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December 14, 2005


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D Conrad

Isn't this a claim that fair use is an economic device used to get around exorbitant transaction costs? In other words, a fair use is uncompensated only because it would be too difficult for every instructor to call up a publisher and send them a royalty payment?

I don't think it is punishing efficiency so much as it is promoting royalities when transaction costs are low enough to be efficient.

There's an underlying assumption, though, that fair use is an economic device, and that the goal of copyright is to provide compensation for any use of a property.


Doug Lichtman

I don't think the claim is that narrow. For instance, suppose that we initially treat a use as fair because we think it won't hurt the copyight holder much. When the use becomes more efficient -- that is, more widespread -- the calculus might change. Similarly, suppose that we initially treat a use as fair because we want to subsidize the use. As I point out, treating the more efficient use as "unfair" might still leave that subsidy intact. So, no, I don't think the point here is just the familiar transaction costs point.


Doesn't it chill innovation if we base fair use on (lack of) efficiency? PearLyrics had a really clever idea here, and one that the established copyright holders either didn't think of or didn't think worthy of investment. We will see less of these innovators if we let Warner/Chappell swoop in and take over now that pearLyrics has proven the concept.

The IP answer, of course, is that pearLyrics should get a patent on their process and then cross-license with Warner/Chappell. But we should be concerned when intellectual property becomes a prerequisite - as opposed to an encouragement - for innovation.

Doug, I think you're right that copyright law is porous. But your efficiency rational would explain this porousness as a mere artifact of the cost/benefit balance of rigorous policing.

I suspect that the truth is more interesting than that. Fair use exists because it empowers consumers to become creators, thereby furthering copyright's goal of promoting creativity in the aggregate.

Jay Byrd

"suppose that we initially treat a use as fair because we think it won't hurt the copyight holder much"

The constitutional issue is whether origination of art and technology is discouraged, not whether copyright holders are "hurt". The whole idea of intellectual "property" flies in the face of the founders' intent. And it leads to such obscenities as the Conyers/Sessenbrenner bill that would require manufacturers of analog-to-digital converters to make them far more complicated so that media corporations can control their operation.

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