Chapter 2, section 4
Chapter 2 Some Basic Economics of Information Production and Innovation, section 4:
The Diversity of Strategies in our Current Information Production System
The Effects of Exclusive Rights
When Information Production Meets the Computer Network
Strong Exclusive Rights in the Digital Environment
We now have the basic elements of a clash between incumbent institutions and emerging social practice. Technologies of information and cultural production initially led to the increasing salience of commercial, industrial-model production in these areas. Over the course of the twentieth century, in some of the most culturally visible industries like movies and music, copyright law coevolved with the industrial model. By the end of the twentieth century, copyright was longer, broader, and vastly more encompassing than it had been at the beginning of that century. Other exclusive rights in information, culture, and the fruits of innovation expanded following a similar logic. Strong, broad, exclusive rights like these have predictable effects. They preferentially improve the returns to business models that rely on exclusive rights, like copyrights and patents, at the expense of information and cultural production outside the market or in market relationships that do not depend on exclusive appropriation. They make it more lucrative to consolidate inventories of existing materials. The businesses that developed around the material capital required for production fed back into the political system, which responded by serially optimizing the institutional ecology to fit the needs of the industrial information economy firms at the expense of other information producers.
The networked information economy has upset the apple cart on the technical, material cost side of information production and exchange. The institutional ecology, the political framework (the lobbyists, the habits of legislatures), and the legal culture (the beliefs of judges, the practices of lawyers) have not changed. They are as they developed over the course of the twentieth century - centered on optimizing the conditions of those commercial firms that thrive in the presence of strong exclusive rights in information and culture. The outcome of the conflict between the industrial information economy and its emerging networked alternative will determine whether we evolve into a permission culture, as Lessig warns and projects, or into a society marked by social practice of nonmarket production and cooperative sharing of information, knowledge, and culture of the type I describe throughout this book, and which I argue will improve freedom and justice in liberal societies. Chapter 11 chronicles many of the arenas in which this basic conflict is played out. However, for the remainder of this part and part II, the basic economic understanding I offer here is all that is necessary.
There are diverse motivations and strategies for organizing information production. Their relative attractiveness is to some extent dependent on technology, to some extent on institutional arrangements. The rise that we see today in the efficacy and scope of nonmarket production, and of the peer production that I describe and analyze in the following two chapters, are well within the predictable, given our understanding of the economics of information production. The social practices of information production that form the basis of much of the normative analysis I offer in part II are internally sustainable given the material conditions of information production and exchange in the digitally networked environment. These patterns are unfamiliar to us. They grate on our intuitions about how production happens. They grate on the institutional arrangements we developed over the course of the twentieth century to regulate information and cultural production. But that is because they arise from a quite basically different set of material conditions. We must understand these new modes of production. We must learn to evaluate them and compare their advantages and disadvantages to those of the industrial information producers. And then we must adjust our institutional environment to make way for the new social practices made possible by the networked environment.