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Dmytro Taranovsky
Last Major Update: December 19, 2001
Last Minor Update: July 31, 2002

Economics of Copyright Laws

Copyright laws are laws that restrict users of certain information, such as literature works and computer programs, from distributing that information. They are based on the belief that those who discover information should have some control over who can use that information. The control is mostly intended to allow the discoverers to make money through distributing the knowledge only to those who pay them. However, such control is inherently inefficient and infringes on the rights of the users to obtain the information they need. Copyright laws should be abolished because they are economically unsound.

If a person obtains information, his or her decision-making capability is likely to improve, thus benefiting both the person and other people. Using information does not hurt its original discoverers since the only direct impact is on the user and the decisions made. Thus, obtaining and using information is generally beneficial regardless of whether it violates copyright laws.

By infringing on peoples' rights to obtain, use, and give information, copyright laws prevent people from reaching correct decisions (or at least slow down decision making) and thus are inherently inefficient. For example, because copyright restrictions require payment of high license fees, many businesses skip the upgrade to Microsoft Office XP despite its important productivity enhancements. A study showed that tasks requiring 43minutes with Office 2000 are accomplished in mere 20minutes with Office XP--over 100% productivity improvement (Microsoft Office XP vs. Office 2000 Comparison Test Public Report). However, the proportion of businesses likely to upgrade from Office 2000 during the first year of Office XP is 8%, second year--12%, and after second year--15% (Smiley).

While works of art do not directly improve productivity, people learn important ideas from art. The ideas may profoundly affect their lives. Moreover, art can bring happiness, and the government should strive to make the people happy. Therefore, all unnecessary laws that reduce access to art by preventing people from communicating art should be abolished.

Copyright laws are ineffective since they are frequently violated. Worldwide, 40% of software is unauthorized (Business Software Alliance). File-sharing networks make copyright laws unenforceable; almost all popular songs can be obtained free of charge through these networks. The victory in courts against Napster file-sharing service is empty since in its place appeared file-sharing programs that do not require a centralized server and thus are almost impossible to stop. In September 2001, 1.51 billion of (primarily copyrighted) files were downloaded using distributed file-sharing networks. In October, that number rose to 1.81billion (Mariano).

The violations show a failure of copyright laws and cause special problems. Because of copyright laws, money and resources are spent on obtaining unauthorized copies of information, on enforcing the laws, and on propaganda that using information to improve life without the permission of copyright holders is theft and piracy. By abolishing copyright laws, that money will be saved. Moreover, widespread violations of the laws cause disorder and promote the dangerous belief that violating laws is good. For example, the prohibition of alcohol in the USA in the 1920s was unenforceable. Alcohol was delivered by criminal groups, who often committed violent crimes, causing a dramatic rise in organized crime.

Some claim that copyright laws are a necessary evil, necessary for providing the incentive to discover information. However, financial incentives are not central to the discovery of knowledge: People discover information (by, for example, writing literature works) for internal feelings of achievement, recognition, benevolence, and understanding. For example, Van Gogh, one of the most famous painters of all times, devoted his life to art and died in poverty (because his talent was not recognized until after his death). He painted not for any profit but because of the mental satisfaction from his art.

People are motivated to write open-source software not for financial gain but to help the world and to have fun. Currently, despite lack of government funding, open-source software (software that can be freely reproduced and for which the source code is available) is of comparable quality and often more powerful than "proprietary" software. For example, one of the leading (and expensive) universities worldwide, Massachusetts Institute of Technology, uses mostly open-source software for its computer systems. The development model of open-source technology is inherently more efficient than proprietary software (software that is developed in secret) because all people, not just the secret group of developers can improve the software. Moreover, people can customize open-source software to fit their needs, and all software developers can use the code to write their programs.

Still, the discoverers should be rewarded to provide fairness and additional incentives to discover. The rewards can come from charitable individuals, organizations, and even large businesses. For example, in year 2000, "IBM pledged $1 billion to help research and develop the free Linux operating system, an alternative to Microsoft Windows" (Cha, Ariana). IBM has adhered to the pledge and actually recouped its investment through Linux powered IBM servers. In an another example, each year, Nobel prizes are awarded to scientists because Alfred Nobel donated his large fortune to fund the prizes. Moreover, even without copyright laws, people will pay for advice such as tutoring, legal services, software support, and psychotherapy: They cannot receive individual advice by reading books, even if the books are free. Copyright laws or alternatives are desirable not for individual information but only for information that is good for many.

The rest of the compensation should come from governments. Information is a public good--consumption by one person does not interfere with consumption by other people--and public goods, such as national defense, should be supported by the government. By replacing copyright laws with government payments, the inefficiencies and failures of the laws will be removed, but the incentives to discover knowledge will be retained and refined.

To allow a smooth transition, the amount of payments should initially be similar to the reward currently provided through copyright laws. Eventually, the compensation will be chosen for the greatest net benefit to the society under the constraint that all works considered valuable by many or very valuable by some receive substantial compensation. The constraint will allow full development of information that the government does not fully approve.

The current compensation is the number of people willing to pay the price times the price, where the price is varied by the copyright holder to maximize revenue. The amount is only indirectly related to the benefit of the information: Assuming the same willingness of people to pay, the payments do not depend on the effect to the society. Creators of virtual child pornography are rewarded by copyright laws to the same extent as are writers of educational books. The government should carefully correct the problem. While the pornography industry should receive some compensation, the payment per unit of desire of people for the information should be lower for pornography than for educational works.

Copyright laws are economically harmful. They should be repealed, or at least carefully restricted. The governments should quickly and carefully decide and implement a proper compensation for those who discover information. The world will become more free, and life will become easier as people will obtain the knowledge they need.

Works Cited

Business Software Alliance. "Seventh Annual BSA Global Software Piracy Study." June 2002. Internet. Accessed: 31 July 2002. Available: http://www.bsa.org/sweeps/2002_piracyStudy.pdf.

Cha, Ariana Eunjung. "Ximian's Volunteer 'Army' Fights Microsoft on Open-Source Code." The Washington Post. September 5, 2001. Internet. Accessed: 19 Dec 2001. Available: http://www.washtech.com/news/software/12296-1.html.

Mariano, Gwendolyn. "Napster rivals winning popularity contest." CNET News.com. November 5, 2001. Internet. Accessed: 19 Dec 2001. Available: http://news.cnet.com/news/0-1005-200-7788007.html?tag=rltdnws.

"Microsoft Office XP vs. Office 2000 Comparison Test Public Report." American Institutes for Research. May 23, 2001. Internet. Accessed: 19 Dec 2001. Available: http://www.microsoft.com/office/evaluation/indepth/XPvs2000.doc.

Smiley, Kenneth. "Microsoft Office XP Migration Planning." GIGA information group. March 28, 2001. Internet. Accessed: 19 Dec 2001. Available: http://www.microsoft.com/Partner/businessresources/SalesResources/CaseStudies/XP_Migration.doc.



Copyright Laws and Human Rights

Copyright laws are laws that restrict users of certain information, such as literature works and computer programs, from distributing that information. They are based on the belief that those who discover information should have some control over who can use that information. The control is mostly intended to allow the discoverers to make money through distributing the knowledge only to those who pay them. However, such control is economically inefficient (see "Economics of Copyright Laws" by Dmytro Taranovsky) and infringes on the rights of the users to obtain the information they need. Copyright laws prevent people from distributing necessary information. They also prevent people from writing books (called "derivative works") that are based on the ideas, such as character personality, that have been "copyrighted". Copyright laws should be abolished because they violate freedom of speech and of the press.

Information is essential for making decisions and for intelligent life. It can be present in different mediums such as oscillations of air pressure (sounds), writings, paintings, videotapes, or pits and plateaus (zeroes and ones) on a compact disk. People transmit information for different purposes: They convey emotions, state facts, suggest actions, give explanations, or make the receivers happy through works of art.

Information can be easily converted between mediums. For example, a microphone with a computer can convert a song into a sequence of zeroes and ones on a hard drive. Although it is in a different medium, the information remains the same: A computer with speakers can convert it back to the original form. A painting, can be scanned into a computer and put as a sequence of zeroes and ones on a hard drive. The painting remains the same because it contains the same information and creates the same emotions when viewed by a person. All information can be stored in a computer, where it is a sequence of zeroes and ones. Because the medium (as opposed to content) of information is irrelevant, each instance of information is equivalent to a sequence of zeroes and ones (such as 101011).

Some claim that copyright laws protect "intellectual property". However, can information be owned? Since a sequence of zeroes and ones is an integer in the binary form (for example, 101011 is 1*25+0*24+1*23+0*22+1*21+1*20 = 43), and since all information is equivalent to such sequences, all information can be presented as integers. Since integers cannot be owned, and since "ownership of information" means ownership of all forms of it, information cannot be owned. Thus, copyright laws do not protect any property rights. As an integer, information is not created but discovered: Every integer is a member of the set of all integers, and "creation" of information is discovery that a particular integer has special importance.

Free exchange of facts and ideas, called freedom of communication (also called freedom of expression, originally called freedom of speech and of the press), is one of the most basic human rights. It is granted explicitly in First Amendment and implicitly in the Fifth, Ninth, and Fourteenth amendments to the United States Constitution. It is a fundamental right since ideas, often ideas that appear dangerous, are essential for imperative changes to the society. Additionally, information is necessary for essential decisions and for the ability of people to rule themselves through voting. Actions, not information, cause damage. Governments cannot be correct when they decide what information is needed for whom.

Copyright laws clearly restrict the press from publishing certain works. Are these restrictions constitutional? Non-copyright restrictions are generally considered censorship and are not approved. The courts have uphold copyright laws because of the illusory belief that copyright only outlaws a way of expression, which they claim is property of the author, and not facts and ideas. According to a unanimous Supreme Court decision, "The most fundamental axiom of copyright law is that [499 U.S. 340, 345] 'no author may copyright his ideas or the facts he narrates'" (Feist v. Rural Tel. Service). Is there information that is neither a fact nor an idea?

A zero or a one is a fact, and "yes" or "no" (equivalent to zero or one) is an idea. A combination of facts is a fact. A composition of ideas is an idea. Thus, each sequence of zeroes and ones is a fact per se. Every sequence of zeroes and ones can be presented as an idea.

Therefore, every sequence of zeroes and ones is protected under freedom of communication. For example, the locations of lands and pits (which represent sequences of zeroes and ones) on a Microsoft Windows XP compact disk is a fact, and it cannot be abolished (and cannot, according to the quote above, be copyrighted). Since copyright laws prevent free exchange of facts and ideas (by requiring consent of the author before distribution), they are unconstitutional and violate fundamental rights.

Of course, some actions are not protected under freedom of communication. Dangerous or disturbing conduct may be prohibited even if it expresses important ideas. People who make a claim can be made responsible for the claim. Certain claims (such as the claim that the advertised food is not poisonous) are made implicitly. Also, offensive graphical presentation of information may require prior consent of the recipient. However, each of these restrictions is not on facts but on actions. Copyright laws outlaw integers, and integers cannot be outlawed. Laws regulate actions and control objects and feelings, but an integer is neither an action, nor a feeling, nor a physical object and thus cannot exist in this world and cannot be subject to laws. Punishing people for "distributing" an "illegal" integer is arbitrary and thus unconstitutional.

Some lawyers may say that outlawing facts is not inherently unconstitutional but should be placed under strict scrutiny, that the Congress has a compelling need for copyright laws, and thus the laws are constitutional. However, while copyright laws may address a compelling need, they are economically harmful and acceptable alternatives (government compensation) exist. Thus, copyright laws do not withstand strict scrutiny. Moreover, fundamental rights are granted regardless of whether a compelling need exists to abridge the rights. The first amendment simply prohibits abridgments of freedom of communication without mentioning any compelling need.

They can also say that the Congress is authorized by the Constitution (Article I Section 8 Clause 8) to make copyright laws. However, since freedom of communication was added as an amendment (the first amendment), it amends the power of the Congress to restrict exchange of knowledge, and it overrides copyright laws at all points of conflict.

Copyright laws are unconstitutional and harmful. They should be found unconstitutional in the United States by courts and promptly repealed elsewhere. The governments should quickly and carefully decide and implement a proper compensation for those who discover information. The world will become more free, and life will become easier as people will obtain the knowledge they need, and as people will not be prosecuted for helping others by giving valuable knowledge.



Work Cited

U.S. Supreme Court. "FEIST PUBLICATIONS, INC. v. RURAL TEL. SERVICE CO., 499 U.S. 340 (1991)." Internet. Accessed 21 Nov 2001. Available: http://laws.findlaw.com/us/499/340.html.