October 11, 2007 2:16PM

A Bad Copyright Reform Proposal

Matt Yglesias points to this Dean Baker piece arguing for sweeping reforms of the copyright system. I think he correctly identifies some of the problems with the copyright laws on the books today, but I think his conclusions reflect a poor understanding of the nature of the problem:

There are many other mechanisms for supporting creative work, such as university funding (most professors are expected to publish in addition to their teaching), foundation funding, or direct public support. It is easy to design alternative mechanisms to expand this pool of non‐​copyright funding, such as the Artistic Freedom Voucher, which would give each person a small tax credit to support creative work of their choosing.

The fundamental problem with copyright is that it gives copyright holders too much control over the works they create. Terms are too long, the rules regarding derivative works are too restrictive, penalties for infringement are too high, secondary liability is too broad, copyright formalities have been unwisely abandoned, and so forth. The first‐​order solution is to fix those problems: copyrights should last for 14 years. Authors shouldn’t be able to stop people from using their characters in fan fiction. Maximum penalties for infringement should be reduced by an order of magnitude. And so forth.

A sensible copyright system—perhaps similar to the one we had for most of the 20th century—would work just fine for the 21st century. It would ensure artists are fairly compensated while greatly reducing the deadweight losses Baker identifies in the status quo. The reasons these reforms haven’t happened (and indeed, the reason that copyright rules keep getting more and more draconian) is that the copyright industries are one of the most powerful special interest groups on Capitol Hill. This is the old story of concentrated benefits and dispersed costs. There’s no shortage of good reform proposals, there’s just no one with the clout to push any of those reform proposals through Congress.

Baker seems to be presenting his plan for taxpayer subsidies to artists as an alternative to the copyright system, but this fails to appreciate the way Capitol Hill works. The copyright interests who have been pushing ever‐​more‐​draconian copyright policies are not going to give up those benefits in exchange for taxpayer handouts. Similar schemes have been tried in other countries, and it didn’t lead to a more sensible copyright system. Instead, the industry just scooped up the subsidies and continued to lobbying for bad copyright policies as enthusiastically as ever.

Moreover, taxpayer handouts for artists has the long‐​run potential to hurt consumers a lot more than bad copyright policies ever could. Whatever the flaws of today’s overly‐​broad copyright rules, the extent of the damage is at least limited to the value of the items being sold. Bad copyright policy can allow copyright holders to capture an unfairly large share of the surplus value created by the purchase of creative works, but they can’t ever capture more than the total value of those works. In contrast, once we start putting artists on the dole, there’s every reason to think they’ll start lobbying for larger and larger welfare checks, the same way farmers do today. Whatever the flaws of the current copyright system, a system in which every rock star in the country is dependent on the dole would certainly be a lot worse.