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Here we'll explore the nexus of legal rulings, Capitol Hill policy-making, technical standards development, and technological innovation that creates -- and will recreate -- the networked world as we know it. Among the topics we'll touch on: intellectual property conflicts, technical architecture and innovation, the evolution of copyright, private vs. public interests in Net policy-making, lobbying and the law, and more.

Disclaimer: the opinions expressed in this weblog are those of the authors and not of their respective institutions.

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June 1, 2004

Fruit Baskets, Free Riders, and Fair Use

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Posted by Wendy Seltzer

Dinner with Quinn fortuiously set me to reading her observations on the free rider problem:

We put a huge amount of resources into punishing and excluding free riders in many parts of society. But is it because they are actually problem, or is it because they piss us off so bad?


My local CSA's trade box was just another good idea: at the pickup site there is a cardboard box you can drop things you don't want (and would most likely waste) and pick out other people's goodies that they didn't want. It had to be a net positive. Then they decided to make it fair and try to exclude the free riders. There's a sign on the box now that says you can only take something out if you put something in. You know, to keep something in the trade box, i guess.

When you think about it, the problem becomes apparent. If you want everything you got that week you either have to exclude yourself from the tradebox, giving up something that possibly no one else want, or give up something which it may turn out no one wanted, and you would have happily eaten. Most painfully, if no one defects from the system, it guarantees that at least one item will go to waste every week. So the tradebox was a great way to reduce waste, until they decided to kick out the free riders, and it became the vector for waste. But at least it's "fair" now.

Food that rots in the box is the co-op's deadweight loss. At some point, guarding the commons to exclude free riders saps more value than it protects. What's more, today's free rider might be tomorrow's donor or innovator, though those who bridle at "free riders" might be more comfortable with "beneficiaries of consumer surplus." In their determination to stop copyright free riders, copyright holders are causing great social harm.

These problems aren't new to copyright. They just show up here more often because technology has driven the marginal cost of the next copy of a copyrighted work near zero, and peer-to-peer lets independent re-distributors shoulder those costs that remain. As a matter of hard costs, the free rider costs the copyright holder and publisher nothing. So long as we can get over the startup hump -- giving creators enough incentive to get the first copy of a work produced -- we should be able to give everybody access to it.

Copyright has long recognized this paradox. The Consitutional compromise is to give authors exclusive rights for limited times. But today, of course, the times have gotten longer (CTEA), the costs of exclusion (DRM or the PIRATE Act) have risen, and fewer and fewer members of the public get to benefit from the consumer surplus of a smoothly functioning market.

We may not have all the answers to a perfectly functioning copyright commons yet, but it can't be to assume, as the MPAA's copyright "education" does, that "If you haven't paid for it, you've stolen it." Only a broken system leaves orphan films to rot because the only ones willing to restore them don't hold (and can't find holders of) the necessary bundle of rights.

Comments (1) + TrackBacks (0) | Category: IP Markets and Monopolies


1. _Eden on June 8, 2004 3:26 PM writes...

"But at least it's "fair" now." -It is amazing the distance an industry (or in the case of your article, the regulatory agency behind a community box) will go to ensure that no one receives without giving; thus, creating a "fair" situation. Nevertheless, they're wrong; it's a blind faith outside of maintaining some sort of equilibrium of one's respective box which inevitably provides the greatest returns and success.

Just because an individual takes from a specific "box" or "author" does not mean that person must return, in one fashion or another, to that particular "fund." By introduction such stipulations as to where and when the giving must take place, I agree – it's the ignorant attempts to maintain that which does not need maintenance.

We, a nation of copyright hoarders, are so dead set on maintaining this need for intellectual works that we con ourselves into believing that more protection equals some sort of extended incentive and greater value of works. In fact, the extended protection results in an exact opposite effect. I personally believe that Copyright has a split approach to creating incentive: Yes, you are rewarded for you creation - that's the first influence - but you are supposed loose the reward after a "limited" time - thus, the second influence.

Today, it's all about sitting on creativity and then eventually passing it on, thus rewarding those who did nothing creative for society.

This is an awesome blog - thanks for sharing!

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