Saturday, July 08, 2006

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


  1. "Objections! your Honor"

    Ben, you might want to read this piece why abolishing copyright-law (that is something different then ownership law!) might not be as bad as the big cartels that holds these "Copy"rights our days, want to tell you.

  2. There is a flaw in that piece, KDSDE.

    For example, as a creator of music I would always have ownership to my works so I could keep on selling them to companies just like today, and they could keep selling them to the market just like today. There would only be this one important difference: copyrights being removed, the company could not set limits to how many copies of the work are being made, how it is further distributed etc.

    With no copyright, why would the company wish to make any sort of deal with you? You've lost the exclusivity to distribute, and they can just release a copy of it without any payment required to the creator. That is the point to the article. Companies will not enter into restrictive contracts to obtain goods at a cost, if they don't need to, and without copyright, they don't need to.

  3. Ben, the "exclusivity to distribute" was already lost in the moment the record company have choosen to distribute in 0's and 1's. There is no exclusivity in it.
    As long as they had produced a physical object (a vinyl for example) there was (some kind of) exclusivity. It was hard to challenge that kind of exclusivity when you are not a large country/company that had the technical resources to produce unlicensed copies of this physical objects.
    In our Days everybody can copy these 0's and 1's. There is no more exclusivness in the business! (And thats for example what the RIAA as the representative of the copying and distributing industry (and not as representatives for the creators of the music) is fearing and fighting.)
    And that's the point when you must start to seperate between Ownership in something and this fact of ownership and its accompenaying rights and "the right to make a copy". Your example that a company can simply buy a copy for 20 bugs instead of "investing" 20000 has this flaw in thinking that ownership rights is the same as copyright.
    Just because there would be no more "copy(preventing)right"-law does not automaticly mean that a company could grab the same piece of music and start selling it without paying the creator (owner) for that work.
    Companies will not enter into restrictive contracts to obtain goods at a cost, if they don't need to, and without copyright, they don't need to. Yes, they still have to, and they will! The Swedish economist ist just pointing out that a formal written law that is simply not obeyed by a large portion of the public has no value for the society at all! Laws are not made for the wealth of some corporations, but for the wealth of the society (which includes the creators of the "goods").
    Getting rid of Copyright-Law in the sense of; do not prohibit for individuals to give away for free without commercial interest on their side something they legally owned from a creator, is something that would be good for the public.
    Copyright Law != Property Law
    Copyright Law = Law to prevent cultural expandation
    You can't pass laws to ensure that people earn money. You can pass laws to give them rights, but if those rights aren't valued by the market, then there's nothing the law can do
    — Ruth Towse

  4. I will probably comment further, but I will begin by questioning why Honda would go to the trouble of imitating you. After all, they have to put in an initial investment themselves, though it is obviously much less than yours.

    Large companies tend not to be all that innovative. They've got their stuff they're selling, presumably quite successfully already. They don't need to change what they're doing unless seriously threatened. Why worry about what you're doing, and why take the risk when it hasn't proven itself in the marketplace?

    Honda would be motivated to imitate you if your invention turns out to be successful, but why should you worry about imitation then? You're already a success!

  5. You assume the future of the music industry is still in recorded music, but the music industry will have to adapt. Base your argument off a (not too inconceivable) reality where the vast majority of the profit comes from live performances instead, where a band's talent is more important than their recording equipment and record label.

  6. I know this is a tad bit late (understatement) but I'm a firm believer in copyright. I like the idea behind it but I understand why people, especially on the internet, have a strong grudge against it.

    I think to appease both parties (pro and anti copyright) is to rethink the business model used to secure publisher and developer income without the need to sell copies of that particular work. I'm still working on a solution. I'll get back to you when its done.

    As for the abolishment of copyright. No. The only thing a developer has without copyright, to guarantee income, is the fact that they are the original developers of a particular work.