The criticism that copyright is a “monopoly” is often bandied about. Most recently, we’ve seen it pop up in certain conservative critiques of copyright law, like Derek Khanna’s memo last November, but it is undoubtedly a recurring argument that stretches back centuries.1

The purpose of this argument is apparent; “monopoly” has historically carried a negative connotation. At times, however, the debate seems to devolve to mere semantics. It may be more helpful to look at exactly what negative effects a monopoly has on society and see how prevalent these effects are in markets for copyrighted works to see how accurate this label is. This is especially helpful because the legal and colloquial definitions of monopoly differ throughout history — the term means something different under the current Sherman Antitrust Act, to someone during the era of trust-busting in early 20th century United States, and to a jurist in 18th century England.

While certainly not the earliest expression of this argument, Thomas Babington Macaulay provides an oft-cited iteration of this critique. The following quote from the 19th century British politician (once called “the most brilliant writer of his time, but not the most correct”)2 comes from a speech made in front of the House of Commons during 1841. The House was currently considering a bill to extend the term of copyright duration. Macaulay made the following remarks:

Copyright is monopoly, and produces all the effects which the general voice of mankind attributes to monopoly. … I believe, Sir, that I may with safety take it for granted that the effect of monopoly generally is to make articles scarce, to make them dear, and to make them bad. And I may with equal safety challenge my honourable friend to find out any distinction between copyright and other privileges of the same kind; any reason why a monopoly of books should produce an effect directly the reverse of that which was produced by the East India Company’s monopoly of tea, or by Lord Essex’s monopoly of sweet wines.3

Given the concerns raised by Macaulay and others throughout copyright’s history, we might say that there are three chief effects of monopoly that are particularly relevant: that it raises prices, that it prohibits others from engaging in behavior they otherwise could engage in, or that it serves as a barrier to entry in the specified market. By examining each of these in turn, we can test whether it is valid to consider copyright a monopoly, beyond the more common definitional arguments.

Does Copyright Raise Prices

In a purely competitive market, the price of a good tends toward the marginal cost of producing the good. When a firm operates under a monopoly, it can set prices above the marginal cost since it is free from competitive pressures. The result is a diversion from the optimal supply/demand curve: less consumers pay more for a good, while a firm sees higher profits, leading to less aggregate economic welfare.4 So, if copyright is a form of monopoly, we should expect that copyrighted works on average are priced higher than non-copyrighted works.

This, however, is not necessarily the case. In a 2008 paper, economist Stan Liebowitz set out to test whether copyright is like a monopoly by endeavoring “to infer the extent of monopoly power by measuring the price increase, if any, caused by copyright,” a question that had apparently not been tested before. Liebowitz came to two conclusions.

The first, treating all observations equally, found “that copyright does not raise price and that there is no monopoly deadweight loss. Increases in copyright unambiguously enhance economic efficiency.” [Emphasis added.] The second observation weighted books by their sales and found “that copyright increases price but by a modest level which is generally about the same as typical royalty payments”, implying “that any economic rents go to authors.”5

These conclusions should not be as surprising as they seem to the ordinary observer. Most people would note that copyrighted works show a remarkable consistency in pricing: iTunes, for example, has a very narrow range of prices for digital song downloads. This would suggest that while a single copyright owner has exclusive control over her work, this control is not monopolistic; there are such a wide range of close substitutes in the market to prevent any individual copyright owner from raising the price too far above the marginal cost.

Does Copyright Take Away Anyone Else’s Rights

Nowadays, a monopoly most often arises organically, when a firm becomes so dominant in its market that it has the ability to engage in anti-competitive behavior unless the law steps in. But in the past, monopolies were likely the result of actual government grants. It is in this sense that copyright has historically been labelled a monopoly, since prior to modern copyright laws, printers and publishers were given exclusive rights through such grants.6

The primary effect of grants like this was that they excluded others from engaging in conduct they were otherwise able to do, as this portion of a 1901 treatise attests:

§ 1. Definition of monopoly.— A monopoly is a license or privilege allowed by the sovereign for the sole buying and selling, making, working, or using of anything whatsoever; whereby the subject in general is restrained from that liberty of manufacturing or trading which he had before.

§ 2. Lord Coke’s definition is, “an institution by the king, by his grant, commission, or otherwise, to any persons or corporations, of or for the sole buying, selling, making, working or using of every thing, whereby any persons or corporations are sought to be restrained of any freedom or liberty they had before, or hindered in their lawful trade.”

§ 3. In Hawkins’ Pleas of the Crown the following definition is found: “A monopoly is an allowance by the king to a particular person or persons of the sole buying, selling, making, working, or using of any thing, whereby the subject in general is restrained from the freedom of manufacturing or trading which he had before. Monopoly differs from ingrossing only in this, that monopoly is by patent from the king, and ingrossing by the act of the subject between party and party.”‘

Under this definition, pre-copyright printing patents surely constituted monopolies.

The Stationers’ Company, operating initially under a 1557 royal charter, were granted privileges to Greek and Roman classics, not based on any privity with the original authors, but only through the caprice of the Crown. Similarly, some printers were granted privileges to entire categories of books, such as law books.

It is this monopoly that political philosopher John Locke wrote of, prior to England’s Statue of Anne, in his 1694 Memorandum Concerning Renewal of the Licensing Act:

By this clause, the Company of Stationers have a monopoly of all the classical authors; and scholars cannot, but at excessive rates, have the fair and correct edition of these books printed beyond seas. … That any person or company should have patents for the sole printing of ancient authors is very unreasonable and injurious to learning; and for those who purchase copies from authors that now live and write, it may be reasonable to limit their property to a certain number of years after the death of the author, or the first printing of the book, as, suppose, fifty or seventy years. This I am sure, it is very absurd and ridiculous that any one now living should pretend to have a propriety in, or a power to dispose of the propriety of any copy or writings of authors who lied before printing was known or used in Europe.

The Statute of Anne rectified this in 1710 by vesting exclusive rights only in the original author of a work, and originality has been the sine qua non of copyright protection in every copyright law that has followed, including the US in 1790 and France in 1793. Protection only extends to that which an author has created anew, and does not extend to anything already in existence, which would presumably be available to all to use.

Yet some continue to make the argument that copyright is a monopoly on the grounds that it restrains someone from doing something they were able to do before.

Stephen Kinsella, for example, makes the following claim in his book, Against Intellectual Property:

Let us recall that IP rights give to pattern-creators partial rights of control—ownership—over the tangible property of everyone else. The pattern-creator has partial ownership of others’ property, by virtue of his IP right, because he can prohibit them from performing certain actions with their own property. Author X, for example, can prohibit a third party, Y, from inscribing a certain pattern of words on Y’s own blank pages with Y’s own ink.

That is, by merely authoring an original expression of ideas, by merely thinking of and recording some original pattern of information, or by finding a new way to use his own property (recipe), the IP creator instantly, magically becomes a partial owner of others’ property. He has some say over how third parties can use their property. IP rights change the status quo by redistributing property from individuals of one class (tangible-property owners) to individuals of another (authors and inventors). Prima facie, therefore, IP law trespasses against or “takes” the property of tangible property owners, by transferring partial ownership to authors and inventors. It is this invasion and redistribution of property that must be justified in order for IP rights to be valid.

The claim is superficially attractive but falls apart on closer glance. Remember, copyright only prohibits copying of original expression. One is not restrained from independently creating existing expression, no matter how closely it resembles another’s work.7

So to say copyright “takes” some sort of right away from third parties is only correct under the most theoretical of physics. It might be easy to conceive of copyright as a restraint on one’s ability to reproduce, say, Suzanne Collins Hunger Games series of books. But it is more difficult to see how copyright “takes away” one’s ability to reproduce Collins’ next book, one she hasn’t written yet. Once she completes it, copyright vests in her the exclusive right to reproduce it, but that exclusive right is not at the expense of anyone else, unless they have a functioning time machine. It is the same as saying a law prohibiting an individual from flying by flapping his arms, or travelling faster than the speed of light, takes away a right. Copyright creates a right in the author without taking away any other’s rights.

Does Copyright Create Barriers of Entry to Potential Competitors

One final negative effect of monopoly is that it allows a monopolist to erect barriers to entry to other potential competitors, keeping the incumbent firm’s dominant position secure. The question would be, does copyright act as such a barrier to entry?

This is probably easiest to answer of all three: of course not. If Jack writes a song, that in no way affects Jill’s ability to write a song.

That’s not to say that firms producing copyrighted works have never engaged in monopolistic behavior — as with any other industry, this will occassionally happen.8 But it’s important to keep in mind that this isn’t an inherent part of copyright law. Such behavior occurs independently of copyright.

Footnotes

  1. See previous posts Myths from the Birth of US Copyright: Part 2, The Purposes of Copyright Law and “Anti-Copyright” Arguments, and 7 Mythbusting Copyright Law Articles for more on these arguments and their history. []
  2. Wraxall’s Memoirs, Littell’s Living Age (Boston 1884). []
  3. A Speech Delivered in the House of Commons on the 5th of February 1841, Lord Macaulay’s Speeches, pg 112 (London 1866). []
  4. George Stigler, “Monopoly“, Concise Encyclopedia of Economics, Library of Economics and LIberty. []
  5. Is the Copyright Monopoly a Best-Selling Fiction? []
  6. See, generally, Tyler Ochoa & Mark Rose, The Anti-Monopoly Origins of the Patent and Copyright Clause, 49 Journal Copyright Society of the USA 675, 677-79 (2002). []
  7. See, for example, Sheldon v Metro-Goldwyn Pictures, 81 F.2d 49, 54 (2nd Cir. 1936), “Borrowed the work must indeed not be, for a plagiarist is not himself pro tanto an “author”; but if by some magic a man who had never known it were to compose anew Keats’s Ode on a Grecian Urn, he would be an “author,” and, if he copyrighted it, others might not copy that poem, though they might of course copy Keats’s.” []
  8. See, for example, US v Paramount Pictures, 334 US 131 (1948); US v Lowe’s, 371 US 38 (1962); Starr v Sony BMG Music Entertainment, 592 F.3d 314 (2nd Cir. 2010). []

11 Comments

  1. Pingback: Three Reasons Copyright is Not a Monopoly | Copyhype | Stan Stewart's Blog

  2. This is especially helpful because the legal and colloquial definitions of monopoly differ throughout history…

    I recently read the book The Master Switch by Tim Wu which spent quite a bit of time discussing AT&T and, I believe, Western Union at the turn of the century. I was surprised to learn that AT&T made no bones about being a monopoly, and argued that it was in the public’s interest that communications be kept under monopoly control. It seems the word wasn’t nearly as dirty as we think of it today. There was some speculation that AT&T was correct, and that granting them a monopoly actually did help spur innovation and served the public interest well.

    As someone who has grown up thinking of monopolies as purely bad things, it was an illuminating take on the concept. Like this post, it also served as a reminder that when the drafters of the Constitution used the word in the copyright clause, they weren’t necessarily using the same language that we speak today.

  3. Some of the arguments of the anti-copyright crowd are literally childish. Like the one you quote who complains that copyright takes away people’s right to use their own property. By the same ‘logic’, there should be no laws against breaking and entering, because anyone who buys a crowbar has the right to use it however they like.

    • All of their arguments are childish. That’s why they’ve been completely, 100% ineffective.

    • Why do you have to resort to logical fallacies to support your arguments?

      tbh, I’ve seen more childish arguments from the copyright apologists, such as yourself, on why copyright should remain the way it is…

      Even though it’s used to take down fair use vidoes on the internet.

      Even though copyright owners can’t seem to figure out that they’ve legally put stuff up on the internet without issuing DMCA takedown notices.

      Even though politicians get their political messages taken down during election years due to the DMCA.

      How about how Copyright Apologists keep screaming about how piracy is costing billions in revenue for movies when Hollywood brought in over 12 BILLION dollars last year, oh, but they still didn’t make a penny in profit.

      Also, they got a 1 BILLION dollar tax subsidy.

      Yeah, they sure need copyright to last forever, don’t they?

      Or how about how Richard O’Dywer, until just a little while ago, was fighting extradition charges from the U.K. to the U.S.? You know what his “crime” was? Having a website that linked people to content. He didn’t host anything, he only gave out links. Just so you know, such a website business is LEGAL in the U.K. He’s a college student, never been outside of the U.K., and yet was having to fight extradition charges to the U.S. for copyright infringement, even though what he did was NOT infringing in the slightest.

      Or how about djazz1? That hip-hop blog that got taken down by the DoJ for over a year before being returned without so much as an apology?

      How about the Megaupload case? That sure has gone well, hasn’t it?

    • The issue is, with copyright the author is lying: he says you buy something, but actually you buy nothing more than a license; and the license is useless. How many people would actually buy cd or dvd, if they knew what they are buying?

      • he says you buy something, but actually you buy nothing more than a license

        So to clarify your point, you didn’t buy anything; you merely bought something.

        That’s somewhat Escher-esque.

        I’m not sure I believe you though, because I did buy a book today and I definitely walked out with much more than a license. I have a book! (Here, There, and Everywhere: My Life Recording the Beatles by Geoff Emerick, and I’m very excited about it.) After I’m done with it, I can sell the book! I can cut it up and make an art installation of its pages; maybe I can make a small-scale origami diorama of Abby Road studios. I can even copy down the passages I find poignant and then I can talk about those passages, or excerpt them on my blog, or use the ideas contained in them to make my own recordings better, or use those ideas to inform my own knowledge and then I can write my own book about recording bands.

        One of the very few things I’m not allowed to do is sell/distribute/publish the copies of the book that I make myself. But wait, if I really want to share the whole book with my friends, I can also buy extra copies and give them away in whatever manner I see fit. Or I can let them borrow the copy that I own. (That’s the traditional, tangible definition of sharing for those new to the concept.)

        And if you want to make the book freely available for everybody…well, maybe you’r–… What ho?! You mean to tell me you can buy the manuscript from the author along with the publishing rights? But I thought you couldn’t buy anything?

        So no, I’m not sure you are quite grasping how money is exchanged for goods and services. People buy books all the time. I have my own library full of them. Are you implying that I don’t own the books on my shelves? Or are you suggesting that I’m some sort of rube who got ripped off and one day all my books are going to vanish? Frederik Pohl is going to show up and repo my cherished copy of Gateway?

        It’s like you’re saying that because I can’t make my own guitars and sell them as Fender Stratocasters, then I can’t really buy a Fender Stratocaster. That’s nonsense. I have two of them, both insured and taxed. Does the IRS subscribe to this “can’t really buy” mentality? They might owe me some money.

        How many people would actually buy cd or dvd, if they knew what they are buying?

        How many people would buy a Beatles album knowing they can’t make and sell their own copies of that album, especially under The Beatles’ name? Um… how about almost everybody? They’ve sold over a Billion records. At one time, it was estimated that over 70% of the British households contained a Beatles record. I don’t think people are as confused as you about the market place.

  4. This post is just silly. Of course copyright is a monopoly. That’s not a criticism; it’s definitional.

    Perhaps you are too young to remember cheap Dover paperback editions of out-of-copyright works. They were clearly cheaper than alternative editions from the original publisher and they were so because they didn’t have the licensing overhead. You’re second point misses the target completely as it doesn’t address Kinsella’s argument at all. And if Kirtsaeng is upheld, we will be restricted by copyright of the ability to dispose of our property as we wish. Finally, obviously I am restricted by copyright from entering the market for the latest Disney monstrosity (never was a fan).

    Again, these aren’t criticisms and in pointing this out I am not at all suggesting that we shouldn’t have copyright laws. These facts are just the nature of copyright (to borrow a phrase).

    • It is generally not good form to call something a monopoly without clearly expounding on how one defines and uses the term.

      Re Kinsella, he loves to count fairies dancing on the head of a pin. Since I am not a philosopher, I prefer to keep conversations ground in reality, and not theory.

      As for Kirtsaeng , hyperbole does nothing to promote a thoughtful and intellectually honest discussion.

    • It depends whose definition. My dictionary (Pocket Oxford) defines ‘monopoly’ as ‘exclusive possession of the trade in some commodity; this conferred as a privilege by State; exclusive possession, control or exercise…’ But what is a commodity? Anyone who owns an individual thing (say, a house, or a car) has the exclusive right to sell it while it remains in his ownership, but it would be an abuse of language to call this a monopoly. By a commodity we usually mean some reasonably broad class of things, such as books, or oranges. You could have a monopoly in the sale of books, or of oranges, but not in the sale of a particular book or orange.

      But what about the class constituted by copies of a particular book, say, ‘Oranges are not the only fruit’? I don’t think any dictionary will answer this question. My own linguistic intuition is that it would sound wrong to describe such a narrow class as a ‘commodity’, and it would be an abuse of language to describe the exclusive right to sell it as a monopoly.

      • “exclusive possession, control or exercise…’”

        Right there, that’s copyright.

        The government gives a person or corporation EXCLUSIVE possession of something to control or exercise how they see fit. Under normal circumstances, it’s fine, as it would allow a creator to know that they can create without people taking their ideas and running with them without giving compensation.

        However, in its current form, copyright has gone so far overboard that it no longer supports the artists and creators.

        I mean, just recently, Warner Bros./D.C. comics just got 100% control of the Superman franchise away from the families of the two people who created Superman.

        However, one thing to note about that…

        The creators died less than 10 years ago (each).

        So, tell me, how is copyright supporting the creators of Superman when they’re dead?

        And that’s just one of many examples out there.

        • Brilliant. You say that copyright is a monopoly by definition. I quote a good dictionary definition of monopoly. You quote the part of the definition that you like (‘exclusive possession, (etc)’), and blithely ignore the part that you don’t like (the reference to ‘commodities’). Not much point pursuing a discussion with someone like you. Head meet brick wall.

  5. Pingback: Commodities, Monopolies, Remixes and Rights – A Symphony - The Cynical Musician

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