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Art – a public or private good? April 23, 2009

Posted by Sverre in : Political economy , trackback

mp3The so-called “Spectrial“, in which the founders of the Swedish file-sharing service Pirate Bay got harsh convictions in court has given further fuel to the debate over copyright laws and file sharing. The Norwegian Broadcasting blog NRK Beta has a very interesting comment on what many view at the industry shooting itself in the foot by waging war on its consumers.

Reading it made me take a political economist view of the apparent discrepancy of rights and ownership between consumers and industry. For the political economist, the market for pirated music and movies is an interesting and peculiar case. It appears to me that the current state of affairs is that the majority of young people view art as a public good, while the music and movie industry insist on treating it as a private good.

There are two important conditions for a public good: That it is non-excludable and non-rivalrous. With the current state of technology, it should be obvious to anyone that music and movies are no longer excludable. Only the most stalwart fundamentalists of copyright law think that it’s possible to stop piracy altogether. For the sake of interest we can call the good “poorly excludable”, as the pirate will with the current state of affairs at least incur the psychological cost of breaking a law by gaining access without paying.

Excludable Non-excludable
Rivalrous Private goods Common goods
Non-rivalrous Club goods Public goods

Just a few years ago, I would admit that movies and music were at least partly rivalrous. The intensity of bandwith necessary for everyone to enjoy music and movies online made it difficult for everyone to do so at once. But that restriction is getting weaker and weaker by the day. Today it’s very difficult to claim that music and movies aren’t at least not very rivalrous goods.

What might then be the reason to treat these forms of art as private goods? The movie and music industry answers in black and white letters that piracy is stealing and thus wrong. Art is the intellectual property of the creator and shouldn’t be enjoyed by anyone without his consent.

But this seems to be a moral interpretation that has less and less resonance with the general populace, especially younger generation. Young people are less concerned with the moral right to your own work than they are with the non-rivalrous nature of the good. Services such as Youtube, Flickr and others are a success because a huge amount of people are happy having others enjoy their work and thus expect the same in turn.

But there is of course a big difference between professional art and what amateurs upload to Flickr and Youtube. I do realise that major feature films cost money to make, advertise and distribute. The problem is that movies have a very high investment cost and a very low marginal cost – meaning that it costs a lot to make a movie, but costs very little to let more people enjoy it once it’s made. It’s the same problem we’ve seen for example with electric power – it costs a lot to invest in infrastructure and power plants and not so much to distribute it afterwards.

Electric power supply is often considered a natural monoploy for those reasons – there isn’t room for more than one supplier of the good. To get someone to be willing to invest, they have been promised exclusivity of supply by the government. But electric power is a very easily excludable good. It’s no problem to disconnect the power lines of consumers that won’t pay. A movie fan that won’t pay can now simply get the movie from a different location.

For public goods, the solution has most often been direct government intervention. Parks are a good for everyone in the vicinity and are most often maintained by the government. It’s difficult to exclude anyone from using roads, so the government is paying for them. Is this a possible way out for movies and music? To have movies and music funded by the government? Libertarians will surely be outraged at the idea, and it will certainly cost a lot of money if we are to maintain the quality and diversity we have today.

But it’s not unthinkable. The most prestigeous painters and writers in many countries live off government stipends. Almost no feature length movie is made in Norway today without a sizeable contribution by the government. Is it conceivable that the population might accept not paying per movie but rather paying for movies through taxes? Probably less of a utopian idea in Scandinavia than in the United States. Perhaps it might it be possible to start with the Norwegian government financing Norwegian movies for a free access market and compensating producers in other countries for Norwegian movie consumption? It’d take some really smart solutions and a lot of tax dollars, but I don’t see it as completely inconceivable.

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