Dean Baker on IP

Dean Baker is one of the most interesting public intellectuals working in DC. His blog Beat the Press does a great job correcting misconceptions about economics generated by the MSM. He has a number of interesting insights on the relative competence of government and business. I just noticed that the PAER has published his piece “The Reform of Intellectual Property.” A few excerpts are below the fold. . . .

Like many copyright scholars (look in Salil Mehra’s paper on the iPod tax for a good roundup), the economist Baker favors a separation of rights to compensation from rights to control:

It is possible to design a system that compensates creative workers, while still leaving the choice of material to individuals (rather than some government commission), and eliminates the economic distortions associated with copyright. The basic point of such a system would be to compensate the creative worker at the point where they do their work, rather than compensating them after then fact for the work. If the creative worker is compensated at the point where he or she produces the material, then there is no need for copyright, the work can be transferred as quickly and freely as technology will allow.

One mechanism for this sort of compensation is a system of individual vouchers, where each adult can be given a fixed sum (e.g. 50 to 100 dollars a year), which can only be used to support creative or artistic work. These “artistic freedom vouchers” (AFV) could be paid out through the tax filing system, so that individuals could make their payments each year directly through their tax return.

Clearly the AFV would have to be fleshed out at a level of detail that, say, Terry Fisher gives for new CRO’s in Promises to Keep. As tools for measuring audiences get more sophisticated, Fisher’s may be the better route to reform. Nevertheless, it is interesting to see the spread of such ideas in economists’ circles.

Here’s the philosophical conflict that Baker’s and Fisher’s ideas raise. Fisher wants artists to be compensated according to how often their work is actually viewed, or listened to. Baker apparently would rather have people choose ex ante whom to support. Baker’s approach may lead to a more “highbrow” public culture. I’ve heard that in some studies of Netflix queues, people are likely to keep moving edifying films slightly lower down in their queues–they know they *should* watch them, but want instant gratification now.

There’s some discussion of the divergence between actual, desired, and predicted media consumption habits in studies of Nielsen ratings and the new Soundscan. Many thought it a triumph when new measurers managed to get a real sense of what people actually watch, rather than what they write in their diaries. However, it may turn out that little apirational lies do more to preserve a public service culture than perfect reporting of actual habits.

One thought on “Dean Baker on IP

  1. The problem I have always had with Bakers (as well as anyone else’s) proposal that people be paid up front for their creativity, or the protection stop when someone has recouped his or her investment is based on two (I think relatively unobjectionable) premises:

    1. Neither the buyer nor the seller knows what the demand for creative end product will be at the time of creation (Frank captures this in the “highbrow” comment)

    2. As a result supply price for creativity is much higher than the ex ante willingness to pay for creativity, such that there will be a shortage of creative work if ex ante wages are all there are.

    The current writer’s strike is a good example of this phenomenon – the debate is not about the up front salaries, but instead it is about the back end residuals for wildly popular materials. The writers appear unwilling to exert creative energy simply for a higher salary, and similarly, the production companies are unwilling to spend more for every internet broadcast because not every broadcast will be a winner – if I am a production company I would ask the writers to take a salary cut in order to see more back end residual – if they want the reward they have to take the risk.

    In other words, for every Lazy Sunday and **ck in a Box, there are 10 or 20 “Andy Popping Into Frame”‘s and the like. Thus, I would argue that the best way to achieve efficient allocation of creative resources is to allow larger profits on the few hits to offset the losses on the many duds.

    There are many exceptions of course – those posting creative blurbs on YouTube are getting paid through notoriety, joy of creation, etc., but I consider that an aberration – how many YouTube contributors are making feature length films or 22 episode season (hour long, multi-camera, etc.) shows for free?

    To the extent that control can be separated from profit, therefore, I think that it has to come in some form of compulsory licensing for non-fair use of creative materials.

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