There is money to be made in this arena – I have yet to speak to anyone who said they would mind paying a reasonable fee for legal music sharing. Supposedly Apple has something in the works for their new I-Tunes service, and they’ve even managed to wrangle contracts with some top record labels. I’m hoping that this will serve as a proof of concept – make it a reasonable, unrestricted service and the users will come.

With the ability to take digital content and automatically create physical art, we have effectively made information into property. What we’ve done is make information into something that _must_ be treated like property, or else all of the rules of the physical world that have served us so well over the years just go away, and huge problems, legal and societal, ensue. The best way we know of to move forward is to build on past intellectual structures, and if we’ve lost the foundations of those structures, we must build them anew in the digital world.

My second thought is that in almost every case, it seems like most of society would rather look out for themselves (as individuals) than follow the law. If there were no guards against theft but the law, everyone would steal. That doesn’t make it right, or more importantly, that doesn’t mean we have to live with that seemingly natural state of affairs. We devise solutions, just as we devise public health measures and force them upon everyone, again seemingly against their will. So in my mind, the fact that “our kids” are now felons in large numbers should not be scoffed at. The vast violation does not imply that the laws are ridiculous, rather that effective measures (not punitive but preventative) are not in place to bring the preponderance of kids in line with the law…

The reason why it’s difficult to profit from information is that it’s easy to copy, so there’s an unlimited supply. IP amounts to the right to artificially constrain the supply for the purpose of increasing the amount that people are willing to pay for what’s left. However, it does no good to constrain the supply of a small amount of information because there are too many alternatives. If one musician figures out how control access to his music and demands a price, while all other music is available for free, the musician who demands a price will never get heard or paid. Control only becomes an effective means of increasing price if a central authority controls access to a large enough portion of the supply that people find paying a price preferable to circumventing the control.

The problem under such a system is that what is being rewarded is control, not creativity, and most of the benefits go to the creators of the control, not to the creators of what’s being controlled. It should come as no surprise that in every information based industry (e.g. music, books, scientific publishing, software) supply is controlled by a small number of companies, the people doing the creative work get little or (in the case of scientific publishing) none of the financial benefits, and only after agreeing to terms that amount to abrogation of their right to challenge the control of the central authority. This is not an accident.

Compulsory licensing with non-commercial carve outs would be a step in the right direction, but it starts with the assumption that the profits of the information industries must be preserved, and that consistent with that we should minimize the harmful impact on creativity. Why not start with the assumption that obstacles to creativity must be avoided, and consistent with that we should make it as easy as possible for the creators of information to make a living? That is, after all, what the Constitution requires. The sole authority of Congress to pass IP laws stems from the copyright clause. The framers of the Constitution intended for the copyright clause to be interpreted in a way that did not conflict with the first amendment. If we perceive a conflict, the first amendment, as an amendment, trumps the copyright clause.

Rather than a compulsory licensing system, why don’t we have a compulsory payment system? Jeremy Herrick has proposed replacing copyright with “profitright.”

http://www.uea.ac.uk/~j013/wipout/essays/0315Herrick.htm

Under such a system, creators would receive the right to share in the proceeds of commercial exploitation of their work, but not the right to control it. I would modify his proposal by enumerating the modes of commercial exploitation covered by profitright, and by requiring that the lion’s share of the proceeds accrue to the original creators, or that they obtain fair value for the sale of their profitrights.

For example, we could say that a percentage of the proceeds from the sales of CDs, ad revenue of radio stations playing music, movie theater tickets, home video rentals, and printed books would accrue to the creators of the content. There are other modes of commercial exploitation, but as long as we identify the largest ones, and ensure that the creators of the content receive a fair share of the proceeds, instead of the pitiful share they currently receive, everyone who is providing value benefits. The creators benefit because much more money will be available to support them, and they will no longer have to agree to the terms, amounting to indentured servitude, currently imposed upon them. Consumers will benefit because everyone, whether rich or poor, will have to the same unlimited access to information, and products and services maximizing the value of that information will finally be legal. The providers of those products and services will benefit, because by agreeing to be taxed to support the creators of content they will be ensuring the supply of content feeding the growth of their businesses. This solution is also “future proof” because as technology changes the list of modes of commercial exploitation covered by profitright can also be changed, without creating barriers to creativity or structural economic inefficiencies.

The only losers under this proposal would be the current information monopolies. Since they claim to be such proponents of the free market, they should get a taste of the free market when it’s really free. If they want to stay in business, they should get into a business providing products and services that people want. If they can’t do that or don’t want to, they should share the fate of other unprofitable businesses. In any case, they should stop whining that everyone is stealing from them, least of all some college kids who supposedly “stole” $100 trillion, when if fact the content monopolies are the ones doing all the stealing, and using the proceeds to pay Congress to make their brand of stealing legal.

1. By statutorily imposing a solution like this, it makes it much harder to establish a true marketplace for digital media – people are reluctant to pay twice. This will reduce overall spending on music.

2. Statistical measurement of a scale-free distribution like music (or the net) is hard to do well – because the central limit theorem does not apply, most sampling will count the large players accurately, but miss significant numbers of small players who may well predominate in aggregate. This kind of centralised scheme undoes the bottom-up formation and propagation of musical styles that the net can do, and puts us back into a top 20 world. I analysed movies, newspapers and weblogs scale-free distributions. If anyone has good data on music revenues by album or group, let me know.

3. Any centralised taxation-like scheme is highly prone to capture by a few interest groups – ASCAP and BMI are poorly regarded by independent musicians for this very reason.

4. By legitimating only non-commercial repurposing of existing copyright, it does nothing to cut through the thicket of rights and licensing that acts as dead weight on those who create; instead it pushes derived works into a second-class non-commercial status. My model in which derivative works pass through the cost of the source works is far more liberating.

A far better idea is to establish a true marketplace for media that incorporates incentives for those who buy and sell within it to reward copyright holders.

I’m made further comments in a blog entry of my own at
Extremism and the “RIAA 4” megadamages, vs. three-strikes laws