no third solution

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IP & Copyright Laws: An Alternative Solution

September 13th, 2006

There’s quite a little discussion brewing over at Catallarchy about IP & copyright laws – which of course is to be expected when you’ve got a nice mix of small-l libertarians and varying degrees of anarchists discussing the matter.

Without getting into the middle of this debate (IP debates are always fun), probably the most viable solution is kind of a dominant-assurance auction:

An author, or musician, or whomever, would produce something we currently regard as IP. He would shop it around to various publishers/record companys, etc. Assuming one of the companies likes the idea, it would then be their job to publicize and market it – this could be done kind of like the way they market first-run movies. Perhaps a few chapters of a book would be released free as a teaser, or maybe the first single from an album, etc.

If the publisher generates a sufficient amount of “buzz”, people would place pre-orders for the book/CD/etc, which of course would be tied to a reserve quantity. If orders did not meet the reserve, money would be refunded and the book or CD would not be produced. The author would retain the exclusive right to seek out another, better publicity agent, or he could rework his product and make it better, and try again.

The above example can of course, be modified. For instance, instead of a reserve quantity, perhaps a reserve dollar-amount would be used. This would allow each potential customer to bid what he was willing to pay for the product, and once the revenues generated met the reserve (which would be contingent upon cost of production), the orders would be fulfilled. This of course involves a significant amount of surplus being transferred from producer to consumer, but it is no different from any other sort of price-discrimination in that regard.

I think it is difficult to justify protecting entrepreneurs from entrepreneurial risk. Copyright laws, of course, “protect” the producers against the risk of producing something that is deemed barely profitable, and then becomes a huge success only later. The risk of producing something that generates just barely-sufficient sales and then becomes a “best-seller” or goes multi-platinum, is of course transferred from customer to producer, after the initial release, the product would become a part of public domain. But in any event, the fact that an album or a book became a huge blockbuster should give some sort of credibility to the author or songwriter in the future, which would likely manifest itself in greater demand for subsequent books or albums.

I’m not sure that this is a novel solution to the problem – I haven’t done very much research on the topic, so I’d like to claim it as “my” solution to the debate, by which I mean, any similarity between this suggestion and those proposed by others is entirely coincidental. But feel free to point me to any articles that replicate my suggestion – it would be nice to know I’m not alone.

no third solution

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