Call this public policy hero, "IP Man." He does a world of good, no doubt. The authors and owners of copyrighted works appreciate him as yet another customer for their wares. The public loves IP Man for freeing up access to beloved songs, books, computer programs, and other works. All join in proclaiming "Yay, IP Man!"
Set aside, for now, the question of where IP Man gets his power (i.e., funding). Let's here focus on the limits of that power. IP Man shares with us this seemingly inescapable weakness: limited resources. He must therefore economize in buying copyright rights. He cannot pay each and every copyright owner infinite dollars for their rights. Instead, IP Man tries to pay the lowest possible price for works of greatest public utility. Only in that way can he maximize his do-gooding.
But how can IP Man calculate the correct price for any given bundle of copyright rights? He would of course know when he'd offered too little money to complete a purchase: When the seller refused his offer. IP Man would, however, find it difficult to know when to offer more. Perhaps the copyright owner has already demanded too much, after all. IP Man thus suffers, in addition to limited resources, limited information.
IP Man needs some help. He needs other people to bid against him for copyright rights. Each new would-be buyer would bring a fresh perspective on the values at stake, a perspective quantified in terms of price. To better know the public benefits of de-privatizing copyright rights, in other words, IP Man needs a market's help.
An open market in copyright rights would not only allow IP Man and similar public policy heros to buy copyright rights. It would also, and crucially, allow anyone to estimate the costs and benefits of copyright law. A copyright exchange would help discover the value of copyright rights by collecting and quantifying information otherwise uselessly scattered or obscured. It would thereby offer guidance to IP Man and everyone else fighting for wise copyright policy.
Copyright policy currently relies, conventionally but not very convincingly, on an alleged "delicate balancing" of public and private interests. Federal lawmakers encourage the authorship of expressive works, the story goes, with a carefully limited package of exclusive rights. Through careful study, legislators calculate which private rights will maximize public benefit.
I don't buy that story. For now, though, I'll leave my critique on the other side of that link. Here, instead, I offer a quick take on what we might learn from an open and relatively thick market in copyright rights; to wit:
• The copyright owner's estimate of the present discounted value of the future income a work's copyright rights would generate (i.e., the private benefits of copyright protection);
• The copyright purchaser's estimate of the internalized benefits of de-privatizing a work (i.e., the private costs of copyright protection;
and, just maybe,
• An estimate of the public costs of copyright protection.
Why did I hedge that last item? In very brief, because it depends on the source of IP Man's power. It depends, in other words, on the process by which IP Man raises funds to buy copyright rights on the public's behalf. To the extent his fundraising process manages to internalize the diffuse external benefits of de-privatizing copyrights, it will accurately measure the public costs—the opportunity costs—of copyright restrictions.
If IP Man relies solely on a generous foundation's general grant, he won't have a very good measure of what works are worth how much to the public. If IP Man instead relies on contributions from grateful users of works he liberated earlier, he'll have a fair gauge of whether he has chosen wisely in times past. IP Man would probably win his best estimate of a private work's public value if, supposing he could overcome the daunting transaction costs, he could convince each would-be user of a work to front the money for making the work publicly available.
Will IP Man come the rescue of copyright policy? We can hardly count on it. We could, however, count on learning a lot from the operation of an open market in copyright rights. IP Man or not, we would still need such a exchange to discover the private and public costs of copyright policy.