November 2012

Yesterday I [heaped praise]( on James V. DeLong for articulating a reasoned conservative defense of copyright that also highlighted just how much common ground he shares with those conservatives and libertarians that are concerned with the current copyright system’s infirmities. I also said that I disagreed with some of the arguments he made in his essay and that I might address those in a later post. That’s no longer necessary because Jordan Bloom of the *American Conservative* [has put his finger]( on just about everything I would have taken issue with in DeLong’s column.

Bloom has been doing yeoman’s work covering the retracted RSC memo story. I believe that he was the first person to write about the memo before it was retracted. For that I thank him. But, I have to disagree with some of his response to DeLong. While he (correctly in my view) takes DeLong to task for conflating copyright with traditional property rights, he treats this intellectual position as make-or-break for copyright reform. This is wrong.

Bloom writes, “Republicans will get nowhere on this issue without drawing a clear distinction between both types of property.” And he concludes:

>We won’t be able to proceed to a serious discussion about what balance of IP protection we ought to have until we stop pretending intellectual property is the same as other types of property and that it’s a God-given right to have the government enforce its exclusivity, in the case of copyright, 70 years after the creator’s death.

I take his point, that there is a confusion about the nature of copyright as property and that it often makes discussion about reform difficult. Many conservatives employ the logic of “property is good, copyright is property, therefore more and stronger copyright is great.” We need to point out why that logic is flawed, as Bloom does in his response. But, we should not excoriate folks like DeLong when they ultimately agree with us.

As I said yesterday, in his article DeLong agrees with the likes of me and Bloom that we should reform copyright to have shorter copyright terms and formalities like registration and renewal. That common ground is what we should be focusing on, not the first principles distinctions that divide us. Even Ayn Rand, a property rights absolutist if there ever was one, agreed that there must be limits on copyright.

Whatever paths DeLong, Bloom and I took to get to our positions, it shouldn’t matter for the practical project of reforming copyright. Some of us are natural rights types and others utilitarians, some of us are Objectivists and others paleoconservatives. If we can all agree, whatever our first principles, that *the current copyright system* is an out-of-control federal program that is beset with terrible public choice problems, then I think we should put aside our philosophical disagreements about the *ideal of copyright* and get to work on fixing the broken system we have now.

There is more common ground among conservatives, libertarians and Republicans on the need for paring back copyright than our squabbling lets on. Instead of arguing about the extremes, I think we should work hard to reach consensus and then provide leadership.

Over the past couple of weeks I have been pointing out examples of conservative/libertarian thinking and rhetoric on copyright that is unhelpful and which I think we should abandon as a movement. This kind of rhetoric is usually reactionary, ad hominem, and uninformed. So, I’m very happy today to point you to an example of some excellent thinking and rhetoric from a free-market/property-rights perspective.

In National Review today, James V. DeLong has an article addressing the retracted RSC memo that sparked the recent debate over copyright among libertarians and conservatives. Now, DeLong makes some arguments with which I disagree, including about the nature of copyright as property not unlike personal property and about the just desert of authors, and I may address those arguments in a later post. But, I think it’s more worthwhile to point out where DeLong and I agree because it shows that in fact those of us who are for liberty, limited government and economic efficiency actually don’t disagree on copyright as much as our arguments on specific proposals might lead one to believe. While dinging the RSC memo as “mediocre,” DeLong nevertheless agrees:

Some of the specific problems noted in the paper and elsewhere are very real: Copyright terms are too long; rights are overly convoluted and hard to pin down; transaction costs are too high; the easy availability of copying is attriting the creative community; orphan works, for which the copyright holders are unknown, present problems. The list is long.

We probably need a clean-sheet rewrite of copyright law, but the solutions to many current problems are far from obvious, and the risks of any such enterprise are so great as to daunt everyone with a stake in the system. So we keep muddling along, with the confusion abetted by those who profit from the current mismatch between law and technology.

Confusion is also caused by the content industry. Much of it really is as greedy and rapacious as its critics contend. The only property rights it cares about are its own; it has no sympathy for anyone caught up in the toils of the EPA or the local zoning board (unless the issue involves Malibu beach property, of course).

Three cheers! I am so happy to discover so much common ground. DeLong goes on to make some concrete proposals, including this:

Many specific reforms should be enacted. My list would include shorter copyright terms; a requirement of registration and renewal, to show seriousness; a one-time requirement of registration of existing works to get rid of the orphan-works problem; and centralized databases to reduce transaction costs.

Huzzah! This is very similar to my list as well! Unfortunately, DeLong concludes that “Despite all these concerns, the temptation for Republicans to reflexively embrace the foes of copyright should be resisted, because the church of property rights is greater than its servants.” But why should Republicans accept an admittedly bad status quo when it presents a perfect opportunity for the GOP to demonstrate leadership? It need not have to “reflexively embrace” copyright reformers on the left who don’t have the same respect that we libertarians and conservatives have for property rights. It can instead provide an alternative that reforms the mess that is copyright today and also respects property rights and the Framer’s original intent when they included copyright in the Constitution.

Here’s what I say: The GOP should take the list that DeLong provides and turn it in to a bill. Such a reform would not only be compatible with strong property rights, but it would also be the true small government position.

P.S. The new book I’ve edited on copyright from a free market perspective will be available in the next few days, so stay tuned.

With each passing year, Washington’s appetite for Internet regulation grows. While “Hands Off the Net!” was a popular rallying cry just a decade ago—and was even a shared sentiment among many policymakers—today’s zeitgeist seems to instead be “Hands All Over the Net.” Countless interests and regulatory advocates have pet Internet policy issues they want Washington to address, including copyright, privacy, cybersecurity, online taxation, broadband regulation, among many others.

Rep. Darrell Issa (R-CA) wants to do something to slow down this legislative locomotive. He has proposed the “Internet American Moratorium Act (IAMA), which would impose a two-year moratorium on “any new laws, rules or regulations governing the Internet.” The prohibition would apply to both Congress and the Executive Branch but makes an exception to any rules dealing with national security.

Will Rep. Issa’s proposal make any difference if implemented? Any congressionally imposed legislative moratorium is a symbolic gesture and not a binding constraint since Congress is always free to pass another law later to get around an earlier prohibition. So, in that sense, a moratorium might not change much. Nonetheless, such symbolic gestures are often important and Issa is to be commended for at least trying to raise awareness about the dangers of creeping regulation of online life and the digital economy.

If policymakers really want to take a more substantive step to slow the flow of red tape, they should consider a different approach. Instead of (or, perhaps, in addition to) a two-year legislative moratorium, they should impose a variant of “Moore’s Law” for information technology laws and regulations. “Moore’s Law,” as most of you know, is the principle named after Intel co-founder Gordon E. Moore who first observed that, generally speaking, the processing power of computers doubles roughly every 18 months while prices remain fairly constant.

As I argued in a Forbes column earlier this year, we should apply this same principle to high-tech policy. Continue reading →

As I noted in an addendum to my previous post, less than an hour after I posted an essay about how the District of Columbia’s subsidy deal with LivingSocial was potentially set to unravel, I received a call from two representatives of the D.C. Mayor’s office asking me to clarify a few aspects of the deal. The tone and substance of the call was courteous and profession from the start and I told them I would be happy to post a quick update to my essay letting readers know of the points that they wanted stressed.

After I did so, however, I kept thinking how strange it was that I received such a quick response from the Mayor’s office about my little post. After all, I can’t imagine that the Technology Liberation Front is on the top of their morning reading list! I just figured that someone in the Mayor’s office probably had a Google Alert set up that caught it.  But then, as luck would have it, I was reading through the Wall Street Journal at lunch and came across a story entitled, “In D.C., Social-Media Surveillance Pays Off” by Sarah Portlock. She reports that:

The local government in the nation’s capital is paying hundreds of thousands of dollars to a startup to gather comments on Twitter, Facebook and other online message boards as well as the government’s own website. The data help form a letter grade for the bureaucracies that handle drivers licenses, building permits and the like. These social-media analytics services are already common for businesses such as restaurants and hotel chains that want to go beyond the comment cards most customers ignore. The D.C. experiment suggests governments are beginning to mirror the private sector in seeking real-time unvarnished feedback.

The D.C. government apparently has a 2-year $670,000 contract with newBrandAnalytics, Inc. to gather social media feedback and insights about the District.  So, I figure that’s how the folks in the D.C. Mayor’s office stumbled upon my little rant. I had posted a link to my essay on both Twitter and Google+ and they probably got an immediate report back about it.

In any event, that got me wondering about how people are going to respond to this sort of “surveillance” of social media sites and activities by governments. Continue reading →

In July 2012, the D.C. Council approved the Social E-Commerce Job Creation Tax Incentive Act of 2012. The deal provided LivingSocial, a popular online coupon service, with corporate and property tax exemptions in Washington, D.C. worth approximately $32.5 million over five years beginning in 2015. Legislators feared that LivingSocial would relocate to areas with a lower tax rate. In exchange for the $32.5 million, LivingSocial said it would attempt to add 1,000 employees to its payroll (roughly doubling its number of employees in the District), although no contractual guarantee for job creation exists and even though the firm had never been profitable. Some of the few contractual obligations required for LivingSocial to receive these tax exemptions are that it must establish a program to mentor D.C. high school students, provide internships for D.C. students, and stay located in the District. LivingSocial must also ensure 50% of newly hired employees live in the District in order to receive the Act’s full $32.5 million in exemptions.

Just a few months after the deal was struck it had already become apparent just how risky of a bet the DC government has made with taxpayer dollars. In late November 2012, LivingSocial announced a net loss of $566 million for the third quarter and that hundreds of employees would be laid off. The promise to roughly doubling the size of its DC-based workforce seems fairly unlikely and some analysts doubt the company will survive much longer.

This serves as another case study for just how foolish it is for governments to make risky, taxpayer-backed bets on information tech companies. Continue reading →

Co-authored with Berin Szoka

In the past two weeks, Members of Congress from both parties have penned scathing letters to the FTC warning of the consequences (both to consumers and the agency itself) if the Commission sues Google not under traditional antitrust law, but instead by alleging unfair competition under Section 5 of the FTC Act. The FTC is rumored to be considering such a suit, and FTC Chairman Jon Leibowitz and Republican Commissioner Tom Rosch have expressed a desire to litigate such a so-called “pure” Section 5 antitrust case — one not adjoining a cause of action under the Sherman Act. Unfortunately for the Commissioners, no appellate court has upheld such an action since the 1960s.

This brewing standoff is reminiscent of a similar contest between Congress and the FTC over the Commission’s aggressive use of Section 5 in consumer protection cases in the 1970s. As Howard Beales recounts, the FTC took an expansive view of its authority and failed to produce guidelines or limiting principles to guide its growing enforcement against “unfair” practices — just as today it offers no limiting principles or guidelines for antitrust enforcement under the Act. Only under heavy pressure from Congress, including a brief shutdown of the agency (and significant public criticism for becoming the “National Nanny“), did the agency finally produce a Policy Statement on Unfairness — which Congress eventually codified by statute. Continue reading →

I’ve come across another example of the kind of thinking and rhetoric on copyright that claims to be conservatives and libertarian, but which really does not serve the cause. I’m loathe to bring attention to it, but I think it’s important to start to renounce the kind of view that are often ascribed to conservatives and libertarians, but which don’t serve us and which only a tiny minority of us hold.

The piece in question is by Scott Cleland and it’s entitled “The Copyright Education of Mr. Khanna,” and like Tom Giovanetti before him, Cleland attacks Derek Khanna for his RSC policy brief. Cleland posits “five fundamental flaws” in Khanna’s argument. The first one is inscrutable, but if I can make out an argument it’s that Khanna is wrong because he’s questioning our existing copyright regime. I don’t see how questioning the status quo can make your argument flawed.

The second “fundamental flaw” Cleland points out is that “Mr. Khanna’s copyright views are not conservative.” He echoes Giovanetti by not addressing the merits of Khanna’s arguments but merely saying that if Khanna is agreeing with folks who are on the left, then there must be something with his argument. Cleland writes,

Mr. Khanna’s copyright views actually closely parrot the collectivist views of the famous Professor Larry Lessig who founded Free Culture and Creative Commons, championed Free Software and CopyLeft, and called for convening a new Constitutional Convention because “Democracy in America is stalled” by the “corruption” of money in politics.

It is also important to note that Marx and Engels said their theory could be summed up in one sentence: “Abolition of property.”

Do you see what just happened there? It’s the worst kind of guilt by association. First, while Khanna’s conclusions match Lessig’s, it’s not clear his reasoning can’t be distinguished. I know I can certainly distinguish my reasoning from Lessig’s in many instances. Folks on the left are more interested in equity, while libertarians are more interested in liberty and economic efficiency. The fact that we coincide on our conclusions on copyright should tell us that there’s something really wrong with out current system, not that we’re not “real conservatives.”

But never mind that, Cleland tries to link Khanna not just to Lessig’s views on copyright, but to his views on money in politics. And if that was not enough, there’s a non-sequitur about Marx and Engels and abolition of property to really drive the character assassination home.

The third flaw Cleland points out is that Khanna refers to copyright as a monopoly. This is wrong, Cleland says, because property can’t be a monopoly; after all, we don’t say you have a monopoly over your car, he says. He is right that the word monopoly is often misused, but the fact is that copyright, in an economic sense, is a grant of monopoly. In a world without copyright, creative expressions are non-rivalrous and non-excludable, unlike cars. We establish copyright in order to make expressions excludable. That is, we give creators market power where they had none before so that they may charge above marginal cost and thus have an incentive to create more than they otherwise would.

The fourth “flaw” that Cleland points out I can’t disagree with. It’s Khanna’s sentence, “Copyright violates every tenet of laissez faire capitalism.” I don’t think that’s right as written, but I also think Khanna wrote that for effect. Our current copyright system (as opposed to copyright as an idea) is certainly more crony capitalist than laissez faire capitalist.

Fifth, and finally, Cleland says that “Copyright is law not regulation.” Actually, as I pointed out in my last post, important parts of copyright are indeed administered through notice-and-comment regulation by the Copyright Office, not courts.

“In sum,” Cleland writes, “Mr. Khanna is promoting Lessigian anti-property thinking (that more American innovation and progress will emanate from the utopian altruism of a property-less system, where taking what others produce without permission is called ‘sharing),’ as superior to America’s Constitutional political and economic system of property and economic incentives.” This kind of rhetoric is exactly what has come from the more desperate and captured parts of the GOP for quite some time, and it should change for the sake of the GOP. It does not address the merits of arguments but instead tries to tar and feather innovative thinkers by asserting that if you’re for copyright reform then you must be against property, and thus a communist.

Don’t buy it folks. Criticism of our current copyright regime fits perfectly within an ideology that respects property rights. This is something that we make quite clear in our forthcoming book on copyright from a libertarian and conservative perspective. Khanna’s memo proposed a system that would grant authors a copyright term of 46 years. I don’t see how that is a “property-less system.”

I find myself delighted, but also mildly disappointed, by a short speech making the rounds on the Internets, given by Amelia Anderstotter, Swedish Member of the European Parliament representing the Pirate Party. For its forcefulness, the speech misses a key distinction about which advocates of freedom, which I think members of the Pirate Party mean to be, should be very clear.

It’s a delightful speech because it’s a crisp rejection of the authoritarian forces that seek to control communications. In doing so, they hinder the development of culture. The woman delivering the speech is equal parts young, serious, and articulate. I reject authoritarianism, too, and I work to eliminate or hold at bay many of the same forces as Anderstotter, so that civil society can organize itself as it will.

I’m nonplussed, though, by the line that has gotten the speech so much attention.

“I would like to paraphrase George Michael from I think 1992,” she says. “‘Fuck you, this is my culture.’ And if copyright or telecommunications operators are standing in the way, I think they should go.’”

In one sense, the bracing language works. It is what generated a lot of interest in her words. But the context of the quote does not work as well. You see, when confronted with paparazzi photos showing him engaged in late-night cruising at a London park, Michael said, “Are you gay? No? Well then Fuck Off! Because this is my culture and you don’t understand it.” That is vituperation when confronted about arguably unhealthy behavior. It is not the conformity-rejecting line you might have expected in “Freedom! ’90,” presaging Michaels’ dispute with Sony over the release of Listen Without Prejudice Vol. 2.

One should certainly be free to act as Michael did among a community of consenting adults, and to reject criticism as he did. But when a speaker’s job is to persuade skeptics, one might choose an example of contempt for authority that the audience can easily embrace. With this quote, Anderstotter didn’t seat her rejection of authority firmly in logic and justice.

That’s a narrow point about influence, but the real weakness of the speech is in its internal logic. In the name of freedom, she calls for authoritarian regulatory interventions on private-sector network operators.

“[V]ery few top political figures in the world have acknowledged,” she says, that free speech and human rights protection “will require regulatory intervention on some private sectors.”

And later: “The control over communities and the ability to shape them must be with the communities themselves. Infrastructure must be regulated to enable that ability and such autonomy.”

Note how her use of passive voice hides the actor. Infrastructure “must be regulated” to achieve her agreeable goals. By whom? Perhaps one imagines beneficent gods fixing things up, but the regulations she seeks will almost certainly come from “the Governments and … public officials and lobbyists” that she says she wishes would fuck off.

A coherent system of rights does not have internal conflicts. If your freedoms come at the expense of someone else’s, you haven’t sorted out yet what “freedom” is.

Anderstotter is on the right track in many respects. Timid though the debate may be from her perspective, the scope and duration of copyright protection is again controversial among U.S. libertarians and conservatives. But her rejection of authoritarianism is an implicit embrace of authoritarianism at the same time.

With a little sorting out, she and the Pirate Party could get it right. Until then, the cultural reference she brings to mind for me is “meet the new boss, same as the old boss.”

Over at the IPI Policy Blog, Tom Giovanetti has a new post about “Copyright and the GOP” reflecting on the recent brouhaha over Derek Khanna’s retracted Republican Study Committee policy brief on copyright. I’m afraid Giovanetti’s post is a good example of exactly what’s wrong with the Republican status quo thinking and rhetoric on copyright.

The post begins by explaining why the GOP has “historically been strong supporters of copyright protections”:

Markets simply don’t work without property rights. You can’t have contracts, or licensing, if you don’t have clear and enforceable property rights. ALL business models, not just “new” business models, rest on property rights.

Further, because the GOP believes in innovation, copyright is a natural fit, because copyright incentivizes and encourages the creation, distribution and promotion of new information. The alternative to copyright isn’t free information, but less creation, less widely distributed and marketed.

Do you see what just happened there? The implication is that Khanna in his memo, or those of us who would like to see copyright reform, don’t think there should be copyright at all or don’t think that copyright is property. That’s just not the case. In his memo, for example, Khanna explicitly proposes up to 46 years of protection for creative works. That is copyright, and that is property, and it would allow for contracts and licensing and for markets to work.

When folks say that copyright reformers are anarchists who don’t believe in property rights, don’t buy it. It’s an inaccurate and unfair characterization.

Giovanetti goes on to write,

That’s why it was jaw dropping to see a paper appear on the Republican Study Committee (RSC) website that was infused with much of the rhetoric and many of the assumptions of the CopyLeft movement. When an RSC paper is praised on the Daily Kos website, you have to wonder what’s going on.

Rather than address the merits of Khanna’s memo, Giovanetti instead tries to make Khanna guilty by association. If some on the left agree with your ideas, the argument seems to go, then there must be something wrong with your ideas. This tribal mentality is exactly what the GOP should be trying to expunge right now. Isn’t it more likely that if your up-and-coming intellectuals agree with other thinkers on the left, then there may in fact be a problem worth addressing? It’s like saying John McCain or Marco Rubio are liberal radicals because they would agree with Ted Kennedy on immigration.

It gets worse. Giovanetti argues that there’s nothing to see here since the Copyright Office regularly reviews exemptions:

In the Information Age, copyright and patents have become focal points of much criticism. And it is both appropriate and necessary to review current laws and standards to ensure they reflect changes in the marketplace and in technology. Accordingly, the Copyright Office regularly releases new exceptions to copyright that reflect those changes.

Boy, how far we’ve come when it is argued that the GOP should be in favor of an unelected regulatory bureaucracy deciding what are our rights. As Matt Schruers recently wrote,

While I’m at peace with this, it continues to baffle me that more conservatives are not skeptical of expanding intellectual property. What is regulation, if not when bureaucrats hold an administrative rulemaking and issue a triennial rule dictating how individuals must conduct their affairs with respect to media they have already purchased? That sounds a lot like regulation to me.

What is regulation, if not when bureaucracies dispense exclusive entitlements to special petitioners intentionally designed to restrict competition, because it serves the broader purpose of incentivizing the pursuit and disclosure of particular creative activity? This is what our IP law does.

Don’t fall for it folks. Copyright reform is perfectly compatible with a strong belief in property rights and markets. More than that, opposition to our bloated copyright system that serves special interests in Hollywood at the expense of the public is in fact the true conservative and libertarian position.

After more than a year of complaining about Google and being met with responses from me (see also here, here, here, here, and here, among others) and many others that these complaints have yet to offer up a rigorous theory of antitrust injury — let alone any evidence — FairSearch yesterday offered up its preferred remedies aimed at addressing, in its own words, “the fundamental conflict of interest driving Google’s incentive and ability to engage in anti-competitive conduct. . . . [by putting an] end [to] Google’s preferencing of its own products ahead of natural search results.”  Nothing in the post addresses the weakness of the organization’s underlying claims, and its proposed remedies would be damaging to consumers.

FairSearch’s first and core “abuse” is “[d]iscriminatory treatment favoring Google’s own vertical products in a manner that may harm competing vertical products.”  To address this it proposes prohibiting Google from preferencing its own content in search results and suggests as additional, “structural remedies” “[r]equiring Google to license data” and “[r]equiring Google to divest its vertical products that have benefited from Google’s abuses.”

Tom Barnett, former AAG for antitrust, counsel to FairSearch member Expedia, and FairSearch’s de facto spokesman should be ashamed to be associated with claims and proposals like these.  He better than many others knows that harm to competitors is not the issue under US antitrust laws.  Rather, US antitrust law requires a demonstration that consumers — not just rivals — will be harmed by a challenged practice.  He also knows (as economists have known for a long time) that favoring one’s own content — i.e., “vertically integrating” to produce both inputs as well as finished products — is generally procompetitive. Continue reading →