Most people never have occasion to navigate the “intellectual-property” thicket so they might be susceptible to arguments like one I recently heard. I was asking permission to use a certain text for a final printed publication. The rights holder knew of my own views on these matters — I see copyright as government coercion — and so he couched his preliminary position in the form of argument that I’m summarizing here:
Yes, you can use the text for a modest fee that we will discern once we look at your final product. This is perfectly reasonable, as you can understand. You pay the printer. You pay the typesetter. You pay the cover designer. You pay your mail house. It only makes sense that you would pay the holder of the rights to this text.
Well, that an interesting argument, plausible at first look. If someone insists on getting the text for nothing — putting the text in the commons — isn’t he operating under a double standard? Isn’t this the same as demanding that the mail house send stuff for free, that the cover designer work for nothing, and the printer provide me charity?
Let’s consider the case carefully.
Unlike the case of all others who get paid, the rights holder here isn’t really provided a service, or, at least, that is not what he is charging for. He is charging for the legal right to use in printed form what is otherwise freely available. The rights holder is there to prevent the use of what you could otherwise do without harming anyone. He has the ability to stop production of my project; that is his only “service,” and I’m expected to pay a fee to stop this coercion from happening.
And unlike the case of others who get paid, the rights holder is not expending scarce resources in granting legal access. His letting me use the text does not mean that any resources are going away. My use does not displace other users — and this is different from the designer or typesetter, whose services to me displace other possible clients.
The conventions are also entirely different. Note that rights holders do not typically post prices. They grant permission and then decide the price they will charge, and this price can be anything. You have to pay that price or else not get the text. This is completely unlike printers and designers, who post prices, and, crucially, compete with many others who provide the same service. The price that others charge is a competitive price, and this figures into the final fee.
This hints at the central difference between what a rights holder charges and other prices that are formed in a market economy. The copyright holder is in the position of being a monopolist. Only that one person or institution can sell the text. No one else can compete, as a matter of law. This is the essence of “intellectual property”: what would otherwise be universalized is legally restricted to a single supplier. The consumer has no choice but to go along.
In a private market, this kind of threat to either pay up or get coerced is regarded as immoral — the kind of thing done by organized crime or by governments. It is not something that any private enterprise is permitted to do.
There are other analogies to copyright fees. Think for example of the fees that are charged by the police when you get a ticket. If you are caught speeding, you sit on the side of the road as the officer writes you up. You then wait for the mail to arrive so that the traffic court can tell you what you owe. You can dispute it but not with much success. You are essentially captive to an institution that is charging you.
It is helpful, then, to think of the fines associated with a speeding ticket as a tax. It is forced upon you, and your only choice to avoid the fine is not to drive (plenty of people get tickets even when they are not breaking the law). In the same way, this happens with copyright too. You have some negotiating room, perhaps, but essentially the rights holder is in a position of power over the consumer. You pay what the holder demands or else you don’t get to use the text.
In other words, the price that people pay for IP rights is not formed in a free market. It is arbitrarily decided by the rights holder in a noncompetitive environment.
The very idea that there would be a price just for a legal right is itself a problem, since the social purpose of prices is to allocate and ration scarce resources. The copyrighted text is not scarce and is in no need of rationing.
To be sure, there are many nonscarce goods that are delivered at a price in the free market. Think for example of the iTunes store. These are digital goods. They can be multiplied without limit. Whether iTunes sells one or one million makes no difference.
So what is being rationed in the case of iTunes? Leaving aside the copyrighted status of the music itself, the delivery mechanism is what consumers are paying for. Most of the music can be obtained in other ways — including pirating — but iTunes has managed to make it a benefit to consumers to have a great search engine and all the convenience that comes with instant delivery (and quality assurance). For this the company has managed to discover a way to bring in revenue. Consumers are willing to pay to avoid squandering their own scarce resource of time in order to avoid search costs. Prices are posted, there are many competitive outlets for delivery, and everyone is happy, more or less (but for DRM — what is this abbreviation? — which is copyright derivative).
I’ve noticed a trend among many copyright holders of highly valued texts. In response to technological changes and overwhelming public attitudes, many are liberalizing policies to permit free posting on the Internet and applying fees only when the books are offered commercially for printing.
This might sound reasonable, but let’s look ahead. The chasm that separates digital and print is starting to evaporate. Already, rights holders are mostly confused about what to do about print-on-demand services. In the old days, they would figure fees based on the number of items printed in advance of sale. But they have no idea what to do when the printing occurs at the time of sale.
It’s complicated enough when then producer of the book is using print-on-demand services. But what if the consumer himself or herself is in charge of deciding if or when to print. Now things get very messy. Already on the Mises Wiki, one can create a book with a drag-and-drop system entirely controlled by the consumer.
I just made a book called Three Panics in Early American History. I can print it myself or order a copy and have it bound and mailed to me. I did this in about 25 seconds. The Mises Wiki has content entirely in the commons, so there are no disputes. But what are rights holders going to do in a world in which this feature is common in all digital media? They will be completely foiled.
Looking at the long term of technology, it seems obvious that copyright is not long for this world. And that’s a good thing. The fees that IP holders charge are not really part of the market order. They only superficially appear to be. They have more in common with a parking ticket or the entrance fee to a national park or a “protection fee” charged by organized crime; it is not a market price, and it is not charged based on mutual agreement between buyer and seller.
