A public good has two defining properties:
The opposite of a public good is a private good. A private good has the following properties:
The difference between private and public goods has implications for making decisions about who pays for them. The rivalrous property of a private good makes it desirable that the consumer of the good should be the one to pay for it; the excludable property of a private good makes it possible to charge the consumer for consuming it – if you don't pay then you will be excluded from having or using it.
In contrast, the non-rivalrous property of a public good implies that once the good comes into existence, as many people as possible should be able to benefit from it. The non-excludable property implies that everyone who can benefit from it will do so regardless, which makes it difficult to force anyone to pay for it.
The economic problem of public goods is that if no one has to pay for them, then very likely no one will pay for them (although voluntary contribution and effort can be sufficient in some cases), and the public goods will not be produced, and the opportunity to benefit from their existence will be lost.
The general solution to this problem is for the government that governs a society to fund the cost of producing public goods from taxation. In fact taxation mainly serves just two purposes:
Non-rivalry and non-excludability can be a matter of degree. For example, roads are commonly regarded as a public good, and their construction and maintenance are usually funded from taxation. Yet roads are not perfectly non-rivalrous, as each portion of a road can only be occupied by one vehicle at a time, and they are potentially excludable (as happens for example with toll freeways and toll bridges, where entrance or exit is controlled).
Even when a public good is funded from taxation, there may be some effort to determine who it is that most benefits from it, and to tax accordingly. Thus roads might be funded from vehicle taxes and fuel taxes. There can be no guarantee that your benefit from using the road is exactly equal to the amount of vehicle and fuel tax that you pay, but it seems like a reasonable estimate, and such considerations make these taxes politically acceptable.
Although taxation solves the problem of how to provide public goods, the decision to provide any good via government has the effect of reducing choice and accountability. Where goods are provided privately and the consumers who consume them pay the costs of production directly to those who produce them, each consumer has direct control over how their money is being spent on the production of the goods that they want to consume. If you don't like what one producer produces, you can choose to buy the same type of good from a different producer.
But if the government is producing roads less efficiently and effectively than is possible, or even if you just think that they are producing roads less efficiently and effectively than is possible, you cannot just select an alternative supplier, unless perhaps you go to the extreme of moving to a different country with a different government. Your only recourse is to engage in some type of political action, to convince a sufficiently large number of people in society that there is a problem with how roads are provided, so that those people will vote for some politicians who are inclined to do something about the problem. The practical result of such difficulties is that government provision of goods, whether public or not, can be much less efficient that comparable private provision of goods by private businesses. The implication is that where a certain good exists on the borderline between being public and private, we should give the benefit of the doubt to private provision.
Having said this, there are many situations where apparently private goods have an element of publicness in their production and provision. For example, you may purchase a car directly from a manufacturer (or their agent) for your own private consumption. Yet certain aspects of the car's manufacture are controlled by government regulations, and depend on public accountability rather than private accountability. For example, reliable information about the car's crashworthiness may be difficult for a private buyer to efficiently acquire, and if the car actually does crash it is too late to find out about it. Government agencies can require and oversee procedures for measuring aspects of a car's suitability for use, such as safety aspects, and make this information available to purchasers, or, in many cases, require the manufacturers to meet certain standards, which in effect provides car purchasers with the knowledge that their car will meet those standards. This knowledge is provided as a public good, since it benefits all car buyers regardless of whether they even want to benefit from it (since they no longer have the choice of buying cars that do not meet the specified standards).
In the modern world, a substantial portion of the goods which are privately manufactured and which we privately purchase consist essentially of information. These goods include such things as:
These items are mostly purchased directly by consumers, and are not funded out of taxation. Yet the curious thing about information is that it has the properties of non-rivalry and non-excludability – exactly the properties which define a public good. Both properties are a consequence of the fact that information can be copied, and to some extent copyability is the defining characteristic of information. Copying information makes its consumption non-rivalrous, because we can all have our own copy. Copying makes the consumption of information non-excludable, because the moment you give a copy of information to someone whose actions you cannot control, that person can make further copies and give them to any number of other people.
The historical response to these facts about information has been to invent the concept of intellectual property. Intellectual property is based on the idea of assigning property rights in information to the producers of that information. The effect of these rights is to create, by legal fiat, a condition of excludability that would not otherwise exist. There are two major forms of intellectual property which assign this type of right:
The transferability of these rights makes them more analogous to normal property rights such as ownership of material goods, since they can be freely bought and sold.
Over the last five or six decades, the processing of information has become steadily more automated and technological. A critical step in the development of information technology has been the invention of the digital computer. Digital computers can process any type of information, if and only if that information is encoded digitally, i.e. in the form of numbers.
One of the consequences of the digitisation of information is that the property of non-excludability has been increased to an extreme level: not only can information be copied, perfect copies can be made extremely cheaply and quickly, and they can be rapidly transferred from one place to another, via computer networks such as the Internet, or via plain old "sneaker net" ("sneaker net" used to mean transporting information on floppy discs, but now we have DVD-Rs, which have more than 3000 times the storage capacity, even though they cost less per disc).
Non-excludability is one of the properties that make something a public good. The other is non-rivalry, and we should note that the consumption of information always has been non-rivalrous. The effect of the digitisation of information is therefore to make it both perfectly non-rivalrous and perfectly non-excludable, with the result that digital information is now a perfect public good. That is, digital information is as much as public good as it is possible for any type of good to be.
This development has inevitably come into conflict with the legal systems of intellectual property. Two basic conflicts can be identified, corresponding to the two properties of public goods:
These conflicts have led to much soul-searching and debate:
These are all good questions to ask, but they seem to avoid the real issue, which is that digital information intended for publication is a perfect public good, and therefore the production of digital information for publication should be funded out of taxation.
There is no avoiding this conclusion. If public goods are the things that taxation has to pay for, and if digital information is the perfect public good, then we should be using taxation to pay for the production of digital information.
We might wonder why this obvious fact about information goods – that they are now public goods – is so strongly ignored. Even though the legal fictions of intellectual property were never perfect (i.e. "pirates" got away with infringing patents and copyrights even before everyone had a computer connected to the Internet), they have been sufficiently real to support the business models of major industries which manage the creation and distribution of information goods such as books, music, movies, television and computer software. These legal fictions have also acquired a moral life of their own, and the notion of "property" leads to a natural interpretation of the unauthorised copying, distribution and use of information as "stealing". Instead of observing that digital information has become a perfect public good, the industries whose business models depend on intellectual property laws have come to the conclusion that "everyone is a thief". What should be a correction of perception, i.e. digital information is a public good, and we should alter the means by which it is funded accordingly, has instead turned into a moral crusade: stop the "stealing", no matter what the cost!
If the production of digital information is to be funded by taxation, then two basic questions arise:
A number of proposals for alternative compensation systems have considered these issues. The first question seems to be the easiest one to answer: if published digital information provides benefits, those benefits will be roughly in proportion to the computer hardware and computer network access which are used to enjoy them, so they should be funded from taxes on computers, computer disks and Internet connectivity.
The more difficult problem, and one that has in some cases been perceived as creating fatal objections to replacement of intellectual property business models with alternative compensation systems, is that of deciding how much to pay different producers of information.
In the world of intellectual property, where producers of information exert perfect control over which customers can use the information they have produced, payment is extracted from those customers in return for permission to use the information that they want to use. When excludability ceases to exist, this source of information about the value of information is lost.
Some proposals require the adoption of measurement systems, where some attempt is made to measure how much effort consumers put into acquiring information that they want. Unfortunately, any attempt to measure the value of information this way is very corruptible. If I want the system to think that my song is really popular, I just have to get as many of my family and friends as possible to download my song, regardless of the fact that they have no desire to listen to it because actually it is a load of rubbish. (I will adopt the term "spurious" to describe content which has been created solely for the purpose of receiving illegitimate compensation in a compensation system.)
This problem of corruption can seem insoluble, if we are looking for a way to determine the value of information as a public good by observing and measuring the actions of those who use and acquire the information. In contrast, the compensation that content creators receive via intellectual property is not corruptible by the actions of consumers, because the only way for consumers to take "fake" action to compensate the content creator is to actually buy the content, which always costs them more than what the content creator receives in royalties. (The allocation of intellectual-property-based compensation can, however, be corrupted by other means, which I discuss further on.)
But before we discard any alternative to prohibitory rights because we are worried about corruptibility, we must remember that intellectual property does not exist for its own sake, or independently of those people whose behaviour it attempts to control:
It follows that we have voted, very indirectly, that the producers of useful information deserve to receive payment.
This observation forms the basis of a "morally optimal" alternative compensation system:
Such an alternative compensation system could be called a voted compensation system, because each person in society votes for how much income each producer of information should receive. In principle such a system is immune to corruption caused by spurious content, because voting represents a collective decision about the value of each item of content considered by the system; it does not represent a replacement for any attempt to measure each voter's behaviour with respect to specific content items. In particular, the voting system must allow each voter to vote either for or against the proposition that any particular content item should receive compensation. Each content item is being voted on to determine its value as a public good. Thus we would expect spurious content to receive a majority of negative votes, as a result of which its creator should fail to receive any compensation at all, even if there is some subset of voters somewhere giving it positive votes.
Although optimal in principle, this system is practically very inefficient. If there are N voters/consumers and M producers of information, then a total of N×M votes need to be cast, in order to determine the allocation of available funds to those M producers.
A more efficient system, from the point of view of voting, is for everyone just to vote for the content which they actually use and enjoy. Such a system is a simple replacement of measurement by voting, and thus is corruptible, in exactly the same way that a measurement-based system is corruptible (even more so, since voters don't have to "fake" votes, they just vote however they want to).
A practical system is likely to involve some compromise between these two extremes. Use of voting intermediaries may help to reduce the number of votes that need to be cast. For example, if there are X intermediaries, and each consumer votes for or against each intermediary, and each intermediary votes for or against each producer, N×M votes have been replaced by N×X + X×M votes, which is a considerably smaller number, depending on the size of X.
The crime of copyright is not that we are denied access to free content, since content does cost money to create and it is therefore unreasonable to expect content to be free, but that we are denied access to cheap content.
In the past, the distribution of information had a substantial material component, i.e. the cost of vinyl, the cost of paper and ink, the cost of CD's and DVD's in jewel cases. If copyright imposed a substantial cost per unit of information distributed, this amount was not out of proportion to the cost of the physical distribution medium. But this cost is very steadily decreasing to a number indistinguishable from zero. The cheapest digital medium currently available is the single-sided 4.7GB DVD-R, and non-brand name disks can be purchased retail for US$30 per 100 in a spindle.
We can consider how many "works" of a given type fit onto one DVD, and what the cost of distibution materials is per unit:
For each content type we can calculate a "piracy ratio", which is the ratio between a typical commercial price and what it would cost if the only thing you had to pay for was the cost of the DVD-R. For example, if e-books are sold for US$10 each, and the DVD cost per book is 0.02 cents, then the piracy ratio is 1:50,000. The most aggressive anti-piracy campaigns currently come from the recorded music and movie industries, and their piracy ratios are about 1:8000 (assuming US$2 for a CD single) and 1:150 (assuming US$10 for a DVD) respectively. For commercial software packages, simply take the price in US$ and multiply by anything from 3 to 100, depending on how much padding you think is contained in the installation CD/DVD.
If we regard existing intellectual property laws as sacred in their own right, then these ratios are a measure of the profits that can be gained by those engaging in crimes against those laws.
But if we regard intellectual property as merely a means to end, i.e. the funding of content so that we can all have access to that content, then we can treat these same ratios as a measure of the wasteage caused by intellectual property laws. It is necessary and desirable to pay content providers for the content that they produce. But, once produced, such content could be made available to everyone (or at least everyone with a computer and a DVD drive) for effectively no cost. That most content is only distributed to a very tiny percentage of the number of people who could benefit from it, or to put it the other way around, that most of us only ever get to access a tiny percentage of all the digital content that is produced and published, is an indication of how much the current system deprives us.
Compared to what we would have if the system for payment of content-providers was not linked to non-distribution, we are living in a system of self-imposed "information poverty". We have swallowed the moral propaganda of intellectual property "rights", and the need to prevent "crime" against those rights, when in reality intellectual property has itself become the crime, one that deprives humanity of the right to fully benefit from its own creativity.
In a world of free distribution and alternative compensation, how much would we have to pay for the promised wealth of content?
A quick answer to this question is: what we have already paid, plus that portion of production costs funded out of expected future earnings, minus most current costs of distribution and promotion. As already explained, distribution costs will be much less than what is currently required. A substantial portion of existing promotion costs arise from the need to convince consumers of their desire to spend a substantial portion of money to purchase something which they cannot really know how good it is until they have tried it. In a world of free distribution, content will become more naturally "self-promoting", or promoted on a fan-to-fan basis, and heavyweight promotion and advertising becomes unnecessary.
Having said that, it is likely that, even in a world of free distribution content, providers will expend some effort and money on promoting their content, because they are not going to receive any alternative compensation if people are not using and enjoying their content. We can also consider that some forms of "promotion" are also content, and a good example is music videos, which are to some extent sold as DVD's, but which are mostly given away to be played on television stations such as MTV. In an alternative compensation system, if consumers actually like watching music videos, then they will have to direct some compensation towards the costs of producing those videos.
The crime of copyright is not just "information poverty" caused by restrictions on our ability to consume published content – there is also the loss caused by our inability to freely build upon existing work. This issue has been highlighted by Lawrence Lessig and the Free Culture movement. It also underlies the motivation for open source software. Open source software licenses are based on the idea that if you have written some software, and you wish to maximise its value, you must do more than just allow anyone to use your software – you must also allow anyone to alter it to make new software, and possibly you should require that anyone making derived works must themselves give the same rights to their users. (Thus the open source, because in practice you need the source code if you want to make altered versions of a software application.) Copyright law does tolerate the existence of open source software, but it denies its creators the right to collect remuneration proportional to the value of what they create.
The deprivation caused by giving creators the right to prevent others from deriving new works based on their works is more critical with reference to patents. Patents protect ideas (where those ideas can be applied to practical benefit), which are a form of "information". As with copyright, the damage done is more acute when the "protected" ideas have a purely digital implementation, because in many cases a patent is the only thing that prevents a particular software application from being used, distributed and improved upon by everyone in the world with a computer and an Internet connection. (If you have seen those web ads saying things like "Down with software patents!", and you wondered what was so special about software, well now you know.)
Ideas build on ideas even more so than content builds on content, and as a consequence patent law does more than just deprive humanity of access to its own creations – it comes close to depriving humanity of the right to think. Patents don't absolutely stop you from thinking, but how many people are going to want to think about something knowing that the results of their thoughts will be controlled by patent lawyers – if you think of an idea which builds upon other ideas, some of which are or might be patented, then you can either go to a patent lawyer to get your idea patented just so that you can achieve a negotiating position that might give you the chance to cross-license your patent with those other patents, just so that you can freely use your own idea (and you are still stuffed if you want other people to be able to freely use your idea), or, you can choose not to patent your ideas, but then you will get letters from other people's patent lawyers telling you to "cease and desist" until the relevant patents expire (which can take up to 20 years).
Copyright and patents deal a double blow to open source software: copyright denies open source developers the right to substantial remuneration, because it only provides for compensation to those who don't allow free distribution of their work, and patent law only gives protection to those who pay the costs of patenting (unlike copyright which is free and automatic), on the assumption that anyone who has an idea worth patenting will use the power of patent law to get compensation by means of their right to prevent people from using their patented idea. The worst case scenario is that an open source application can contain hundreds of unpatented ideas, but just one critical patented idea in the application can give that patent holder complete control over who can and cannot use that application. Patents do more than prevent other people "stealing" your work: they also let you "steal" the unpatented work of other people.
Details of how voted compensation could be implemented within one particular country can be divided into various aspects:
The source of funding for any alternative compensation system has to be taxation. To make such tax as fair as possible, it should be levied in proportion to the benefit expected to be received from the content provided by the system. In practice this means taxation on:
Also, since eventually almost everyone gains some access to content made freely available, there is a case for funding some of the compensation from general taxation.
A number of countries already have taxes on digital recordable media. In Canada there is a "copyright levy" on CD-R blanks and high-capacity digital music players. Payments from the levy are made to "eligible" "authors" (songwriters), performers and "makers" (record companies). Germany also has levies on media and also on personal computers. It is not clear if these systems have the ability to provide funds to composers and writers who freely distribute their work.
The moral objection to these levies, which fall somewhat short of full alternative compensation, is that they serve only to perpetuate the existing system. The distribution of the funds is determined by existing rights societies, and is certainly not directly determined by those who are paying the levies. Disbursement of funds is based on existing receipts from traditional copyright and copy-control based sales channels. Rights-holders retain their ability to disallow the free copying of material – the very thing they are being compensated for. The legal and moral judgement that free copying is a crime is retained, even though the system is based on the assumption that such copying will inevitably occur, both indefinitely and on a large scale. The levies are simultaneously "taxes" and "fines". As "taxes" they are unjust, because no public good is being formally provided in return, and as "fines" they are unjust, because there is no formal determination of "guilt" on those paying them.
The democratic argument for voted compensation is that "we" vote for intellectual property laws as an indirect way of paying content creators, so the same "us" can vote directly for who should receive alternative compensation. The "us" would therefore be those adults over the voting age who live in the country where the system is being implemented, and each voter would receive the same number of votes per unit of time as every other voter. Although simple and fair, these rules may not be ideal:
A possible slogan for alternative compensation is:
Attribution, not prohibition.
That is, we abandon the notion of content creators being able to prohibit the distribution of their work, but it is still important that they be attributed with the creation of their work. In practice this means maintaining some type of digital registry, where each content creator registered in the system has a unique ID, and each registered creator registers their individual items of content.
The following is an outline of a scheme that fits into the existing Internet, DNS and WWW frameworks:
A lot of the detail that needs to be worked out to make voted compensation truly practical and effective has to do with how people can vote for content, and how that determines compensation. Most of the problems that can occur with voted compensation are really general problems that can occur with any democratic system:
The most important concept that comes from comparing voted compensation to normal political democracy is the idea of negative voting. Voting compensation for content created by a particular creator is equivalent to deciding that the content in question constitutes a public good. This is a proposition that one should be able to vote either for or against.
However, most of the time most people will be interested only in voting for the content that they themselves approve of and enjoy. The main reason for having the option of negative voting is to eliminate compensation for spurious content, which is created solely for the purpose of giving the content creator and their associates the opportunity to vote compensation to themselves. But of course there is no guarantee that voters won't use negative voting for other purposes, such as voting down content that offends their religion, or their moral point of view. Whether or not this is actually a bad thing is hard to say. It raises the possibility of voter-driven censorship, although we must remember that creators who suffer from negative voting are not being prevented from creating their content, they are just not being paid for it (at least not from the voted compensation system – other means of receiving compensation are not necessarily excluded by the existence of such a system).
Given the difficulty of knowing how voted compensation would work in practice, and how people would vote, and whether people would judge the overall result of other people's voting behaviour as leading to a satisfactory result, I think it is important to design a system which allows for transparency of operation, with the option to alter rules for voting and fund dispursement, where such options could themselves be subject to occasional voting (which in modern technical geek language would be called meta-voting).
A primary requirement for transparency is that the following information should be made public:
A general argument in favour of this level of transparency is that it should apply to anyone who receives public funds in return for the provision of a public good. In particular it should be easy to identify spurious content. Not everyone will be interested in hunting through registries and public compensation reports to find undeserving recipients, but it would only take a few determined searchers to provide the information which could then be used by a larger (more apathetic) voter population as the basis for making negative votes.
Another major question is: how will people actually vote? Some possible answers are:
These options seem straightforward and reasonable enough, but they do raise some implementation issues:
Although computer-mediated voted compensation creates new financial opportunities for computer hackers, it may also have the desirable side-effect of making large profitable (legitimate) industries, such as movie and record companies, be really, really interested in the security of the average personal computer, and, who knows, they might even sponsor the development of better security in computer operating systems.
Consolidation is a feature of both existing commercial copyright and patent payments, and of political democracy. Every radio station does not pay royalties to each individual composer or performer; rather they pay via collection societies. Patents for complex technologies get grouped together, so that manufacturers can pay just once to license all the patents necessary to implement a process or produce a product. In the political arena, every voter does not vote for every law; rather we vote for representatives, who form a government which then votes for different laws. (Citizen referendums are a move in the opposite direction, and the popularity of these in some places suggests that it is possible to have too much consolidation.)
Consolidation of voting power in government reduces the amount of thinking that individual voters have to do. It also facilitates deal-making. At the beginning of this paper I listed two qualities of a public good: non-rivalry and non-excludability. But there is perhaps a third important quality, one which is highly relevant to an alternative compensation system, and that is universality, which asks the question: does everyone benefit from it? In practice there is probably no public good which is perfect in this third sense, although some might come close.
A lack of universality can argue against tax-funded provision of a good, even if it is public by the first two criteria. It does not seem right that 100,000,000 people in a country should have to pay money for an item that only benefits 100 people. Of course if there were 1,000,000 groups of 100 people each, where each group benefited specifically from one unique item, then it could still be beneficial (and just) to provide those 1,000,000 items as public goods.
The rules for levying taxes to fund a public good can alleviate some of this problem. I have already mentioned the example of road taxes being levies on vehicles, and an analogous requirement for taxes to fund alternative compensation is that they should be levied on the technology used to benefit from the digital information which is compensated by the alternative compensation system.
But we are still left with the problem that individual taste for some forms of digital content is very specific. If taste is very specific, and I am the only person in the world who wants to listen to a particular piece of music, then neither copyright law nor alternative compensation is very relevant, because the good is effectively a private good, and it is up to me to pay someone to perform it for me.
At the other extreme, for content that is very popular, in most cases there will be substantial voting for that content (in a voted compensation system). This type of content is the type of content that suffers most from the failure of copyright law to provide the copy-control that it is required to enforce payment. It is also the type of content which receives the profits which drive a lot of the political action towards more extreme attempts to make copy-control work no matter what the cost to society overall. So if voted compensation can provide an alternative guarantee of payment for more popular content, it will help relieve the tension that currently exists between the copyright-based business models of big-time content creators and the desire of society to benefit from the ability to freely copy and distribute digital information.
But there remains a potential hole in the system with regard to "in between" levels of content – content with a large audience, but one which is still a small proportion of the total population of a country. In the first instance we might expect the audience for each item of content to vote for that content, and guarantee income to the creator of it. But we have already determined that pure positive voting leads to a corruptible system. We can introduce negative voting as an antidote to spurious content, but this introduces the risk of spurious negative voting. There is a very fuzzy line between voting against content because you disapprove of it, and voting against content because you really, really disapprove of it. If a content creator fails to receive payment for a book on lock-picking, because too many people disapprove of the distribution of such information, then that is not necessarily a bad thing. If pornography fails to receive payment through a voted compensation system, then that may not necessarily be such a bad thing. An argument raised against some types of alternative compensation systems is that pornographers might receive more compensation under such systems. For example, a large portion of P2P file-sharing traffic is pornographic content, so a compensation system based on measuring sizes of downloads would have to give a corresponding proportion of allocated compensation to the creators of that pornography.
But what if people vote against heavy metal, because they find it annoying, or because they don't like guitar players with lots of tatoos? Fundamentalist Christians might vote against heavy metal. When heavy metal fans realise who is voting against their favourite bands (the system will probably not directly reveal this information publicly, but no large-scale action against someone is going to remain a perfect secret forever), they may take revenge and vote against Christian music, just out of spite. The Christian musicians might then tell their fans not to vote against the heavy metal bands, and to call some kind of truce. But how to arrange and maintain such a truce? Or can we fine-tune the system to better balance the desires of the fans against the desires of those who disapprove of other people's taste in music?
One way to reduce the impact of spurious negative voting, without losing the ability to act against those who vote for spurious content, is to treat a large positive vote as sufficient defense against even a large negative vote. This reflects the fact that content which is popular among a large portion of the population is very unlikely to be spurious, and that just because some larger portion of the population doesn't like that content, that is not sufficient reason to disallow compensation to its creators.
For example, we might set a threshold of 1% of the population. In a country of 100,000,000 voters, that would we 1,000,000, which seems far too large a number to organise voting for spurious content. (The optimal setting for such thresholds may not be known until a system is in operation, which emphasises the importance, already mentioned, of being able to monitor the system and adjust the rules by means of meta-voting.)
It may be that 5% of the voting population like heavy metal, but the size of the dedicated fan base for individual metal bands may be much smaller than this. To defend the right of compensation for heavy metal as a whole, it could make sense to group all heavy metal bands together in some way. Of course this raises the question of exactly who gets to decide which band can be included in the group. Even among heavy metal fans, there is going to be some level of disagreement as to who is good, and of course there are any number of "up and coming" heavy metal bands that can't even play properly, and whose work does not constitute a public good.
There are various options, and I will just list them, together with suggestions as to how voting and dispersement rules might be adjusted to take advantage of them, as I cannot currently say which is expected to be the most effective way of dealing with the problem:
Intermediaries are a special form of consolidation. Continuing the previous example, a natural intermediary to vote for heavy metal bands might be a heavy metal radio station. Instead of voting for their favourite band, heavy metal fans could delegate their votes to their favourite radio station. Two advantages that voting via intermediaries has over individual voting are the following:
The rules for voting and the rules for dispersement cannot be completely separated from each other, because in the end what matters is the relationship between votes made by voters and compensation received by content creators. Also the optimisation of this relationship can be revised if necessary (as meta-voted by the voting public themselves), after observing who gets voted for and how much voted compensation they receive.
However, I can give some basic rules of voting and dispersement that are likely to be useful in any voted compensation system which desires to maximise the public good and in particular to eliminate compensation of spurious content:
Transparency of voting and compensation outcomes seems to be a requirement for achieving a system that works effectively and which is seen to be working effectively. A more difficult question relates to whether or not information is available, either publicly or privately, about the identity of voters and who they voted for. If, for example, you had identified some suspiciously spurious content, you might wish to determine who was voting for it, and how they were related to the content creator. You might even wish to publicly shame such individuals. But this would seem to be a breach of individual privacy.
Another problem with publishing who voted for what is that it facilitates corruption on a grand scale: spurious content creators can simply offer to pay back a portion of any compensation they receive to anyone that can be proved to have voted for them. The only way to prevent this is to deny anyone the ability to provide verifiable information about who they voted for, even if they don't care about privacy.
Another concern is that voters might wish to be able to verify that the content creators they voted for really did receive the benefits of those votes. One way to do this is for the system to issue a unique ID for every vote cast, and to make publicly available the set of ID's for all the votes cast for a given content creator. These ID's would also be made available to the voters, who could then check that the votes they had made had been applied correctly. However it would be necessary to make sure that such ID's could not be used as a mechanism for corrupt voters to prove to spurious content providers that they had voted for them.
The possibility of voter corruption is probably the single biggest objection to any sort of alternative compensation system. In some ways it applies even more strongly to voted compensation, as a voting system does not even try to restrict or control the individual's choice of which content to select for compensation.
"Vote-buying" is a non-trivial problem even in the normal kind of voting that occurs in political democracies. There is also a very fuzzy line between vote-buying and electoral bribery. However there are some natural limitations to the benefits that individual voters can derive from this type of corruption. In most elections, an individual vote counts for almost nothing. This is for the simple reason that almost all election results are unaffected by a single vote. An immediate implication is that a single vote has little "market value". A downside is that because a single vote has close to zero value, there is no rational reason to vote at all, and this is a major cause of voter apathy.
In a voted compensation system, each vote is likely to make a difference to the compensation that some content creator receives. This means that there is less reason for apathy, but at the same time more opportunity for corruption.
Although corruption is a major potential problem with voted compensation, or any other type of alternative compensation system, we must remember that corruption is already a problem in the current system. It's not just that people are cheating the system by making free copies and distributing them. There is also a substantial amount of commercial piracy in the world, and there is always a chance that the CD you bought in the record shop was not sold to the shop by a legitimate representative of the copyright holder. And if you go to one of those places where they sell software, movies and music for 10% off the normal price, then you know that it didn't come a legitimate source. Thus the wrong people are already receiving someone else's money.
This kind of piracy would be largely prevented by a voted compensation, because the pirates would have to blatantly and openly register themselves as content creators of someone else's content. It's one thing to announce to tourists walking down some city street that you are a pirate (and pay off the local cops to keep things safe), it's another thing to announce to the whole world on the Internet that you are a thief, that this is the content you stole, and here's how much money you are making from it.
Another type of corruption is a scheme described by Eugene Volokh. This involves the NRA as a hypothetical registered creator of spurious content (a song called "Those Second Amendment Blues"). "Fans" of the NRA download the song, and as a result the NRA receives royalties on their "song" paid out of taxes. The NRA "fans" do not receive any directy payment for their downloading, but they receive indirect benefits from the extra funding that the NRA receives.
This type of corruption is less of an issue in a system of voted compensation with negative voting. The moral justification of the voted compensation system is that people are voting whether or not to fund the production of particular content as a public good. Although the system might be set up to provide compensation for producers of information public goods, there is no reason why it cannot also provide compensation for other types of public good. And it is not particularly a problem if it is used for such a purpose. To avoid the need for dishonesty among non-informational public good providers, providers could have an option to register themselves explicitly as non-informational providers, and to detail on their registration web page exactly what it is that they do provide (or have provided) as a public good.
This leaves us with one basic question about the NRA. Does it provide a public good? Does the National Rifle Association advocate or determine public policy options for use of rifles in a manner that benefits everyone in the US? (Note: I don't live in the US.) Or does it promote the interests of rifle owners against the interests of non-rifle owners? In the latter case, we might expect the NRA as a hypothetical provider of public goods to receive negative votes that would undermine their ability to receive compensation. In practice we might expect organisations representing special interest groups not to register as "public good" providers, as such dishonesty would make them look bad to the general public.
Some proposals for alternative compensation involve compulsory licensing. For example, see Making P2P Legal at the EFF web site (which lists various non-compulsory alternatives).
To those in the content industry, a compulsory licensing scheme is a forced buy-out – a form of confiscation with no guarantee of fair compensation. Someone would have has to determine rules for defining specific types of content, how much license fees were payable for those types of content, and who would get paid how much as a function of whatever it is that is being licensed (such as P2P file sharing). The compulsoriness creates a number of political difficulties:
With a voted compensation system, it is not actually necessary to introduce compulsory licensing. The only compulsory element is the taxation required to fund the compensation. This taxation is not an imposition on the content creators – it is imposed on those paying the tax (which in practice will be almost everyone), and like all good taxes it is voted for by those who are paying it. An element of conditional compulsion is required by the system because anyone registering content in the system for compensation must license the content for free redistribution and private use. This requirement represents the "public good" that the voters are expecting to get in return for the extra tax they are paying.
Some have suggested that it is unfair that all users of computers, Internet bandwidth, recordable media and content playing devices should have to pay a tax to fund compensation for content that they may have no interest in consuming. However, the point should be made that anyone using a computer, the Internet, CD-Rs, DVD-Rs and content devices has to be consuming information that comes from somewhere. It is slightly possible that all the content you use or copy is your own, but in practice it is very unlikely. You may think that the content and information that you consume is free content, so why should you have to pay for other people's not-so-free content? The existence of truly free content is however an illusion, caused by the fact that the current copyright and patent system makes it difficult to receive money for something if you also decide to distribute it freely. To put it another way, if the creators of all the legally free content available on the Internet had the option to receive substantial payment for their efforts, I would bet that many of them would be quite happy to receive such payment.
So the most politic way to introduce voted compensation is not to impose blanket compulsory licensing, but to introduce compulsory taxation, with conditional compulsory licensing for anyone wishing to register their content. A big question is: what level of taxation should be imposed? Various possibilities are:
As long as the system is making money available for paying compensation, we can be certain that someone will register themselves and their content within the system. This suggests the following possible history of adoption of voted compensation within a country:
Whether the migration will ever be complete is hard to say. But beyond a certain point, I think the public will become used to having free and legal access to high quality content that has already been paid for, and existing business models of selling copy-restricted content will fail. People will get used to the idea that free copying of content is not and does not need to be a "crime". They will become less tolerant of those who want to suppress unknown future technologies just so that they can preserve their obsolete business models.
Another point to remember is that conditional compulsory licensing does not have to include surrender of all rights provided to creators under existing copyright laws. In particular, those rights that have a significant material component could be retained by creators. For example:
The right to control distribution of content in shops on CD and DVD (and even denser formats yet to be invented) might seem to be an example of rights over distribution with a material component. But really such distribution is a form of digital distribution. If private copying and distribution is allowed, then there is very little difference between getting a DVD with copied data from a friend and buying a DVD with the same data from a shop. Until we all have really great broadband service, recordable media will be the cheapest option for many users wanting to access large amounts of digital content. Of course the shops won't be distributing digital content the way it is currenly distributed, with as little as possile on each disk. Instead of a CD with just one song on it, users will be buying DVDs with a thousand songs on each disk. The performers and composers won't receive any income from the purchase of the DVD; rather they will receive income from the compensation voted by the consumers after they have trawled through the DVD and found songs which they like, and which they therefore vote for. One particular advantage of explicitly allowing bulk non-royalty distribution by shops is that shops could at least be held to standards of providing correct digital registry IDs for the content on the disks, whereas who knows what your "friend" might have done to the data before they gave you a copy of it.
The argument that published digital information is a public good does not respect national boundaries. Indeed the argument implies that published digital information is a global public good, and therefore should be compensated by some sort of international voted compensation system, funded out of global taxation. Of course that probably isn't going to happen, because it involves ceding too much national sovereignty.
But firstly we can note that the existing intellectual property system involves the ceding of national sovereignty, because prohibition-based intellectual property only works properly if everyone agrees to respect the intellectual property rights of the rights holders. Thus we have the Berne Convention, and the TRIPS Agreement. We also have intellectual property law expansion as a part of bilateral agreements, such as Australia's recent adoption of copyright term extension to match that of the United States, as part of a bilateral free trade deal.
There has been recent controversy about patent licenses for AIDS drugs, where the need to impose uniform license fees and the desire of drug companies to maximise profits meant that poor AIDS sufferers just couldn't afford the drugs at all, even though they could afford the cost of manufacturing them. This appears to be a circumstance where the operation of our current intellectual property regime is regarded as more sacred than human life itself, even though it would be entirely possible to pay the drug companies the same amount of money they would have received from licensing, and to manufacture drugs for everyone who needs them. The patent laws which prohibit the manufacture and sale of these drugs at a price that poor AIDS patients can affort have been imposed on the poorer countries by the richer countries. It's hard to think of a more extreme example of ceding national sovereignty than a government which has to tell its citizens that they must die in order to preserve the operation of a particular scheme for rewarding inventors which has been developed and imposed on them by other countries.
If we assume that the model of introduction given above is followed for voted compensation, then the basic question to ask about cross-nation issues is: what happens when your country introduces voted compensation and some other country hasn't yet?
If you are a content creator who has registered your work in a voted compensation system, the conditional compulsory licensing of registered content only applies to distribution of your content within the same country. But if your content can be freely distributed within one country, it is going to be very difficult to prevent it "leaking" to other countries. (Of course information "leaks" everywhere anyway, which is really the whole point of this paper.) The provision of registered content via official URL's could at least make a show of blocking IP addresses that are determined to come from other countries (unless those countries have a relevant cross-licensing agreement), which would make it clear to the casual (or honest) web surfer that they were not entitled to freely access that content in their country because their country did not have a suitable alternative compensation scheme.
The best response to cross-border "leakage" in the short-term may be to emphasise the positive aspects. For example, if you look at the Reproduction Guidelines for Use of NASA Images and Emblems on the NASA web site, you will see that the first sentence says:
NASA images generally are not copyrighted.
Now I will admit that I don't know the exact history of NASA's copyright policy, but it seems reasonable to suppose that one justification for placing their material in the public domain is that US taxpayers have already paid the costs of creating that material, and therefore should have the right to freely enjoy it. However it is not just Americans who can freely use and redistribute NASA photos: everyone in the world can do so as well, because "public domain" in one country means "public domain" everywhere.
Does this mean that US taxpayers have been cheated, by all those non-Americans who make use of all those NASA photos for free, and they haven't even paid the US taxes which fund NASA? I would say: no they haven't. By providing what is in effect a global public good, NASA has done something for which we can all give credit to the United States, and to the public of that country, who made the decision to provide that public good. A lot of what goes on in international relations consists of what countries do for and to each other. There are no rules as to how much good any country should do for any other country, but certainly people remember which country did something that helped some other country.
We might also consider the Internet, another American product that freely benefits the whole world. And it's not just the US that provides free content to the world. For example, open source software is derived from both government-sponsored developers as well as private developers and companies from all over the world. The world's most widely used operating system was developed and freely distributed by a Japanese professor, and there's that other operating system kernel developed by that Finnish college student ..
So if your country charges ahead and institutes an alternative voted compensation scheme, don't sweat too much that the inhabitants of other countries get the benefit of the content creation that has been funded by your own taxpayers. But do make sure that everyone realises the contribution that your country is making to the global public good.
In a system of voted compensation, should registered content creators be required to license the ability to create derived works? And how should compensation be apportioned between a derived work and the original?
The first thing to note is that, given the existence of computers, free distribution of content and a system of unique content identification, it is not possible to prevent the distribution of derived content, if it is at all possible to express the process of derivation as a computer program. (For example, if the derivation consists of cutting and pasting bits of something into something else, then such expression is fairly trivial.) All the distributor of the derived work has to do is distribute said "deriving" program as their content, which from the point of copyright law does not contain any portion of the original work (except for the unique ID, which necessarily has to be excluded from the provisions of copyright law if the system is to work at all). Any computer owner who wants to enjoy a copy of the derived work just has to download and run the deriving program. This program will execute an instruction to retrieve the required copy of the original work, and will, within the privacy of the user's computer, perform the actions necessary to create the derived work.
In this situation, apportionment of payment is entirely a function of voter choice. If retrieval of content by registry ID is provided as an operating system service, then the operating system can be configured to log or notify all such retrievals that occur within the evaluation of content which derives itself programmatically from other content, and this information can be taken into account when voting for or against these derived works.
If someone more blatantly steals another person's work, and officially registers it as their own, or claims that their work is original when it is derived without permission from someone else's, then this is more a case of something that has to be dealt with legally. But even in such a case, there is less necessity to be as heavy-handed as the courts are when dealing with prohibitory rights. For example, if my song sounds a bit like your song, and you wrote your song first, then you might go to court to get an injunction against me distributing my song, or to secure payment of damages. At some point in the court case, the judge and the jurors will have to listen to my song and to your song, and decide if my song really is the same as, or is derived from, your song. This decision will then stand forever (or until it is appealed).
In an attribution-based compensation system, the same decision can just as easily be made by individual voters (or by their intermediaries, if the voters themselves don't care so much). Any attempt by a court to force a decision that voters disagree with might only have the effect of encouraging them to "vote around" the decision. For example, the court might demand that all payment for my song actually gets sent to you, but I could create some spurious content which represented the assertion that actually my song was original. If the voters agreed that my song really was original, then they could vote for the spurious content in lieu of the actual song whose attribution was being contested. In view of this, it might be more to the point for a court decision about attribution to just require that the creator of the derived work acknowledge in their formal registration details the possibility of a similarity of their work to the earlier work of another creator, leaving voters to decide for themselves how much dependence there really is.
The justification for considering alternative compensation systems is the observation that digital information has become, whether anyone likes it or not, a public good.
There are of course those who don't like it, and who refuse to accept the obvious. This has led to proposals to make digital information not a public good. Many of these proposals have even been put into action, and they can be found right now in music shops and electronic shops, and on legal music download web sites. There are encrypted "DRM" (Digital Rights Management) formats for music and movies which refuse to play in unauthorised music playing devices. There are music CDs which attempt to hijack your computer and alter the operation of the operating system so that you cannot copy the music off the CD onto the computer. DVD players refuse to play DVDs if you live in the "wrong" country (they even refuse to let you fast forward the bits of the DVD you don't want to watch).
The imposition of all this DRM has stirred up controversy. Points of argument tend to fall into two major groups:
Of course if the second point is true, then the first one is just plain irrelevant. Which, given all the DRM proposals and systems being designed and implemented, makes one wonder who is kidding who. In order to make DRM work, the content industry has to suppress the development of new technology, and they also have to suppress the development of technology already developed, which would seem to require destroying millions of computers and computer peripherals that people already own. Can they really achieve this? Will we really end up living in a technological dictatorship, where even the Right to Read has been taken away from us, and computers running debugging software are locked inside secure buildings? A more optimistic and at the same time more cynical view is that even the DRM companies know that their efforts are doomed, but if someone is silly enough to invest in them, then at least that way their employees can go to work and get regular paychecks.
There are different ways of measuring the success of any DRM scheme, including:
I think the answer to the second question is zero, but the answer to the first question may be a larger number, like 20% or 50% or even 99.999%, depending on the scheme in question. This does suggest a more sinister answer to the question of why content companies even bother with DRM. Many people will continue to get almost all the content they want by file-sharing, but a certain number will be obstructed by the DRM, and unwilling to engage in file-sharing which they perceive as too risky (or too immoral), and those people will be forced to pay for all the content that they wish to consume. They may even be forced to pay twice (for example when their DRM-authorised stereo breaks down). The world will become divided into two camps:
The sinister implication is this: the content companies don't care about the first category of people, as long as they can continue to extract some money from the second category.
For the revolution to happen, the people in the second category have to realise what is going on. Firstly they have to realise that they are being screwed, and then they have to decide whether they are being screwed by the people in the first category (who aren't paying their share), or whether they care being screwed by the content companies and those companies' determination to persist with an obsolete and unjust system for funding the creation of digital information products.
William Fisher is the Hale and Dorr Professor of Intellectual Property Law at Harvard University. His book Promises to Keep: Technology, Law, and the Future of Entertainment has a chapter An Alternative Compensation System, which starts with a description of the theory of public goods, and includes detailed discussion of the economics and practicalities of alternative compensation systems. Fisher does actually state that "recorded entertainment" "falls into this category", where "this category" refers to "public goods".
There is a fairly detailed calculation in the chapter of how much money needs to be put into the system in order to make up for losses of music and film royalties caused by file-sharing. In his calculation Fisher assumes only partial "losses" to illegal copying. If we take a more radical view, and assume total replacement, then his estimates of annual royalties paid by United States consumers for content that can be copied digitally (so cinema sales are excluded) are about $7 billion for music and $10 billion for movies. Given that the population of the US is about 290,000,000 (US Entry in CIA World Factbook), this is less than US$60 per person per year.
The thing that shocked me when I read this calculation was just how small the amount of money involved was. The future of technology is being decided by the determination to preserve the copyright-based business models of the music and movie industries, for the paltry amount of US$5 per consumer per month. A similar level of income will probably underlie the push to propagate anti-technology laws to all other countries of the world. For such a tiny sum of money, we should be able to have access to all music and all movies (or at least those released on DVD), and then be able to tell the music and movie industries to leave us alone! I suspect that an even tinier sum of money would give us free e-books. (Fisher mentions books, but does not attempt to estimate the amount of money involved.)
Professor Fisher seems to favour measurement-based systems, and the consequent requirements that all forms of content handled by the system must be bureaucratically categorised so that it can be determined how they should be measured and how the value of the content should be determined from the measurements. Although he considers voting based systems, with reference to the Burr-Blanff proposal (and he mentions Volokh's NRA argument), he seems put off by the issues of voter corruption and spurious content.
This paper is a call for reform. There needs to be more awareness of what is wrong with the prohibition-based intellectual property system that the world has imposed upon itself, and how much we all lose if we fail to consider more effective alternatives.
In summary: