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File-sharing and property rights
Recently, the Los Angeles Times's Jon Healey kicked off a new round in the long-running debate about the moral status of file-sharing. Critics of the practice analogize copyrights to property rights, suggesting that file-sharing is a form of theft. Property rights have emotional resonance across the political spectrum. As a result, those who want to increase the power of copyright owners have tended to stress the similarities between copyrights and property rights. In contrast, those who who favor less restrictive copyright laws, as well as those who oppose copyright altogether, have resisted this analogy.
In a sense, this is obviously just a semantic dispute. But there are also important philosophical and legal issues underlying these arguments. As a strong supporter of property rights, I'm very interested in the similarities and differences between copyrights and traditional property rights.
Two arguments for property rights
To evaluate the analogy more carefully, it's necessary to consider why property rights are needed in the first place. There are two basic arguments, which we might call the scarcity argument and the reward argument. The scarcity argument suggests that property rights are needed to ensure an efficient allocation of scarce resources. When a resource lacks a clear owner, there is a temptation to overuse it. The classic example of this is the tragedy of the commons, in which communally-owned pasture land is over-grazed to the detriment of all of the field's users. The tragedy of the commons can often be solved by dividing the land up into discrete plots, each owned by a single individual who will be motivated to take good care of it.
The scarcity argument focuses on the efficient use of existing resources. In contrast, the reward argument focuses on the creation of new resources. It says that people will under-produce valuable resources if they aren't allowed to keep what they produce. For example, a farmer is far less likely to plant crops in the spring if he won't be able to prevent others from harvesting them in the fall.
Both of these arguments are good reasons for property rights in physical objects. But only the reward argument seems to apply to copyright. As Mike Masnick has noted, once an information good has been produced, it can be reproduced an unlimited number of times without diminishing its value. Opponents of copyright emphasize the scarcity argument to illustrate the differences between copyright and traditional property rights.
Of course, the reward argument assumes that particular classes of creative works wouldn't be adequately supplied in the absence of copyright protection. This seems to be true for at least some categories of copyrighted works. It is hard to imagine, for example, that Hollywood studios would spend tens of millions of dollars producing a new blockbuster if the law didn't grant them exclusive rights in its commercial reproduction.
Yet in many cases, it's far from clear that copyright is necessary for all categories of creative works. For example, I doubt there would be a shortage of photographs without copyright protections for photographers. Similarly, there is no shortage of garage bands producing music with no realistic expectation of making music for a living. It's not hard to imagine that there would be continue to be plenty of music in the absence of copyright protection for musical works.
The mystery of copyright
If we take the analogy between copyright and property rights seriously, it has some implications that advocates of strong copyright may not like. The copyright system is currently undergoing rapid changes as technology undermines old business models and enforcement regimes. Some aspects of copyright law are widely ignored and evaded, and efforts to strictly enforce the law have sparked widespread outrage. If we want to take the property rights analogy seriously, it doesn't make sense to compare today's chaotic copyright regime to the stable, orderly, and universally accepted property rights system we have today. Rather, the right comparison is to the American property rights system at a time when it, too, faced rapid changes and serious challenges to its legitimacy.
In his widely-cited 2000 book The Mystery of Capital, economist Hernando de Soto looked back at the formative years of property regimes around the world. While de Soto himself never mentions copyright law, the conflicts he describes have striking parallels to today's copyright debate.
21st century virtual squatters?
The American property system is based on the British common law system, but colonists quickly discovered that British property law was inadequate to the realities of the New World. In England, land was scarce, and titles were well-established. The American colonies, in contrast, had an abundance of land but poorly-defined boundaries and inadequate record-keeping. As a result, squatting became extremely common. Landless Americans would move to the frontier, clear some land, and begin building on it without first securing a property title.
This was illegal, and governments worked hard to prevent it. The resulting conflicts made today's battles over file-sharing look tame. In 1786, when Massachusetts tried to eject squatters in Maine (a Massachusetts territory at the time) the result was what one historian describes as "something like open warfare." Squatters refused to pay for their land or vacate it, and the government tried to forcibly evict them. One sheriff was killed trying to evict a squatter, and juries refused to convict the accused murderer.
The newly-created federal government soon joined the war against the squatters. The 1787 Northwest Ordinance established procedures for purchasing Western land from the federal government, but these laws were widely ignored by squatters who lacked the funds and the legal expertise to participate. In 1807 Congress provided for fines and imprisonment for squatters who refused to vacate land they had settled without federal permission.
As Congress and state governments passed more legislation to deal with squatters, the law only became more chaotic. As de Soto describes it:
Between 1785 and 1890, the United States Congress passed more than five hundred different laws to reform the property system, ostensibly based on the Jeffersonian ideal of putting property into the hands of private citizens. The complicated procedures associated with these laws, however, often hampered this goal... By 1820, the original U.S. property system was in such disarray that the Supreme Court Justice Joseph Story wrote: "Ages will probably lapse before litigations founded on [the U.S. property laws] will be closed."
The property rights quandary was ultimately resolved not by harsher enforcement of existing laws, but by adjusting the property system to recognize the realities on the frontier. Politicians from Western states were more sympathetic to squatters, many of whom were their constituents, and they pressed for their claims to be recognized by the legal systems. Squatters had created informal mechanisms for delineating and enforcing their claims, and over the course of the 19th century, governments increasingly extended formal recognition to these arrangements.
Lessons for copyright policy
There are some obvious parallels to the contemporary file-sharing debate. Like squatters of old, many ordinary users find copyright law bewildering and are frustrated by the arbitrary restrictions it imposes. Customers wanting to rip their DVD collections to their computers, download music they can play on any device, or incorporate copyrighted works into original creative works find that there is no straightforward, legal way to do these things.
The dismal state of copyright law is a reflection of rapid technological change. In the 20th century, the copyright system was geared toward the needs of the large, capital-intensive firms—movie studios, book publishers, newspapers, record labels—that produced the bulk of the copyrighted works. Because few individuals could afford their own printing presses or broadcasting equipment, 20th-century copyright law hardly ever impacted the actions of ordinary Americans. The large firms that were subject to copyright law could afford to hire lawyers to advise them on what the law required.
But the emergence of the Internet and other digital technologies have brought the technologies of wide-scale content creation and distribution to the masses. As a result, millions of people suddenly have to worry about copyright issues that previously applied only to commercial firms. Many of them find the requirements of copyright law unreasonable, and they have reacted by simply ignoring it.
Getting users to stop sharing files and circumventing DRM is likely to prove just as hopeless as getting squatters to leave their homes. There are now millions of people who think nothing of evading the law, and there are simply not enough courts to try more than a tiny fraction of them. Sooner or later, Congress will have to do for the copyright system what it did for property rights in the 19th century: change the law to bring it back into line with peoples' moral intuitions.
The fundamental lesson is that property rights are not—and never have been—created by Congressional fiat. Property rights emerge spontaneously from the social fabric of a community. The job of the legislature is not to create a property system from scratch, but to formalize the property arrangements that communities have already agreed upon among themselves. A system of property rights will only be effective if it is widely viewed as legitimate.
If copyrights are a form of property right, then the history of American property rights provides clues about how the copyright system will need to evolve in the future. It suggests that Congress's current strategy of imposing ever more draconian penalties for breaking laws that lack broad public support is a recipe for failure. Congress may be forced to concede, as it did two centuries ago, that property law must accommodate the actions of ordinary Americans, and not the other way around.
Similarly, major copyright owners might learn something from this history. Ordinary consumers are more likely to respect copyright if they view its restrictions as reasonable. Rather than trying to browbeat consumers into accepting highly restrictive copyright policies, they might find it worthwhile to adjust their business strategies to provide their customers with legal ways to do things they're likely to do anyway. The labels' contract with Imeem is a good model, as it, for the first time, gave consumers the ability to share music with their friends in exchange for a cut of ad revenue. In the long run, accommodating customer demands is likely to be a more successful business strategy than trying to enforce every provision of copyright law to the hilt.
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