As Congress starts thinking about renewing and, maybe, reforming copyright law, already there’s a debate brewing. One on side of this debate are content industry groups who think that, in the digital age, copyright law should give intellectual property more protection in order to give artists a financial incentive to create. On the other side are internet companies and digital advocates who think copyright law is already too strong and is stifling innovation.
Interest groups in Washington DC are not known for their strict adherence to facts. But in this particular debate, ideas and intuitions hold unusual sway. Not only does real-world evidence not matter much, it often doesn’t exist. As a report from the National Academies put it back in May, “This debate is poorly informed by independent empirical research.”
It’s strange that this is the case: Intellectual property is a legal idea rooted in economic assumptions that can be tested. But lawyers—even legal academics—have, as rule, based their work on the analysis of legal cases, rather than the analysis of data. Increasingly, though, legal scholars are testing the basic economic assumptions of copyright law against empirical results—and finding that they don’t hold up.
Copyright law is based on a simple idea: If a person produces a creative or innovative work, they should be able to control what happens to that work—who has access to it, how it’s sold, who can copy it—for at least some period of time, so that they can benefit, financially or otherwise, from their intellectual production. The idea is that protection will spur innovation—just like you’re not going to build a house if someone can just move into it when you’re done, you’re not going to write a book if someone can just copy it and sell it as their own. With copyright protections, creators can confidently produce new work, with the knowledge that they’ll be able to sell it for whatever it’s worth on the market.
A couple years back, for instance, Christopher Buccafusco, now a professor at the Illinois Institute of Technology Chicago-Kent College of Law, began thinking about behavioral economics and how its insights might apply to markets for creative production. Like economics, he points out, “IP is based on the same sort of rational-choice assumptions on how brains and minds work”—assumptions that indicate that markets in intellectual property will function well, that sellers and buyers will be able to agree on a reasonable price for a piece of work.
But Buccafusco wondered, for instance, if there was a corollary to the endowment effect—a well-documented insight in behavioral economics, that people irrationally value objects more once they own them—in creative industries. He and Christopher Sprigman, a law professor now at NYU, set up a series of experiments that they thought could help them understand how creators value their work. In one experiment, they had one group of subjects write three-line haikus, to be entered in a contest with a prize of $50. These authors had the option of selling their poems (and the chance to win $50) to another group, the bidders. Both the authors and the bidders were asked to value how much a particular haiku was worth.
It turned out that, perhaps not surprisingly, the creators of these tiny works of art valued them more than the people who were thinking of buying them. “Our data revealed that Authors valued their work more than twice as high as Bidders ($20.05 versus $9.21),” Buccafusco and Sprigman wrote. Another experiment involved having painters, owners, and potential buyers of artworks value paintings up for a $100 prize. On average, the painters valued their work at $74.53, the owners at $40.67, and the buyers at $17.88.
The takeaway, for Buccafusco and Sprigman, is that markets for creative work are not nearly as efficient as IP law assumes—and that the argument that more protection is needed to ensure innovation might not be quite right. “The work I do with Chris suggests that we don’t know as much about IP as we think we do,” says Sprigman. “It’s been a faith-based policy for a long time. A lot of people in my field are trying to uncover what IP laws actually do and what they don’t.”