Against Intellectual Monopoly by Michele Boldrin;David K. Levine Page A
Authors: Michele Boldrin;David K. Levine
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monopolists,
on May 12, 2004, the Spanish Tribunal de Defensa de la Competencia firmly
denied the requested authorization to proceed with the Gedeprensa project.
One wishes the Supreme Court of the United States had shown the same understanding of basic economics, and the same concern with preserving
market competition and improving social welfare, when ruling in the Eldred
v. Ashcroft case that a monopoly that lasts forever lasts only for a limited
time. Alas, it did not.23
How would the news industry operate in the complete absence of copyright? Obviously local newspapers would no longer feel the need to license
stories from the Associated Press and Reuters. Most likely, the big news services would sell first to a few impatient and highly motivated customers, for
whom getting the news an hour earlier than other people is highly valuable.
Among the very impatient customers of Reuters, we might find the Washington Post and the New York Times, and maybe other news replicators, who
then give away the replicas of the Reuters story with a few hours' delay and
at a substantially lower price. It is possible that, depending on technology,
speed of replication, and stratification of the market for news, a third or
fourth layer of Reuters replicators would appear.
If this does not sound like a Star Trek story to you, it is simply because we
already witness a very similar arrangement in the market for financial and
most other valuable news. Here, highly impatient customers pay substantial
fees to purchase from Bloomberg, Moody's, or Reuters the real-time news
and quotes. The news and quotes then trickle down from Web sites to cable
televisions, to national newspapers, and so on, until, often a whole day later,
the New York Stock Exchange quotes are published in most newspapers
around the world. In fact, just click on the Yahoo site, or the Reuters site, or
the CNN site before you go to sleep at night. What do you get? You get the
main ingredients of the articles you will read tomorrow morning from your
beloved newspaper. The only difference with the financial news is that, for
"normal" news, people's degree of impatience is a lot lower, which does not
allow Reuters or CNN to charge you a high fee for feeding the news online
before the newspapers publish it. Reuters and CNN, then, must get by with
the revenues they collect from advertisers, or with the smaller fees they
charge other professional news organizations. Still, the news gets collected,
written and distributed, and most journalists, apparently, seem to find the
salary they make in this competitive industry a reasonable compensation
for their creative effort.
Similar considerations apply to the parroted questions about the highly
paid author, the sleek imitators, and the money-losing publisher standing
stupidly in the middle: the latter would stop standing stupidly in the middle
and would get smart. This is not to say that authors might receive only
a modest amount for their work - for example, Stephen King might not
spend weeks and weekends writing his latest great work if he could sell it for
only a grand total of $19.95. But as we have seen, the evidence of the 9-11 Commission Report suggests he would command a rather higher price than
this.
The Modern American Newspaper
The very form in which the news is currently distributed is itself a triumph
of competitive innovation. The innovation was that of Benjamin Day, who
in September 1833 started publishing the New York daily Sun, which he
managed to sell at a penny while other newspapers sold at $.05 or $.06.24 His
low price came from two simple innovations: he collected lots of advertising
instead of relying on subscriptions, and his paper was sold on street corners
by armies of newsboys.
In the current parlance, these are "innovative business methods" and
today they would be patentable. Fortunately for the American newspaper
sector and for millions of American readers, they
on May 12, 2004, the Spanish Tribunal de Defensa de la Competencia firmly
denied the requested authorization to proceed with the Gedeprensa project.
One wishes the Supreme Court of the United States had shown the same understanding of basic economics, and the same concern with preserving
market competition and improving social welfare, when ruling in the Eldred
v. Ashcroft case that a monopoly that lasts forever lasts only for a limited
time. Alas, it did not.23
How would the news industry operate in the complete absence of copyright? Obviously local newspapers would no longer feel the need to license
stories from the Associated Press and Reuters. Most likely, the big news services would sell first to a few impatient and highly motivated customers, for
whom getting the news an hour earlier than other people is highly valuable.
Among the very impatient customers of Reuters, we might find the Washington Post and the New York Times, and maybe other news replicators, who
then give away the replicas of the Reuters story with a few hours' delay and
at a substantially lower price. It is possible that, depending on technology,
speed of replication, and stratification of the market for news, a third or
fourth layer of Reuters replicators would appear.
If this does not sound like a Star Trek story to you, it is simply because we
already witness a very similar arrangement in the market for financial and
most other valuable news. Here, highly impatient customers pay substantial
fees to purchase from Bloomberg, Moody's, or Reuters the real-time news
and quotes. The news and quotes then trickle down from Web sites to cable
televisions, to national newspapers, and so on, until, often a whole day later,
the New York Stock Exchange quotes are published in most newspapers
around the world. In fact, just click on the Yahoo site, or the Reuters site, or
the CNN site before you go to sleep at night. What do you get? You get the
main ingredients of the articles you will read tomorrow morning from your
beloved newspaper. The only difference with the financial news is that, for
"normal" news, people's degree of impatience is a lot lower, which does not
allow Reuters or CNN to charge you a high fee for feeding the news online
before the newspapers publish it. Reuters and CNN, then, must get by with
the revenues they collect from advertisers, or with the smaller fees they
charge other professional news organizations. Still, the news gets collected,
written and distributed, and most journalists, apparently, seem to find the
salary they make in this competitive industry a reasonable compensation
for their creative effort.
Similar considerations apply to the parroted questions about the highly
paid author, the sleek imitators, and the money-losing publisher standing
stupidly in the middle: the latter would stop standing stupidly in the middle
and would get smart. This is not to say that authors might receive only
a modest amount for their work - for example, Stephen King might not
spend weeks and weekends writing his latest great work if he could sell it for
only a grand total of $19.95. But as we have seen, the evidence of the 9-11 Commission Report suggests he would command a rather higher price than
this.
The Modern American Newspaper
The very form in which the news is currently distributed is itself a triumph
of competitive innovation. The innovation was that of Benjamin Day, who
in September 1833 started publishing the New York daily Sun, which he
managed to sell at a penny while other newspapers sold at $.05 or $.06.24 His
low price came from two simple innovations: he collected lots of advertising
instead of relying on subscriptions, and his paper was sold on street corners
by armies of newsboys.
In the current parlance, these are "innovative business methods" and
today they would be patentable. Fortunately for the American newspaper
sector and for millions of American readers, they
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