Countering arguments that would later prevail in the case of digital audio tape (“DAT”) technology, Stan Liebowitz argued that the case of Sony’s “appropriation” of the value of televised content was no different than that of other situations where an ostensibly parasitic product actually established a symbiotic relationship:

VCR manufacturers earn revenues selling a product which would, for practical purposes, have little value if not for the existence of copyrighted intellectual products. Notice, however, that an identical argument can be made for the producers of television sets, TV guides, antennae, Neilsen ratings, TV stands, etc.. All these products are strong complements with television programming and are “exploiting” the televi-sion market to earn revenues. Should they all pay a portion of their revenues to copyright owners (as cable television own-ers now do for retransmission of over-the-air
broadcasts)? . . . Perhaps copyright owners should pay part of their revenues to the manufacturers of these complementary products?

Seen in this light, the content providers appear like the avaricious candle-sellers of Bastiat’s parody, who petition the government to block the sun in order to increase their sales. They are trying to leverage public concern about the classic “free-rider” problem of in-tellectual property production into control over the value of all posi-tive externalities arising from their products.

and of course that leads us to Lemley’s very nice article on free riding in Tex. L. Rev.

The key question is whether we want the categorizers to be independent of the owners of the content they categorize. I need to think about this in terms of parallels in the physical world. For example, is there some principle to justify separate ownership of the “pipes” and “what’s in the pipes”?

There seems to be a big trend toward convergence–for example, the Sony that fought for fair use in 1984 now installs “rootkit” and other DRM goodies in order to maintain control over content. The RBOCs recent call for a net “tax” on traffic is meant, in part, to drive people to their own sites. (i.e., Comcast won’t charge for hits to its “Fan” of content, but may charge other providers if you want to go to their site).

I think this convergence is troublesome–that the increasing economies of scale will generate very powerful “cable/phoneline/satellite/content-owning” conglomerates. Guy PEssach, in his piece on Copyright’s Diversity Externalities, warns about this very well.

So hopefully, copyright fair use can loosen up a bit to make this type of business strategy less profitable.