Why it shouldn’t be stealing to listen to an mp3 file you didn’t buy

Matt Yglesias   and Kevin Drum  are at it again about digital content. Unasked, I propose to mediate this dispute between parties known to me to be technically, economically, and politically astute, and to have their hearts in the right place.   The question on the table is, approximately ,whether taking a good embodied in a bunch of bits that can be copied perfectly and cheaply without limit, like an mp3 file of a song, is “like” taking a physical chattel like a pair of shoes from their possessor against his will – something widely viewed as stealing  and wrong. [Matt was provoked back into this issue by a fairly loony radical article urging us to loot more physical goods when the opportunity arises.]

Mediation is done in the spirit of recognizing the merits of both parties’ positions, and discerning a result with which both can be comfortable. After careful Solomonic reflection, the result I propose is thus: Kevin (unusually for him) is wrong, and Matt (more typically) is right. An mp3 file is not like physical stuff in the way Kevin says it is.

Their conversation is mixing up at least two technical properties goods can have, and a couple of kinds of rights to dispose of resources.  The technical properties are being non-rivalrous (NR) and non-excludible (NE). I emphasize that whether something has either of these is not a matter of ideology or preference, any more than a sane person can claim that air is denser than water or make it so because of some political or moral principle. NR goods are those that are not used up: if you have some and consume it, there’s no less for me. Classic examples are non-pollution of the air, or a beautiful sunset, or the central limit theorem, or a recording of a song, or this post. Some tricky “congestible” NR goods become R if enough people start to use them, like a seat on a bus, or space on a sidewalk. Some goods that were R in the past have become NR, like music that used to be inseparably attached to a physical object or a seat in a concert hall: if you are listening to a 78 RPM record of that song, the record, and hence that instance of the song, is not available to me.

Non-excludible goods are those that are available to all once created, and some are R, like the fish in the ocean. Whether the mp3 file’s contents are E depends on the outcome of a contest between Sony’s programmers and a bunch of kids in Finland and Bulgaria, and the kids have won every round. There is also the “analog hole”: if you listen to music, you have to have rendered it into an analog signal that can be redigitized with very little loss, no DRM, and then distributed costlessly. It leaks out through the hole.

The efficient price for consuming a non-rival good is the cost of doing so, which is zero; if we want some, we have to cook up a scheme to buy it and give it away free. Unless we can make it excludible; then we could sell it to those willing to pay. But we’ll always have too little of it unless we can also figure out how to charge everyone a different price, right down to zero for the least interested consumer.

So far, I’ve described properties of goods. But markets also include artificial, socially constructed and enforced, rules about who can possess and use particular goods (no infernal machines, even if you make your own with fertilizer you paid for with money you earned) and back in the day, we constructed rules restricting rights to copy and exploit creative work to the creators. These rules are both financial and personal. In the first category is the legal right to copy this post and send it to your friends (or enemies you wish to bore and stupefy), which I have and you do not until I give it to you (for example, with a Creative Commons notice). In the second category is the right to claim that you wrote it, which I can reclaim even if I sell it to you because we view it as a moral principle rather than an aid to commerce. An absolutely essential distinction in this business, and the one Kevin misses, is that just because copyrights and patents have been with us for a while, and used (for better or worse) to give people who make NR goods an incentive to do so, they are completely independent of the NR quality of the goods. You cannot copyright or patent a mathematical theorem, and the second you reveal it I may do what I want with it (other than misrepresent it in your name or present it in mine).

That consumers don’t have the right to copy and distribute digital content is in no way a property of the content, but a construction of law that could be different: that we have granted copyright to authors does not mean their work in digital form is rivalrous. It does mean that until we fix this mess, copying is stealing, but it’s only stealing because we declared it so. And now that that grant is pretty much worthless because the technical excludibility of such content has been destroyed, it’s time we figure out some other way to reward creators when people use their stuff, a way that takes advantage of exactly the technology that broke the old scheme of selling newspapers on latent fishwrapping with advertisements.. This is not a counsel of despair: we rent the sidewalk free to anyone who wants to walk on it, and also paid the contractor who built it. The sidewalk is nice to walk on because homeowners along the way charitably keep up their front gardens. We get mathematical theorems by paying salaries to mathematicians. We will not have the right amount of music, medicine, video, software or text until we figure out what Kevin missed: personal rights like claims of authorship – in distinction to claims of royalties -  and economic rights in goods are not ordained by the goods’ technical properties. What is disciplined ruthlessly by those properties is the value (to society and to authors) of assigning these rights this way or that. Now the economic rights are assigned wrong; copyright and patents were never perfect, but technology has broken the system beyond patching.

If you want a moral angle on this issue, it’s not what you think it is.  It is that charging more (or less) than marginal cost for anything is wasting the fruit of human labor and the resources of God’s creation, both sins in my book.  Letting people sit around who want to work making stuff we could use, like infrastucture of every kind, because a bunch of yahoos have the wrong idea about property rights and think government and taxes is what they hate, is another such sin, which Kevin nails perfectly.

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.

44 thoughts on “Why it shouldn’t be stealing to listen to an mp3 file you didn’t buy”

  1. I think you used unnecessarily complicated phrasing here, so I might be misunderstanding you, but it seems to me that you are saying that the proper price for anything is based solely on the cost of manufacturing and distribution. That is, after all, the marginal cost. Do I have that right? So, for example, it is, in your opinion, immoral for the New York Times (among others) to charge for access to their web site, since the additional load on the servers is minuscule, and easily covered by advertising.

    So all actual development and production costs should not be figured in? If I spend 100 labor-years building a software program, you would say that I have to give it away because the cost of copying is basically nothing? Why would anybody produce commercial-grade software, then? And don’t preach to me about free and open source software. I’ve maintained an open source project for more than a decade – but it’s no longer really worth my while to do so. I have much more interesting / lucrative things to do with my time.

    A quibble about sidewalks, BTW. I don’t know about where you live, but I maintain my sidewalk because I may be liable if somebody slips and hurts themselves on it. I would possibly be better off without one, except that I do use everybody else’s sidewalks on occasion, plus you cannot get an occupancy permit here if you don’t have a sidewalk, and you cannot sell your house unless you first repair all breakage and subsidences in your sidewalk. It’s not exactly charity that provides them.

  2. FF, what’s immoral is that we have not corrected the legal exchange regime so the Times can make a buck producing a great newspaper free for all to read. Under current rules, it’s not immoral for the Times to stand on the ill-suited, outdated, obsolete set of rights we’ve given it.
    One more time: I don’t want you to give away your software any more than I want the gardener to give us a park! I want you to be paid properly for it and I want your work available to all (like the park) at the efficient price, which is zero. Of course I’m also OK with anyone who wants to charitably maintain open-source software, or a garden for me to look at, as long as they want to do that.
    Some towns make sidewalks the abutter’s responsibility, some maintain them at municipal expense.

  3. Since the potential market for content creators’ products can be magnitudes larger than the actual market, illegal copying and distribution can be a net economic positive for the creators.

  4. Michael, how do you propose that we do that? If the people who choose to read the Times don’t pay for it, who should? That’s the part I don’t understand. It makes sense to me that people can decide if reading the paper is worth their scarce pennies, but how else do you do it? Take from everyone to pay the Times? What would privilege the Times against other papers who would love to be paid irrespective of whether people choose to read them? Track usage somehow and award the Times money based on the number of readers? Why would people who choose not to read any paper have to pay? Similarly, how do you propose that I be compensated for my software? Believe me, I would love to have a good answer – I have bills to pay.

    Charles, can you explain? I definitely remember some cases where something like that could have occurred (such as the early days of DOS where illegal copying helped make it the standard), but that was because of the complementary goods phenomenon. The more people who used DOS, the more demand there was for DOS-compatible software, which in turn fed the demand for DOS. But outside of those kinds of situations, how does illegal copying help the creators?

    Eli: since records are not easily copied, there is no issue. You have purchased that particular record, which means that nobody else can own it. If I have understood Michael’s terminology correctly, records are excludable goods.

  5. This whole line of argument rests pretty heavily on the assumption that copyright is a privilege, to be granted by the government (through the Statute of Anne or the Copyright Clause of the US Constitution), and not a natural right that belongs to the author as the creator of the work. However, there are people that have disagreed with this view, most prominently Pierre Beaumarchais and Immanuel Kant. To wit, from Beaumarchais’s petition to the National Assembly:

    “It is, one says, very strange that a formal law was necessary to attest to all of France that the property of a dramatic author belongs to him; that no one has the right to take possession of it. This principle, derived from the first rights of man, went so much without saying for all the properties of man acquired by work, donation, sale, or heredity, that one would have thought it very derisory to be obliged to establish it by law. My property alone, as dramatic author, more sacred than all others as it comes to me from no one and is not subject to dispute for deceit, or fraud, or seduction, the work coming from my brain, as Minerva fully armed from that of the master of gods; only my property has needed that a law pronounce that it is mine, assuring me the possession of it. But those who observe thus have not understood the text of the law.

    “[The theater directors] do not blush to add that the permission granted in the past to authors by the government, to print and perform, evidently allocated to the individual who bought this printed play for twenty-four sous, the right to perform it without giving anything to the proprietor. Although one cannot articulate such absurdities other than in profound desperation, I will not leave this without response; not so as to enlighten the assembly, I do not affront it so, but to shame our adversaries for employing such means.”

    Less dramatically and more philosophically, Kant in “Von der Unrechtmäßigkeit des Büchernachdrucks” (Of the Injustice of Counterfeiting Books):

    “A personal positive right against another can never be derived from the ownership of a thing only.

    “Now the right of publishing is a personal positive right.

    “Therefore it never can be derived from the ownership of a thing (the copy) only.”

    Kevin may still be wrong, of course, but even if that is the case, he has excellent company.

  6. The comments above illustrate how difficult it is to separate the *moral* question of giving credit, from the *economic* question of how to get money to creators, given that the *economically efficient* cost to consumers should, for this class of good, be zero. So the morality of the Times charging is not the question. Creators of content, for obvious reasons, tend to get muddled about these issues. For one creator, who made a fortune from his writing but did not get muddled, and who covers all the issues of copyright (really) see

    http://baencd.freedoors.org/Discs/Baen%2013b/Vol%201%20Num%202/1932093002__26.htm

  7. Side note on who owns mathematical theorems: L’Hospital’s famous rule was bought from Bernoulli.

    http://www.gap-system.org/~history/Biographies/De_L'Hopital.html

    Some people think that it should now be called Bernoulli’s rule:

    http://www.facebook.com/group.php?gid=95346372512

    but as a practicing mathematician, I’m not sure I agree; I might well be willing to prove-for-hire. (If you want an Erdos number, for the right price I can help you with that too!)

  8. “Charles, can you explain?”

    While digital content is non-rivalrous and non-excludible, consumption defiantly is not. Content, even free content, is in competition for consumption. The number of people who could read and enjoy a particular book might be a thousand times greater than the number who ever read it. So anything that brings attention to the book, even illegal copying and distribution, can lead to increased book sells.

    I’ve spent hundreds of dollars on the books of authors I might never have read if I hadn’t read one of their books they gave away for free or a bootlegged copy.

    The same thing is happening with video. Today, after watching part of the streaming video of a pirated first episode of Nikita, I bought the whole first season from Amazon.com.

  9. Yglesias is wrong because his argument is based on the idea that if a physical good was not taken there is no theft. This is not and never has been true. 100 years ago if a composer of music publishes a work and someone copies without paying nothing was physically stolen. So why then was it wrong to “pirate” sheet music but fine to pirate mp3s? To date I have yet to see an answer from the pirates explaining this.

    ” I want you to be paid properly for it and I want your work available to all (like the park) at the efficient price, which is zero”

    A proper payment of zero. Why? Because it is the “efficient price”? Good to know you decide these things instead of the market.

  10. “So anything that brings attention to the book, even illegal copying and distribution, can lead to increased book sells.”

    Do you have any evidence for this? This sounds like a religious argument not an empirical argument.

    “Today, after watching part of the streaming video of a pirated first episode of Nikita, I bought the whole first season from Amazon.com.”

    Inductive reasoning. Do I have to explain why making an argument based on an anecdote is bad? Also why would you buy it if you could watch it for free. This makes no sense.

  11. “Do you have any evidence for this? This sounds like a religious argument not an empirical argument.”

    From author and publishing editor Eric Flint:

    […]
    1. Online piracy — while it is definitely illegal and immoral — is, as a practical problem, nothing more than (at most) a nuisance. We’re talking brats stealing chewing gum, here, not the Barbary Pirates.

    2. Losses any author suffers from piracy are almost certainly offset by the additional publicity which, in practice, any kind of free copies of a book usually engender. Whatever the moral difference, which certainly exists, the practical effect of online piracy is no different from that of any existing method by which readers may obtain books for free or at reduced cost: public libraries, friends borrowing and loaning each other books, used book stores, promotional copies, etc.

    3. Any cure which relies on tighter regulation of the market — especially the kind of extreme measures being advocated by some people — is far worse than the disease. As a widespread phenomenon rather than a nuisance, piracy occurs when artificial restrictions in the market jack up prices beyond what people think are reasonable. The “regulation-enforcement-more regulation” strategy is a bottomless pit which continually recreates (on a larger scale) the problem it supposedly solves. And that commercial effect is often compounded by the more general damage done to social and political freedom.
    […]

    Introduction by Eric Flint

    “Also why would you buy it if you could watch it for free.”

    In this case, the good quality of the downloaded version was worth the cost over the low quality of the free streaming video version.

  12. “if you are listening to a 78 RPM record of that song, the record, and hence that instance of the song, is not available to me.”

    I don’t understand what you are saying here. If you are playing a 78 on a record player and I walk into the room, you don’t suddenly stop hearing the music. Unless I just don’t understand how record players work.

    ” it’s only stealing because we declared it so”

    Quite the tautological statement. This is true of anything isn’t it? What you seem to be saying is that it should not be a crime to take non-rivalous goods without permission. Why?

    “It is that charging more (or less) than marginal cost for anything is wasting the fruit of human labor and the resources of God’s creation, both sins in my book.”

    This makes absolutely no sense. Cars are not priced at their marginal cost. Nothing is priced at the marginal cost, there is always profit. I can’t tell if you are arguing for Communism or what. Everything should be priced at the marginal cost? Well I have seen an appraisal and you know what? The marginal cost of a house is very low. Are you suggesting that homeowners sell their houses for the few hundred dollars in wood contained therein? Will you set a good example and do just that? And isn’t it a bit hypocritical for you published authors to commit these sins and sell ebooks instead of giving them away for free?

  13. Benny –

    Let me assure you, friend, that any house you might build these days would contain much more than “a few hundred dollars in wood”. I mean, come on man, reallly…!

  14. Benny, I was with you on the first part of your post, but I think you’ve missed the point of “marginal cost.” The marginal cost of a house includes not only the raw materials, but also all of the labor, since it must all be expended to create a second house. The marginal cost of a published good, on the other hand, is relatively low, since most of the labor goes into the development and relatively little into publishing each copy. For electronic goods, in fact, the marginal cost is essentially zero – what it costs to copy the data.

  15. I agree that Yglesias has the better of the argument. And I’m sympathetic with the idea that we need to come up with an alternative system for compensating creators. But, as FuzzyFace points out, the devil is in the details. There are, of course, many alternatives to copyright as a way of providing incentives for creative activity. The government could fund creativity. Perhaps first-mover advantages or bundling strategies might be enough. Etc. Yet all of these alternative approaches have costs as well. Do you really want the government deciding which newspapers, bands, authors, etc. are worthy of funding, and how much? Will non-copyright strategies (bundling, tip jars, etc.) be enough to provide incentives for more sustained works of authorship, like movies? I think these details are much harder to work out than many people think.

    Benny, yes, the economically efficient price for most creative works is zero, because the marginal cost of production and distribution is currently zero. Copyright law enables authors to charge a higher price than the marginal cost of production. This provides the incentive for creating the work in the first place. But it creates inefficiency by preventing access by those who value the work above the marginal cost of production but below the price being charged (absent perfect price discrimination). This has always been the economic tradeoff for works protected by copyright (and patent, etc.).

  16. M O’H: “… copyright and patents were never perfect, but technology has broken the system beyond patching.” My italics. You haven’t made the case on patents, beyond your accurate description of the underlying logic. Does technology allow me to get away with making a knockoff of an approved drug patented by Pfizer or GSK? I don’t think so. Pfizer’s lawyers can prove what’s in my pill, they cam prove their client has a valid patent on it, and my clever plan is toast.

    Patents are of course in trouble, and the system needs reform, but not in the same way. A culture of laxity in the patent offices has allowed vast numbers of trivial patents (Amazon’s one-click ordering and the like) to be issued, that serve primarily as barriers to market entry and arms in oligopolistic competition. Patents depend on secrecy before grant, so they prevent information-sharing between technologists, as with Hitler’s multiple competing atomic bomb programmes.

    However, in contrast to copyright, the lobbying power of patent-holders is roughly matched by that of non-patent-holders, so the duration of patents has been pretty stable. There’s no equivalent in patents to the copyright maximalism of Disney and de Bono.

    Copyright (and for that matter patent) violation isn’t theft, it’s trespass.

  17. Fuzzy, you seem hung up on the idea of “who pays”. That is actually easy to answer, at least with respect to music. People who want to, do. I suggest you spend some time reading techdirt.com , for instance. Many artists are figuring out how to give music away and make a good living under the new reality of NR music. (Mike Masnick, the primary author over there, has an annoying habit of attempting to coin business-speak terms to boil down his arguments, but his insights are spot on.)

    The model of selling discs or tapes is going away. That doesn’t mean people don’t pay for entertainment they enjoy. I have only bought a couple of CDs in the past 10 years, and actually have noticed that I’m spending more on music than I did when I was in my 20s.the money goes to concerts, “donations” (really, the purchase of goods associated with a musician, or financing events they wish to perform), and, sometimes, digital music. But most of what I listen to is provided for free, or on a pay-what-you-like basis.

    The key insight to take away, at least in terms of music, is that the Internet and software-based production has made music very cheap to make. This is not to take away from the creative aspect- on the contrary, making it cheaper to make means we get more of it. People make music for reasons other than the pocketbook, although that is important, too. It also means that the financiers are less important, and they don’t like that. But music is thriving under the new reality. Not everyone with a voice wants to be Lady Gaga, nor every one with a guitar Metallica.

  18. PS: The following incident deserves greater fame. Commenter Eric Smith in this thread at Language Log. Mark Liberman’s response has further links.

    In 2002 a group called The Planets published a best-selling CD which included a silent track by Mike Batt called A One Minute Silence. John Cage’s publisher sued them for infringement of copyright. Mike Batt defended the case robustly, saying, “I certainly wasn’t quoting his silence. I claim my silence is original silence… Ours is better silence, it’s digital. Theirs is only analogue.” The case was settled out of court for a six-figure sum.

  19. by Michael O’Hare

    “Matt Yglesias and Kevin Drum are at it again about digital content. Unasked, I propose to mediate this dispute between parties known to me to be technically, economically, and politically astute, and to have their hearts in the right place. ”

    Matthew has been shown to be economically on an Econ 101/Mankiw level, luvs him some union-bashing and generally neoliberal destruction of the working and middle class. So he fails on #1 and #3.

  20. “[C}opyright and patents were never perfect, but technology has broken the system beyond patching.” James Wimberley’s points on patent aside, as to copyright, this is the core and the crux of the problem. A stable and functional copyright system must be soundly rooted in the technology of the day. In the last 15 years or so, technology has leapt forward, and the law and the marketplace are struggling mightily to adjust. For myself, I am sympathetic to the interests of genuine creators, but not much to ranting about morality. As to the adjustment process, I note that recording artists and that industry are mostly now agreeing to systems that not many years ago they would have considered horrifying infringements on their sacred ownership rights.

  21. Sorry for the double post, but I wanted to address this:

    “It does mean that until we fix this mess, copying is stealing, but it’s only stealing because we declared it so.”

    Perhaps this is simply a semantic issue, but I do not believe this to be true. The dirty teens who pirate music with abandon, for the most part, would not steal physical objects from one another. This, in turn, indicates that law is behind reality. “We” might have given Disney a free hand to pull up the ladder on the public domain from a legal perspective, but the issue is that they are fighting economic reality. If we want laws to mean something, they have to intersect with real life, you know?

  22. So Eric Flint makes an argument, devoid of any evidence, and you believe it? Sounds like a religious argument to me. Fact is music sales are way down.

    http://meetthadealer.com/wp-content/uploads/2011/05/musicsales.gif

    “In this case, the good quality of the downloaded version was worth the cost over the low quality of the free streaming video version.

    So if you had a high quality free stream or the video equivalent of an mp3, you would not have purchased anything? Because these high quality video rips can be downloaded for free too, this isn’t just about music and mp3s. So really your argument is self defeating because when the pirated qualtiy is high there is no sale anyways, contra your “good for the artist” claim.

  23. The post appears to beg the question. I suspect both Kevin and Matt would grant that copying an mp3 file and taking a physical good are in some respects identical to each other and in some respects different. The issue is on what moral grounds each may be immoral – a set of unstated assumptions here without which I can’t see a viable dialogue. As a commenter above notes, “it’s only stealing because we declared it so” is tautological: it presumes that we have a rationale for which taking a physical good is not a moral act, but that copying does not violate that rationale. I imagine that rationale is an assumption on which many people already disagree.

  24. FuzzyFace,

    So you agree that houses aren’t sold for their marginal cost, but disagree with what the marginal cost of a house is. Ok, so? My numbers were hyperbole (thanks Worn for being deliberately obtuse) but the main issue stands. Why insist that some things be sold at their marginal cost and some not?

  25. Jody Davis,

    You seem to be missing the point. ” Copyright law enables authors to charge a higher price than the marginal cost of production.”

    This is true of all products. Nissan does not charge the marginal cost for a Leaf and yet I don’t hear that being called “sinful”. Certainly Apple does not charge the marginal cost for an iPhone and where are the accusations of sin against Steve Jobs?

  26. “So Eric Flint makes an argument, devoid of any evidence,…”

    Evidence or not, Flint and other authors and publishers are backing the argument. And they have a whole lot more to loose than just loosing an argument.

    “Fact is music sales are way down.”

    And book sales, especially ebooks, is up.

    “So if you had a high quality free stream or the video equivalent of an mp3, you would not have purchased anything?”

    When I can, I watch streaming video at legit sites even though I have to put up with a lot of annoying commercials. I’ve yet to bother with downloading full length movies and TV episodes from pirate sites.

    Some content is not available at any price except for free from pirate sites. There are several programs I would like to watch at Showcase, but can’t because my IP is located in the US, not Canada. Canadians can’t access content from Hulu and other US sources.

  27. Some ultimate basics of property concepts, often overlooked: I own my watch because of a basic concept of property possessed by most cultures, long predating our current legal systems. My wife and I own a small plot of land and the house on it for reasons that are somewhat similar, but to be meaningful must necessarily bound up with much more complex societal rules, mostly laws and restrictions of various kinds. I own the copyright to an out-of-print book that once made me a few thousand in royalties because a statute says I do. The ownership of that book, meaning those words and ideas, is much more ephemeral and much more directly a conscious, legislated creation of the laws of the particular society in which I live than are the other examples of ownership; and the differences are important. This is bound up with “rivalrous” and “excludible” concepts that Professor O’Hare discusses. For those to whom this is painfully obvious, apologies.

  28. “Evidence or not, Flint and other authors and publishers are backing the argument. And they have a whole lot more to loose than just loosing an argument.”

    So you’ve given up any claims to empirical evidence and are making a straight emotional plea? I’ll take it you concede the point then?

    “And book sales, especially ebooks, is up.”

    Yes and how many illegal downloading ebook sites are there? This example only further demonstrates my point. Ebooks are not sold for the marginal cost. And there aren’t ebook pirates because of the industry lock on the format.

  29. […]
    E-book piracy is growing, too.

    I first realized the scale and scope of digital book piracy back in 2009 when I heard researcher Gabriella Coleman describe the then-exploding DIY book-scanning scene. She described projects like the BookLiberator, which allow for rapid scanning of analogue books, with or without the permission of copyright holders.

    But now, as e-book readers, tablets, and digital bookstores have become more commonplace, some pirates have switched tactics. Rather than manually scan physical books, some pirates download original e-book files from paid sources, then remove the digital locks.
    […]

    E-book piracy may have unexpected benefits for publishers

  30. If you want a moral angle on this issue, it’s not what you think it is. It is that charging more (or less) than marginal cost for anything is wasting the fruit of human labor and the resources of God’s creation, both sins in my book.

    Wait a minute. Why is the relevant marginal cost the cost of reproduction? Isn’t marginal cost properly considered to be replacement cost? It’s not clear what it is that needs to be replaced, but it might be the original work itself. In any event,long-run marginal cost surely includes the creator’s labor.

    To illustrate, if you want to talk about wasting resources, consider a tremendously talented musician, say, who is capable of producing terrific music that is quite valuable, as judged by the market’s willingness to pay for it or whatever other standard you want. Widespread piracy prevents this musician from making much of a living by creating music, however, so she just sticks to giving lessons, or maybe learns computer programming. Nothing wrong with that, but surely there’s a considerable waste of resources there, and society suffers the loss of the next work that would otherwise have been produced.

    I may well be shoehorning things into the notion of marginal cost, but I do think there’s a strong direct argument that piracy does is not wrong just because of legal definitions. It’s also wrong because it robs society of some amount of future creative work.

  31. The fixed cost of a recording F, identical to the marginal cost of the first listen, is the value of the time of the composer, band, producer, engineer, depreciation and debt service on the cost of the studio over the recording time,etc. The marginal cost of the second and subsequent listens is zero, or as close as makes no difference. The average cost of four listens is F/4, and so on. The cost, marginal or fixed, of consuming something is the value of the economic resources used up to create it…that are gone when it is used.

    Bernard, you correctly characterize an important opportunity cost (net value not created by your musician) of the current broken system. Whether we want to outlaw a behavior as piracy depends on various things, like whether we can enforce the rules if we make them, and on whether the good in question is rival, etc. Why isn’t a walk in the park piracy, if using something without paying for it directly is always stealing?

  32. Why isn’t a walk in the park piracy, if using something without paying for it directly is always stealing?

    I may be alone in this, but this kind of stupid sophistry is one of the reason I not only disagree with many set-it-free advocates, but do not respect them either. It is not trespass for my invited guests to come into my house. It is trespass for people not invited to come in my house. Unless they have some special legal right (a search warrant, a raging fire, etc).

    No one says that using something without paying directly is always stealing. Piracy is using (or selling or making available to others to use of sell) without having a legal right. Paying directly is not the only way to acquire a legal right.

  33. Just want to point out that social-status issues may make apparently non-rivalrous goods into rivalrous ones. A good example of this is clothing designs, where people are willing to pay large chunks of money for (among other things) guarantees that very few other people will be wearing the same thing at some given point in time.

  34. Michael,

    I understand the marginal cost concept as you describe it, but I still think replacement cost is the correct definition. Remember, MC is often defined as the cost of the incremental unit. In a system where costs rise smoothly, whether that’s the nth unit or the (n+1)th often doesn’t matter. But in some situations it does. What is the correct price of the last barrel of oil that could be extracted before extraction costs double?

    Your zero MC notion is correct as far as reproductions of a single work goes, but if we view the artistic product as a series of creations – musical compositions, say, then the marginal cost is in fact what you call F, the various costs of creating the music and making the recording. And the proper total price for the product, taken as a whole, in all its incarnations, is that cost. Anyway, that may just be quibbling over definitions. I personally think it is possible that the standard micreconomic structure of MC, etc., may not be particularly useful here.

    Regardless, we agree that the system must create that revenue, or we will lose a huge amount of artistic output. And until a system is in place to do that, I’ll maintain that piracy is wrong, in part because it does, in the aggregate, involve obtaining the good at less than this MC.

    Why isn’t a walk in the park piracy, if using something without paying for it directly is always stealing?

    It would be, if the park were a private place that charged admission. But I assume you mean a public park. Then walking there is not piracy because doing so does not discourage the (economically efficient) creation of more public parks.

  35. Some public parks, including most state (as opposed to city or county) parks here in Wisconsin, assess a yearly or daily fee, but have rarely-monitored entrances. If one bikes past the self-pay station and enjoys a free ride on a paved path that consumes virtually nothing and displaces virtually no other use, I would suggest that we do indeed have a very close parallel to unauthorized downloading of a copyrighted recording of, say, the University of Wisconsin’s excellent band. Where this observation takes us I am not exactly sure.

  36. For what it’s worth, this is arbitration, not mediation. Mediators broker agreements between parties; it’s arbitrators who decide who’s right, and who’s wrong.

    Great post, though!

  37. CharleyCarp,

    You aren’t the only one that finds the sophistry stupid, and why I don’t respect the arguments made by the pirates. These pro piracy arguments are also hypocritical, since the proponents of them have benefited monetarily from the system they argue against. I mean Yglesias and O’Hara didn’t have to publish their book through the evil sinful publishing system. They could just put them online for free, but then they wouldn’t get paid for all that work!

  38. Bernard Yomtov,

    You notice that the pirates don’t have an answer for the second part, though they acknowledge that it is a legitimate question. “we agree that the system must create that revenue, or we will lose a huge amount of artistic output”.

    That’s a problem with no proposed solution, so smash the system instead of tweaking the rules?

  39. My comment reads meaner than intended. By all means make proposals for an alternative that compensates creators. But really, what is the point of arguing that the current property rights system wasn’t created by God (a straw man if ever there was one) other than to justify taking the creations without proposing a system that compensates creators?

  40. “It does mean that until we fix this mess, copying is stealing, but it’s only stealing because we declared it so.”

    Pardon my ignorance, but can one steal something absent a definition of the act? Theology and morality aside, is there some kind of stealing that is universally considered to be stealing even when we haven’t declared it so? Would appreciate an example or two.

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