A Preliminary Economic Analysis of Napster: Internet Technology, Copyright Liability, and the Possibility of Coasean Bargaining

Abstract:     
This Article offers a preliminary economic analysis of whether
it is desirable to hold Napster, Inc. liable for copyright
infringement committed by Napster users. The Article does so
because the recording industry's recent lawsuit against
Napster, Inc. offers a prominent example of the claim that
the efficient production and distribution of copyrightable
subject matter require broad injunctive relief against
providers of certain Internet technology. If this argument
is accepted, profound consequences for the Internet's
development may follow because copyright liability against
Napster will give the recording industry significant control
over Napster and - by application of precedent - other similar
technologies. Such control could prove undesirable because
the recording industry may not efficiently develop and
exploit technology like Napster. This drag on the Internet's
development could be warranted if leaving Napster alone would
substantially diminish the supply of recorded music.
The Article contends that Napster does not significantly
threaten the supply of recorded music, and that it may be
wise policy to leave Napster alone.

Keywords: Napster, intellectual property, copyright, economics

JEL Classifications: K00, K11

Accepted Paper Series