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The role of copyright in the Internet economy

By 21 June 2010 3 Comments

Ars Technica reports on a new study which claims “Weaker copyright protection, it seems, has benefited society.”

When we think about copyright, the most pertinent question to ask is not whether some change would produce less money for rightsholders, but whether some change would remove incentives to create. Has file-sharing reduced creators’ incentives?

Oberholzer-Gee and Strumpf presented a recent paper at a music business conference in Vienna that tried to answer this question empirically. By charting the production of new books, new music albums, and new feature films over the last decade, the authors tried to see whether creative output went up or down in correlation with file-sharing.

“Data on the supply of new works are consistent with our argument that file sharing did not discourage authors and publishers,” they write in their paper, “File-sharing and Copyright” (PDF).

I am skeptical, for some of the same reasons that I am usually skeptical of “the internet has changed everything!” arguments.  The Internet is not a magical device that makes everything free, copyright is not simply a legal mechanism to make creators get out of bed, creative output is not an undifferentiated mass of content and there are many more variables than just piracy that affect content production.

Based on this story, the study seems to miss the ways in which weaker copyright protections would be destructive.  It’s not necessarily that we produce less creative work – obviously, humans will never stop being creative – but that…

  1. We produce less higher-quality creative work than we otherwise would with better copyright protections (i.e., witness the movement towards low-budget reality shows, with higher-budget shows moving towards cable and premium channels; or note the difference between the quality of online-only production versus premium channel production)
  2. Consumers have fewer signals about quality of creative work that allows them to invest their time/resources more efficiently
  3. Creators and distributors have far less incentive to make their works more readily available in better ways.

Finally, another important point, a lot of the apparent viability of creative content is simply a function of the fact that creators can still make their money through offline distribution.  But what happens when “the internet” is not a relatively minor, tangential revenue stream, but instead THE distribution mechanism for content?  A tragedy of the creative commons.

As we move more towards online distribution for everything, the inability to protect content will slow the emergence and development of efficient markets and better distribution mechanisms. It won’t stop people from producing various forms of creative content, but then copyright has never been the only reason people create all content; it is the reason they create better content and do better things with it.


  • James DeLong said:

    These two authors published a similar study in 2004, which was eventually published in the Journal of Political Economy. Prof. Stan Liebowitz of the University of Texas had serious problems with it and published a detailed critique. (On Stan’s webpage, click on “Intellectual Property/File Sharing,” then on “What about the “Harvard” (JPE) Paper?”)

    I have immense respect for Stan, so I hope he weighs in on this new one. As I recall, the issues were discussed in several forums, and the debate was not amicable. One problem was that Oberholzer-Gee & Strumpf refused to share their data, which made it a bit hard to analyze.

    Oberholzer-Gee & Strumpf also filed an amicus brief in the Supreme Court in support of Grokster in 2005.

  • SiliconANGLE — Blog — Jeff Jarvis on Cable said:

    […] I’ve mentioned before, I am skeptical of “the Internet has changed everything!” analyses.  It’s great for the […]