Cultivating Copyright

How Creators and Creative Industries Can Harness Intellectual Property to Survive the Digital Age

Bhamati Viswanathan

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781351104784
• Edition: 1
• Topic: Droit
• Subtopic: Droit de la propriété intellectuelle

Creators and creative industries are struggling to navigate the digital age. Intellectual property rights, including copyrights, trademarks, and patents, offer invaluable tools to help creative industries remain viable and sustainable. But to be fully effective, they must be considered as part of a greater ecosystem. Cultivating Copyright offers a framework for tailoring flexible strategies and adaptive solutions suited to diverse creative industries. Tailored solutions entail change on four fronts: business models and strategies, legal policies and practices, technological measures, and cultural and normative features. Creating strong creative industries through tailored solutions serves critical functions: promoting richly varied artistic endeavors and supporting democratic flourishing.

1 What Is the Problem

Copyright and Creativity in Crisis

The creative industries are in crisis. Multiple factors have contributed to disrupt their business practices on such a scale that they are now facing unprecedented struggles to survive. Any one of these industries—music, entertainment, publishing, journalism, and fashion, to name but a few—has faced turmoil in its history, and most have experienced cycles of growth, disruption, uncertainty, and eventual recovery; but it is hard to point to a time when all of them have struggled at once, and with such broad economic swings and reversals. It remains to be seen whether the change is irreversible—but what is clear is that it urgently requires reform.

Addressing the current state of affairs requires understanding how the creative industries arrived here. The crisis that faces us is long in the making, and tracing out the path that brought us to this juncture would require a book of its own. But the roots of copyright law and the economic realities of creative industries are well-established and enduring foundations on which that path is laid. Exploring their basic principles, and tracing their development to the new digital age, is a fitting place from which to start and launch the inquiry: how can creative industries survive the digital age?

1.1 The Germination of Copyright

Creativity has always been an expression and a sign of human flourishing. In music, art, and storytelling, expression began with communal traditions that were only occasionally preserved in recorded form: a handful of scribes laboriously transcribed musical plainsong, some artists made devotional paintings and sculptures that adorned places of worship, and storytellers learned oral narratives that they recounted to live audiences. Eventually, works began to be recorded, and recordings started to become valuable. The introduction of the Gutenberg Press made books available for readership and circulation on a previously unimagined scale. The development of the recording disc, the innovation of the phonograph, the progress to magnetic tape recording, and all the iterations that followed made sound recordings available to listening audiences first in public venues and music halls and then at home. As these recordations of creative works gained wide circulation, they became increasingly sophisticated, their fidelity to the original work improved, and they grew increasingly popular with enthusiasts and ever-larger audiences.

The advent of copyright law grew from these bursts of creativity—not just in creation, but also in the production, refinement, and delivery of creative works. It is vital to bear in mind that copyright was born of the impetus to make creative works but also to make them available to others. Naturally, one part of that drive to create access was commercially motivated: creators and producers wanted to get paid for their work and to ensure that in the future they would be compensated if that work proved valuable in their creative market. But another part of that drive to create access was shared, if not perhaps universally recognized: to add to the cultural heritage shared by society, and to inspire, feed, and give future artists the materials and resources that would help them in turn add to culture’s creative capital and its bounty.

Doubtless competitive interests drove copyright law as well. The history of copyright in U.S. book publishing makes this eminently clear. The advent of copyright law in the U.S. was hastened by the contentious relationships between British publishers, American upstarts, and brash entrepreneurs who sought to engage in a kind of literary arbitrage by buying works in England and selling them at a discount in the U.S. Even the first instance of U.S. copyright law was written to protect American publishers’ rights and returns. But under the influence of Noah Webster, American authors and publishers came to learn the value of copyright, and to understand that it could pay dividends that compensated for the initial risks taken to bring a book to market.¹ The early contentiousness over copyright in book publishing led to the creation of agreed-upon federal copyright law. But it also serves as a reminder that battles over the control of creative works have deep and lasting roots in commerce that resonate to the present day.

1 See James N. Green, The Rise of Book Publishing in America 1782–1830, Library Company of Philadelphia, available at http://www-management.wharton.upenn.edu/raff/documents/Green_2.pdf.

1.2 The Economic Justifications for Copyright: The Appropriability Problem; The Production, Structural, and Expressive Functions of Copyright

Early tussles over the rights to bring creative works to market and to reap their value laid the groundwork for the development of copyright. Many scholars have sought to justify the grant of copyright on various philosophical grounds.² One proposition is imported from John Locke’s views on real property, and holds that property rights are natural rights earned as the rightful fruits of one’s labor and investment in tending to, developing, and stewarding one’s property.³ That natural rights view has been the subject of much dispute with respect to both real property and intellectual property, but it still has a powerful appeal to those who believe that originality takes great investment on the part of creators, and that their investment deserves to be rewarded accordingly.

2 See generally William Fisher, Theories of Intellectual Property, in New Essays in the Legal and Political Theory of Property 168, 170–3, 184–94 (Stephen R. Munzer ed., Cambridge University Press, 2001).

3 See John Locke, Second Treatise of Government (1690), available at www.gutenberg.org/ebooks/7370.

The philosophical underpinnings of copyright law are too vast and disputatious to canvass here. But there is compelling ground to justify the grant of copyright on economic grounds alone. The economic justification of copyright gives a cogent framework for understanding why copyright arises and how it effectively functions. A fundamental principle underlying copyright in creative works is solving the appropriability problem of public goods. Creative works are generally agreed to fall into the category of “pure public goods.”⁴ Public goods have two key characteristics. First, public goods are nonexcludable, in that producers cannot provide their benefits to one consumer without simultaneously providing those benefits to other consumers. Second, pure public goods are nonrival, in that the consumption of goods by one consumer does not reduce the supply available for consumption by others.⁵ Nonrivalry is predicated on the assumption that the marginal cost of making an additional copy of a copyrightable work is zero.⁶ Together, these assumptions imply that creative markets will provide insufficient incentives to produce copyrightable works and will provide insufficient access to those works that are produced. They also imply that any attempt to alleviate the problems of underproduction will exacerbate the problems of underutilization.⁷

4 For the seminal statement tying intellectual property to the theory of pure public goods, see Kenneth J. Arrow, Economic Welfare and the Allocation of Resources for Invention, in The Rate and Direction of Inventive Activity: Economic and Social Factors 609, 614–16 (Nat’l Bureau of Econ. Research, ed., 1962). In the copyright literature, see Stephen Breyer, The Uneasy Case for Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs, 84 Harv. L. Rev. 281 (1970); William W. Fisher III, Reconstructing the Fair Use Doctrine, 101 Harv. L. Rev. 1659, 1700–5 (1988); Wendy J. Gordon, Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and Its Predecessors, 82 Colum. L. Rev. 1600, 1610–11 (1982); William M. Landes & Richard A. Posner, An Economic Analysis of Copyright Law, 18 J. Legal Stud. 325, 326 (1989); Mark A. Lemley, The Economics of Improvement in Intellectual Property Law, 75 Tex. L. Rev. 989, 994–9 (1997). For overviews of the economics of public goods, see Richard Cornes & Todd Sandler, The Theory of Externalities, Public Goods, and Club Goods 143–239 (2nd ed., 1996); William H. Oakland, Theory of Public Goods, in 2 Handbook of Public Economics 485, 486–99, 502–22 (Alan J. Auerbach & Martin Feldstein eds., 1987).

5 See R.A. Musgrave, Provision for Social Goods, in Public Economics: An Analysis of Public Production and Consumption and Their Relations to the Private Sectors 124, 126–9 (Julius Margolis & Henri Guitton eds., 1969).

6 See Yochai Benkler, An Unhurried View of Private Ordering in Information Transactions, 53 Vand. L. Rev. 2063, 2066, 2070, 2078 (2000); James Boyle, Cruel, Mean, or Lavish? Economic Analysis, Price Discrimination and Digital Intellectual Property, 53 Vand. L. Rev. 2007, 2013 (2000); Timothy J. Brennan, Copyright, Property, and the Right To Deny, 68 Chi.-Kent L. Rev. 675, 698 (1993); Mark A. Lemley, Property, Intellectual Property, and Free Riding, 83 Tex. L. Rev. 1031, 1053–4 (2005); Neil Weinstock Netanel, Copyright and a Democratic Civil Society, 106 Yale L.J. 283, 292 (1996).

7 Christopher S. Yoo, Copyright and Public Good Economics: A Misunderstood Relation, 155 University of Pennsylvania Law Review (2007), available at https://ssrn.com/abstract=948229.

In the digital world, creative goods approach the classic characterization of pure public goods: one person’s consumption does not diminish their availability to others, and they can be perfectly reproduced at essentially zero marginal costs.⁸ Thomas Jefferson expressed the essence of this concept more poetically:

8 Lee Davis, Is Appropriability a “Problem” for Digital Information Goods? (2001), available at https://openarchive.cbs.dk/bitstream/handle/10398/6819/wplefic012002.pdf?sequence=1.

If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.⁹

9 Thomas Jefferson, Letter to Isaac McPherson, Aug. 13, 1813, available at http://press-pubs.uchicago.edu/founders/documents/a1_8_8s12.html.

The nonrivalrous and nonexcludable nature of creative goods makes the problem of appropriability central to creative industries, and only more pressing in the digital age. The main concern that public goods present is the degree to which industry participants can recover up-front investments in creative works. Following the traditional economic analysis of appropriability,¹⁰ the public good nature of creative works means that they may not clearly indicate that investing in their creation and production will lead to adequate returns on investment. Thus, industry participants will lack adequate incentives to invest in their production.

10 Kenneth J. Arrow Economic Welfare and the Allocation of Resources for Invention, in The Rate and Direction of Inventive Activity: Economic and Social Factors 609, 614–16 (Nat’l Bureau of Econ. Research, ed., 1962).

The grant of intellectual property (IP) rights in creative work, of which copyright is a part, neatly solves this appropriability problem. Under the U.S. Constitution, Congress is empowered to grant authors and inventors an exclusive right to their writings and discoveries.¹¹ While expressly limited by time, the grant of rights by Congress can be expansive, as long as it serves “to promote progress in science and the useful arts.”¹² The grant of IP rights offers creators and innovators a palpable incentive for undertaking risks and bearing costs, assuring them that they will receive a “bundle of rights” in exchange for their productive efforts and output. The holder of a copyright is entitled to exploit, or monetize, her rights in her work, rewarding the venture she has undertaken and ensuring that she will be encouraged to venture again, secure in the knowledge that she can continue to benefit from copyright ownership if the work is deemed valuable in the creative market.

11 U.S. Const. Art. 1, Section 8, clause 8, available at https://fairuse.stanford.edu/law/us-constitution/.

12 Id.

Copyright is designed to be both a tradeoff and a balancing act. The tradeoff exists because creating original works tends to be a costly and risky undertaking. When professional creators and creative industries consider the task ahead of them, they require assurance that if they create a valuable work their risks will be rewarded and their costs compensated. In order to face the prospect of earning a living through creativ...