IP Without Scarcity

In an academic paper posted last year on SSRN, Mark Lemley of Stanford Law looks at the issues surrounding "IP in a World Without Scarcity." This is an academic paper and is a dense 60+ pages of PDF so I'm not going to be able to do justice to Professor Lemley's arguments in a short blog post. But here's what I took from it.

Lemley argues that the purpose of IP, and the laws that create it, is to create scarcity so that creators can profit. The government grants a monopoly so that the creator can prevent others from copying their invention and the creator can reap the financial rewards. If there was no scarcity what would be the incentive to pay for the creative product? If you think this sounds like the music industry since, oh, 1999 or so then you're on the right track.

Lemley points out that we're on the verge of seeing a similar thing happen to many physical objects as happened in the past few decades to purely digital objects. As (home) 3D printing becomes a consumer item, even more radical ideas are taking shape, such as small-scale creation (growing, printing - who knows what verb we'll use; Lemley uses "bioprinting") of biological items (think drugs). So take as given that scarcity is not going to be easy to create in the future - what future does IP have in that world?

Lemley assumes that people are "intrinsically motivated" to create. There's some good evidence for that: if you look at areas and regimes where IP restrictions are weak you find innovation flourishes, both at the individual and the corporate/commercial level. To organize this sort of intrinsic creativity in an era where scarcity is the exception, requires what Lemley calls "post-scarcity economics" and he believes this is one of the greatest tasks of economists in the 21st century, comparable to how post-agrarian economics developed.

Lemley's paper dives into each of these area (disintermediation, 3D printing, robotics) and gives a concise introduction to where we've gotten in the last 5-10 years. His message seems to be that it's not an all-or-nothing situation. Some things get copied a lot and yet people still pay ever more for it. Digital music is a great example of this - illegal copying and sharing are likely at historical highs, but so is the number of dollars spent on music.

It's also the case that the same technologies that make scarcity so hard to enforce also vastly lower the barriers to creative expression in the first place. Making and publishing digital music is easier now precisely because of the technologies and systems (YouTube, the Internet, cheap home computers) that enable copying and sharing.

Lemley is also realistic that those with the current monopoly powers will fight the loss of those powers and likely can delay the (as he sees it) inevitable for some time. In effect, the current IP infrastructure makes it inevitable that any transition away from that infrastructure will have to be gradual.

In the end Lemley is not offering solutions to the problem, though he believes our experiences with the upheavals of the last two decades offer valuable lessons. Among them: you have no right to have the government intervene to protect your monopoly, and we should resist the expansion of IP rights beyond targeting infringers, particularly when that expansion would threaten the growth of new technologies. Too bad the judge in Aereo didn't read this paper.