Copyright is right

I recently sat down for a discussion with a young man about his views on copyright. His views were somewhat extremist, but are becoming more and more common amongst netizens as a wave of backlash strikes out, over certain industries perverting copyright usage into perpetual licensing rights. In short, he wanted to abolish copyrights and patents entirely.

It is of course easy to see how the view has come about, to quote the fellow, who we'll call 'Gape',
“The copyright, patent, and trademark laws prop up the big houses. it's why they lobby for them, and lobby for even stricter enforcement and stricter rules on them. If they thought for one moment that eliminating copyright, patent, and trademark laws would be to their benefit we'd see massive campaigns against them.”

Who would benefit from abolition of these things then? Lets look at, say, a music CD.

First, you have to write the songs, or since there's no copyright, you can cover them. However, you'll need to rent a studio, and equipment, and a sound engineer. That costs money. Eventually, you have your recording. Now, to release it, you just have to put it out there. You could try selling a download, or burning your own CDs, but these big labels, and indeed all the companies, could take your work and release it themselves. Additionally, since they have only had to pay for a copy of the music, and then only have the distribution costs to cover, and since the big record companies can afford to produce thousands of a CD if they think it'll do well, its cost per CD will be low. So low that they will easily be able to undermine the price of the contents producer. So they will get all the sales, and the musicians will just have a large hole in their pocket, and CDs that cost more to make than their competitors can sell at a profit. How many people would voluntarily spend thousands on music that they will never recoup?

What about they get a record contract then, you are possibly thinking. Well, in short, they won't exist. The point of a contract is to sign over exclusive rights for the distribution of music to a company. With no copyright, there is no exclusivity. It's a lot cheaper for the record company to spend $20 buying a copy of a CD, and release that, than spend say, $20,000 on the music in the first place.

Patents are the same story. If I were to design a new type of engine, ideal for ooh, mopeds and scooters, and other small personal vehicles, how would I get it to market? I've sunk £150,000 into development and testing, and prototyping of this new engine design. Without a patent, as soon as I release the engine design to try and recoup my costs, a big company, be it Black and Decker, Honda, or Briggs+Stratton could buy a single example, and mass produce copies much faster and cheaper, and to greater tolerances than I could, meaning they will also be more reliable. Where its costing me £200 in raw material (metal, springs and so on) and then £100 in energy costs to make the engine 9power for tools, heat to melt/bend metal etc), and I can make one every 3 days, Honda can spend £30,000 and set up a small production line, use their existing CNC machinery and produce engines for a cost of £120, and make 5 an hour at first. They could sell an engine for what I'm paying for the raw material and still make a profit. Meanwhile, I've sold a total of 20, because by that time Honda, and everyone else, is in production, and their cheaper engines, based on my design, are on the market. The increase in supply also means that i can't even charge a premium for rarity now. Even if those 20 were each sold for £1,000 each I've only had £20,000 back, and those have cost me £6,000 to make, so I've made back £14,000 of my £150,000 outlay, and now I can't sell any more.

I, the inventor, or the musician, have done all the work, spent all the outlay, and everyone else gets to profit from it, with the bigger you are in the field, the easier you will make profit. The equation simply boils down to if you create something new, you're going to take a heavy financial loss for it. With that kind of incentive, its hard to justify spending time and money on anything creative or innovative. You might as well take the money you would have spent and burn it.

Abolishing copyright and patents is not the answer. That way leads to eternal stagnation, as no-one can afford to take the financial loss that will come from being creative. Eventually, a new form of copyright will form, between whatever big players are left, gentleman's exclusivity agreements, that will reduce competition between rivals, and bring us back to the status quo.

Eventually, over a period of many years, things would stabilize and rectify itself, but until then, any country stupid enough to abolish copyright and patents would find itself quickly ostracised from the world of intellectual property. Goods embargoed, restricted sales of items and so on. It'd be just like the Cold War all over again, and in what way can that be good for anyone?

Ben jones