Republic, Lost_ How Money Corrupts Congress--And a Plan to Stop It - Lawrence Lessig [24]
The difference is between “negative” externalities and “positive” externalities. Negative externalities impose costs on others. Positive externalities create benefits for others, even if, as with competition, they make some people worse off. The public policy challenge with negative externalities is to avoid these imposed costs, by forcing the imposer to pay for them. The challenge with positive externalities is to ensure that the creator gets enough of the externalized benefits to have incentive to produce them in the first place.
To say that something is a “public policy challenge,” however, is not to argue for a government program to solve it. Neighbors are pretty good at working stuff out. And social norms lead even the stranger on a highway to bus his tray at a restaurant. Likewise with externalized benefits: Just because painting my house makes you wealthier doesn’t mean that justice requires a tax to give some of that benefit back to me. Often, both negative and positive externalities are manageable without some regulator stepping in the middle.
Many externalities are not manageable like this, however, and the government is needed then to avoid both the underproduction of positive externalities and the overproduction of negative externalities.
Consider, for example, the case of movies. Imagine a blockbuster Hollywood feature that costs $20 million to make. Once a single copy of this film is in digital form, the Internet guarantees that millions of copies could be accessed in a matter of minutes. Those “extra” copies are the physical manifestation of the positive externality that a film creates. The value or content of that film can be shared easily—insanely easily—given the magic of “the Internets.”
That ease of sharing creates risk of underproduction for such creative work: If the only way that this film can be made is for the company making it to get paid by those who watch it, or distribute it, then without some effective way to make sure that those who make copies pay for those copies, we’re not going to get many of those films made. That’s not to say we won’t get any films made. There are plenty of films that don’t exist for profit. Government propaganda is one example. Safety films that teach employees at slaughterhouses how to use dangerous equipment is another.
But if you’re like me, and want to watch Hollywood films more than government propaganda (and certainly more than safety films), you might well be keen to figure out how we can ensure that more of the former get made, even if we must suffer too much of the latter.
The answer is copyright—or, more precisely, an effective system of copyright. Copyright law gives the creator of a film (and other art forms) the legal right to control who makes copies of it, who can distribute it, who displays it publicly, and so forth. By giving the creator that power, the creator can then set the price he or she wants. If the system is effective, that price is respected—the only people who can get the film are the people who pay for it. The creator can thus get the return she wants in exchange for creating the film. We would be a poorer culture if copyright didn’t give artists and authors a return for their creativity.
Since 1995, Congress has enacted thirty-two different statutes to further refine and strengthen the protection of copyright.1 The frequency of these new laws has increased as digital technologies have put more pressure on the traditional architecture of copyright. But there’s little doubt that the objective of this system of regulation is good and important for a free