Monday, August 23, 2010

Free That Tenor Sax

New York Times editorial "Free That Tenor Sax" (August 21st, 2010) espouses a shift in U.S. copyright law. Specifically, it advocates shortening the copyright law to only protect a work during an author's life, rather than an author's life plus seventy years.

Copyright laws are designed to ensure that authors and performers receive compensation for their labors without fear of theft and to encourage them to continue their work. The laws are not intended to provide income for generations of an author’s heirs, particularly at the cost of keeping works of art out of the public’s reach.

Corrections should first note the patent falsity of this statement. The law protects a work for an authors life plus seventy years. To argue that the law is only meant to protect a work during an author's life, but not past it, is the sort of socialist self-deception the New York Times editorial board has made a habit. The position of the Times is ludicrous.

But more important than this deliberate deception by the Times are the false economic implications behind its statement. The Times appears to believe that an author prefers monetary reward only during his lifetime. Authors are not so selfish as to only desire profits in their lifetime--they have dynastic preferences, and are altruistic towards their heirs.

When deciding how hard to work, authors care about the net present value of profits--that is, total profits over all time, discounted to the present period. In the current paradigm, we might suppose that profits look like this (click to enlarge):

The Times wishes to change this to a value-stream following this model: (click to enlarge):

If all authors care about is the shaded area, their total profits, then we can see why the Times idea serves as an assault on art--it helps corrode and shrink an artist's livelihood and joy from his work.

Yet the point Corrections is espousing holds even if authors didn't care about their children. All an author needs to gain the net present value of all future profits is to sell the continuing rights to his work before his death. In this manner, all that matters is the total profits an artist can make--he can obtain the net present value of his work's entire stream of profits currently by selling the work to another individual. Indeed, a work's copyright could span many generations and liquidation would still be possible.

What the Times is suggesting is to destroy a portion of the incentives that authors have to create their original works in return for a few works to be out-of-patent now. This is, in effect, a tax on the value of all author's works. If ever an organization was willing to kill the infinitely-lived goose for its golden egg, the New York Times is.

Indeed, we might note that because an author is a durable-goods monopolist that does not face the Coase Conjecture (gated) (not to be confused with the Coase Theorem), profits are further decreased that they would otherwise have been, because consumers are willing to put off their consumption during an author's lifetime when they know the end of copyright is near.

1 comment:

  1. The NYT position essentially wipes out the value of the creative author's assets following their death. At one level it is unsurprising that a publisher would be in favor of not having to pay royalties after an author's death. At another level the principle itself if valid implies that any source of wealth that continues to produce value after the death of the creator no longer belongs to the creator to dispose of. The implication if generalized would basically mean that the logical behavior for any individual would be to completely dissipate all their wealth to zero by the time of their death. For authors the implication is to decrease their efforts in writing in direct proportion to their projected end of lifespan. Hardly a socially useful practice given the many great artistic works and the many useful businesses created in an individuals full maturity.