Recently Salon featured an interview with author Robert Levine, entitled "Does culture really want to be free?" Levine has written a new book, Free Ride, on the subject of intellectual property (IP). His subtitle is How Digital Parasites Are Destroying the Culture Business and How the Culture Business Can Fight Back, the thesis of which is predicated on a misunderstanding of property rights and a poor grasp of economics.
In this essay I'll begin with a brief outline of property rights, explain how IP fails to meet the requirements of tangible property, and refute some of Levine's other fallacies.
Over time, property rights emerged as a way of mitigating conflict over scarce goods. If there is a finite amount of something, say hammers, it's possible that at some point conflict over the use of a tool may arise. Establishing property rights, and institutions to enforce those rights and arbitrate disputes, tends to reduce this conflict.
Hans Hermann-Hoppe explains this concept by using the Garden of Eden as an example, where everything is in abundance. However,
outside the Garden of Eden, in the realm of scarcity, there must be rules that regulate not only the use of [property] but also of everything scarce so that all possible conflicts can be ruled out (emphasis in original).
If there are an infinite number of hammers, or a device exists to infinitely reproduce them, then the problem of scarcity disappears, along with the need for property rights. Intellectual property is not a scarce commodity. Whether it is the design plans to a rocket engine, the arrangement of musical notes, or the pixels of a digital image is immaterial. None of these meet the scarcity requirement to necessitate property rights. Each can be infinitely reproduced, without denying their use by the original owner.
Levine and other advocates of IP rights view reproduction as theft. But theft is not a synonym for duplicate. A key element of theft is depriving the original owner of his or her property, which does not occur when an item is reproduced. Therefore, IP should not have the protection that scarce property enjoys.
In the course of the interview Levine quotes Supreme Court Justice Sandra Day O'Connor regarding copyright and free speech. "The framers intended copyright itself to be the engine of free expression," she said. An interesting argument indeed, considering the actual wording from article 1, section 8 reads, "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries…." There is nothing in that clause regarding free speech. The history of copyright laws is rooted not only in protection for guilds but also in censorship. So to suggest that copyrights are intended to secure rights to free expression could only be described as Orwellian.
Levine asserts that "copyright laws … create some kind of market for intellectual property." And he's right to one extent; they do create some kind of market. The question however is, is it the kind of market a free society would have? Certainly not; there is a market now, but rather than one based on spontaneous order and voluntary trade, it's one of central planning, which is predicated on coercion.The market for intellectual property would, and does, exist independent of IP laws. There are no laws that seek to regulate the hat industry in the way that IP laws do music, and yet there remains a vibrant market for headwear. A market is nothing more than two or more individuals exchanging in commerce...
Perhaps if the historical record supported Levine's thesis that government intervention is vital to the culture market we could at least find it plausible. To see that such regulation is not in fact necessary one need only look to the case of book publishing in the United States vis-à-vis England in the 19th century. Michele Boldrin and David K. Levine (no relation) did just that while researching for their book Against Intellectual Monopoly, and what they found is compelling.
During this period England had strict laws of copyright while publishers in the United States were free to reprint works from foreign authors. Despite the lack of legal protection, English authors and American publishing houses still found it profitable to contract with one another. In some cases these authors earned more in the United States than they did from royalties at home.
This relatively liberal set of copyright laws allowed books to be published on such a scale that their domestic price was but a fraction of what Britons paid. For example, a copy of Charles Dickens's A Christmas Carol was available in the United States for only 6¢, while the same book was available on English bookshelves for almost $2.50. The result of such low prices, as Boldrin and Levine point out, was that literacy rates in the United States were much higher.
We might also ask what explains great classical music. Jeffrey Tucker has noted that it was the absence of IP laws that allowed composers to freely emulate and build on one another's works. Had IP laws been enforced in the manner they are today we would have missed out on so much of the great work. As Tucker explains, "There would be no progress in culture, ideas, or technology without [copying]."
Concerning the music business, Levine conflates low CD sales with a decline in total demand for music. But CDs aren't music; they're just one of many formats. It happens that they're becoming less desirable to consumers, as the principle of revealed preference has shown. Music downloads and streaming are increasingly becoming the most common media, and live performances are still the most lucrative aspect of the industry.
Many critics of digital downloading point to single-song sales as a terrible thing for artists. But this is only a terrible thing if the artist possesses marginal talent. Most people have probably experienced a time when they heard a song they liked on the radio and bought the CD, only to discover that overall it wasn't that good. Allowing consumers to buy one song at a time provides musicians an incentive to produce not one or two good songs for radio, but an entire record's worth of quality music.
Levine says in the interview,
Most online companies rely for their content, and hence for their money, on traditional media companies. If they destroy that business model, it's unclear what they're going to have to distribute. If you look at YouTube, eight of the top 10 videos are major-label music videos. If the major labels shrank to the point where they can't make videos, YouTube isn't much of a business.
These online companies are only the intermediary between producer and consumer, so it really doesn't matter who is creating content. Whether the traditional media companies or their business models survive or not, the Internet can still marry supply with demand. As far as clarity of what's going to be distributed is concerned, we can't know this a priori regardless of who's doing the production. Whether it's a traditional record label or an independent artist using YouTube to market himself, consumer preference will ultimately decide.
It does not follow that, because some of the highest-rated videos are from major labels, YouTube would become irrelevant for the business in their absence. All that shows is that major labels continue to provide the most popular products. If these traditional companies get left behind, there's still going to be a "top ten" on YouTube. The logical equivalent to his argument would be wringing our hands over Michael Phelps's eventual retirement from swimming. His departure won't mean that swimming as we know it will end; there will always be champion swimmers, and, who knows, maybe there's someone faster out there.
When asked to name the winners and losers following the digital age, Levine declares a short-term victory for the technology sector, and says the losers are large media companies. The long-term loser, he says, is everyone. Interestingly enough, he ignores the group that all of this is meant to serve: the consumers.
It is for consumers that businesses innovate, and artists create. In order to earn a profit, firms look to produce valuable goods; and to put food on the table artists hope to please their patrons. IP laws are nothing more than monopoly grants — and an affront to property rights in real things. In their absence, consumers would have access to more and better goods, because, without IP laws, emulation and improvement are possible.
Levine's conclusion that anything outside of the current scheme is going to result in the [destruction of the] "Culture Business" is shortsighted. It looks only at "what is seen" while ignoring "what is unseen." We see that big media and technology companies thrived. We don't see what could have come about as a result of copying, emulation, and, ultimately, improvement.