May 31, 2004

Fruit Baskets, Free Riders, and Fair Use

Filed under: DMCA — Wendy @ 2:00 pm

Dinner with Quinn fortuiously set me to reading
her observations on the free rider problem:

We put a huge amount of resources into punishing and excluding free riders in many parts of society. But is it because they are actually problem, or is it because they piss us off so bad?

My local CSA’s trade box was just another good idea: at the pickup site there is a cardboard box you can drop things you don’t want (and would most likely waste) and pick out other people’s goodies that they didn’t want. It had to be a net positive. Then they decided to make it fair and try to exclude the free riders. There’s a sign on the box now that says you can only take something out if you put something in. You know, to keep something in the trade box, i guess.

When you think about it, the problem becomes apparent. If you want everything you got that week you either have to exclude yourself from the tradebox, giving up something that possibly no one else want, or give up something which it may turn out no one wanted, and you would have happily eaten. Most painfully, if no one defects from the system, it guarantees that at least one item will go to waste every week. So the tradebox was a great way to reduce waste, until they decided to kick out the free riders, and it became the vector for waste. But at least it’s “fair” now.

Food that rots in the box is the co-op’s deadweight loss. At some point, guarding the commons to exclude free riders saps more value than it protects. What’s more, today’s free rider might be tomorrow’s donor or innovator, though those who bridle at “free riders” might be more comfortable with “beneficiaries of consumer surplus.” In their determination to stop copyright free riders, copyright holders are causing great social harm.

These problems aren’t new to copyright. They just show up here more often because technology has driven the marginal cost of the next copy of a copyrighted work near zero, and peer-to-peer lets independent re-distributors shoulder those costs that remain. As a matter of hard costs, the free rider costs the copyright holder and publisher nothing. So long as we can get over the startup hump — giving creators enough incentive to get the first copy of a work produced — we should be able to give everybody access to it.

Copyright has long recognized this paradox. The Consitutional compromise is to give authors exclusive rights for limited times. But today, of course, the times have gotten longer (CTEA), the costs of exclusion (DRM or the PIRATE Act) have risen, and fewer and fewer members of the public get to benefit from the consumer surplus of a smoothly functioning market.

We may not have all the answers to a perfectly functioning copyright commons yet, but it can’t be to assume, as the MPAA’s copyright “education” does, that “If you haven’t paid for it, you’ve stolen it.”
Only a broken system leaves orphan films to rot because the only ones willing to restore them don’t hold (and can’t find holders of) the necessary bundle of rights.

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