I read with great interest “When Sharing Is a Crime” (Spring 2004), outlining the Berkman Center conference exploring solutions to uncompensated music sharing on the Internet.
The problem of how to incentivize the creation of intellectual property works (such as music) while simultaneously maximizing their dissemination to all consumers who seek them has been the subject of debate for centuries. Today, copyright and patent protection do a fairly decent job of providing financial motivation to creators but do a relatively poor one of ensuring distribution to all potential users who stand to benefit. Devices that allow music sharing accomplish the distributional goal at the expense of diluting incentives to musician-innovators.
As Professor William Fisher notes, a better system would be one which accomplishes both pursuits. Analogous to his compulsory licensing scheme would be a pure government-run reward system, under which today’s intellectual property works would be paid for by the government instead of by the marketplace. What was formerly private intellectual property would become public domain, freely reproducible by anyone at its marginal cost (instead of the monopoly price that prevails under copyright or patent). Of course, tax revenue would need to be raised to finance the necessary rewards to induce creation but would be offset by the corresponding substantial price decreases in what were previously copyrighted and patented works.
HLS Professor Steve Shavell has published an interesting analysis of such a proposal (Shavell & van Ypersele, 44 J. L. & Econ. 525, 2001), and there is also my own (“An Economic Analysis of Intellectual Property Rights,” 9 Fordham I.P., Media & Ent. L.J. 301, 1998). Valuing the rewards would be the trickiest prong of the proposal but is by no means an insurmountable problem, especially when weighed against the large distributional benefits that would follow.