Is Copyright Obsolete Yet?
August 2000

When copyright was first invented (that's right, somebody had to invent it -- it is not a naturally occurring element!), one of the main reasons for doing so was the copying was difficult and expensive. The percentage of capital required to produce a copy of a book, for example, was a high percentage of the total cost of the book (at least at the wholesale level). Since copying was a technological feat based on capital investment, marketing, and even some R&D, it seemed to make sense to provide a governmental crutch or subsidy (through protective enforcement) to stimulate the business of copying information.

That worked when copying was merely an automation of the process of handwriting, when copying involved physical ink on physical paper. The entry cost into the copying business was quite high, and governmentally-prescribed artificial scarcity of copies helped encourage the high investment required to enter that business. However, it gradually became less and less expensive to produce written copies of things. We scarcely noticed the cost reductions, because simultaneous to cost reductions were increases in the complexity of the printed matter: fancy fonts, pictures, diagrams, color printing, and other "innovations". In order to maintain the status quo with regards to price, publishers of printed matter did "value-added" marketing. Also involved was a growth in the complexity and the breadth of content, so that everything from cheap dime novels to scientific tomes could be produced and sold in bulk. Naturally the producers of such content would want a share in the profits.

However, over time there came to be alternative methods of information duplication, due to the fact that information storage media began to change. First the telegraph provided an electronic means of distributing signals (although without storing them for re-use). Later, the phonograph and other forms of musical media were devised, and copyright was eventually extended to these media. Similarly with film, broadcast, and more advanced electronic systems, copyright was eventually extended as a follow-on to the increasingly fast, cheap, and global copying systems.

The ultimate copying systems became global indeed. Telephone, satellite broadcast, and finally the Internet have made duplication and distribution of information a near-zero-cost phenomenon. There is a large fixed cost in establishing and maintaining these distribution systems, but when amortized over the number of participants in the network, the cost per transaction is essentially zero. This is on the other end of the original cost spectrum: instead of low-volume, high-cost, high-margin duplication, we now have high-volume, low-cost, low-margin duplication. Thus the ultimate question is, Does copyright have a valid meaning in this new technological regime?

To answer this question, we must first divorce the interests of the copiers from the interests of the originators of information. With the Internet, there is really no *technological* reason why artists, writers, and filmmakers cannot eventually sell individual copies of their works directly to individual buyers. Indeed, there is no technological reason why individual *performances* of artistic works cannot be provided, in real time, with a set of direct commercial transactions between artist and consumer. The only problem with this scenario is that it does not provide a profitable "middleman" fee for maintaining the networks. Any kind of direct payment system must allow for an allocation of money for the maintenance of computers and networking equipment, either through a flat fee or a per-transaction charge.

But in this arrangement, the leverage has changed hands. Now the cost of entering the market for copied information is near-zero, and the distribution costs for artists and writers have become near-zero. The equilibrium has changed; there is no longer a need to encourage entrants into the distribution business because the entry cost is already near zero. In fact, at this point on the curve the main obstacle to entry is in fact the pre-existing distribution arrangement! Yes, it is because of the studios, the publishing industries, and the bookstore and movie chains that we have obstacles to market entry by other parties. We have long-standing distribution deals and complex business arrangements from Hollywood to Washington that are threatened by the sudden shift from a high-duplication-cost to a zero-duplication-cost paradigm.

This situation is similar to what Detroit automakers encountered in the 1970s, when foreign automakers began to produce decent, fuel-efficient cars for well below what domestic automakers charged. And the reaction of duplication-industry bigwigs today is very similar to what Detroit bigwigs wanted 25 years ago: Protectionism. Even softmeister Bill Gates recently hinted that government punishment of Microsoft "might not guarantee that a U.S. company wins the next round." Corporate information networks and other data barons have lobbied long and hard to get the U.S. to participate in global protectionist schemes such as the World Trade Organization (WTO).

So if copyright was designed to fit a high-duplication-cost environment, what sort of legal structure best suits a low-duplication-cost environment?

Is there no longer a need for a distribution "middleman," as long as the network maintenance is paid for somehow?

Is copyright in its present form a guarantee of reasonable payment to artists and writers, or is it mostly for the benefit of the big guys who act as the middlemen?

Personally, I get the impression that copyright issues have turned America into a kind of "lawyers' paradise" where huge piles of money are extracted from a potentially efficient system in order to subsidize an obsolete, lethargic bunch of corporate dinosaurs. I see that a handful of writers, musicians, and actors garner the vast majority of big-money contracts and opportunities to showcase their talents, while a thousand other who are just as great -- or maybe even better -- are shunted aside because of the low-risk mentality of these giant distribution houses.

A revolution is coming -- a revolution from the production side, and a revolution from the consumption side -- where both sides have a lot to gain and most participants have little to lose. It is only the middlemen who are truly challenged to provide something of value, or else get out of the way. Copyright may not be obsolete as a concept, but its current implementation and the current array of legal precedents are about to be shaken to their foundations. The paradigm has already shifted; it is only a matter of time before the people catch up with it.

Most recent revision: August 1, 2000
Copyright © 2000, Tom Nadeau
All Rights Reserved.