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Creative Content Needs Functioning Markets

By 13 July 2010 2 Comments

So much is going on in the world of content and intellectual property that it is hard to keep up – the release of the 2010 Joint Strategic Plan on Intellectual Property Enforcement, the Viacom/YouTube and Flyonthewall cases, the Immigration & Customs Enforcement’s “In Our Sites” offensive against movie piracy, the negotiations over the Anti-Counterfeiting Trade Agreement (ACTA), the recent USPTO-NTIA Symposium on Copyright Policy, Creativity & Innovation in the Internet Economy; the Comcast/NBC merger.

A useful organizing theme, I submit, was in an email sent to me recently by a colleague, commenting on the judgment by the artist once again known as Prince that the Internet is over: “I think Prince is obviously wrong, too, but he has a good point about the market failure of the Internet – i.e. the lack of a functioning market for digital content.”

Market in Belfast (Photo by Ross)

This is indeed the essence of the problem. As is so often the case with market arrangements, for a couple of centuries we have been able to rely on markets to produce and distribute creative products. These markets have never worked perfectly – markets never do – but they worked well enough to do the job. Sometimes technological development would require some tweaking of the legal rules, but never before have we had such total technological disruption of functioning markets, with a corresponding disruption of legal rules that were designed to fit the old technologies.

Whatever illusions the academic and cultural left may have about a world in which creativity is all open and free and produced out of sheer exuberance, these are indeed illusions. There is no substitute for the hard work of providing incentives and coordinating mechanisms that is performed by markets. So the primary task of everyone involved in the intellectual property system should be to cobble together new combinations of technological measures, new legal rules, and enforcement mechanisms to rebuild the markets for creativity.

Some of the participants are indeed trying to put together new systems. But, as always in human affairs, there can also be profit in a crackup, and some others are determined to prevent the attainment of solutions because until new rules and practices come into being they can profit from the fact that a lot of very valuable intellectual property is there for the grabbing.

2 Comments »

  • Christopher Meatto said:

    I respect your basic thesis reflected in the title.

    Yes, there are many on the CopyLeft who certainly appear to have an irrational exuberance about the effect of completely open digital markets.

    We will move, for sure, to different forms of capital markets for creative content, and the process is already in the works.

    I do believe that the current process is the <a href "creative destruction defined by Schumpater. “In Schumpeter’s vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies and laborers that enjoyed some degree of monopoly power derived from previous technological, organizational, regulatory, and economic paradigms.”

    Finally, I think one might argue that the market itself will define and create a functioning market. If YouTube would have stopped at the Stop Sign of technical copyright law, the creation of that market would have been delayed. This cannot be a rules based journey, but a market driven one.

  • Digital Society » Blog Archive » Papering over the Problem said:

    […] The “fracturing” point is correct, but the problem is not the multiplicity of outlets but the lack of effective property rights and thus the collapse of markets. […]