Wu, TimothyCopyright's Communication Policy 2004
Michigan Law Review 278

Summary:

Introduction

Copyright theory is author-centric (usually depicted as a conflict between two duelling theories – economic incentive theory and the natural rights (fruits of one's labour) theory) [pp281-283]

But these provide only a partial description of copyright law. It leaves out a description of copyright's communication policy – i.e. disseminators' roles within copyright law

“The central modules of copyright's classic communications policy have arisen out of conflict – out of bitter, public battles between incumbent and challenger disseminators…We can predict that conflicts between incumbent and challenger disseminators will arise as long as two things are true: first, that more efficient technologies of dissemination will be invented and second, that there exists the possibility, but not the certainty, of convincing government to provide laws that can be used against a competitor.” [p292]

A challenger's advantage in efficiency is usually described as “piracy” [p294]

Classic Communications Regime

Charts a number of examples over time (the “Classic Communications Regime” 1900-1976):

  • Unordered List ItemThe Birth of the Recording Industry (pp 297 – 304)
  • The Wireless Age (radio) (pp304 – 311)
  • Cable Television and the Broadcasting Industry (pp 311 – 324)

The rhetoric of the recording industry conflict provided a template for the conflicts that followed – the incumbent disseminators adopted a theme of “depict[ing] the recording industry as irresponsible pirates whose reckless copying of music threatened to destroy American creativity. What was, in retrospect, a battle over the impact of new technology was at that time portrayed as a threat to traditional values and artistic development.” (p298)

“How about the challengers – the recording industry? Sounding themes also familiar today, the recording industry identified itself as the inventing class, heroes of American ingenuity and engineering. The portrayed the incumbent industry as a monopoly threat interested only in destroying a technologically advanced rival.” (p299)

White-Smith Music Publishing Co v. Apollo Co. 209 U.S. 1 (1908) set a rough precedent of deciding technologically sensitive copyright cases in favour of a challenger industry in a manner likely to force Congress's hand (this case was cited in Sony) (pp 301-302)

The general result of the conflict was usually that the parties settled on a statutory “royalty” scheme. (i.e. a liability regime as opposed to a property regime).

Side note:

In Herbert v. Shanley Co. 242 U.S. 591 (1917), Holmes J expressed a view that the copyright owner should be able to demand a licence for every revenue stream dependent on the copyright work, even from adaptions to other media. This “Herbert principle” has had a powerful impact on copyright's theory and evolution (pp305-306).

Communications policy and competition

“However pure and true copyright's goals of promoting authorship may be, the law will inevitably be used by communications companies as an instrument of competitive advantage. Copyright cannot help creating the baseline for competition among disseminators. It creates communications policy not by design but by necessity.” (p325)

“The economic analysis of authorship revolves around the nonrivalrous nature of information goods and the problems thereby created. Copyright’s role in communications policy, conversely, is more readily analyzed as the “bottleneck” problem deriving from copyright’s grant of control over an asset essential to market entry (namely, copyrighted works), and the potential created for vertical foreclosure of rivals…Two potential abuses of bottleneck power are of particular interest and recur in the study of communications law. The first is the simple problem of monopoly price-setting…The second is the problem of vertical foreclosure: the use of the protected link to prevent a competing disseminator, or challenger, who depends on the link, from reaching the customer in question.” (pp325-326)

Models of communications policy

Wu explains that there have long existed two basic models of the optimal communications policy: (at pp 329-335)

  • stewardship model (e.g. Bell (or Telstra) with telephones/telephone lines
  • competitive (or open) model – usually suggests a more active government role in removing barriers to market entry

“the courts and Congress have in practice avoided a stewardship model of communications and delivered results closer to a competitive model of communications policy”

Author-driven communications policy

“The analysis in this Part should make one thing clear: who owns or controls the relevant copyrights in an industry sets the nature of the competition and communications problems created. Authorial control of copyrights (as in the case of the ASCAP) will lead to potential pricing problems, but is less likely to lead to the problem of vertical foreclosure. Conversely, it is when an incumbent disseminator owns, or has effective control over, copyright that the potential for more troubling efforts to foreclose technological rivals emerges. This analysis makes the possibility of author-driven dissemination attractive…

…The problem remains what it always has been. Despite the fact that authors who are not employees nominally own copyrights upon creation, they rarely control copyrights. Most copyrights are contractually assigned to disseminators, owned by the employer through the work-for-hire doctrine, or otherwise effectively controlled by the disseminator. It is a function of the relative bargaining power of authors and disseminators. Unless this difference in power or the laws controlling copyright contracting changes, true authorial control of copyright will likely remain an attractive vision but not a discernable reality…

…It is, first of all, hard to get rid of intermediaries for a reason having nothing to do with law or technology, but instead stemming from the basic theory of comparative advantage. Specialized intermediaries exist, after all, because they specialize in doing things that others do not necessarily do well themselves…

…In short, despite centuries of good intentions, the goal of moving actual, as opposed to notional, control over copyright to authors remains unachieved. It remains for many an aspiration of copyright policy, and a communications analysis suggests the aspiration has independent economic justifications. But in the meantime, copyright theorists must continue to analyze a world in which various disseminators are the effective owners of copyright. This fact makes copyright’s role in communications policy more, not less, important.” (pp 338 – 341)

Copyright's new communications policy

The new challenger can best be described as a team effort – between passive, enabling technologists and infringing users who, equipped with copying technology, take on the economic role previously occupied by challenger industries (p343)

Summary of Sony at pp347-350 – see also analysis at p348: “The Sony rule can be understood as a rule to help a court distinguish between problems of authorship and the more difficult problems of competition among disseminators. The fact that a new communications technology can be used for “legitimate, unobjectionable purposes” establishes that the court is faced with a market entrant, as opposed to mere evasion of the copyright statute. Therefore the court knows that it faces a problem of regulating competition among rivals, and acts accordingly. Conversely, if the technology in question is used to infringe, the court is faced with a problem where protecting authorship incentives predominates.”

Summary of and commentary on Netcom (“the first true ISP liability case”) at pp353-356

The other development is how the potential for users to act as rival disseminators (the “user infringer”/”recreational pirate” disseminates copyright works for the fun and a kind of glory, not monetary gain) has led to the growth in copyright's direct regulation of end users (e.g. through criminal provisions, increased damages etc.) - see pp 357-359

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