Academic journal article Vanderbilt Law Review

An Unhurried View of Private Ordering in Information Transactions

Academic journal article Vanderbilt Law Review

An Unhurried View of Private Ordering in Information Transactions

Article excerpt

We stand at an unprecedented moment in the history of exclusive private rights in information ("EPRIs").1 Technology has made it possible, it seems, to eliminate to a large extent one aspect of what makes information a public good-its nonexcludability. A series of laws-most explicitly the Digital Millennium Copyright Act ("DMCA") and the Uniform Computers Information Transactions Act ("UCITA")-are building on new technologies for controlling individual uses of information goods to facilitate a perfect enclosure of the information environment.

The purpose of this Essay is to explain why economic justifications interposed in favor of this aspect of the enclosure movement are, by their own terms, undetermined. There is no a priori theoretical basis to claim that these laws would, on balance, increase the social welfare created by information production. The empirical work that could, in principle, predict the direction in which more perfect enclosure will move us has not yet been done. Empirical research that has been done on the effects of expanded EPRIs--in the context of patents-is quite agnostic as to the proposition that EPRIs- are generally beneficial, except in very specific industries or markets.2 We are, in other words, embracing this new legal framework for information production and exchange on faith. Given the tremendous non-economic losses-in terms of concentration and commercialization of information production and homogenization of the information produced3--that a perfectly enclosed information environment imposes on our democracy and our personal autonomy, such a leap of faith is socially irresponsible, and, as I have argued elsewhere at great length, probably unconstitutional.4

It used to be that the distribution technology of information goods was such that once they were uttered-say, a copy of a book was released-the owner could do little to prevent significant dissemination of the information by the holder of the medium of the utterance. One could lend the book to a friend, quote passages, or make photocopies, for example, without the owner being able, as a practical matter, to do anything about it. Information goods were, in this sense, partially nonexcludable-to some extent the owner could not exclude others from making valuable use of the work, and to that extent could not capture the social benefit created by the work. Goods that have this attribute are public goods in the limited sense that they will be underproduced if produced solely by private parties, because some of their social benefits are external to the producer.

Encryption technology makes it possible, at least in principle, for owners of information goods perfectly to control access to, and use of, their products. With the right legal background, say some, encryption could solve the public goods problem of information production. We could prohibit decryption of technical measures that control access to works, and enforce contracts made among private parties regarding the use of information goods. This would introduce a regime of private agreements regarding the price and terms of access to creative works, which would be more efficient than subjecting all information transactions to uniform background laws. The legal implementations of this optimism are the DMCA's anticircumvention and antidevice provisions, and the UCITA's enforcement of mass-market clickwrap licenses, including license terms that give vendors greater rights to control access to or use of the work licensed than general copyright law gives them.

There are three types of "economic" arguments in favor of the laws that support encryption and licensing as means of displacing background copyright law with private agreements. The first, which one might call the simplistic argument, is that if vendors can charge for all uses valuable to users, then users can use price signaling to signal vendors what information they value. Producers will respond by increasing production of what consumers are willing to pay for. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.