The Creative Destruction of Copyright: Napster and the New Economics of Digital Technology
50 Pages Posted: 2 May 2001
To determine whether the public sharing of music over networks like Napster should be considered copyright infringement, we must first conclude that digital works should be entitled to copyright protection. Professor Ku argues against copyright protection for digital works because the economics of digital technology undercut prior assumptions about the efficacy of a private property regime as a remedy to the public goods nature of information. This becomes clear when we separately examine the two interests served by copyright, the creation and the dissemination of works to the public. By questioning the conventional wisdom that these interests are aligned, Professor Ku reveals that the argument for copyright is primarily an argument for protecting the distributors of content in a world in which "middlemen" are no longer necessary. Copyright is no longer needed to encourage distribution because consumers, themselves, build and fund the distribution channels for digital content. With respect to the creation of music, Professor Ku argues that the exclusive rights to reproduce and distribute copies currently provide little, if any, incentive for creation, and that free music and digital technology may in fact increase the financial rewards to artists. Consequently, the exclusive rights to reproduce and disseminate digital music under copyright cannot be justified. To the extent that additional incentives are considered necessary, he proposes the Digital Recording Act that would fund artists through a statutory levy scheme with the distribution of funding tied to aggregate Internet downloading or use. The DRA is superior to copyright because it encourages creation while providing information about consumer preferences without the market-distorting effects of a private property regime.
JEL Classification: K11, K19
Suggested Citation: Suggested Citation