On Patricia Briggs’s site, her husband Mike has put up a great section about copyright and internet piracy. I can’t even read to the end because the arguments in blue (which represent the piracy viewpoints that he’s refuting) are so painful.

Clearly, the people who are arguing the economic justification for piracy have never taken an economics course, or read Charles Wheelan’s wonderfully simple book Naked Economics.

If they had, they would realize they’re trying to make fiction into a public good. Public goods are non-excludable and non-rivaled. That means that one consumer’s use of the public good/service does not diminish another consumer’s use, but also that there’s no way to exclude consumers from use of the good. That leads to the rise of free riders, people who use the service without having to pay for it, because there’s no way to stop them.

The thing is, public goods commonly result in instances of market failure, because there’s no incentive for anyone to provide the good when they can’t get compensated for it. In other words, if we follow the path these pseudo-economist pirates would like to take us, the market will push professional fiction writers into extinction. Authors will stop writing books because they can’t get paid for them, so there’s just not enough incentive, and the only fiction on the market will be the type and quality that you typically find on a fanfiction site. Correct me if I’m jumping to wild conclusions here, but I don’t think anyone wants that, even the pirates.

Two issues come to mind–one is whether or not the transition of fiction from private to public good is inevitable. Not in terms of whether it should be made a public good, but whether it can be kept private.  Do we have, or will we have the funds to R&D, technology that will keep fiction excludable? Will digital security develop to the point where digital content can be restricted to a certain number of people (i.e. without the tech to reproduce it), or will the tactics of crackers (for laymen/non-geeks, that’s the correct term for what you call hackers) always be one step ahead to circumvent them? It’s an unending race, just like anything else, but is one contestant going to pull ahead enough to out-lap the other?

If digital security stays ahead of the game, and fiction prevails as a private good, then great. We’re set. But if vice versa, if fiction becomes a public good because there’s no way to keep it excludable, then we have the second issue of how to compensate for this market failure. One option is the honor-system payments, or donations. Honestly? That’s not a viable option. It’s not going to work in a market-based economy. Even if you maintain that people have a sense of inherent honor, we’re a capitalist society and our worldviews are built on capitalism even if we aren’t consciously aware of it.

Realistically, if fiction ends up as a public good, we have to look to the example of our predecessors in the transition from private to public good. Medical research, for instance. I don’t have the historical background to pinpoint when the development of medical drugs became no longer excludable, but in the same way that digital tech has made fiction infinitely reproducible and insecure, other analytic technologies developed to the point where drug formulas became reproducible and insecure, and generic drugs threatened to drown the market. There was no incentive for medical R&D, because the instant a company came up with a successful drug, other companies free-rode and created their own versions.

That’s where government stepped in. Regardless of to what extent they believe government should regulate the economy, economists agree that it plays a necessary role in correcting the problems of market failure with public goods. Government enforces the excludability of new drugs through the patent system, giving the companies an incentive to R&D, and also provides grant funding up-front (eliminating free-riders because everyone pays through taxes).

Technically we’re already at the patent stage, with copyright, but the same tech that’s enabling people to circumvent digital security is going to be the tech that makes enforcement difficult. Tracking down a physical drug is (probably) easier than tracking pure digital content such as fiction. Government can make an example by targeting big offenders (e.g. Napster), but it might be impossible to really enforce laws against piracy. I guess this refers back to my above paragraph about the transition to a true public good, but with the added note that not only is prevention impossible, but prosecution is, too.
 

So really I guess the question is whether or not fiction is going to become a form of government-funded R&D.

Personally, I hope that digital security evolves to keep fiction a private good, because this looks like an icky future. We do have the advantage of powerful allies, however. Fiction may not have the power to throw much weight around, but Hollywood and the movie industry certainly do. And they’re facing the same issues of piracy that we are.