Expanding the Market’s Role in Advancing Intellectual Property

Issue Analysis 2005 No. 4

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The debate over copyright is one of technology and economics. The rapid progression of technology and, concomitantly, consumer attitudes and behavior, poses problems for the content industries’ dominant paradigms and business models as configured today. Enforcement costs for protection of old models—encouraged and calcified by congressional expansion of the length of copyright terms—are mounting. Some rights holders are now developing promising new business models that recognize these realities. To encourage this trend, lawmakers should consider dismantling regulatory barriers—particularly antitrust—obstructing the development of potentially superior alternatives to legal copyright protection. The Constitutional justification for copyright to “promote the progress of science and useful arts” is best served by markets not overburdened by excessive copyright regulation.

Proponents of an expansive copyright regime argue that enforcement costs are justified to protect a “right” that they maintain is as important as physical property rights. But intellectual property (IP) is different from physical property in many ways. As with physical goods, an important question in the copyright debate is: To what degree should copyright holders—artists, their agents, and the content industries—who choose to use the force of the state to protect their intellectual property pay for this assistance? 

Technological innovation can provide the answer. Instead of relying on taxpayers to fund enforcement actions, large copyright holders can internalize the costs of enforcing—or at least protecting the value of—their copyrights through new technologies for preventing unauthorized copying, while making copyright protection more efficient. Content producers can also use new technologies to offer differentiated products at differentiated prices to consumers showing different levels of interest in the work of particular artists. Such innovations should not be hampered by antitrust and other government regulations. One-size-fits-all mandates on critical consumer technologies will stifle the growth of the intellectual property industry and indeed, of new forms of art. A wide array of hardware-software combinations to choose from would best serve copyright holders—artists and the content industries—and consumers.