An Entrepreneurship Theory of Copyright
84 Pages Posted: 28 Mar 2022 Last revised: 26 Apr 2022
Date Written: February 24, 2022
The dominant utilitarian formulation of copyright incentives is preoccupied with reducing copyright’s social costs by limiting an author’s income to the precise amount necessary to incentivize production of a particular work. Under that approach, the grant of copyright is considered by many to be social waste when authors create for intrinsic reasons. This Article argues that viewing isolated “persuasion costs” as the absolute determinant of authorial deserts largely ignores the full range of authorial risks and investments and the effect of incentives across the entire copyright ecosystem. Authors are economic speculators akin to entrepreneurs; thus, entrepreneurship theory provides a richer theoretical framework for understanding copyright’s incentive function. Authors, like entrepreneurs, innovate and bear economic risk in the face of market uncertainty. Because their economic activities are speculative, authors and entrepreneurs rely on uncertain compensation via property rights in lieu of dependable salaries or wages. Further, entrepreneurial profit entitlements do not hinge on the entrepreneur’s intrinsic or extrinsic motivations; one may start a venture for intrinsic reasons and still bear substantial risk. Entrepreneurs’ risk bearing and innovation—not their motivations—trigger their profit entitlements. Although there are differences between copyright and the entrepreneur’s right to profit—most importantly that copyright is state intervention in free markets for information goods that leads to unique static and dynamic costs—these differences are not fatal to the analogy between authors and entrepreneurs. Copyright is therefore best viewed not as an incentive for discrete acts of creation but rather as the author’s compensation for the economic value added by the risk-laden reallocation of resources toward the authorial endeavor. Copyright thus incentivizes the author and partnering intermediaries to bear the commercial risk entailed in shepherding a work from conception to a realized, marketable information good.
Keywords: copyright, copyright theory, entrepreneurship, authorship, incentives, utilitarian
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