File sharing and marginal cost pricing

Last fall, I discussed the future of digital media, especially music, and argued for a system in which digital media is free to users, but artists and producers are paid for it with public funds distributed by observing use. The basic idea, articulated in Terry Fisher’s and Lawrence Lessig’s recent books is that a royalty fund is put aside from taxes (about $10 billion a year, or $100 per family, would do it for the US music market). Playing music files is observed (but not who plays what) by the copyright office through a piece of software running on any device that can see the internet. The Copyright Office then divvies up the fund each year in proportion to plays.

Two developments have brought this development much closer. The first is the demonstration by 411-song that a recording can be identified by software with only fifteen seconds of listening to it over a cell phone, so robust reporting of use is a realistic prospect. The second is the passage by [admittedly, a rump sitting of 58 members of] the French Chamber of Deputies of an amendment to a bill that was supposed to increase filesharing penalties, using digital rights management technology for enforcement. To the astonishment of the Minister of Culture, who offered the bill, M. Alain Suguenot’s amendment goes in exactly the opposite direction, making free file sharing of music and movies legal. The bill includes a tax on internet access to be divided as royalties in an unspecified fashion, so the French are approaching an admirable revolution in intellectual property rights, even if this episode is a piece of political theater for the moment.

(Here’s an AP story in English.) The amendment “freeing culture” in France is here. The operative mechanism

“La publication d’une œuvre ou d’une interprétation fixée sur phonogramme, vidéogramme ou tout autre support emporte cession du droit de mise à la disposition du public sur des services de communication en ligne, pour les seuls actes effectués par des particuliers à des fins non commerciales, à une société régie par le titre II du livre III et agréée à cet effet par le ministre chargé de la culture.”

is to transfer non-commercial virtual (en ligne) reproduction rights to a new national quasi-governmental organization as a condition of publication.

The “arm-wrestling”, as Figaro describes the debate, has pitted the country’s largest consumer organization against a variety of publishers and some artists’ groups. Further debate has been put off until after the holidays; this story bears watching.

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.