Egalitarian Copyright (4): High Volume, Low Margin Business Models

Back in 2002, two coauthors and I wrote a pretty long article on the music industry. We predicted then that providers who moved from a “low volume, high margin” business model to “high volume, low margin” would do best in the emerging media marketplace.

Unfortunately, that may have been wishful thinking. Scared by filesharing, content owners (and big distributors) have retrenched, keeping CD prices high and fixing iTunes prices at a dollar a song. (I admit, some CEO’s at the Big Four say they want “variable pricing,” but most media reports suggest precious little willingness to vary those prices down; rather, the idea seems to be a one dollar baseline and hits at $2.49 or $3. And yes, there are some reports of “price wars” starting at rival services, but don’t hold your breath for those to reach the dominant player (iTunes)).

These are troubling developments, and they span the range of copyrightable works, denying access to many people who simply cannot pay, and who make no one worse off by enjoying these works. Terry Fisher’s book Promises to Keep provides the best answer here: give everyone access to all content in exchange for a tax on broadband (apparently about a $10 a month tax on the 35 million or so broadband subscribers would cover all the revenues of the entertainment industry.) . . . rather like the recording industry has repeatedly forced composers and lyricists to accept a governmentally set compulsory license (rather than retaining the right to stop recordings of their songs).

Well, Fisher’s proposal isn’t likely to be adopted anytime soon. So we need to start looking for “second-best” solutions. What might those be? (more after jump)

I think there must be some way of rewarding businesses that try to expand access via a “high volume, low margin” model. Perhaps we can see it emerge in the fair use doctrine…just as Justin Hughes and Joseph Liu have suggested that a work be more open to fair use as it ages, perhaps it should be more open to fair use if its owner appears to set extraordinarily high licensing fees.

Or there could be higher penalities for people who arbitrage or otherwise subvert a low-margin model. If I were a judge, I’d certainly be “angrier” at a person who ripped off a service offering songs at 10 cents a pop than one offering songs at $1 each. A person who defies a CCC demand for $40 for one copy of a newspaper article also seems more sympathetic than one who neglects to pay a more reasonable demand of, say, $1.

Given the comments on this post, I think this proposal will meet with some resistance in the academy. There is a sense out there that history matters, and matters absolutely–if someone has gotten absolute control over a piece of property, they deserve “despotic dominion” over its disposition. I just find that kind of property rights absolutism incongruous in the copyright context, where we already have so many provisions for compulsory licensing on the books.

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