File-sharing and property rights

Recently, the Los Angeles Times's Jon Healey kicked off a new round in the long-running debate about the moral status of file-sharing. Critics of the practice analogize copyrights to property rights, suggesting that file-sharing is a form of theft. Property rights have emotional resonance across the political spectrum. As a result, those who want to increase the power of copyright owners have tended to stress the similarities between copyrights and property rights. In contrast, those who who favor less restrictive copyright laws, as well as those who oppose copyright altogether, have resisted this analogy.

In a sense, this is obviously just a semantic dispute. But there are also important philosophical and legal issues underlying these arguments. As a strong supporter of property rights, I'm very interested in the similarities and differences between copyrights and traditional property rights.

Two arguments for property rights

To evaluate the analogy more carefully, it's necessary to consider why property rights are needed in the first place. There are two basic arguments, which we might call the scarcity argument and the reward argument. The scarcity argument suggests that property rights are needed to ensure an efficient allocation of scarce resources. When a resource lacks a clear owner, there is a temptation to overuse it. The classic example of this is the tragedy of the commons, in which communally-owned pasture land is over-grazed to the detriment of all of the field's users. The tragedy of the commons can often be solved by dividing the land up into discrete plots, each owned by a single individual who will be motivated to take good care of it.

The scarcity argument focuses on the efficient use of existing resources. In contrast, the reward argument focuses on the creation of new resources. It says that people will under-produce valuable resources if they aren't allowed to keep what they produce. For example, a farmer is far less likely to plant crops in the spring if he won't be able to prevent others from harvesting them in the fall.

Both of these arguments are good reasons for property rights in physical objects. But only the reward argument seems to apply to copyright. As Mike Masnick has noted, once an information good has been produced, it can be reproduced an unlimited number of times without diminishing its value. Opponents of copyright emphasize the scarcity argument to illustrate the differences between copyright and traditional property rights.

Of course, the reward argument assumes that particular classes of creative works wouldn't be adequately supplied in the absence of copyright protection. This seems to be true for at least some categories of copyrighted works. It is hard to imagine, for example, that Hollywood studios would spend tens of millions of dollars producing a new blockbuster if the law didn't grant them exclusive rights in its commercial reproduction.

Yet in many cases, it's far from clear that copyright is necessary for all categories of creative works. For example, I doubt there would be a shortage of photographs without copyright protections for photographers. Similarly, there is no shortage of garage bands producing music with no realistic expectation of making music for a living. It's not hard to imagine that there would be continue to be plenty of music in the absence of copyright protection for musical works.

The mystery of copyright

If we take the analogy between copyright and property rights seriously, it has some implications that advocates of strong copyright may not like. The copyright system is currently undergoing rapid changes as technology undermines old business models and enforcement regimes. Some aspects of copyright law are widely ignored and evaded, and efforts to strictly enforce the law have sparked widespread outrage. If we want to take the property rights analogy seriously, it doesn't make sense to compare today's chaotic copyright regime to the stable, orderly, and universally accepted property rights system we have today. Rather, the right comparison is to the American property rights system at a time when it, too, faced rapid changes and serious challenges to its legitimacy.

In his widely-cited 2000 book The Mystery of Capital, economist Hernando de Soto looked back at the formative years of property regimes around the world. While de Soto himself never mentions copyright law, the conflicts he describes have striking parallels to today's copyright debate.