Monthly Archives: January 2011

Copyright is a Monopoly! (And isn’t like normal property)

The equation of ‘intellectual property’ (IP) such as copyright with (traditional “real”) property is frequently made, especially by those advocating its extension. However, this equation is fundamentally erroneous and results in very serious misapprehension of the nature and effect of IP. In particular, patents and copyright confer monopolies in a way that ownership of real property does not.

How is it different?

‘Real’ property like an apple, a car or an acre of land can only ever be used by one person/entity at one time — in economist’s terminlogy they are ‘rival’ goods. Giving someone exclusive rights over them therefore does no harm — only one person can have it and via trade we can ensure the person who values it most ends up with it 1. Here, creating property rights leads to an efficient outcome (at least in our simple case — in more complex setups we would need to think about complementarities, transaction costs etc).

By contrast, a copyright in, for example, a particular text confers not simply control over this or that particular book containing the text but over every instance of such a book. This is the very essence of a monopoly: being sole supplier of some good!

And it has all of the standard consequences of the monopoly: prices rise relative to what they would have been and access is reduced relative to its efficient level in which the price equals the cost of reproduction (i.e. we have a “deadweight” loss).

Furthermore, this cost of monopoly can be particularly serious when we have extensive “reuse” — i.e. new work builds upon old — as the monopoly inhibits not only access by users but the creation of new creative work.

The difference then between “normal” property and “intellectual property” is the difference between giving someone control of one apple (the apple they bought say) and control of all apples. The latter results in significant harm and inefficiency while the former does not.

Now, of course, the fact copyright is a monopoly does not mean it is per se bad. After all, we are deeply concerned with the incentives to create and the copyright monopoly helps provide such incentives.

We may therefore be willing to tolerate the ex-post costs of a monopoly because of the ex-ante benefits it provides in incentivizing and rewarding the creation of new work. But this is fundamentally a trade-off and one which gets worse as the monopoly is extended — a completely different situation from that with “real” property.

This point is made elegantly by Macaulay (opposing a copyright term extension in the 1840s):

“It is good that authors should be remunerated, and the least exceptionable way of remunerating them is by a monopoly. Yet monopoly is evil. For the sake of the good we must submit to the evil: but the evil ought not to last a day longer than is necessary for the purpose of securing the good.”

This is not something one would write about normal, ‘real’, property.

Substitutes (or, what exactly is a Monopoly)

Some people, particularly rights-holders, tend to argue that copyright isn’t a monopoly because of the existence of close substitutes (Helprin does this too where he tries to distinguish expression and ideas). In a strict sense this is simply false: a monopoly is the control over all (or most) of a market in a particular good (in this case the copies of a given cultural work). If entity X has monopoly in apples, the fact that I can buy oranges instead of apples does not change the fact that X has a monopoly.

However, in a broader sense this point is correct: the “proximity” of substitutes will clearly affect the demand curve a monopolist faces and therefore the price they can charge (in the extreme case when substitutes are perfect the ‘monopoly’ of course disappears).2

This is the point lying behind the copyright/patent distinction — the argument being that copyrighted works have much closer substitutes than patents (whether this actually true is unclear to me: what substitutes were there for Harry Potter? Many patents have relatively close competitors etc).

Nevertheless the fact remains that a copyright still acts like a monopoly in permitting the owner of a copyright to raise price above what it would have been (if not there’d be no point in having it — at least the “economic” rights portion). Furthermore, one has to be cautious in one’s logic here: the existence of close substitutes may lessen the harm of a copyright monopoly but it also reduces the benefits (the revenue incentives).

To put it most bluntly:

If copyright isn’t acting like a monopoly then, while causing little harm, it’s also not doing much good.

Specifically, if substitutes are sufficiently close that the copyright holder can only raise prices (much) to a very small degree above reproduction cost (and hence we can say no monopoly exists), then the benefits of the copyright, in terms of increased revenues to the copyright holder, must be commensurably small.

Colophon

I wrote the original version of this post over 3 years ago but failed to hit publish for reasons unknown. It’s creation was motivated by being pointed at this article by a Mr Helprin (who later fleshed out his thesis into a book). Discussions over the intervening years, especially with those advocating the extension of copyright, have only made it clearer how important it is establish the basic point that ‘copyright is a monopoly and isn’t property’.


  1. To a crude first approximation. There are many reasons why this ‘efficient’ trade may not happen (see next sentence). 

  2. As recognized in antitrust law with the endless discussions of what constitutes the ‘market’ for a given product. 

Speaking at CCSR in Manchester about Open Data

This Tuesday (25th Jan) I’ll be giving a seminar at Manchester University’s Centre for Census and Survey Research on Open Data.

The seminar is 4-5pm and there’ll be an open-data workshop/discussion from 12-4. If you’re interested in working with open data generally or any Open Knowledge Foundation projects specifically, for example [Where Does My Money Go], CKAN, etc, you’re very welcome to come along to any part of it.

Seminar Info

Title: Open Data: What, Why How!

There has been growing interest in many circles, and especially in government regarding ‘open data’. In this talk I explain what open is, what’s its attraction is, especially for public sector information, from an economic and policy standpoint, and finally explain how governments and others can adopt this new approach.

Introducing YourTopia – Development beyond GDP

The following is cross-posted from the Open Knowledge Foundation blog post. It reports the results of the code-sprint reported in this previous blog post.

Today we’re announcing a simple new app (also submitted to World Bank Apps competition) that allows anyone to say what kind of world, what ‘YourTopia’, they would like to live in:

http://yourtopia.net/

As well as having a very simple function: to tell you what country is closest to your ideal, the app also has a very serious purpose: to help us develop a real empirical basis for the measures of development that are used to guide policy-making.

Is health more important than education, or GDP, is the amount of R&D more important than amount spent on primary education? Help us find out what the world thinks!

You can see the app in action in the following video, or head over directly YourTopia and answer the 2-minute quiz.

More Information

Development Economics has for a long time recognised the deficiency of GDP as an indicator of human development but with little reception in policy-circles. Recently, however, the debate changed and no month passes now without a high-level report on “Development beyond GDP”.

OKFN’s new Open Economics Group has now constructed an application to test two solutions to primary problems in this debate, and it is participating in the World Bank’s competition “Applications for Development“.

Measures of human progress beyond GDP either use so-called dashboards of indicators (e.g. WDI) or composite indices (e.g. HDI or MPI). An openness-problem with the first approach has been that dashboards were so complex that the public was de facto excluded from the debate. The second approach tried to simplify through combining different dimensions into a single index but then suffered from arbitrary assumptions on the choice of weights applied to indices and choice of proxies for different development dimensions.

These are significant problems and so we’ve created Yourtopia, as the first application that produces a composite index of human development (OpenHDI) without arbitrary choices of indicator-weights and proxy choices.

We circumvent these problems simply: by letting the user participate. Rather than the researcher selecting proxies and indicator-weights we let the user choose. The resulting index of human progress is then personalised and contains no arbitrary assumptions by construction.

While the constructors of the HDI, for example, was always attacked for their assumption that human progress just depends on education, health and income and that these each carried the same importance, we now let the user decide which dimensions of progress are important and how they compare to each other.

Get Involved

We’d love to improve YourTopia in lots of ways and we need help with design, coding (python or javascript), and writing (from both an economists and a layman’s point of view!) (for example what does GNI in PPP terms mean to most people — we need translators from jargon to English!).

If you’re interested in helping please send either join the open-economics mailing list or just send a mail to info [at] okfn [dot] org.

Colophon

OpenHDI: Open Human Development Index

A few members of the Open Knowledge Foundation’s nascent open economics working group are having a code-sprint this Friday and Saturday to work on an app for the world bank competition currently called ‘Open HDI’ (Human Development Index):

The idea is to look at ‘development beyond GDP’ by collecting weightings on particular aspects of ‘development’ (health, education, gdp, inequality) from users and using that to build our own human development index.

We first talked about this a few months ago at the open economics online meetup. Dirk Heine and Guo Xu then put together an excellent demo version: http://eutopia.guoxu.org/ and now we’re working to take that to the status of a full app!

PyWordPress – Python Library for WordPress

Announcing pywordpress, a python interface to WordPress using the WordPress XML-RPC API.

Usage

Command line

Check out the commands::

wordpress.py -h 

You will need to create a config with the details (url, login) of the wordpress instance you want to work with::

cp config.ini.tmpl config.ini
# now edit away ...
vim config.ini

Python library

Read the code documentation::

>>> from pywordpress import WordPress
>>> help(WordPress)

The Public Domain in 2011

According to http://publicdomainworks.net/ (which I helped build) there were 661 people whose works entered the public domain in 2011:

http://publicdomainworks.net/stats/year/2011

Of course, I should immediately state that this is a fairly crude calculation based on a simple life+70 model and therefore not applicable to e.g. the US with its 1923 cut-off (for those interested in the details of computing public domain status there’s you can find lots more here: http://wiki.okfn.org/PublicDomainCalculators).

The figure is also a significant underestimate — to do these calculations you need lots of information about authors, their death dates and their works. This kind of bibliographic metadata has, until fairly recently, been very hard to come in an open data form and so we have been limited to doing calculations with only a relatively small subset of the actual all works (though, it should be said, we do have many of the most ‘important’ authors).

Thankfully this is now changing thanks to people like the British Library opening up their data so we should see a much extended list for 2011 some time in the next few months (if you’re interested in open bibliographic data, you should join the Open Knowledge Foundation’s Open Bibliographic Data Working Group).

Launch of the Public Domain Review

Lastly, I have an exciting announcement. Thanks to the work of my Open Knowledge Foundation colleague Jonathan Gray, we’re pleased to announce the Launch of the Public Domain Review to celebrate Public Domain Day 2011:

http://publicdomainreview.okfn.org/

As Jonathan explains in the blog post:

The 1st of January every year is Public Domain Day, when new works enter the public domain in many (though unfortunately not all) countries around the world.

To celebrate, the Open Knowledge Foundation is launching the Public Domain Review, a web-based review of works which have entered the public domain:

Each week an invited contributor will present an interesting or curious work with a brief accompanying text giving context, commentary and criticism. The first piece takes a look at works by Nathanael West, whose works enter the public domain today in many jurisdictions.

You can sign up to receive the review in your inbox via email. If you’re on Twitter, you can also follow @publicdomainrev. Happy Public Domain Day!