After a seminar last year, I met a representative of Google and fell into a conversation reminiscent of Who’s On First. I said Google is a great search engine and it should make me and others pay for using it. He assured me that the company has no intention of charging. I responded that its value to me far exceeds the amount of a modest fee, and if the company charged then it could spend the proceeds doing even more good things, and I would get even more surplus value. He answered that I need not worry because they are making money from ads and other services and will not make users pay. I said I worried that they might not be making enough money.
He edged away, keeping a wary eye on this madman.
But the point is serious. Consumers should want to pay for intellectual property. Only in such a system – a market – can they transmit to producers the proper incentives to provide goods and services of the quantity and quality that they (the consumers) desire. So they want to express their preferences directly with money, not force purveyors of useful services to cadge dimes from advertisers or patrons.
We have a market system of intellectual property, and over the years it has worked pretty well. A combination of technological limitations, legal doctrines, and social convention has allowed producers to scotch serious piracy while leaving sufficient play in the joints to keep consumers from being unduly inconvenienced. Principles of fair use have also recognized that producers and consumers are not completely separate categories, that intellectual property is often an input into even more IP, and that there must be allowance for transformative use.
The digital revolution put a spoke in this wheel by removing the technological controls. For example, it was once cheaper to buy a book than Xerox® it; now, it can be scanned. To make a copy of a copy of music resulted in considerable degradation; now, digital copies are perfect to infinity. The last technological dike is the slowness of dial-up Internet connections, and that one is eroding fast as broadband deploys.
To meet the problem, hundreds of companies are working to create new technical dikes in the form of encryption, hardware requirements, or other forms of Digital Rights Management (DRM). It is not clear how to make these work, or what the best approach will be, or what marketplace compromises need be made between IP protection and consumer convenience, or how to maintain diversity and competition.
These problems are hideously difficult. Three things are clear, however.
(1) Consumers have the largest stake in DRM. Some argue that IP can be funded by advertising, the patronage of the rich, T-shirt sales, or taxation, but they are wrong. None of these substitutes for the power of markets.
(2) Some “consumer advocates” are actually consumer enemies. Digital Consumer is pushing a Bill of Rights that would have the practical effect of outlawing DRM, and the Electronic Frontier Foundation, which does good work in some areas, provides a home for demented academics of like mind. The real agenda seems to be to replace a regime based on property and markets with a fuzzy communalism.
(3) Government mandates would be premature and destructive.
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