TCS Daily

A Metaphor's Metaphors

By Arnold Kling - March 3, 2003 12:00 AM

"Since the Internet has lowered distribution and reproduction costs, bad IP laws are more costly now than they were in the past. 150 year copyright terms just didn't matter much before Napster. A new IP regime needs to understand the economics of production for different types of ideas and tailor the right laws for the right circumstances. Personally, I'd like to see shorter copyright, no patents on business processes or software, and longer patents for drugs."
--Zimran Ahmed

Ahmed's intuition about intellectual property (IP) closely accords with my own. However, it is difficult to provide a rigorous justification for my thinking.

IP as a Metaphor

One tends to use metaphors when talking about IP. In fact, the very term "intellectual property" is itself a metaphor. Physical property is something that you can feel, touch, and take away from someone else. Knowledge has none of those characteristics. So why treat ideas or creative works as property at all?

As James DeLong points out, the philosophy that was influential in America at the time of our nation's birth emphasized "natural rights," including the right of a man to the fruits of his labor. Within that philosophical framework, the effort spent composing a creative work or developing an idea is labor, and the creator has a natural right to a reward for that labor. That remains a morally compelling argument for IP.

Another rationale for IP is purely utilitarian. Taking the existence of a creative work as given, the social optimum is to make it available to everyone, for nothing more than the cost to copy and distribute the work. With the Internet, the marginal cost of accessing digital music and text approaches zero, so that all else equal, creative work ought to be available for free.

However, all else is not equal. If creative works were available for free, there would be no reward for creators, and this would reduce the supply of creative works. Therefore, even if we were strictly utilitarians and had no belief in "natural rights," we might still support the concept of intellectual property in order to ensure the development of creative works.

IP as a Racehorse

Michele Boldrin and David K. Levine developed a theoretical argument suggesting that copyright laws are not necessary in order to protect IP. Douglas Clement provides a nice survey of the controversy surrounding their view.

The Boldrin-Levine argument is couched in mathematics, which makes it a bit unclear what is going on. My understanding of it can be articulated using a metaphor from horse racing.

A couple years ago, Laura Hillenbrand wrote what turned out to be a best-selling book about a racehorse named Seabiscuit. The horse's owner and trainer clearly had to go to considerable effort to evaluate and develop their racehorse.

People attempt to make copies of horses, in the process known as breeding. Because a champion like Seabiscuit is valuable for breeding purposes, the owner is able to earn rewards for selling the breeding services. Thus, the fact that a racehorse can be "copied" enhances rather than detracts from the wealth of the original owner.

The Boldrin-Levine paper makes a similar argument about copies of creative works. They suggest that because the first people to buy a creative work will capture value from copying that work, what they will pay for the first copy will be very high. Thus, copyright is not necessary. The owners of Seabiscuit did not need a copyright in order to capture the breeding value of their horse.

If Seabiscuit, the horse, does not need a copyright, why do we need a copyright for Seabiscuit the book? My guess is that the publisher, Ballantine Books, could not be sure ahead of time whether Seabiscuit would be a winner or an also-ran. The book was available to be copied before this uncertainty was resolved. Without copy protection, another publisher could wait for Ballantine's full line-up of books to come out, observe how they sell, and then choose to copy only the popular titles.

In contrast, the owner of the horse could wait until the quality of the horse was established before making the horse available to others to make copies. I can see how the Boldrin-Levine mechanism works for horses, but I have a hard time seeing it work for books.

IP as Popcorn

I believe that music publishers should not be entitled to take legal action against file swappers. The metaphor I use for this is popcorn.

When I go to a movie theater, I never buy popcorn there. Even though I can afford the four bucks, I am offended by the price.

There are movie theaters that will not allow you to bring your own popcorn into the theater. Clearly, what they are thinking is that if they forbid you from bringing your own popcorn, then you will buy their popcorn. My reaction, however, is that this is just one more reason not to go to the movies (along with the deafening sound, obnoxious patrons, and Hollywood's predictable story lines).

Music publishers who go after file swappers are like movie theater owners who won't let you bring your own popcorn to the theater. They are simply alienating their customers while trying to protect a revenue stream that they were not going to get, anyway.

IP as a Hitting Technique

Baseball players and coaches always work on hitting technique. For example, a popular current saying is "short to, long through" meaning that hitters should try to drive directly into the ball as opposed to starting with a backswing or looping motion.

Suppose that I had been the person who came up with the concept of "short to, long through." Should Barry Bonds be required to get a license from me in order to use it? If you believe that, then you support the idea of business process patents.

Because business processes, like hitting techniques, depend so heavily on execution, the idea of granting them status as intellectual property is abhorrent. Patents on business processes make a mockery of the game and serve only to create opportunities for lawyers.

IP as Prize

Drug companies go to considerable effort and expense in order to develop pharmaceuticals. The reward for this is a patent on the drug. The patent gives the developer control over the manufacturing license for a fixed period of time. The value of this license is the prize for finding the drug.

An alternative mechanism would be to offer prizes for drug development. There are foundations that are dedicated to dealing with particular diseases, such as breast cancer or diabetes. These foundations could offer prizes for the development of pharmaceuticals that achieve certain objectives. Money from the private foundations could be supplemented by government funding for prizes. My guess is that reducing the role of patents and increasing the role of prizes as incentives for drug research would help to shift resources away from research into solutions for hair loss and erectile dysfunction and toward research into solutions for illnesses that many people would regard as more important to address.

I think that the public policy issues that surround ideas and creative works require more than one metaphor. In fact, for many creative works, my controversial metaphor Content is Crap applies. That is, until the works have been sifted by a filter, they have no value.

For me, the overall topic is too complex to be resolved with a single formula or policy. The term "intellectual property" is overly broad. We need multiple metaphors.

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