Some of the most interesting challenges for digital-age copyright policy arise from the growing popularity of user-generated content (UGC). UGC offers exciting new possibilities for people to create or interact with their favorite works, but it raises thorny problems that range from its potential to facilitate infringement to questions about reconciling the creative potential of UGC with other creators’ interests in the artistic integrity of their works.

Fortunately, one advantage of letting enforceable property rights generate markets for socially valuable goods and services is that markets require participants to find “win-win” solutions: In a market, a given transaction should occur only if all parties to it are better off as a result. Markets thus create potent incentives to reconcile divergent interests.

The solution-generating power of markets was evident today when a diverse coalition of technology and media companies released Copyright Principles for UGC Services. The Principles attempt to define a win-win-win solution: A set of ground rules that will promote respect for copyrights, the production of UGC, and the development of innovative platforms for promoting and distributing it. Key provisions of the Principles include the following:

1) UGC sites should use “highly effective” filtering technologies, or human review, to identify and remove infringing content before it is uploaded and enhance or update those technologies as significant advances become commercially available.

2) Copyright holders and UGC sites should cooperate to ensure that filtering systems effectively balance legitimate interests in blocking infringing uploads, allowing original or authorized uploads, and accommodating fair use.

3) Copyright holders and UGC sites should develop procedures to promptly address conflicting claims of ownership, and user’s claims that filtered content was not infringing.

4) Copyright holders should neither file infringement claims against UGC sites that adhere in good faith to the Principles nor assert that adherence to the Principles disqualifies a UGC site from claiming the benefits of safe-harbor protections like those in the DMCA.

At their core, the Principles seek cooperative solutions to the possibilities and challenges posed by UGC. For that, they should be applauded. When property rights are unclear, or not respected, we often resort to non-market-based dispute-resolution mechanisms—like litigation. But litigation does not promote win-win outcomes and may leave all parties worse off. Companies like Disney, Microsoft, NBC-Universal, MySpace, Daily Motion, CBS, Viacom, and Fox deserve great credit for this effort to identify solutions that balance their interests with those of creative consumers. Bravo.