October 18, 2003
A fairer use based settlement

Ideas are malleable and may be transformed into almost anything when seen in the proper light. That's why, when intellectual property rights advocates argue for copyright extensions, they think of their intellectual property as property: Even though they have been selling it to customers for years it is still their property. When they think of copyright violations the situation is reversed: Even though they still have the use of their material, they argue that you've stolen it from them. The metaphor of ownership and property simply doesn't work very well for ideas.

In general I think IP rights owners are in favour of use based pricing (material is provided on a time limited rental basis), whereas consumer advocates favour a notion of transfer of ownership via some 'physical act'. A token of ownership - either a unique physical copy of the material, or maybe a transfer of some unique digital token - gives you unlimited usage rights for the file. The reasoning behind the two positions is easily understood: For rights owners use based pricing preserves control of the copyrighted material, and adds repeated revenue from later reuse of the material. For consumer advocates transfer of a physical token of ownership does the exact opposite.

When evaluating the RIAA lawsuit campaign (Previous mentions here and here) I think it is actually in the consumer interest to turn the tables and argue for use based pricing when figuring out a reasonable settlement amount.
Lets suppose the entire revenue of the music industry came from use based pricing, and lets just suppose that the growth streak of the '90s had continued so that annual revenue of shipments when sold at suggested retail price was $20 billion (actual figure for 2002 is $12.6 billion down from a record high of $14.6 billion in 1999). That's $100 per adult american. Lets figure in a very uneven distribution of use, and only count the americans between 15 and 35 as music consumers.That's on the order of 75 mio people so we say $260 per consumer instead. That's like buying a CD or two every month - not too unreasonable an assumption. So if the way we paid for music was by use, a reasonable assumption on the loss of income from one consumer spending absolutely no money on music would be in the range of $250, say $1000 at the very high end of consumption. Instead we're hearing about $12000 settlements. The unsurprising conclusion: The settling file sharers are being railroaded.

Has anybody argued for a use based settlement point of view in court? If so, what happened? If it failed, why?

This, inspired by a longish post by David Weinberger covering Larry Lessig's pro-freedom copyright talk at Pop!Tech. As usual it is really good stuff. It is a blessing that someone keeps saying these completely obvious things about copyright and the way it is enforced today.

Posted by Claus at October 18, 2003 01:07 AM | TrackBack (0)
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