August 15, 2023
David Streitfield had an interesting piece in the NYT on an ongoing legal battle between a group of publishers and an online library. The central issue is the extent to which copyright can apply to digital copies of books and other printed material held by the library.
The piece runs through the various legal decisions on the extent to which copyright restricts digital sharing. The question is once the library has bought an item or had it donated, does it then have the right to freely share it, as would be the case with a physical copy?
I’ll leave the legal issues here to lawyers and legal scholars and instead ask what ultimately is at issue. Copyright monopolies are the mechanism we have used to support the vast majority of creative work in this country. At least a small number of writers, musicians, singers, and other creative workers are able to make a decent, or even extraordinary, living through this mechanism. The vast majority of people who choose these careers earn very little through copyright, but even a little can be better than nothing.
Over the last half-century, Congress has repeatedly made the duration of copyright longer, extending it from 56 years as of 1976, to 95 years after 1998. Incredibly, it made these extensions retroactive so that works that would have seen their copyright expire instead had years added to the duration by these acts of Congress. It is hard to imagine a serious rationale for these retroactive extensions since we can’t increase the incentives that creative workers saw in the past.
Congress also adjusted the laws for the digital age and set in place rules for copyright enforcement for online platforms. While Section 230 of the Communications Decency Act shields a platform like Facebook or Twitter from liability for any defamatory material their users may post, the same is not true for copyright infringement. The Digital Millennial Copyright Act requires them to promptly remove any infringing material after the alleged infringement has been called to their attention. Since platforms generally want to avoid copyright suits, they have arguably over-removed material, pulling down items where the copyright claim is dubious or the material would arguably be protected as fair use.
A main reason that Internet hosts tend to be quick to remove material in response to an alleged infringement is that the law allows for statutory damages for copyright infringement. This is a big deal because statutory damages can often be hundreds of times the amount of actual damages. In addition, the judge can also award attorney’s fees.
This makes a huge difference when it comes to enforcement. Take the case of a song that is posted in clear violation of copyright. Suppose it is streamed 10,000 times as a result of this unauthorized posting, which would be a lot for most songs and most websites. Spotify pays artists between $0.003 and $0.005 per stream. That means that the actual damages in this case would be between $30 and $50. That’s not an amount that most people would file a suit over, especially if they could not expect to collect attorney’s fees, even if they win.
There would be even less at stake with a less frequented website where maybe 50 or 100 copies may be streamed. Or, in the case of a copyrighted book or article that is perhaps ten or twenty years old, the actual damages would likely be in the single digit dollars. In other words, the laws on copyright provide incentives for lawsuits even when the actual damages involved are trivial.
To think of the analogous situation, suppose that we had statutory damages for trespassing. This would give people incentive to file lawsuits for even trivial acts of trespass, such as cutting the corner over the edge of someone’s lawn, or a dog sniffing in someone’s bushes. We would end up, as a society, spending a lot more money on lawyers for no plausible gain. Arguably, this is the story with copyright enforcement today.
Bringing Copyright in the 21st Century
Given the trivial amount of money at stake in the vast majority of instances of alleged copyright infringement, it can’t make sense to provide statutory damages to copyright holders. Even if we think copyright is a good mechanism for financing creative work, there is no obvious reason that copyright holders need to get compensated beyond their actual damages for instances of infringement. If the actual damages from an act of infringement are trivial, why would we want to encourage lawsuits over small sums of money?
As a practical matter, many acts of infringement may actually end up being a net gain for creative workers. Suppose a person had one hundred unauthorized streams of a musician’s songs. Based on Spotify’s compensation rate, the loss to the artist would be between 30 and 50 cents, assuming that the person would have been willing to pay for the streams, if they did not have a free option.
But suppose they decided they liked this musician after hearing these unauthorized streams. As a result, they may in the future be willing to pay for recorded material or even to hear them live. In this scenario, preventing the unauthorized streams deprived the musician of a future customer.
If that scenario seems far-fetched, remember I specified that the person listened to unauthorized streams one hundred times. Presumably, someone would only listen to a version of a song or songs one hundred times if they liked the music. If they didn’t like the music, then they would likely only listen to a small number of unauthorized streams, say 5-10, implying actual damages in the single digit pennies.
Without statutory damages, the issues raised in the Streitfield article would largely disappear. A digital library that made older books and articles available, in possible violation of copyright, would be inflicting trivial damages in almost all cases. No one is going to hire a lawyer and file a suit to recover $50-$100 in potential losses of royalty payments. The cases where the library might face a plausible claim of any real size for actual damages would almost certainly be few and far between. Dealing with these claims would impose a modest expense that the library could likely bear, just as it probably has to pay for water and electricity.
They probably would be advised not to post a newly released Taylor Swift recording or Steven King book, but even with these superstars they probably would not have much to worry about after five or ten years. The number of copies being streamed or downloaded would likely be at best marginally profitable to file a suit over.
I haven’t made a secret of my dislike of copyright, but I am sympathetic to the idea that we should respect the copyrights that have already been granted, just as we would respect property in land after the government has sold it off, even if it got a bad price. However, this isn’t an issue of not respecting copyright, it is a question of changing enforcement rules.
Even without statutory damages, copyright holders have the right to sue and collect any actual damages that they suffer from infringement. They just don’t get the extra bonus of statutory damages.
Governments change enforcement rules literally all the time. To take an example that got considerable attention when it took effect, in 2005, Congress passed a bankruptcy reform bill. This change made it far more difficult for debtors to declare bankruptcy and discharge debt. Congress applied this change retroactively, meaning that people who took out debt under the old bankruptcy law were now subject to collection under the new law. This retroactive application of the new bankruptcy law was not even an issue.
In this context, it’s hard to see any basis for copyright holders complaining about losing their ability to collect statutory damages, although they would obviously be unhappy about the prospect of getting less income from their work. The benefit to society from free access to a vast amount of material, without having to worry about copyright claims should swamp this loss. And, we would not be wasting so many resources enforcing copyright. Lawyers who spend their time harassing website owners and Internet platforms over alleged infringement could instead do something productive with their time.
An Alternative to Copyright
Creative workers do deserve to be compensated for their work. It is not their fault that we have chosen an incredibly archaic and inefficient mechanism for this task. I have proposed a system of tax credits where every person has a certain sum (e.g. $100 to $200) as a credit which they can give to the creative worker(s) of their choice. They alternatively can give it to an organization that supports creative work in certain areas, such as country music or mystery novels. (I discuss this in chapter 5 of Rigged [it’s free] and also here.)
The model for this sort of system would be the tax deduction for charitable contributions. To be eligible to get money under the system, an individual or organization would have to register with the I.R.S. just as a religious organization or charity must do now.
The registration would simply indicate what creative work an individual does or an organization supports. The I.R.S. would not make any effort to assess the quality of a musician’s performance or a writer’s books, it would just keep a record of what they claim to do just as is the case with churches and charities. If there is a question of fraud, the I.R.S. could determine if the individual or organization actually does what they claim.
There would also be a condition that creative workers who receive money through the system don’t have the option of getting copyright protection for a substantial period of time (e.g. 3-5 years). The logic here is that the government only gives creative workers one subsidy, not two. If people choose to get money through the tax credit system, they are not also entitled to a copyright monopoly.
A nice feature of this system is that it is self-enforcing. If someone is getting support through the tax credit system, but then tries to secure a copyright in the period in which they are not eligible, the copyright would be unenforceable. If they attempted to file an infringement suit, the defendant need only point out that the creative worker was in the tax credit system and the case would be immediately dismissed.
This sort of tax credit system could support a huge amount of creative work. If the credit was $100 and 200 million people chose to take advantage of it, that would generate $20 billion a year to support creative workers. A $200 credit would generate $40 billion a year. By comparison, in 2022 the United States spent $16.1 billion on music streaming services.
Of course, there can be no guarantee that everyone who wanted to do creative work would be able to support themselves through this system, just as there is no guarantee under the copyright system. What we can say is that there would be much less money wasted supporting an archaic legal construct and harassing people like Brewster Kahle, the creator of the digital archive at the center of the Streitfield piece.
Streitfield begins his article with the famous line “information wants to be free.” With a system of tax credits to support creative work, it would genuinely be free.