Sunday, April 7, 2013

How Copyright Drives Innovation in Scholarly Publishing

Note: The below paper makes a utilitarian argument in favor of copyright, rather than the "designed rights" approach that I would take. Nevertheless, it is an important paper in showing that the utilitarian approach is not all leaning against IP. NSK will slide into the utilitarian camp when it suits his needs. Recently, the vicious NSK said that pro-IPers  "who favor patents on 'utilitarian'  grounds are either ignorant or dishonest [...] Or maybe they are just misanthropes or Luddites." He did this after referencing a weak paper (more to come on this) by Michele Boldrin & David Levine. Remarkably, NSK didn't seem all that familiar with the contents of the Boldrin-Levine paper, during his debate with me, despite using it as a vicious hammer against pro-IP utilitarians. 

By Adam Mossoff

Today’s public policy debates frame copyright policy solely in terms of a “trade off” between the benefits of incentivizing new works and the social deadweight losses imposed by the access restrictions imposed by these (temporary) “monopolies.” I recently posted to SSRN a new research paper, called How Copyright Drives Innovation in Scholarly Publishing, explaining that this is a fundamental mistake that has distorted the policy debates about scholarly publishing.
This policy mistake is important because it has lead commentators and decision-makers to dismiss as irrelevant to copyright policy the investments by scholarly publishers of $ 100s of millions in creating innovative distribution mechanisms in our new digital world. These substantial sunk costs are in addition to the $ 100s of millions expended annually by publishers in creating, publishing and maintaining reliable, high-quality, standardized articles distributed each year in a wide-ranging variety of academic disciplines and fields of research. The articles now number in the millions themselves; in 2009, for instance, over 2,000 publishers issued almost 1.5 million articles just in the scientific, technical and medical fields, exclusive of the humanities and social sciences.
The mistaken incentive-to-invent conventional wisdom in copyright policy is further compounded by widespread misinformation today about the allegedly “zero cost” of digital publication. As a result, many people are simply unaware of the substantial investments in infrastructure, skilled labor and other resources required to create, publish and maintain scholarly articles on the Internet and in other digital platforms.
This is not merely a so-called “academic debate” about copyright policy and publishing.
The policy distortion caused by the narrow, reductionist incentive-to-create conventional wisdom, when combined with the misinformation about the economics of digital business models, has been spurring calls for “open access” mandates for scholarly research, such as at the National Institute of Health and in recently proposed legislation (FASTR Act) and in other proposed regulations. This policy distortion even influenced Justice Breyer’s opinion in the recent decision in Kirtsaeng v. John Wiley & Sons (U.S. Supreme Court, March 19, 2013), as he blithely dismissed commercial incentivizes as being irrelevant to fundamental copyright policy. These legal initiatives and the Kirtsaeng decision are motivated in various ways by the incentive-to-create conventional wisdom, by the misunderstanding of the economics of scholarly publishing, and by anti-copyright rhetoric on both the left and right, all of which has become more pervasive in recent years.
But, as I explain in my paper, courts and commentators have long recognized that incentivizing authors to produce new works is not the sole justification for copyright—copyright also incentivizes intermediaries like scholarly publishers to invest in and create innovative legal and market mechanisms for publishing and distributing articles that report on scholarly research. These two policies—the incentive to create and the incentive to commercialize—are interrelated, as both are necessary in justifying how copyright law secures the dynamic innovation that makes possible the “progress of science.” In short, if the law does not secure the fruits of labors of publishers who create legal and market mechanisms for disseminating works, then authors’ labors will go unrewarded as well.
As Justice Sandra Day O’Connor famously observed in the 1984 decision in Harper & Row v. Nation Enterprises: “In our haste to disseminate news, it should not be forgotten the Framers intended copyright itself to be the engine of free expression. By establishing a marketable right to the use of one’s expression, copyright supplies the economic incentive to create anddisseminate ideas.” Thus, in Harper & Row, the Supreme Court reach the uncontroversial conclusion that copyright secures the fruits of productive labors “where an author andpublisher have invested extensive resources in creating an original work.” (emphases added)
This concern with commercial incentives in copyright law is not just theory; in fact, it is most salient in scholarly publishing because researchers are not motivated by the pecuniary benefits offered to authors in conventional publishing contexts. In fact, as a result of the policy distortion caused by the incentive-to-create conventional wisdom, some academics and scholars view scholarly publishing by commercial firms who own the copyrights in the articles as “a form of censorship.” Yet, as courts have observed: “It is not surprising that [scholarly] authors favor liberal photocopying . . . . But the authors have not risked their capital to achieve dissemination. The publishers have.” As economics professor Mark McCabe observed (somewhat sardonically) in a research paper released last year for the National Academy of Sciences: he and his fellow academic “economists knew the value of their journals, but not their prices.”
The widespread ignorance among the public, academics and commentators about the economics of scholarly publishing in the Internet age is quite profound relative to the actual numbers.  
(ht Dominick Armentano)


  1. This is entirely consistent with the anti-IP argument that IP law is a system of special privilege that benefits some (at the expense of others).

    A use of force that allowed only McDonalds, Burger King, and Five Guys to produce hamburgers, on the basis of hamburger IP, then the resulting "burger industry" would greatly benefit, at the expense of others who could have produced and sold hamburgers, but were forced not to due to hamburger IP law.

    Keep these pro-anti-IP posts coming! You're doing the job for them.

  2. Ok
    1) Kinsella was making an anti-IP argument using utilitarian methodology because he was talking to utilitarians. That you went to his site and noticed he used this argument against utilitarians and then took it as an argument against those with "principles" like you was ignorant.

    2) You are now making a utilitarian argument to someone who is anti-IP on non-utilitarian grounds, simply because he used such an argument himself because you have no principled argument at all.

    Just admit it. You are done Wenzel.

  3. Oh, and if anyone argues that IP law is justified because of some alleged outcome of it, are really just advocating for consequentialist ethics, which is praxeologically impossible to follow.

  4. Here is my challenge to the So called IP proponents: do the enforcing yourself. Only then will see the ridiculousness of your argument.

    1. @ awake
      Argument from a Marxist: If property rights in land are valid, do the enforcing yourself.

    2. "If property rights in land are valid, do the enforcing yourself."

      Ed, this is actually libertarian argument. Marxists argue the people cannot rightfully have a property to protect.

  5. Complaining about ""utilitarian" arguments in the context of arguing "How do you enforce IP?" is pretty laughable. I suppose we should exonerate people who pay assassins to murder someone because we can't return the victim his life under this model.

    1. Nick, agreed.

      It is just as wrong for pro-IP advocates to say IP should be enforced because of profit making, innovation, and other utilitarian considerations, as it is for anti-IP advocates to say that IP should not be enforced because of logistics, costs, and other utilitarian considerations.