Balancing the Rights of Creators and Consumers

Questions of authorship can obscure the real interests of artists and society.  The notion of “intellectual property” is based on a balance between a creator’s rights and social benefits.  This equation originally presumed a human creator, and proprietary rights were based on life-spans.  In the 20th Century corporations, with unlimited life-spans, intentionally attacked this rationale, purchasing politicians, dramatically expanding control.  Everything from compulsory licenses, to patent and copyrights have been redefined for the benefit of corporations. This obliterates the original rationale which drove invention and progress beyond all previous human history, in a short 200 years.  If it is not reversed, the US will inevitably revert to local corporate feudalism, and become an economic backwater in a global economy that ignores tributary licensing.

The crisis is easy to see in prescription drugs.  Pharmaceutical companies rely on federal dollars and state universities and hospitals for basic research, augmenting their own investment.  In return for public investment, patent laws are designed to expire to allow generic competition.  Unfortunately this system is broken on both ends.  Because patent protection begins with discovery, and drugs often take decades to develop, the 17 year term is compressed; companies must recover research investment in 7 years or less!  Consequently, companies develop successor products in tandem.  The successor is usually ready for market before the original goes off-patent.   An inconvenient original form, like an injectable or something you take 4 times/day, cripples generic competitors in the market.  A saner approach would be to return to the original conception of intellectual property by the Founding Fathers: It starts when the product comes to market to ensure a fair return on investment.  And it should not be extended to “me-too” improvements, to increase competition and encourage continuous improvement in formulations through innovation.

If Coca Cola cured cancer, would it be in anyones interest to raise the price of Coke to pharmaceutical standards?  If so, at what point is the loss of $1 2-liters offset by $200 ounces?  The real costs are found in delivery, not manufacture, so the margin is inconsequential. Taste and formulation are irrelevant to price: Coke charges more for Dasani water than it’s cola! The companies profits are tied to volume, and volume is driven by ubiquity, not rarity.  Competition is for market share, not form factor.    Clearly more is always more.  Period. By disincentivizing the obsolete notion of value-through-scarcity via patent control, many products clearly become more valuable.

Lets grant the status quo: An creator (individual or corporation) MUST be granted some exclusivity as reward for their labor.  A standardized system with voluntary participation has balanced rights effectively enough for half a century to grow not one company, but THREE major sectors of our ecomony (musical content drove broadcasting, invented recording technology which invented twin revenue streams of entertainment software/media and consumer electronics industry).  The predominance of Microsoft, Sony and GE, replacing GM as the critical bell-weathers indicates the scale of the shift from industry to information.

The Digital Millenium Copyright Act, and virtually every legislative direction beyond the original establishment of compulsory license are steps backwards, and an anchors on our industry and culture.  Attempts to cripple fair use and hobble the internet to make industrial artifacts more attractive are ignorant and reactionary.  Look back with 20/20 hindsight: every new technology has been resisted tooth and nail when it appeared, while every real advance has ultimately grown the industry.  Fans embrace value, and resist garbage.  The 8 Track Tape was the industries backwards answer to the cassette: a less reliable, program-chopping nightmare that cost more than it ever earned, while the cassette lives on.

The fact that the iTunes Music Store has sold 100 million songs contradicts the notion that value cannot be found in purely digital products.  Obviously someone finds some value in a product that has no physical dimensions whatsoever.  Hard disk space, on either end, is a given fact of life, and a diffuse cost.  At the end of the day there is no more pure example of value in intellectual property to fans and artists.  In spite of it’s shortcomings and limitations, it stands as proof-of-concept.

A common argument against compulsory licensing, and for proprietary control goes something like this: Should a neo-nazi group be granted license to Whitney Houston’s music against her will?  Or: Should the rates for extremely popular, successful stars be set by bottom-feeding desperate wannabes or vice versa?  In any analysis we look to extremes to predict outcomes, so these are fair questions.  But if we look at history, and examine what’s unique and new about our present, the answer to both questions, in even the broadest sense, may be yes.

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