If the "P" in "IP" stands for "Property" then why isn't there any property tax?
Here's a working model for taxing these "properties" that would help not only to bring things into the public domain once they no longer had value to the "owner" but would pull in some much needed tax dollars for the public coffers. If the current rights-holders want us to believe that the New Economy is built on owning ideas (that they are so important to be viciously protected) then they should also help in carrying their share of the tax burden.
All copyrights and patents would have to be registered (for ease of discussion, I'm only going to talk about copyrights, but the idea can easily be used for patents as well). The registration would include a basic filing fee (say $50) to cover the paperwork, and would also set a minimum threshold specifically to keep (most) people from registering every though they have as copyright. Next, the registration would require a value be placed on the work. Tax would be assessed on this value. In order to keep people honest, this would become a matter of public record, and at any time anyone could buy the rights to this work for any amount greater than the taxed-value. The purchase amount would set the new value, and tax would be due on this new amount, pro-rated for the balance of the year. Once per year, the rights-holder would submit a new value along with the tax, allowing them to decrease the value. Set the value too low and some other organization will purchase it from you.
At some point, the rights-holder will decide that it isn't worth continuing to pay tax+filing fee for this work, and will release it to the public domain. By not filing, the work would become public domain. There might have to be some provisions around the year-end to either keep organizations from doing 11th-hour 'liberations' of works (buy it 1-min to closing, and then allow it to go public) or other unintended gaming of this system for profit. There might need to be a grace period, during which the 'owner' has let registration lapse, but it's still available for another organization to purchase. Purchase amount plus tax would go to the tax-base for this sort of transaction to keep organizations from speculatively purchasing at year end and allowing it to lapse. This area might need some tuning.
This is basically a bidding system: it ensures that whomever most values (and is capable of paying) owns the work. Ideally the entire system is on-line, including registering and purchasing works.
The system ensures that works eventually go into the public domain. The profit driven companies won't hang onto unprofitable works, releasing them into the public domain once they no longer offer a return above what it costs to own it.
This also deals with abandonware since a work is not owned unless registered, and deals with the reality that not every sentence you commit to paper or pixel should be protected by law.
The only (official) complaint the current rights-holder class will have with this system is the forced-sale aspect if someone is willing to pay the value. The real complaint is that they will now get taxed on something they've been calling property to get the property advantages while never paying for the costs that come with owning property.
I think we can dispense with the complaint quite easily. If the rights holder sets an appropriate value then no one will buy it from them. It is only if they try and cheat; to set a price too low that works will ever get bought out from under them. Even then, the 'punishment' is that they get paid more than what they said it was worth! Imagine a car company complaining that people bought cars from them above the asking price!
Finally, all organizations have this ability: so they are also free to pursue ownership of works that others have priced too low. They are part of the market that places value on Intellectual Monopolies.
Lastly, as a derivative of this idea, if it is discovered that large companies simply pay the filing fee, plus set an unreasonable value and can afford to pay the tax in order to ensure that nothing goes into the public domain, then there can either still be a maximum time limit, or we can again assert financial pressure to force them to relinquish the works. Options include increasing the filing fee or tax rate as certain time-lines are met (from original filing: each 'owner' does not reset this clock). For example: The first 14 yrs would be reasonably inexpensive to own the work, while subsequent increments of 14yrs would double the filing fee and tax rate. This would make it impractical to own works forever.
Anyways, it's an idea
In recent years, the economics of pop music have been upended. The market for CDs has collapsed, and not even the rise of legal downloading can offset the damage to record companies. Meanwhile, demand for live performances has rocketed...
Back in 2003, we mentioned an article that compared the entertainment industry to the fashion industry, noting that even though there was no intellectual property protections over clothing design and copying was rampant, the fashion industry was thriving. This shouldn't come as a surprise, really. After all, without the artificial protectionism, the fashion designers are forced to continually compete by continually innovating and always trying to come out with the latest and greatest design. Even though others copy, there's tremendous value in being the first, or being the "big name" in the industry. The article included this fantastic quote: "Ideas arise, evolve through collaboration, gain currency through exposure, mutate in new directions, and diffuse through imitation. The constant borrowing, repurposing, and transformation of prior work are as integral to creativity in music and film as they are to fashion." In 2005, the NY Times wrote a similar article, but warned that the fashion industry was moving in the wrong direction, as lazy designers who didn't want to compete and wanted to rest on their laurels had started pushing for new intellectual property over their designs. Late last year, the calls for such protectionism grew even stronger -- though, the reasoning doesn't make any sense. The entire point of intellectual property protections is to create incentives for a market. If that market is already thriving, why do you need to add new incentives? The real reason is that it's not to provide incentives. It's a way for successful players to keep making money without continuing to innovate -- which is simply bad for society.
The NY Times is taking another look at this issue, this time in a piece written by well-known economist Hal Varian, who points to a recent study that doesn't just note that the fashion industry has thrived without intellectual property protection, but notes that a big part of the reason it has thrived is because of the lack of IP. In other words, if those pushing for those new IP rights get them, the end result will likely be harmful to the overall fashion industry. Again, this shouldn't be surprising, as removing protectionist policies tends to increase competition and the size of the addressable market, but it's certainly a good example to point to when people insist that things like the music industry wouldn't exist without copyright protection.
If people had understood how patents would be granted when most of today's ideas were invented and had taken out patents, the industry would be at a complete standstill today... A future start-up with no patents of its own will be forced to pay whatever price the giants choose to impose.
--Bill Gates, Microsoft CEO, 1991
Now that they be giants?
Protection for software patents and other intellectual property is essential to maintaining the incentives that encourage and underwrite technological breakthroughs. In every industry, patents provide the legal foundation for innovation. The ensuing legal disputes may be messy, but protection is no less necessary, even so.
--Brad Smith, Microsoft general counsel, 2007
So where would Billy-G be today if (for example) IBM owned it all?
So the reasoning goes that Intellectual Monopoly (which the apologists call Intellectual Property) would be the same. Left undefended by law, IM wouldn't be upgraded by private capital. And this is used as defence for patent and copyright law.
This is where the analogy falls apart. The problem with this is that while undefended property will likely be stolen or damaged, you can't actually 'steal' or 'damage' an idea. While a single plot of land can be owned by only one at a time, an idea can be shared with everyone, and no one is deprived of the idea.
In fact, mankind progresses by sharing ideas. Ideas build on those that came before. We could not build the automobile until the wheel was invented. We could not build the automobile until the blacksmith learned their trade. We could not build the automobile until we harnessed the energy in oil. In short: there were thousands of incremental steps over many generations before the automobile was made. Without all the ideas and inventions that came before, there would be no automobile today.
Patents are a monopoly. A monopoly means that you have no competition. In most places in the world, patents are good for about 20yrs at this point. That means that for 20yrs no one else except you can make use of your idea.
Not only can no one produce your idea, no one can improve on it. This means that for the duration of the patent the public must rely on one entity to improve on this idea. This has the net effect of artificially slowing the rate of innovation. This means that ideas are most valuable when they can be freely shared and expanded on by others.
So we have a situation where protecting physical property increases it's value while creating intellectual monopolies decreases their value.
This is also a good example to disprove the commonly stated claims of patent system defenders. They usually claim that these patents are needed to protect smaller players from being stomped out of business by a big company with more money and connections who can simply "steal" their idea and dominate the market. In this case, it was Vonage, the smaller player, that innovated in the market while the bigger company was slow to act. Verizon did later copy Vonage's offering, but was unable to succeed in the marketplace, despite having a lot more money, much better brand recognition, and many more telephony customers already in place.
We find that file sharing has only had a limited effect on record sales. OLS estimates indicate a positive effect on downloads on sales, though this estimate has a positive bias since popular albums have higher sales and downloads. After instrumenting for downloads, most of the impact disappears. This estimated effect is statistically indistinguishable from zero despite a narrow standard error. The economic effect is also small. Even in the most pessimistic specification, five thousand downloads are needed to displace a single album sale.
Musicians generally make very little from the sale of their records. The costs of production, marketing, and promotion are charged against sales, and even if they go multiplatinum and cover those costs, their cut of any extra revenue is usually less than 10 percent. On top of this, the labels typically retain the copyrights to the recordings, which allows them to profit from the musicians' catalogs indefinitely. "It's as if you received a loan for a house," says Ed Robertson, one of BNL's lead vocalists. "But when you finish paying off that loan, the label says thank you and keeps the house."
Please explain to me how locking a drug abuser in a metal coffin will make him/her a productive member of society?
Everybody likes a kidder, but nobody lends him money. -- Arthur Miller