Note this entry at Marginal Revolution, in which Tyler Cowen refers to DRM as a tax. I was surprised by the lack of subtlety in this post; Tyler Cowen is sharp. But there much of the policy community has fallen into a mental rut in thinking about law and policy, and it has particular relevance to copyright policy. I've said it before, and I'll say it again:

For most policy discussions, one can assume a relatively active, reasonably fair, and well-functioning system for enforcement and dispute resolution. That is, the civil and crminal justice system. For the most part, excluding free riders throughout the economy has been a matter of setting out the legal rights (physical property rights, for example), buttressing with some not-fool proof but reasonably effective boundaries (walls & locks) and then letting the enforcement end take care of the rest. Policy discussions can generally leave out the boundaries discussion and the enforcement end.

Not so with copyright. The boundaries discussion is tricky (DRM and beyond); and the enforcement end is entirely broken. Entirely. Bottom line; pirates, whether physical counterfeiters in Asia or casual copiers for a million or so friends online run almost no chance of being caught. When caught, a token case may be brought, a drop in the bucket. The process is too cumbersome by far.

In this context, where one has a failure in the basic functions that government is supposed to provide, it is short-sighted in the extreme to think of this as the "content industry's" problem alone. It is a problem of the whole community. The tweaks in substantive law such as the DMCA that the government has come up with in a weak attempt to compensate for a lack of more basic enforcement functions are a drop in the bucket, not some overwhelming regulatory response. Positing that DRM is a "tax" on consumers makes sense only if consumers have no interest in a system that allows ongoing experiments with new types of boundaries to exclude free riders. No one has to buy DRM'd content. Furthermore, there is no reason to assume that the price point for some kinds of DRM'd content is higher than the price point for some kinds of un-DRM'd content. It might be that a DRM'd market is more viable and can support innovation at the tech and business end that leads prices to fall.

Bottom line: For ninety percent of policy issues, one is safe in assuming that basic enforcement institutions work. One is safe in taking the attitude that enforcement and policing (civil or criminal) is bread and butter stuff, suitable for blue-collar types, and not of academic interest. That is simply not true of copyright debates.

posted by Solveig Singleton @ 8:27 AM | DRM & Watermarks, etc.

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