The Supreme Courtmeister, Makin' Copies

I'm no constitutional scholar, but I think the petitioners' claim in Eldred v. Ashcroft makes eminent sense on economic grounds. The purpose of copyright (and other forms of intellectual property) is to "promote the progress of science and useful arts," as the Constitution puts it in Article I, section 8. This is consistent with the standard justification on grounds of economic efficiency, which is that the production of ideas is subject to a public good problem: once an idea is produced, anyone can use it without charge, meaning that the creator can't reap the full benefits of his creation (because others can copy the idea repeatedly, dissipating most or all of the profits). Copyrights create a temporary monopoly that allows the creator to claim some of those benefits after all, thus giving a greater incentive to create new ideas. Of course, monopolies have their own efficiency problems -- specifically, producing too little of the associated goods at too high a price -- which is why the term needs to be limited in time. Now, there can be a useful debate about the appropriate length of the copyright term, and there's no simple answer to that question. But what is clearly inefficient about the Sonny Bono Copyright Extension Act of 1998 (challenged in this case) and similar extension laws is the *retroactive* extension of copyrights on existing works. Retroactive extensions do nothing to encourage the creation of new works; they merely increase the monopoly inefficiency in their reproduction. In short, retroactive extensions are all cost, no benefit.

But I recently encountered an argument to the effect that retroactive extensions might serve some legitimate economic purpose after all. From an article (available at here if you have a subscription) by David Streitfeld in the L.A. Times Magazine of 22 September:

"Peermusic had acquired the catalog of Hoagy Carmichael and was working to 'rejuvenate it," as they say in the business. The studios were reacquainted with songs such as 'Stardust' and 'Georgia on My Mind'; negotiations were underway with a store chain to sell a line of products based on Carmichael's romantic allure; a musical is in the works. [paragraph] But if Bono falls, 'Stardust' goes in the public domain immediately, and 'Georgia' follows in three years. 'There's no incentive for us to do what we're doing if we don't have the opportunity to earn renumeration [sic]," says chief executive Ralph Peer II."

This argument sounds right at first but doesn't withstand scrutiny. If Peermusic creates new works of art based on Carmichael, such as a new musical or new artwork for T-shirts, that material is (unless I'm quite mistaken about the operation of copyright law) copyrightable. The retroactive extension of the copyright on Carmichael's work would only assure that Peermusic and other who wish to use it for new creative works would have to pay for it. That might be good from Peermusic's standpoint because it keeps out some of their competitors -- but it's bad for the consumers, who will be better served by many companies instead of just one providing them with reproductions and derivatives of Carmichael's work. Any reduction in Peermusic's incentives is more than balanced by the reduced cost to other companies that might wish to engage in similar activity.

An analogy: What if Whitney Houston were the only pop singer currently producing Christmas albums with old (public domain) Christmas songs on it? Her profits would probably be higher if she could exclude other pop singers from making similar albums, so naturally she would favor a law that makes it more expensive for them to do so. Allowing other singers to use old Christmas songs would reduce Houston's profits and hence her incentive to record those songs -- but the overall effect would be more pop singers doing more Christmas albums, to the benefit of consumers. The only justification for copyrights in this case is to encourage the creation of *new* Christmas songs --but retroactive copyright extensions do nothing of the sort.