Caleb Crain: I’m Still Not Convinced Matt Yglesias Is Right About Copyright

Commentary about business and finance.
Feb. 2 2012 7:15 AM

Loaves, Fishes, and a Nice Marinara

I’m still not convinced Matt Yglesias is right about copyright.

120201_$B_civilWar
Writing a book about the Civil War doesn't give you a monopoly on books, Civil War books, or even books that convey the same information

Matt Yglesias says he's having trouble seeing how he and I disagree about copyright. Fortuitously, then, I bring not peace but a sword.

Let's get Jesus out of the way first. Yglesias compares online intellectual piracy to Jesus' miracle of the loaves and the fishes. But whether gratuitous multiplication is a boon depends on what's being multiplied. Bread and fish, fine. But if a deity were to appear in Poughkeepsie, N.Y. and start miraculously duplicating Oxycontin prescriptions, few would approve.

In my initial salvo, I pointed out that Yglesias had minimized the harm of copyright infringement with a rationale that could extenuate theft of any kind. Yglesias repeats the error in his reply. He describes copyright holders as monopolists who set high prices in order to maximize profits, thereby pricing some consumers out of the market, and he argues that

There are customers who would derive some non-zero benefit from using the product, but the benefit would be smaller than the profit-maximizing sale price. To the extent that unauthorized copying helps such people get their hands on works, so-called "piracy" is socially beneficial.

But nearly all companies try to maximize profits when they set prices, and every price higher than zero excludes somebody. Suppose that Savor of the Savior tomato sauce sells for $4.99 a jar and I feel that eating it is only worth two bucks. Theft would help me get my hands on it. Would theft therefore be socially beneficial? Am I justified in stealing the goods of any company whose prices don’t suit my budget?

Yglesias writes that he and I agree that "what copyright does is provide a monopoly on sales of a product." Yes and no; I'm afraid I need to draw a distinction here. Copyright provides a monopoly on a particular expression. That's very different from a monopoly on a material good. If Congress were to award to Savor of the Savior Incorporated the exclusive right to sell tomato-based sauce in the United States, law-abiding families would be forced to either overpay for marinara or go without. But under American law, the only exclusive right that Savor of the Savior could have is to sell marinara under its brand name. As Yglesias observes, not even Savor of the Savior's recipe is protected by law, once disclosed.

Tomato sauce, of course, isn't subject to copyright, so let me replace the analogy with a more appropriate example: If Yglesias writes a book about the Civil War, he won't thereby acquire a monopoly on books. He won't acquire a monopoly on Civil War books. He won't even acquire a monopoly on books that convey the same information or ideas about the Civil War that are in his book. Only his expression will be protected. Drew Gilpin Faust and James McPherson will be nipping at his heels. Given the sharp limits on his "monopoly," Yglesias will have to expect that his publisher will be competing against publishers who have paid for the work of writers interested in the Civil War who are as industrious, insightful, and talented as he is. Under the circumstances, how big is the deadweight loss attributable to copyright likely to be? Not very, in my opinion. (By the way, I never wrote and never thought that Yglesias was "distasteful." I've been reading his blog for years and look forward to continuing to do so.)

I don't think it would be fair to expect Yglesias's hypothetical publisher to compete against publishers who use the work of comparably talented writers without paying. But a site like Pirate Bay becomes such a publisher as soon as someone uploads such a book. In fact, Yglesias's book might be forced to compete with an evil twin: itself, liberated of all the costs of creating it. As an economist, Yglesias believes that the optimal price of a product is its marginal cost, that is, the cost of making one more. But what's the cost of making one more book about the Civil War? Is it merely the cost of duplicating the e-book, a fraction of a cent? Or does it include the per-copy cost of a scholar's research, rumination, conception, and expression; an editor's selection and revision; a production staff's design and manufacturing; and a sales team's marketing and distribution? Those expenses might total hundreds of thousands of dollars. When it comes to pricing, a work of art appears to have a dual nature: cheap if seen as a collection of bits or ink marks, but expensive if seen as the record of years of intellectual and editorial labor.

This duality isn't new, and it was to suggest the history behind the problem that I dragged Kant into my previous essay. Copyright is a somewhat jerry-rigged legal concept, designed to make possible fair compensation in the marketplace for works that have this dual nature. It isn't perfect. In fact, I'm on record as believing that the term is currently too long. Yglesias claims that I have conceded "that copying is in fact not stealing." Again, yes and no. I concede that copyright infringement isn't a violation of property rights understood in a common-sense way. And I don't believe that all copying is copyright infringement. But I do think that copyright infringement is wrong, ethically and legally.

Yglesias is correct that piracy shifts enormous value to consumers—a value almost utopian in magnitude. The erasure of copyright-induced deadweight loss is the least of it. If I'm drawing the graphs correctly (and as I've said, I'm no economist), unchecked piracy cedes almost the whole triangle under the demand curve to consumers—transferring just a sliver along the bottom to the pirates themselves and leaving virtually nothing for legitimate publishers. Virtually nothing strikes me as a rather small kitty out of which to pay creators, editors, and publishers. Very few people with the talent and strength of mind to write a book about the Civil War, for example, will have the leisure and sufficient motivation to do so as a hobby. In an economic system that doesn't pay writers, there might still be first novels, but I doubt there will be many third or fourth ones, and probably few that are great. If the arts aren't going to be rewarded, where will literature or music worth pirating come from? If the salt have lost his savour, wherewith shall it be seasoned?

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