There’s an interesting Wiki discussing Copyright Economics. It breaks down the interaction between producers and consumers of “intellectual property”, comparing it with the interaction between buyers and sellers of physical goods.
From what I can tell of the analysis, a “social gain” is equivalent to saying that the extra money that the producer gained over the minimum they would have done it for plus the extra money that the consumer has that they didn’t need to use to buy what they wanted results in extra money for everyone!
The interesting conclusion is that pirating IP actually results in a social gain in the short term, while in the long term can potentially result in a social loss:
Since the producer cost is $0 the short term social gain of piracy is always positive (PC = $0, CV > 0, SG = CV - PC = CV so SG > 0). In other words, pirating software that would not be bought is economically beneficial.
So piracy can harm society when the software would otherwise be purchased but the producer never produces the software in the first place since expected piracy levels are too high.
I’m curious to see how this sort of analysis sees concepts like tax-supported-free-music and the eventual drop of food in cost to $0. Well, the latter certainly requires some major technological hurdles to exist, but I’d like to see it.
As an aside, what value does IP have in a world where food and shelter (effectively all basic necessities) are free? A point to ponder for tonight!Read full post