I think nowadays text is actually somewhat harder to copy effectively than video or audio. You tend to lose all the formatting information when the text is copied into its new environment. For example, books that are out of copyright tend to have many ways to buy it on a Kindle. But it's still worth paying a few dollars for an "official" supplier, because the other ones are often degraded in some way, with errors, or missing formatting.
For video and audio, on the other hand, all of the formatting information is canonically contained in the file. If all videos created before, say, 2004 were out of copyright, Netflix would be able to reproduce them essentially perfectly for free.
Not sure how this points to either shorter or longer terms, just a curious thing.
Yes! A related alternative is "Compulsory" copyright rather than "exclusive" which means that the holder only requires that anyone using the IP must pay a fee (Harberger tax would be a good way to set this fee) not that no one can use the IP unless they agree.
I am curious though, how would one set this fee using Harberger taxation? Would not the value of the patent fall dramatically if we adopted compulsory licensing?
> This upfront investment is what copyright is made to reimburse so if it decreases, copyright shouldn’t reimburse as much.
No. Copyright exists for the effects of the works that would not have been created, not to 'reimburse upfront investments'. If that was the purpose of copyright, J. K. Rowling would have made a few hundred thousand pounds (the cost of a UK woman living at welfare level for a decade or two) and that would be it. And if that was the purpose of copyright, authors would not need to receive royalties at all nor control the rights; did no one buy it? That's fine, the point was to reimburse you and you get a check for whatever receipts you held onto while writing. There, you've been reimbursed for your upfront costs: Mission Accomplished?
Obviously, neither of those is the case nor should they be the case. The upfront investment has little to do with the optimal regime, and so rises or falls in it do not affect copyright much. It has to do with the tradeoff between the deadweight loss of no one but the author being able to use a work, the value of the counterfactual works to a global public (including the compound long-term returns), and the elasticity of creator response to stronger/weaker copyrights.
Hmm yeah I can see where I went wrong there. I don't want to slip into labor theory of value. But I'm still not convinced that the upfront investment has little effect on optimal copyright.
Copyright exists to induce more production of positive externalities. The cost of producing these externalities has to matter for our strategy right?
It matters a lot less than the other variables, I think. How much does it really matter to J. K. Rowling whether her word processor software costs $50 or $100? Pretty much any variable whatsoever like 'current book market for twee boarding-school fiction' or 'expected translation royalties into Swahili' or 'Hollywood movie rights' or 'demographic forecasts in global child birth rates' changing by 0.00...1% outweighs that.
Presumably in your scenario, the Cameron flicks were worth at least $1b to society (since we know Cameron movies turn a profit), and so to be comparable, some of these $1 Sora feature films were also worth $1b+$1 to the audience/long-run and so if copyright allowed the $1 Sora feature films to extract $1b from society, society is still better off on net. And this has little to do with whether it cost $1 or $10 or $100 to make the Sora film. It's not obvious a priori why society should get *all* the surplus here and the creator gets ~0%, but anyway, the question is whether that Sora film would have been made without the carrot of 'extract much more of the consumer surplus rather than give ~100% away'. Just because it costs $1 doesn't mean anyone will do it. Lots of things cost $1 or less but no one does it. (I could stand on my head right now for free, but I won't. On the other hand, if you gave me a lottery ticket for $1b in exchange for standing on my head...)
The question is, does that carrot of copyright convince enough people to try to create great Sora films who would not otherwise do so, and is that enough to outweigh the simultaneous cost of locking up all new works by default for a lifetime? This is not an easy question to answer, because you need to look at the elasticity of creators at the current margin of IP rights versus the deadweight lossses, both of which are pretty hard things to estimate!
I personally think that current copyright regimes go much too far: in theory, creators should be almost totally indifferent to much of copyright protection given them so many decades out, exponentially discounted, while the occasional natural experiments we have suggest that there's a substantial amount of deadweight. But the cost of creation largely doesn't enter into this.
(And anyway, even if AI makes video generation super cheap, you shouldn't expect film budgets to fall by much. It'll just be a Jevons paradox, as we've already seen with SFX over the past half-century, and followed by even greater inflation in negative-sum marketing budgets to stand out in even more crowded media markets.)
1 Assume we have a dial that can adjust copyright from 1 year to 100 years. What are the tradeoffs? One year has dead weight loss from underinvestment. Be explicit about the dead weight loss from 100 years - and discount that loss to the present day.
2. Expand on the comparison with drugs. Developing and testing and getting FDA approval on a drug is the same order of magnitude of investment as a Marvel movie, and marginal cost in both cases almost trivial. I personally benefit from cheap generic drugs after 17 years, but maybe it should be longer to encourage investment.
I think nowadays text is actually somewhat harder to copy effectively than video or audio. You tend to lose all the formatting information when the text is copied into its new environment. For example, books that are out of copyright tend to have many ways to buy it on a Kindle. But it's still worth paying a few dollars for an "official" supplier, because the other ones are often degraded in some way, with errors, or missing formatting.
For video and audio, on the other hand, all of the formatting information is canonically contained in the file. If all videos created before, say, 2004 were out of copyright, Netflix would be able to reproduce them essentially perfectly for free.
Not sure how this points to either shorter or longer terms, just a curious thing.
In your opinion, would it make sense to impose a Harberger tax on copyrighted/patented works to make them more "liquid?"
This is something I have mulled for a while, it would reduce the incentive to squat on IP for the full duration of validity.
Yes! A related alternative is "Compulsory" copyright rather than "exclusive" which means that the holder only requires that anyone using the IP must pay a fee (Harberger tax would be a good way to set this fee) not that no one can use the IP unless they agree.
You sent me down a research rabbit hole. Thank you!
I am curious though, how would one set this fee using Harberger taxation? Would not the value of the patent fall dramatically if we adopted compulsory licensing?
> This upfront investment is what copyright is made to reimburse so if it decreases, copyright shouldn’t reimburse as much.
No. Copyright exists for the effects of the works that would not have been created, not to 'reimburse upfront investments'. If that was the purpose of copyright, J. K. Rowling would have made a few hundred thousand pounds (the cost of a UK woman living at welfare level for a decade or two) and that would be it. And if that was the purpose of copyright, authors would not need to receive royalties at all nor control the rights; did no one buy it? That's fine, the point was to reimburse you and you get a check for whatever receipts you held onto while writing. There, you've been reimbursed for your upfront costs: Mission Accomplished?
Obviously, neither of those is the case nor should they be the case. The upfront investment has little to do with the optimal regime, and so rises or falls in it do not affect copyright much. It has to do with the tradeoff between the deadweight loss of no one but the author being able to use a work, the value of the counterfactual works to a global public (including the compound long-term returns), and the elasticity of creator response to stronger/weaker copyrights.
Hmm yeah I can see where I went wrong there. I don't want to slip into labor theory of value. But I'm still not convinced that the upfront investment has little effect on optimal copyright.
Copyright exists to induce more production of positive externalities. The cost of producing these externalities has to matter for our strategy right?
It matters a lot less than the other variables, I think. How much does it really matter to J. K. Rowling whether her word processor software costs $50 or $100? Pretty much any variable whatsoever like 'current book market for twee boarding-school fiction' or 'expected translation royalties into Swahili' or 'Hollywood movie rights' or 'demographic forecasts in global child birth rates' changing by 0.00...1% outweighs that.
Say Sora is making feature films for a few bucks in 2028. Should copyright for these films be the same length as 1 billion dollar Cameron flicks?
I don't have a clear model of this but that just doesn't seem right to me. Where does your intuition on this come from?
Presumably in your scenario, the Cameron flicks were worth at least $1b to society (since we know Cameron movies turn a profit), and so to be comparable, some of these $1 Sora feature films were also worth $1b+$1 to the audience/long-run and so if copyright allowed the $1 Sora feature films to extract $1b from society, society is still better off on net. And this has little to do with whether it cost $1 or $10 or $100 to make the Sora film. It's not obvious a priori why society should get *all* the surplus here and the creator gets ~0%, but anyway, the question is whether that Sora film would have been made without the carrot of 'extract much more of the consumer surplus rather than give ~100% away'. Just because it costs $1 doesn't mean anyone will do it. Lots of things cost $1 or less but no one does it. (I could stand on my head right now for free, but I won't. On the other hand, if you gave me a lottery ticket for $1b in exchange for standing on my head...)
The question is, does that carrot of copyright convince enough people to try to create great Sora films who would not otherwise do so, and is that enough to outweigh the simultaneous cost of locking up all new works by default for a lifetime? This is not an easy question to answer, because you need to look at the elasticity of creators at the current margin of IP rights versus the deadweight lossses, both of which are pretty hard things to estimate!
I personally think that current copyright regimes go much too far: in theory, creators should be almost totally indifferent to much of copyright protection given them so many decades out, exponentially discounted, while the occasional natural experiments we have suggest that there's a substantial amount of deadweight. But the cost of creation largely doesn't enter into this.
(And anyway, even if AI makes video generation super cheap, you shouldn't expect film budgets to fall by much. It'll just be a Jevons paradox, as we've already seen with SFX over the past half-century, and followed by even greater inflation in negative-sum marketing budgets to stand out in even more crowded media markets.)
Two thoughts:
1 Assume we have a dial that can adjust copyright from 1 year to 100 years. What are the tradeoffs? One year has dead weight loss from underinvestment. Be explicit about the dead weight loss from 100 years - and discount that loss to the present day.
2. Expand on the comparison with drugs. Developing and testing and getting FDA approval on a drug is the same order of magnitude of investment as a Marvel movie, and marginal cost in both cases almost trivial. I personally benefit from cheap generic drugs after 17 years, but maybe it should be longer to encourage investment.