John M. Newman
U.S. Department of Justice - Antitrust Division
August 29, 2012
Vanderbilt Law Review, Vol. 66, 2013
Innovation has wreaked creative destruction on traditional content platforms. During the decade following Napster’s rise and fall, industry organizations launched litigation campaigns to combat the dramatic downward pricing pressure created by the advent of zero-price, copyright-infringing content. These campaigns attracted a torrent of debate, still ongoing, among scholars and stakeholders — but this debate has missed the forest for the trees. Industry organizations have abandoned litigation efforts, and many copyright owners now compete directly with infringing products by offering licit content at a price of $0.
This sea change has ushered in an era of “copyright freeconomics.” Drawing on an emerging body of behavioral economics and consumer psychology literature, this Article demonstrates that, when faced with the “magic” of zero prices, the neoclassical economic model underpinning modern U.S. copyright law collapses. As a result, the shift to a freeconomic model threatens entrenched tenets that lie at the very heart of copyright law and theory. This Article argues that the traditional dichotomies separating “use” from “ownership” and “utilitarian” from “moral” rights have been seriously eroded, if not outright destroyed. If copyright law does not evolve to face these changes, it will run the risk of extinction through irrelevance. Accordingly, this Article both identifies responsive policy prescriptions and, perhaps more importantly, establishes a set of structured, coherent, and efficient analytical frameworks to aid in their implementation.
Number of Pages in PDF File: 46
Keywords: copyright law, freeconomics, freemium, ad-supported content, free content, content platforms, copyright damages, Ariely, zero-price effect, magic of free, utilitarian rights, moral rights, RIAA lawsuits, MPAA, corporate copyright, Spotify, Hulu, celestial jukebox
JEL Classification: D11, D21, D23, D42, E21, E30, H41, K00, K39, K42, L11Accepted Paper Series
Date posted: August 29, 2012 ; Last revised: March 27, 2013
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