proceed in three stages.

1. Pro: “IP is like any other form of property.” Con: “No, it is not, because information is non-rivalrous. The main justification for exclusive property rights, allocating scarce resources, is therefore lacking.”
   
2. Pro: “We need to drive up the price for accessing today’s information in order to create incentives for people to get involved in the production of tomorrow’s information.” Con: “The incentive effect today is likely outweighed by higher input prices tomorrow. Moreover, as culture is a collaborative enterprise, propertization increases the transaction costs. Lastly, a linear increase in fuzzy boundaries results in an exponential increase in litigation costs. The net welfare effect from increased protection is in all likelihood negative.”
   
3. Pro: Be that as it may. The fact remains that in the real world cultural production is IP protected. Books and songs are copyrighted, inventions are patented, etc.
   

I am always a bit puzzled by the “real world” argument, because while undeniably most cultural production is copyrighted, it is not at all clear that the copyright protection is a significant reason for the production. This may well be an endemic case of post hoc ergo propter hoc. For example, most organic search results on Google or Yahoo seem to come from either non-profit actors (Wikipedia, blogs, forums, universities, SSRN, etc.) or from for-profit actors whose core business model does not depend on IP protection (newspapers, consultants, universities, blogs, etc.). The online advertising revolution is certainly a major contributor to that trend, because the advertising-supported business model is the excact opposite of the IP-based paradigm in that it relies on increasing distribution, not limiting it. Not even the software industry is predominantly IP reliant, with almost two times the revenues from services than from software sales. (See, e.g., Software and Information: Driving the Global Knowledge Economy).

Of course, this is not to deny that some business models stand to profit from increased IP protection, they most certainly do, as Herbert Hovenkamp and others have described in detail. The point is rather to question the assumption that most creative production is in fact driven by IP-based business models. The more actual cultural production takes place outside the IP incentives model, the less credible — and justifiable as a matter of constitutional law — the call for increased protection.

Full post as published by Antitrust Review on June 06, 2008 (boomark / email).