Economic Gridlock – the Invisible Cost of IP Law

smellsofbikes writes "This week's New Yorker magazine has a financial article, 'The Permission Problem,' discussing the hidden cost of patent, trademark and copyright laws. It's a subject anyone here already knows well, but he brings up two interesting points: 1) He uses the term 'tragedy of the anticommons.' Instead of depletion of a shared resource, this describes under-use of hoarded resources: areas that can't be explored because they're encumbered by patent/copyright issues. As he points out, the result of this is an invisible loss: drugs not made, software not written. The loss is impossible to quantify and difficult to see. I like the term 'tragedy of the anticommons' because it encapsulates a long-winded explanation into a pithy, memorable phrase that will stick with people unfamiliar with the topic. 2) He also cites a study by Ben Depoorter and Sven Vanneste that discusses why anticommons effects are seen, beyond mere competition. Individual right holders value their contribution to the overall project as a significant fraction of the project value, so if there are more than three or four right holders, their perceived value can far exceed the total value of the project, making it uneconomical."

Comments

Divesting yourself of intellectual property

[dada21]

I've been anti-copyright for years, testing the water in a large variety of industries to see how getting rid of copyright can actually aid artists. I've now discovered that in every market I've tested, holding on to copyright creates less profit for the artist.

In music, I helped 3 bands (one who is now on an international tour, has had MTV coverage, and sells out a lot of shows) move away from copyright. Tell your fans to bootleg your album, and amazing stuff materializes. It's free promotion, and the tour is where you make your money. Let the fans design their own shirts, and you're getting your own artists for nothing. The plumber makes his money doing repeat work, the musician does the same. The plumber goes to school, and learns new skills all the time; the musician does the same when they compose music.

I moved on to photography and discovered that giving away your photography (say, as free stock imagery) is the best form of marketing your ability as a photographer. I now know at least 3 photographers who openly give their images away online, and have seen their hired work double or even triple. Again, marketing is free if you give it away.

As a writer myself, I repudiate copyright on all I do. I openly ask others to reprint my writings, and even stick their own names on it if they want. Because I write about niche markets, the aid of distribution of my thoughts means more people are attracted to those ideas, which means they'll likely eventually find me. That's a huge benefit for me as I can then sell future newbies to the market on my newsletters, or even hire myself out as a ghost writer or personal writer. My income has surged because I don't copyright my writings, or even ask others to attribute me during the redistribution process.

Copyright doesn't inhibit a market in any way, it inhibits the artist who thinks they can retain creative control and distributive control of prior labor. That's over -- if you didn't charge for the labor, it's now a marketing tool. If you did charge for the labor, you've profited. If you market your abilities correctly, you'll get hired for the work in the future.

I do understand the "need" to patent medicines, but I truly believe even that is useless. Research and development for medicines does not need to be publicly funded or protected by patents. Instead, research can continue the way it always has: fund raisers, private charitable donations, and other ways to get the money needed to develop new medicines. What is the biggest reason medicine costs hundreds of millions to develop? The FDA and other organizations which restrict the market due to government intervention. No different from why copyright is a failure and harms the copyrighter more than it helps them.

YouTube cartoonists will trump Disney eventually. Online music distribution has already destroyed the record stores. Free PDF newsletters, blogs and other web products are killing the newspaper industry and periodical industry. Free product = marketing yourself for being hired to do new work. It's a good thing.

Re:Divesting yourself of intellectual property

[Shados]

Most of the examples you gave seem more like "Less restrictive copyright helps" than no copyright. Give your songs for free! The money is on the tour... Of course, as long as another band doesn't do -exactly- the same songs with a bigger marketing budget (and if everyone does it, ONE of the bands who copy you will most likely be bteter). Also, thats as long as the video of your show isn't in hi definition 7.1 surround blu ray the day after it for free (or even worse, SOLD by someone else). With absolutely -zero- copyright, its a lot less powerful as a promotion tool. (Now it works because you're only letting indiviuals step in... once corporations can rape your copyright too, things get a little grim). Oh, and without IP laws, people can rip off your name, your logo, everything, and not only sell it as free promotion to you... but make it -theirs- and use it for -themselves-.

If you're really well known... no one will think the "fake" Metallica is the real thing. If you're just starting though? BANG! Gone.

For the photographer... yes, giving their pictures away is great if they get their money from hired work (all photographers I know do this). But lets remove all IP laws for a sec there... The photographer's customers aren't going to be too too happy once their FACE (your pictures that you, not only gave away, but couldn't restrict in any ways, shape and form) is on a box of cereals or used on TV to advertise condoms.

Overly strong IP laws and copyright hurts, yes. None at all though... That will leave only niche markets. Heck, look at the extremes like China... their "illegal" copying practices are only working at all because there are people across the ocean who invest millions and billions in their IP products, because they have market for them. The result's good enough that a ton of people are willing to pay for even copies... But if no one needed the original?

And you'd want to stop regulations on medecines? If you did that, medecines would be even LESS tested than they are now... The customers would be "beta testers" like they are in software... oh yeah, that would work. Sure, its far from perfect the way it is now... (a lot of info is "hidden" to push the medecine out even if its known not to work), but without any market restrictions, they could just lie in your face legally on medecines that were barely tested on mice, woohoo!

The only example you gave that would still work with zero copyright or IP laws is your own (the writer stuff). We agree I think that the current system is overboard and doing way way too much, and its hurting rather than helping... Its an extreme. I don't beleive the OTHER extreme is any better, however...

Re:Divesting yourself of intellectual property

[poetmatt]

Actually, the person you are replying to is 100% correct.

The only time the service doesn't work is in an unestablished industry with 0 competitors. In every other industry if you look long term giving things out for free makes exponentially more.

You are absolutely incorrect about medical patents. If it weren't for medical patents, my cousin would have been able to release a cure for a form of HIV she discovered about 5 years back. 5 years! But what happened? A similar modification by a big company has been patented, and they did it merely by patenting every possible variant of the string she used.

Patents are allowing the medical R&D companies to over-recoup the costs of research by a factor of 50+, easily, considering government sponsored research as well.

Lets look at other industries. If cars were given away through promotions (which happens all the time), do you think it might draw up more buzz for the companies?

Lets look at other industries. Take any product, and the more you sell it for, the less people come back for more business. The less you sell it for, the more competitive and more people come back for more business. All products break, or wear down, or need some sort of service. Not all products are worth buying twice in anyone's eyes.

This is also why well trained and good customer service policies make or break a company. Think of Dell's customer service and how people hates them for that.

Another form of gridlock

[grahamsz]

I've seen a situation where a few major manufacturers dominate a field (which i wont name) but all have cross-licensing agreements with each other.

It'd be like Ford holding patents on wheels, doors and windows but GM holding streering wheels and brakes. Then they agree to cross license all their patent portfolios.

This effectively makes it nearly impossible for a newcomer to break into the field. They don't have the resources to challenge fords "wheels" patent, and all the people who are resourced to have that thrown out - aren't motivated to because they have a licensing agreement.

Move it back to 14 years.

[khasim]

Copyrights / patents ... if you cannot turn a profit in 14 years then it's your fault.

The system was not ORIGINALLY intended to provide someone with a lifetime's worth of income. It was to ENCOURAGE development.

Re:Calculating Loss

[Anonymous Brave Guy]

I'd prefer not to stoop to their level, but you don't win against a bully by fighting fair.

On the contrary, usually that is exactly how you beat a bully. Most bullies win precisely because the people they are bullying consider themselves constrained in ways the bullies do not. Release those constraints to put the participants on an equal footing, and most bullies lose very quickly.

This applies almost universally, whether you're talking about the kid who gets beaten up at school because the teachers always tell him not to fight back, or the RIAA cases against song swappers where one side has to pay silly legal fees just to get their day in court while the other side pays no legal fees if it gets settled out of court.

However, you're right that the results of the "loss calculations" for works never produced because of copyright would be just as valid as the RIAA's, which is to say not at all.