[Ecommerce] Financial Times Leader: Intellectual propriety

[Thiru Balasubramaniam]

Intellectual propriety

Published: December 9 2006 02:00 | Last updated: December 9 2006 02:00

The Sex Pistols did not record Anarchy in the UK to secure their
pensions and, unless his divorce goes particularly badly, Sir Paul
McCartney will enjoy a prosperous retirement. That makes the plea by
British musicians for a copyright extension on music from 50 to 95
years, in line with America's Sonny Bono Act of 1998, sound like a bit
of a broken record.

This week, as part of a welter of documents accompanying a budget
report, the Treasury published a review of the rules on intellectual
property. Written by Andrew Gowers, a for-mer editor of this newspaper,
it argues against extending the term of copyright for music, but for
reforms that would make intellectual property cheaper to protect and
easier to enforce.

That is consistent with the purpose of copyrights, patents and
trademarks: they exist to encourage the creation of knowledge, by
providing the creator with a period of exclusive use, and to persuade
people to make their discoveries public, so others can build on them.

If the revenue from a temporary monopoly is more than the cost of
writing, recording or inventing then a financial incentive exists. But
because that monopoly has a cost to society - the drug or film or book
costs more than it would if it could be freely copied - the term of the
intellectual property should be the minimum possible.

A copyright that extends far into the future is a poor incentive
anyway. Eminem's albums make him a lot of money now, but expected
revenue from the same albums, 50 years in the future, has little value
today - even assuming people still want to listen.

Musicians can still argue that they are treated unfairly in comparison
with other copyright owners. Writers, for example, get copyright for
life plus 70 years, which must make for well-incentivised corpses. But
there is a stronger case to reduce other copyrights than to extend the
term for music.

Far more important, as the Gowers report recognises, is enforcement of
intellectual property rights: if fewer teenagers download illegal
copies and buy the music instead, more bands will be able to make a
living.

The biggest issue in intellectual property, therefore, is how to
enforce copyrights and patents when technology is constantly changing.
Twenty years ago music industry executives were having palpitations at
the threat of copying with cassettes. Then the compact disc was
invented, profits soared, and all was well until the internet arrived.

The technological arms race never ends: one megabyte computer programs
were easy to pirate by floppy disc; 10 gigabyte programs on DVD are
more difficult. The role of law is to enforce fair play. It should make
copyrights and patents as easy as possible to enforce. But it should
allow consumers to copy material they have bought from one format to
another.

The problem with debate about intellectual property is that those who
own it tend to be rich and well organised. Society at large, which pays
for IP, finds glamorous pop stars hard to resist. But longer copyright,
especially if applied to works already written, would be less a boost
to creativity than a pension for wealthy rock stars.

The Gowers review has established that Britain will not make
retrospective changes to copyright. That is an important principle. But
wider international debate about the optimal term for patents and
copyright will rage on. Less protection would not be popular with
writers or movie stars. But it might be in the interests of society.

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Thiru Balasubramaniam
Geneva Representative
CPTech
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