The Surefire Way to End Online Piracy: End Copyright

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Dean Baker

Dean Baker is co-director of the Center for Economic and Policy Research

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January 24th, 2012 3:21 AM

The Surefire Way to End Online Piracy: End Copyright

The popular rebellion against the Stop Online Piracy Act (SOPA) was an impressive display of democracy in action. The opponents of the bill were able to use the web and various social media venues to educate the public about the specifics of the bill. The resulting flood of e-mails, phone calls and letters caused the bill's congressional sponsors to cut and run.

While this revolt against the entertainment industry's effort to rein in the web was inspiring, there is a real issue at stake. It is getting ever harder for creative workers to get paid for their work.

This is seen most clearly in the music industry. Sales of recorded music in the United States dropped from $14.6 billion in 1999 to $7.7 billion last year. If sales had kept pace with inflation and the growth of the economy they would be over $23 billion today.

Furthermore, the overwhelming majority of this money stems from the work of small number of performers who are promoted by the major entertainment companies. The vast majority of singers and musicians get almost nothing from copyright protection.

However the answer to this problem can't be the SOPA route of closing off the web. The more obvious route is to develop alternatives to copyrights for funding creative and artistic work.

The idea of alternatives to copyright should not sound strange. There already is a vast amount of work supported through universities, private foundations and different levels of government. While the existing channels of funding are not sufficient to replace copyright-supported work, they can be expanded to fill the gap.

One route would be to allow individuals a modest refundable tax credit -- an artistic freedom voucher (AFV) -- that would allow them to give $75-$100 a year to support creative work. This money could either go directly to the worker or to an intermediary that supports specific types of creative work (e.g. an intermediary may finance action films, jazz music, or mystery novels).

To be eligible to receive money through this system a creative worker would have to register with the IRS in much the same way as a tax-exempt charity or non-profit registers. They would have to give basic information about what it is they do, just as charity for feeding the homeless or the Heritage Foundation think-tank must do to get and keep their non-profit status.

The IRS would not evaluate the quality of the work; it would simply have the ability to verify that a registered worker actually engages in the type of work claimed. It would also be desirable to require some minimal level of funds to be a recipient, like $1,000 a year per worker or organization, to prevent some of the most obvious ways to game the system.

The other condition for receiving the money is that the person would be ineligible for copyright protection for a substantial period of time (e.g. five years) after collecting money through the AFV system. This rule is to prevent the AFV system from turning into a farm system for the entertainment industry.

If someone makes a reputation with AFV funding, they would take a big risk by dropping out of sight for five years so that they could then produce work that was subject to copyright protection. This provision also has the benefit that it is completely self-enforcing. If a singer records a copyrighted record two months after his last check from the AFV system then the copyright is simply invalid. The singer will not be able to take any action against anyone who makes and sells unauthorized copies of their work.

From the standpoint of tax filers the contribution would be similar to a contribution to a charity. They would simply need some record of a payment having been made and could then deduct this amount from their income taxes or receive the sum as a negative income tax payment.

While there is a risk of fraud and abuse in this system, as with any system, there is far more opportunity with the current charitable contribution tax deduction. A wealthy person donating $10 million to a bogus charity would stand to gain $3.5 million from this fraud. The most an individual could pocket through cheating on the Artistic Freedom Voucher system would be the $75-$100 maximum contribution.

This funding mechanism would likely generate a vast amount of music, books, movies and other video material. None of this work would be protected by copyright. Rather than using SOPA-type bills to limit the Internet, creative workers would have incentive to spread their material as widely as possible. This would increase the probability that they would get more support through the AFV system in future years.

There may well be better ways than the AFV to support creative work, but the real lesson from the SOPA debacle is that we need to develop alternatives to copyright to support creative work. The institution of copyright dates back to the late middle ages. It may have served a useful function back then, but we will need something better for the Internet Age.