Matt Yglesias and Kevin Drum are at it again about digital content. Unasked, I propose to mediate this dispute between parties known to me to be technically, economically, and politically astute, and to have their hearts in the right place. The question on the table is, approximately ,whether taking a good embodied in a bunch of bits that can be copied perfectly and cheaply without limit, like an mp3 file of a song, is “like” taking a physical chattel like a pair of shoes from their possessor against his will – something widely viewed as stealing and wrong. [Matt was provoked back into this issue by a fairly loony radical article urging us to loot more physical goods when the opportunity arises.]

Mediation is done in the spirit of recognizing the merits of both parties’ positions, and discerning a result with which both can be comfortable. After careful Solomonic reflection, the result I propose is thus: Kevin (unusually for him) is wrong, and Matt (more typically) is right. An mp3 file is not like physical stuff in the way Kevin says it is.

Their conversation is mixing up at least two technical properties goods can have, and a couple of kinds of rights to dispose of resources. The technical properties are being non-rivalrous (NR) and non-excludible (NE). I emphasize that whether something has either of these is not a matter of ideology or preference, any more than a sane person can claim that air is denser than water or make it so because of some political or moral principle. NR goods are those that are not used up: if you have some and consume it, there’s no less for me. Classic examples are non-pollution of the air, or a beautiful sunset, or the central limit theorem, or a recording of a song, or this post. Some tricky “congestible” NR goods become R if enough people start to use them, like a seat on a bus, or space on a sidewalk. Some goods that were R in the past have become NR, like music that used to be inseparably attached to a physical object or a seat in a concert hall: if you are listening to a 78 RPM record of that song, the record, and hence that instance of the song, is not available to me.

Non-excludible goods are those that are available to all once created, and some are R, like the fish in the ocean. Whether the mp3 file’s contents are E depends on the outcome of a contest between Sony’s programmers and a bunch of kids in Finland and Bulgaria, and the kids have won every round. There is also the “analog hole”: if you listen to music, you have to have rendered it into an analog signal that can be redigitized with very little loss, no DRM, and then distributed costlessly. It leaks out through the hole.

The efficient price for consuming a non-rival good is the cost of doing so, which is zero; if we want some, we have to cook up a scheme to buy it and give it away free. Unless we can make it excludible; then we could sell it to those willing to pay. But we’ll always have too little of it unless we can also figure out how to charge everyone a different price, right down to zero for the least interested consumer.

So far, I’ve described properties of goods. But markets also include artificial, socially constructed and enforced, rules about who can possess and use particular goods (no infernal machines, even if you make your own with fertilizer you paid for with money you earned) and back in the day, we constructed rules restricting rights to copy and exploit creative work to the creators. These rules are both financial and personal. In the first category is the legal right to copy this post and send it to your friends (or enemies you wish to bore and stupefy), which I have and you do not until I give it to you (for example, with a Creative Commons notice). In the second category is the right to claim that you wrote it, which I can reclaim even if I sell it to you because we view it as a moral principle rather than an aid to commerce. An absolutely essential distinction in this business, and the one Kevin misses, is that just because copyrights and patents have been with us for a while, and used (for better or worse) to give people who make NR goods an incentive to do so, they are completely independent of the NR quality of the goods. You cannot copyright or patent a mathematical theorem, and the second you reveal it I may do what I want with it (other than misrepresent it in your name or present it in mine).

That consumers don’t have the right to copy and distribute digital content is in no way a property of the content, but a construction of law that could be different: that we have granted copyright to authors does not mean their work in digital form is rivalrous. It does mean that until we fix this mess, copying is stealing, but it’s only stealing because we declared it so. And now that that grant is pretty much worthless because the technical excludibility of such content has been destroyed, it’s time we figure out some other way to reward creators when people use their stuff, a way that takes advantage of exactly the technology that broke the old scheme of selling newspapers on latent fishwrapping with advertisements.. This is not a counsel of despair: we rent the sidewalk free to anyone who wants to walk on it, and also paid the contractor who built it. The sidewalk is nice to walk on because homeowners along the way charitably keep up their front gardens. We get mathematical theorems by paying salaries to mathematicians. We will not have the right amount of music, medicine, video, software or text until we figure out what Kevin missed: personal rights like claims of authorship – in distinction to claims of royalties – and economic rights in goods are not ordained by the goods’ technical properties. What is disciplined ruthlessly by those properties is the value (to society and to authors) of assigning these rights this way or that. Now the economic rights are assigned wrong; copyright and patents were never perfect, but technology has broken the system beyond patching.

If you want a moral angle on this issue, it’s not what you think it is. It is that charging more (or less) than marginal cost for anything is wasting the fruit of human labor and the resources of God’s creation, both sins in my book. Letting people sit around who want to work making stuff we could use, like infrastucture of every kind, because a bunch of yahoos have the wrong idea about property rights and think government and taxes is what they hate, is another such sin, which Kevin nails perfectly.

[Cross-posted at The Reality-Based Community]

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Michael O'Hare is a Professor of Public Policy at the University of California, Berkeley.