Copyright in the Post-Napster World:
Legal or Market Solutions?
I am an economist. So my view with respect to the digital copyright wars of today boils down to, “I don't care what the courts say, I'll tell you what they should have said.” That economic perspective is a fairly narrow one, concerned usually with economic efficiency.
The balance to be struck over intellectual property is simple enough to state. People who invest in creating things need to receive sufficient rewards to make it worthwhile for them to make the investment—as long as the investment is one that should have been made in the first place, which is a very hard thing to know. But the key thing is whether or not that linkage between creation and reward can continue to exist in the Internet era. The digital revolution has raised the question of whether law or markets are the best means of incentivizing the creation of intellectual properties, such as movies, music, and books.
The truth of the matter is that copyright owners have often cried “wolf” when a new technology appeared at the door, particularly when they didn't understand the technology or its implications well and merely assumed that it would threaten them. The most famous example is Hollywood's reaction to the videocassette recorder (VCR), a campaign that resulted in the Supreme Court, by but a single vote, allowing the VCR to remain legal. History has demonstrated that Hollywood was fortunate to have lost the case. Even though content owners cried “wolf” for copying technologies in the past, however, I have a feeling they're right about Napster and peerto-peer networking. Rampant file sharing of digital copies of what had once been relatively safe content really does represent a wolf at the door.
However, even though Napster and its descendants like AudioGalaxy, MusicCity, and other peer-to-peer systems have considerable potential to harm copyright owners, there is a potential solution