A World Without Intellectual Property

Snowflake — Tue, 17 Nov 2009 14:26:09 GMT

Current revision posted to Austrian Economics by Snowflake on 11/17/2009 8:26:09 AM

A World Without Intellectual Property

There are many good reasons to completely repeal patents and copyright laws. They : they are too complex ; they cannot to be understood or obeyed by anybody except a highly trained IP Intellectual Property (IP) attorney. They , they are often used for predatory purposes; some companies exist that purchase patented inventions and then, rather than place them into production, use the patents to initiate lucrative litigation against productive firms. They they impede innovation ; since a patented invention cannot be improved by a third party. In addition

Additionally, because one firm holds a monopoly on the patented product, no competition exists, and hence, no incentive to improve on diminishes bringing with it the product. Intellectual property cannot be enforced without spying on consumers' habits high prices and impeding their usage low quality of products they have bought and paid forall monopoly services. Consider, for example, DRMs and the draconian measures agencies like the RIAA take Intellectual property is also very expensive to crack down enforce since it requires surveillance and enforcement on file-sharing. Ironically, in order to be enforced equitably, IP laws would have to be enforced globally--which is neither feasible nor desirablemillions of consumers.

Nevertheless, some continue to ask how we could live without support IP . Like,

...but then how would authors and performers get rights under the following mantras:

Authors of IP should be paid ?

... but then who would invest in important R&D if somebody else could copy for their work?

...but then authors

IP supports investment and performers innovation in R&D departments

An industry with no IP would simply be relying on goodwill donations!lose productivity

This article attempts to answer those and other objections.

Books & Newspapers

Imagine you run a major book publisher. You publish a book, but then --whoops-- somebody clear across the country (or across the world) starts printing the same work. Because you don't have exclusive control over your content, you cannot pay your authors.

Major newspapers, on the other hand, produce new content on a daily (or weekly) basis, print millions of copies, and have them on their customers' doorsteps before anybody else has a chance to copy their work. Because of this, they don't need a government-enforced monopoly on their content.

In centuries past, authors used to have their books published one chapter at a time in major periodicals. Readers had to purchase multiple issues to read the entire book.

In a world without copyright laws, authors would probably follow a similar protocol. Then, after the last chapter has been published, other printers could copy the author's work and distribute it far and wide.

Authors have two main interests: to be paid for their work, and to have their work widely read and enjoyed so as to make a name for themselves. Those two interests sometimes run contrary to each other. However, the system discribed above, works for everybody. Authors can get paid by the newspapers. The newspapers make a profit by selling multiple, successive issues. Printing companies can "free ride" by printing the book without paying royalties. Authors are promoted by having their works published by multiple firms. Consumers get the best deal of all: they can read a few chapters in the newspaper, then purchase the entire book at a competitive price.

Movies

Movie makers receive most of their revenues from motion-picture theatres, not DVD sales. Motion-picture theatres, unlike DVDs, are at low risk of piracy. Therefore, movie piracy is not nearly as harmful to the movie industry as they would have you to believe.

Broadcasting

Broadcasters are funded by advertising revenues, not by selling content. Hence, broadcasting would continue as usual without IP laws.

Music

Musicians could still get paid, even without copyright. They would still be able to sell concert tickets, even if they did not make a thin dime from CDs and MP3 downloads. In fact, file-sharing might actually make them more famous! They could then cash in on their new-found fame in other ways (increased ticket sales, T-shirts and promotional items, product endorsements, movie deals...)

Of course, people would still buy CDs, even with unrestricted file sharing networks in place. If you hear a CD being played in a store, and you like it, what are you going to do:

a) spend a few dollars, get a dozen good songs in your possession, or

b) spend the next four hours on the Web trying to find those songs performed by some obscure local artists.

The answer is obvious.

Inventions

When Thomas Edison (or, more accurately, Edison's company) invented the light bulb, he was three steps ahead of anybody who would try to manufacture light bulbs of their own. He had the technical know-how, he had the necessary equipment to manufacture light bulbs, and his name was known in every household. Because of these three major advantages, he did not need a legal monopoly on light bulbs to get a return on his investment. He must, however, remain three steps ahead of the competition.

Let's invent a a parallel universe, however, where Edison invents the light bulb, and then does not bother in any way to improve it or reduce the cost of manufacturing it. After several years, a rival inventor reverse-engineers the light bulb and build his own on his garage. He then discovers a way to manufacture the light bulb for cheaper than Edison's. He would quickly capture Edison's market share. In the absence of patents, Edison's laziness is punished and his rival's ingenuity is rewarded.

This happened with the invention of the steam engine. James Watt made important improvements and secured a patent for them, but then blocked many further improvements, which could be applied only when his patent expired.

"During the period of Watt's patents the United Kingdom added about 750 horsepower of steam engines per year. In the thirty years following Watt's patents, additional horsepower was added at a rate of more than 4,000 per year. Moreover, the fuel efficiency of steam engines changed little during the period of Watt's patent; while between 1810 and 1835 it is estimated to have increased by a factor of five." (*)

Software

Even without copyright laws, programmers would continue to produce software. They might engineer the software to work only with permission from the software firm, requiring the consumer to pay for it.

A second profitable business model is to allow consumers to use to the software for free, courtesy of advertisers. Google follows this model.

A third option, and probably most preferable from the consumer's perspective, is the open-source freeware/shareware model, or software written by volunteers/hobbyists and made freely available without difficult licensing restrictions. Users may copy, edit, modify, sell, or pretty much do anything with the software. (For-profit entrepreneurs are able to take a piece of shareware, add useful features, and sell copies with tech support.)

Brands & Trademarks

Let's take it a step further. Why do we need to have registered trademarks? The conventional answer is that it helps consumers recognize a familiar product and distinguish it from other manufacturers' products. Without corporations having legal monopolies on their respective trademarks, though, consumers would still be able to distinguish one producer's products from another's.

Imagine that you are an entrepreneur who makes O-shaped cereal similar to General Mills' Cheerios. Without legal trademarks, it would be perfectly legitimate to call your product Cheerios.

Even though you would have the right to call your product Cheerios, grocery stores may refuse to carry your product. They might object to the name and request you to call it something else. In the absence of intellectual property laws, general consensus would determine which words refer to a specific firm and which words refer to a generic product.

There you have it. Without patents and copyright, we would still have books, music, software, and world-changing inventions. We could still watch movies, and authors would still get paid for their work. There would by less mind-numbing regulation, and more competition in the market. Plus, you wouldn't need to feel guilty for downloading audio files from your next-door neighbor.

Further Reading

http://www.micheleboldrin.com/research/aim/anew02.pdf

James Watt: Monopolist

The Cathedral and the Bazaar -an essay on open software

A World Without Intellectual Property

Peter Sidor — Sat, 18 Apr 2009 14:41:00 GMT
Revision 5 posted to Austrian Economics by Peter Sidor on 4/18/2009 9:41:00 AM

A World Without Intellectual Property

There are many good reasons to completely repeal patents and copyright laws. They are too complex; they cannot be understood or obeyed by anybody except a highly trained IP attorney. They are often used for predatory purposes; some companies exist that purchase patented inventions and then, rather than place them into production, use the patents to initiate lucrative litigation against productive firms. They impede innovation; a patented invention cannot be improved by a third party. In addition, because one firm holds a monopoly on the patented product, no competition exists, and hence, no incentive to improve on the product. Intellectual property cannot be enforced without spying on consumers' habits and impeding their usage of products they have bought and paid for. Consider, for example, DRMs and the draconian measures agencies like the RIAA take to crack down on file-sharing. Ironically, in order to be enforced equitably, IP laws would have to be enforced globally--which is neither feasible nor desirable.

Nevertheless, some continue to ask how we could live without IP. Like,

...but then how would authors and performers get paid?

... but then who would invest in important R&D if somebody else could copy their work?

...but then authors and performers would simply be relying on goodwill donations!

This article attempts to answer those and other objections.

Books & Newspapers

Imagine you run a major book publisher. You publish a book, but then --whoops-- somebody clear across the country (or across the world) starts printing the same work. Because you don't have exclusive control over your content, you cannot pay your authors.

Major newspapers, on the other hand, produce new content on a daily (or weekly) basis, print millions of copies, and have them on their customers' doorsteps before anybody else has a chance to copy their work. Because of this, they don't need a government-enforced monopoly on their content.

In centuries past, authors used to have their books published one chapter at a time in major periodicals. Readers had to purchase multiple issues to read the entire book.

In a world without copyright laws, authors would probably follow a similar protocol. Then, after the last chapter has been published, other printers could copy the author's work and distribute it far and wide.

Authors have two main interests: to be paid for their work, and to have their work widely read and enjoyed so as to make a name for themselves. Those two interests sometimes run contrary to each other. However, the system discribed above, works for everybody. Authors can get paid by the newspapers. The newspapers make a profit by selling multiple, successive issues. Printing companies can "free ride" by printing the book without paying royalties. Authors are promoted by having their works published by multiple firms. Consumers get the best deal of all: they can read a few chapters in the newspaper, then purchase the entire book at a competitive price.

Movies

Movie makers receive most of their revenues from motion-picture theatres, not DVD sales. Motion-picture theatres, unlike DVDs, are at low risk of piracy. Therefore, movie piracy is not nearly as harmful to the movie industry as they would have you to believe.

Broadcasting

Broadcasters are funded by advertising revenues, not by selling content. Hence, broadcasting would continue as usual without IP laws.

Music

Musicians could still get paid, even without copyright. They would still be able to sell concert tickets, even if they did not make a thin dime from CDs and MP3 downloads. In fact, file-sharing might actually make them more famous! They could then cash in on their new-found fame in other ways (increased ticket sales, T-shirts and promotional items, product endorsements, movie deals...)

Of course, people would still buy CDs, even with unrestricted file sharing networks in place. If you hear a CD being played in a store, and you like it, what are you going to do:

a) spend a few dollars, get a dozen good songs in your possession, or

b) spend the next four hours on the Web trying to find those songs performed by some obscure local artists.

The answer is obvious.

Inventions

When Thomas Edison (or, more accurately, Edison's company) invented the light bulb, he was three steps ahead of anybody who would try to manufacture light bulbs of their own. He had the technical know-how, he had the necessary equipment to manufacture light bulbs, and his name was known in every household. Because of these three major advantages, he did not need a legal monopoly on light bulbs to get a return on his investment. He must, however, remain three steps ahead of the competition.

Let's invent a a parallel universe, however, where Edison invents the light bulb, and then does not bother in any way to improve it or reduce the cost of manufacturing it. After several years, a rival inventor reverse-engineers the light bulb and build his own on his garage. He then discovers a way to manufacture the light bulb for cheaper than Edison's. He would quickly capture Edison's market share. In the absence of patents, Edison's laziness is punished and his rival's ingenuity is rewarded.

This happened with the invention of the steam engine. James Watt made important improvements and secured a patent for them, but then blocked many further improvements, which could be applied only when his patent expired.

"During the period of Watt's patents the United Kingdom added about 750 horsepower of steam engines per year. In the thirty years following Watt's patents, additional horsepower was added at a rate of more than 4,000 per year. Moreover, the fuel efficiency of steam engines changed little during the period of Watt's patent; while between 1810 and 1835 it is estimated to have increased by a factor of five." (*)

Software

Even without copyright laws, programmers would continue to produce software. They might engineer the software to work only with permission from the software firm, requiring the consumer to pay for it.

A second profitable business model is to allow consumers to use to the software for free, courtesy of advertisers. Google follows this model.

A third option, and probably most preferable from the consumer's perspective, is the open-source freeware/shareware model, or software written by volunteers/hobbyists and made freely available without difficult licensing restrictions. Users may copy, edit, modify, sell, or pretty much do anything with the software. (For-profit entrepreneurs are able to take a piece of shareware, add useful features, and sell copies with tech support.)

Brands & Trademarks

Let's take it a step further. Why do we need to have registered trademarks? The conventional answer is that it helps consumers recognize a familiar product and distinguish it from other manufacturers' products. Without corporations having legal monopolies on their respective trademarks, though, consumers would still be able to distinguish one producer's products from another's.

Imagine that you are an entrepreneur who makes O-shaped cereal similar to General Mills' Cheerios. Without legal trademarks, it would be perfectly legitimate to call your product Cheerios.

Even though you would have the right to call your product Cheerios, grocery stores may refuse to carry your product. They might object to the name and request you to call it something else. In the absence of intellectual property laws, general consensus would determine which words refer to a specific firm and which words refer to a generic product.

There you have it. Without patents and copyright, we would still have books, music, software, and world-changing inventions. We could still watch movies, and authors would still get paid for their work. There would by less mind-numbing regulation, and more competition in the market. Plus, you wouldn't need to feel guilty for downloading audio files from your next-door neighbor.

Further Reading

http://www.micheleboldrin.com/research/aim/anew02.pdf

http://mises.org/story/3280

James Watt: Monopolist

The Cathedral and the Bazaar -an essay on open software

A World Without Intellectual Property

Peter Sidor — Sat, 18 Apr 2009 11:26:07 GMT
Revision 4 posted to Austrian Economics by Peter Sidor on 4/18/2009 6:26:07 AM

A World Without Intellectual Property

There are many good reasons to completely repeal patents and copyright laws. They are too complex; they cannot be understood or obeyed by anybody except a highly trained IP attorney. They are often used for predatory purposes; some companies exist that purchase patented inventions and then, rather than place them into production, use the patents to initiate lucrative litigation against productive firms. They impede innovation; a patented invention cannot be improved by a third party. In addition, because one firm holds a monopoly on the patented product, no competition exists, and hence, no incentive to improve on the product. Intellectual property cannot be enforced without spying on consumers' habits and impeding their usage of products they have bought and paid for. Consider, for example, DRMs and the draconian measures agencies like the RIAA take to crack down on file-sharing. Ironically, in order to be enforced equitably, IP laws would have to be enforced globally--which is neither feasible nor desirable.

Nevertheless, some continue to ask how we could live without IP. Like,

...but then how would authors and performers get paid?

... but then who would invest in important R&D if somebody else could copy their work?

...but then authors and performers would simply be relying on goodwill donations!

This article attempts to answer those and other objections.

Books & Newspapers

Imagine you run a major book publisher. You publish a book, but then --whoops-- somebody clear across the country (or across the world) starts printing the same work. Because you don't have exclusive control over your content, you cannot pay your authors.

Major newspapers, on the other hand, produce new content on a daily (or weekly) basis, print millions of copies, and have them on their customers' doorsteps before anybody else has a chance to copy their work. Because of this, they don't need a government-enforced monopoly on their content.

In centuries past, authors used to have their books published one chapter at a time in major periodicals. Readers had to purchase multiple issues to read the entire book.

In a world without copyright laws, authors would probably follow a similar protocol. Then, after the last chapter has been published, other printers could copy the author's work and distribute it far and wide.

Authors have two main interests: to be paid for their work, and to have their work widely read and enjoyed so as to make a name for themselves. Those two interests sometimes run contrary to each other. However, the system discribed above, works for everybody. Authors can get paid by the newspapers. The newspapers make a profit by selling multiple, successive issues. Printing companies can "free ride" by printing the book without paying royalties. Authors are promoted by having their works published by multiple firms. Consumers get the best deal of all: they can read a few chapters in the newspaper, then purchase the entire book at a competitive price.

Movies

Movie makers receive most of their revenues from motion-picture theatres, not DVD sales. Motion-picture theatres, unlike DVDs, are at low risk of piracy. Therefore, movie piracy is not nearly as harmful to the movie industry as they would have you to believe.

Broadcasting

Broadcasters are funded by advertising revenues, not by selling content. Hence, broadcasting would continue as usual without IP laws.

Music

Musicians could still get paid, even without copyright. They would still be able to sell concert tickets, even if they did not make a thin dime from CDs and MP3 downloads. In fact, file-sharing might actually make them more famous! They could then cash in on their new-found fame in other ways (increased ticket sales, T-shirts and promotional items, product endorsements, movie deals...)

Of course, people would still buy CDs, even with unrestricted file sharing networks in place. If you hear a CD being played in a store, and you like it, what are you going to do:

a) spend a few dollars, get a dozen good songs in your possession, or

b) spend the next four hours on the Web trying to find those songs performed by some obscure local artists.

The answer is obvious.

Inventions

When Thomas Edison (or, more accurately, Edison's company) invented the light bulb, he was three steps ahead of anybody who would try to manufacture light bulbs of their own. He had the technical know-how, he had the necessary equipment to manufacture light bulbs, and his name was known in every household. Because of these three major advantages, he did not need a legal monopoly on light bulbs to get a return on his investment. He must, however, remain three steps ahead of the competition.

Let's invent a a parallel universe, however, where Edison invents the light bulb, and then does not bother in any way to improve it or reduce the cost of manufacturing it. After several years, a rival inventor reverse-engineers the light bulb and build his own on his garage. He then discovers a way to manufacture the light bulb for cheaper than Edison's. He would quickly capture Edison's market share. In the absence of patents, Edison's laziness is punished and his rival's ingenuity is rewarded.

This happened with the invention of the steam engine. James Watt made important improvements and secured a patent for them, but then blocked many further improvements, which could be applied only when his patent expired.

"During the period of Watt's patents the United Kingdom added about 750 horsepower of steam engines per year. In the thirty years following Watt's patents, additional horsepower was added at a rate of more than 4,000 per year. Moreover, the fuel efficiency of steam engines changed little during the period of Watt's patent; while between 1810 and 1835 it is estimated to have increased by a factor of five." (*)

Software

Even without copyright laws, programmers would continue to produce software. They might engineer the software to work only with permission from the software firm, requiring the consumer to pay for it.

A second profitable business model is to allow consumers to use to the software for free, courtesy of advertisers. Google follows this model.

A third option, and probably most preferable from the consumer's perspective, is the open-source freeware/shareware model, or software written by volunteers/hobbyists and made freely available without difficult licensing restrictions. Users may copy, edit, modify, sell, or pretty much do anything with the software. (For-profit entrepreneurs are able to take a piece of shareware, add useful features, and sell copies with tech support.)

Brands & Trademarks

Let's take it a step further. Why do we need to have registered trademarks? The conventional answer is that it helps consumers recognize a familiar product and distinguish it from other manufacturers' products. Without corporations having legal monopolies on their respective trademarks, though, consumers would still be able to distinguish one producer's products from another's.

Imagine that you are an entrepreurs entrepreneur who makes O-shaped cereal similar to General Mills' Cheerios. Without legal trademarks, it would be perfectly legitimate to call your product Cheerios.

Even though you would have the right to call your product Cheerios, grocery stores may refuse to carry your product. They might object to the name and request you to call it something else. In the absence of intellectual property laws, general consensus would determine which words refer to a specific firm and which words refer to a generic product.

There you have it. Without patents and copyright, we would still have books, music, software, and world-changing inventions. We could still watch movies, and authors would still get paid for their work. There would by less mind-numbing regulation, and more competition in the market. Plus, you wouldn't need to feel guilty for downloading audio files from your next-door neighbor.

Further Reading

http://www.micheleboldrin.com/research/aim/anew02.pdf

http://mises.org/story/3280

A World Without Intellectual Property

freedom_seek — Sun, 15 Feb 2009 13:25:36 GMT
Revision 3 posted to Austrian Economics by freedom_seek on 2/15/2009 7:25:36 AM

A World Without Intellectual Property

There are many good reasons to completely repeal patents and copyright laws. They are too complex; they cannot be understood or obeyed by anybody except a highly trained IP attorney. They are often used for predatory purposes; some companies exist that purchase patented inventions and then, rather than place them into production, use the patents to initiate lucrative litigation against productive firms. They impede innovation; a patented invention cannot be improved by a third party. In addition, because one firm holds a monopoly on the patented product, no competition exists, and hence, no incentive to improve on the product. Intellectual property cannot be enforced without spying on consumers' habits and impeding their usage of products they have bought and paid for. Consider, for example, DRMs and the draconian measures agencies like the RIAA take to crack down on file-sharing. Ironically, in order to be enforced equitably, IP laws would have to be enforced globally--which is neither feasible nor desirable.

Nevertheless, some continue to ask how we could live without IP. Like,

...but then how would authors and performers get paid?

... but then who would invest in important R&D if somebody else could copy their work?

...but then authors and performers would simply be relying on goodwill donations!

This article attempts to answer those and other objections.

Books & Newspapers

Imagine you run a major book publisher. You publish a book, but then --whoops-- somebody clear across the country (or across the world) starts printing the same work. Because you don't have exclusive control over your content, you cannot pay your authors.

Major newspapers, on the other hand, produce new content on a daily (or weekly) basis, print millions of copies, and have them on their customers' doorsteps before anybody else has a chance to copy their work. Because of this, they don't need a government-enforced monopoly on their content.

In centuries past, authors used to have their books published one chapter at a time in major periodicals. Readers had to purchase multiple issues to read the entire book.

In a world without copyright laws, authors would probably follow a similar protocol. Then, after the last chapter has been published, other printers could copy the author's work and distribute it far and wide.

Authors have two main interests: to be paid for their work, and to have their work widely read and enjoyed so as to make a name for themselves. Those two interests sometimes run contrary to each other. However, in the system discribed above, works for everybody. Authors can get paid by the newspapers. The newspapers make a profit by selling multiple, successive issues. Printing companies can "free ride" by printing the book without paying royalties. Authors are promoted by having their works published by multiple firms. Consumers get the best deal of all: they can read a few chapters in the newspaper, then purchase the entire book at a competitive price.

Movies

Movie makers receive most of their revenues from motion-picture theatres, not DVD sales. Motion-picture theatres, unlike DVDs, are at low risk of piracy. Therefore, movie piracy is not nearly as harmful to the movie industry as they would have you to believe.

Broadcasting

Broadcasters are funded by advertising revenues, not by selling content. Hence, broadcasting would continue as usual without IP laws.

Music

Musicians could still get paid, even without copyright. They would still be able to sell concert tickets, even if they did not make a thin dime from CDs and MP3 downloads. In fact, file-sharing might actually make them more famous! They could then cash in on their new-found fame in other ways (increased ticket sales, T-shirts and promotional items, product endorsements, movie deals...)

Of course, people would still buy CDs, even with unrestricted file sharing networks in place. If you hear a CD being played in a store, and you like it, what are you going to do:

a) spend a few dollars, get a dozen good songs in your possession, or

b) spend the next four hours on the Web trying to find those songs performed by some obscure local artists.

The answer is obvious.

Inventions

When Thomas Edison (or, more accurately, Edison's company) invented the light bulb, he was three steps ahead of anybody who would try to manufacture light bulbs of their own. He had the technical know-how, he had the necessary equipment to manufacture light bulbs, and his name was known in every household. Because of these three major advantages, he did not need a legal monopoly on light bulbs to get a return on his investment. He must, however, remain three steps ahead of the competition.

Let's invent a a parallel universe, however, where Edison invents the light bulb, and then does not bother in any way to improve it or reduce the cost of manufacturing it. After several years, a rival inventor reverse-engineers the light bulb and build his own on his garage. He then discovers a way to manufacture the light bulb for cheaper than Edison's. He would quickly capture Edison's market share. In the absence of patents, Edison's laziness is punished and his rival's ingenuity is rewarded.

Software

Even without copyright laws, programmers would continue to produce software. They might engineer the software to work only with permission from the software firm, requiring the consumer to pay for it.

A second profitable business model is to allow consumers to use to the software for free, courtesy of advertisers. Google follows this model.

A third option, and probably most preferable from the consumer's perspective, is the open-source freeware/shareware model, or software written by volunteers/hobbyists and made freely available without difficult licensing restrictions. Users may copy, edit, modify, sell, or pretty much do anything with the software. (For-profit entrepreneurs are able to take a piece of shareware, add useful features, and sell copies with tech support.)

Brands & Trademarks

Let's take it a step further. Why do we need to have registered trademarks? The conventional answer is that it helps consumers recognize a familiar product and distinguish it from other manufacturers' products. Without corporations having legal monopolies on their respective trademarks, though, consumers would still be able to distinguish one producer's products from another's.

Imagine that you are an entrepreurs who makes O-shaped cereal similar to General Mills' Cheerios. Without legal trademarks, it would be perfectly legitimate to call your product Cheerios.

Even though you would have the right to call your product Cheerios, grocery stores may refuse to carry your product. They might object to the name and request you to call it something else. In the absence of intellectual property laws, general consensus would determine which words refer to a specific firm and which words refer to a generic product.

There you have it. Without patents and copyright, we would still have books, music, software, and world-changing inventions. We could still watch movies, and authors would still get paid for their work. There would by less mind-numbing regulation, and more competition in the market. Plus, you wouldn't need to feel guilty for downloading audio files from your next-door neighbor.

Further Reading

http://www.micheleboldrin.com/research/aim/anew02.pdf

A World Without Intellectual Property

ama gi — Thu, 12 Feb 2009 08:42:39 GMT
Revision 2 posted to Austrian Economics by ama gi on 2/12/2009 2:42:39 AM

A World Without Intellectual Property

There are many good reasons to completely repeal patents and copyright laws. They are too complex; they cannot be understood or obeyed by anybody except a highly trained IP attorney. They are often used for predatory purposes; some companies exist that purchase patented inventions and then, rather than place them into production, use the patents to initiate lucrative litigation against productive firms. They impede innovation; a patented invention cannot be improved by a third party. In addition, because one firm holds a monopoly on the patented product, no competition exists, and hence, no incentive to improve on the product. Intellectual property cannot be enforced without spying on consumers' habits and impeding their usage of products they have bought and paid for. Consider, for example, DRMs and the draconian measures agencies like the RIAA take to crack down on file-sharing. Ironically, in order to be enforced equitably, IP laws would have to be enforced globally--which is neither feasible nor desirable.

Nevertheless, some continue to ask how we could live without IP. Like,

...but then how would authors and performers get paid?

... but then who would invest in important R&D if somebody else could copy their work?

...but then authors and performers would simply be relying on goodwill donations!

This article attempts to answer those and other objections.

Books & Newspapers

Imagine you run a major book publisher. You publish a book, but then --whoops-- somebody clear across the country (or across the world) starts printing the same work. Because you don't have exclusive control over your content, you cannot pay your authors.

Major newspapers, on the other hand, produce new content on a daily (or weekly) basis, print millions of copies, and have them on their customers' doorsteps before anybody else has a chance to copy their work. Because of this, they don't need a government-enforced monopoly on their content.

In centuries past, authors used to have their books published one chapter at a time in major periodicals. Readers had to purchase multiple issues to read the entire book.

In a world without copyright laws, authors would probably follow a similar protocol. Then, after the last chapter has been published, other printers could copy the author's work and distribute it far and wide.

Authors have two main interests: to be paid for their work, and to have their work widely read and enjoyed so as to make a name for themselves. Those two interests sometimes run contrary to each other. However, in the system discribed above, works for everybody. Authors can get paid by the newspapers. The newspapers make a profit by selling multiple, successive issues. Printing companies can "free ride" by printing the book without paying royalties. Authors are promoted by having their works published by multiple firms. Consumers get the best deal of all: they can read a few chapters in the newspaper, then purchase the entire book at a competitive price.

Movies

Movie makers receive most of their revenues from motion-picture theatres, not DVD sales. Motion-picture theatres, unlike DVDs, are at low risk of piracy. Therefore, movie piracy is not nearly as harmful to the movie industry as they would have you to believe.

Broadcasting

Broadcasters are funded by advertising revenues, not by selling content. Hence, broadcasting would continue as usual without IP laws.

Music

Musicians could still get paid, even without copyright. They would still be able to sell concert tickets, even if they did not make a thin dime from CDs and MP3 downloads. In fact, file-sharing might actually make them more famous! They could then cash in on their new-found fame in other ways (increased ticket sales, T-shirts and promotional items, product endorsements, movie deals...)

Of course, people would still buy CDs, even with unrestricted file sharing networks in place. If you hear a CD being played in a store, and you like it, what are you going to do:

a) spend a few dollars, get a dozen good songs in your possession, or

b) spend the next four hours on the Web trying to find those songs performed by some obscure local artists.

The answer is obvious.

Inventions

When Thomas Edison (or, more accurately, Edison's company) invented the light bulb, he was three steps ahead of anybody who would try to manufacture light bulbs of their own. He had the technical know-how, he had the necessary equipment to manufacture light bulbs, and his name was known in every household. Because of these three major advantages, he did not need a legal monopoly on light bulbs to get a return on his investment. He must, however, remain three steps ahead of the competition.

Let's invent a a parallel universe, however, where Edison invents the light bulb, and then does not bother in any way to improve it or reduce the cost of manufacturing it. After several years, a rival inventor reverse-engineers the light bulb and build his own on his garage. He then discovers a way to manufacture the light bulb for cheaper than Edison's. He would quickly capture Edison's market share. In the absence of patents, Edison's laziness is punished and his rival's ingenuity is rewarded.

Software

Even without copyright laws, programmers would continue to produce software. They might engineer the software to work only with permission from the software firm, requiring the consumer to pay for it.

A second profitable business model is to allow consumers to use to the software for free, courtesy of advertisers. Google follows this model.

A third option, and probably most preferable from the consumer's perspective, is the open-source freeware/shareware model, or software written by volunteers/hobbyists and made freely available without difficult licensing restrictions. Users may copy, edit, modify, sell, or pretty much do anything with the software. (For-profit entrepreneurs are able to take a piece of shareware, add useful features, and sell copies with tech support.)

Brands & Trademarks

Let's take it a step further. Why do we need to have registered trademarks? The conventional answer is that it helps consumers recognize a familiar product and distinguish it from other manufacturers' products. Without corporations having legal monopolies on their respective trademarks, though, consumers would still be able to distinguish one producer's products from another's.

Imagine that you are an entrepreurs who makes O-shaped cereal similar to General Mills' Cheerios. Without legal trademarks, it would be perfectly legitimate to call your product Cheerios.

Even though you would have the right to call your product Cheerios, grocery stores may refuse to carry your product. They might object to the name and request you to call it something else. In the absence of intellectual property laws, general consensus would determine which words refer to a specific firm and which words refer to a generic product.

There you have it. Without patents and copyright, we would still have books, music, software, and world-changing inventions. We could still watch movies, and authors would still get paid for their work. There would by less mind-numbing regulation, and more competition in the market. Plus, you wouldn't need to feel guilty for downloading audio files from your next-door neighbor.

Further Reading

http://www.micheleboldrin.com/research/aim/anew02.pdf

A World Without Intellectual Property

ama gi — Sun, 25 Jan 2009 04:49:10 GMT
Revision 1 posted to Austrian Economics by ama gi on 1/24/2009 10:49:10 PM

There are many good reasons to completely repeal patents and copyright laws. They are too complex; they cannot be understood or obeyed by anybody except a highly trained IP attorney. They are often used for predatory purposes; some companies exist that purchase patented inventions and then, rather than place them into production, use the patents to initiate lucrative litigation against productive firms. They impede innovation; a patented invention cannot be improved by a third party. In addition, because one firm holds a monopoly on the patented product, no competition exists, and hence, no incentive to improve on the product. Intellectual property cannot be enforced without spying on consumers' habits and impeding their usage of products they have bought and paid for. Consider, for example, DRMs and the draconian measures agencies like the RIAA take to crack down on file-sharing. Ironically, in order to be enforced equitably, IP laws would have to be enforced globally--which is neither feasible nor desirable.

Nevertheless, some continue to ask how we could live without IP. Like,

...but then how would authors and performers get paid?

... but then who would invest in important R&D if somebody else could copy their work?

...but then authors and performers would simply be relying on goodwill donations!

This article attempts to answer those and other objections.

Books & Newspapers

Imagine you run a major book publisher. You publish a book, but then --whoops-- somebody clear across the country (or across the world) starts printing the same work. Because you don't have exclusive control over your content, you cannot pay your authors.

Major newspapers, on the other hand, produce new content on a daily (or weekly) basis, print millions of copies, and have them on their customers' doorsteps before anybody else has a chance to copy their work. Because of this, they don't need a government-enforced monopoly on their content.

In centuries past, authors used to have their books published one chapter at a time in major periodicals. Readers had to purchase multiple issues to read the entire book.

In a world without copyright laws, authors would probably follow a similar protocol. Then, after the last chapter has been published, other printers could copy the author's work and distribute it far and wide.

Authors have two main interests: to be paid for their work, and to have their work widely read and enjoyed so as to make a name for themselves. Those two interests sometimes run contrary to each other. However, in the system discribed above, works for everybody. Authors can get paid by the newspapers. The newspapers make a profit by selling multiple, successive issues. Printing companies can "free ride" by printing the book without paying royalties. Authors are promoted by having their works published by multiple firms. Consumers get the best deal of all: they can read a few chapters in the newspaper, then purchase the entire book at a competitive price.

Movies

Movie makers receive most of their revenues from motion-picture theatres, not DVD sales. Motion-picture theatres, unlike DVDs, are at low risk of piracy. Therefore, movie piracy is not nearly as harmful to the movie industry as they would have you to believe.

Broadcasting

Broadcasters are funded by advertising revenues, not by selling content. Hence, broadcasting would continue as usual without IP laws.

Music

Musicians could still get paid, even without copyright. They would still be able to sell concert tickets, even if they did not make a thin dime from CDs and MP3 downloads. In fact, file-sharing might actually make them more famous! They could then cash in on their new-found fame in other ways (increased ticket sales, T-shirts and promotional items, product endorsements, movie deals...)

Of course, people would still buy CDs, even with unrestricted file sharing networks in place. If you hear a CD being played in a store, and you like it, what are you going to do:

a) spend a few dollars, get a dozen good songs in your possession, or

b) spend the next four hours on the Web trying to find those songs performed by some obscure local artists.

The answer is obvious.

Inventions

When Thomas Edison (or, more accurately, Edison's company) invented the light bulb, he was three steps ahead of anybody who would try to manufacture light bulbs of their own. He had the technical know-how, he had the necessary equipment to manufacture light bulbs, and his name was known in every household. Because of these three major advantages, he did not need a legal monopoly on light bulbs to get a return on his investment. He must, however, remain three steps ahead of the competition.

Let's invent a a parallel universe, however, where Edison invents the light bulb, and then does not bother in any way to improve it or reduce the cost of manufacturing it. After several years, a rival inventor reverse-engineers the light bulb and build his own on his garage. He then discovers a way to manufacture the light bulb for cheaper than Edison's. He would quickly capture Edison's market share. In the absence of patents, Edison's laziness is punished and his rival's ingenuity is rewarded.

Software

Even without copyright laws, programmers would continue to produce software. They might engineer the software to work only with permission from the software firm, requiring the consumer to pay for it.

A second profitable business model is to allow consumers to use to the software for free, courtesy of advertisers. Google follows this model.

A third option, and probably most preferable from the consumer's perspective, is the open-source freeware/shareware model, or software written by volunteers/hobbyists and made freely available without difficult licensing restrictions. Users may copy, edit, modify, sell, or pretty much do anything with the software. (For-profit entrepreneurs are able to take a piece of shareware, add useful features, and sell copies with tech support.)

Brands & Trademarks

Let's take it a step further. Why do we need to have registered trademarks? The conventional answer is that it helps consumers recognize a familiar product and distinguish it from other manufacturers' products. Without corporations having legal monopolies on their respective trademarks, though, consumers would still be able to distinguish one producer's products from another's.

Imagine that you are an entrepreurs who makes O-shaped cereal similar to General Mills' Cheerios. Without legal trademarks, it would be perfectly legitimate to call your product Cheerios.

Even though you would have the right to call your product Cheerios, grocery stores may refuse to carry your product. They might object to the name and request you to call it something else. In the absence of intellectual property laws, general consensus would determine which words refer to a specific firm and which words refer to a generic product.

There you have it. Without patents and copyright, we would still have books, music, software, and world-changing inventions. We could still watch movies, and authors would still get paid for their work. There would by less mind-numbing regulation, and more competition in the market. Plus, you wouldn't need to feel guilty for downloading audio files from your next-door neighbor.