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COPYRIGHT, CONGRESS, DUE DILIGENCE, AND COASE
by Frank Forman 7/26/02

COPYRIGHT AND COPYLEFT

Frank Forman checker@panix.com http://www.panix.com/~checker is an economist at the U.S. Department of Education--his views are distinct from theirs -- and the author of The Metaphysics of Liberty (Dordrect, Holland: Kluwer Academic, 1989). aka Pemise Checker.


Congress should amend the copyright act to allow anyone to reprint an old book if a decent effort to track down the copyright holder turns up blank or to pay only a nominal amount if the book hasn't been in print for a long time. Once the book, or article, or sound recording, or whatever, goes back into print in this way, it should forever remain the public domain.

This should keep the big boys--Disney, Playboy, the big publishers--reasonably happy, and all the little people, like scholars, should be happy too. Article I, Section 8, Clause 8 of the Constitution authorizes Congress "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." You and I might naively think that this means that a judicious balance will be struck about just how long these limited times are, and those of us with business calculators know that there is very little difference between an annuity that pays out for fifty, even twenty, years and one that pays out forever. Copyrights should not last for very long, twenty years being my somewhat educated guess.

But in a democracy (rule by rent-seeking pressure groups), this judicious balance is not struck, and the reason is that those who stand to gain, however slightly, from long copyrights are concentrated, while those who stand to benefit from shorter ones are diffused. The only way to strike an actual balance isto have experts rule or to change human nature so that politicians follow an abstract public interest rather than trying to get reelected. We've tried the both with unhappy results.

I see no prospect that the big publishers are going to start acting in the interests of scholars, but those who would like to revive old, forgotten books are getting organized. Politicians need their votes, too. Hence, the compromise I have proposed. I can't work out the details of what a decent effort (called "due diligence" by regulators) to track down a copyright holder would be, nor to specify what the other terms of the compromise might mean. Spelling these out will be the job, not so much for Congress as for the U.S. Copyright Office, whose staff numbers over 400 but does not include a single economist, so Marybeth Peters, then and now the charming Register of Copyrights, told me at a convention of the Association for Recorded Sound Collections several years ago.

I *am* an economist, and I'm here to propose something more than just a compromise. This takes us to the Coase of my title, specifically to Ronald Coase and "The Problem of Social Cost," which is the most widely cited paper both in economics journals and in legal journals. It came out in 1960 in a journal called, not very surprisingly, the _Journal of Law *and* Economics_. It is so well written that you do not need a single course in either field to understand it. It is a pleasure to read, too, and I recommend it. It has been reprinted in a Coase anthology _The Firm, the Market, and the Law_.

Coase says, with the terribly important qualifier *in the absence of transaction costs* (the whole point of my writing here, but later), that it makes no difference in behavior how property rights are drawn up. Coase's famous illustration is the case of a railroad scattering sparks along the tracks as it sped through farmland, occasionally causing fires. Who's to pay? If the railroad is liable, it can either pay for the fires or put devices on its locomotives to prevent the fires. Whether the fires are so rare that it doesn't pay to install the devices is up to the folks on the railroads to decide.

On the other hand, if the railroads are not liable and if the safety devices are economical, then the farmers should get together and pay the railroads to install the devices. Coase's point is that the pure economics of the situation, not where the liability lies, is all that matters, though of course the railroads would rather not be liable and the farmers wish they were.

The practical difficulties of protecting farms from sparks, when there is no liability on the part of the railroads, are immediately obvious: the farmers would have to get organized so that they all paid and each farmer didn't expect the other farmers to pay and not he. In other words, what we economists call the "transaction costs" involved in organizing the farmers would be prohibitive. And so they often are, in finding the copyright holders of a book that has long since ceased to make anyone money but is still legally under copyright protection. I know someone who wanted to put Henry Veatch's _Intentional Logic_ up on her website. It was copyrighted in 1952. She wanted to know if Yale University Press had renewed its copyright, for otherwise it would now be in the public domain. She wrote the press, and they did not bother to reply. She asked me to check at the Library of Congress. I hiked up there, a mile or so up Capitol Hill on my lunch hour, to a huge room in the Madison Building. It was between Christmas and New Year's with hardly anyone there, so I got immediate help and was taken over to the correct bank of 3x5 file cabinets, which I could never have found on my own, and shown what the markings on those cards meant.

Anyone further afield would have had to pay the Library of Congress to do the search, and you know that you always have to pay for the minimum of an hour. It would take the obligatory "six to eight weeks," too. As it happened, Yale had sent in the forms and paid the fees to get the copyright extended for the second term of twenty-eight years. Apparently Yale did so for all its books.

Most books did not get their copyrights renewed under the old system of twenty-eight years plus twenty-eight years renewable (it was fourteen plus fourteen in 1790), and this would still be true of most books today.

Veatch's book was an easy case. Publishers go out of business. Individual copyright owners die, oftentimes without wills. Copyrights can be sold, with the Library of Congress never finding out. All this can be difficult to track down. And if Yale University Press won't bother to answer a simple inquiry, you can bet on the difficulties elsewhere.

Worse, and even if Yale did answer the inquiry, there are a great many people in this world whose job it is to say no. Or to charge you a minimum of $250 (like the infamous Nieman-Marcus cookie recipe. Since the Waldorf-Astoria hotel allegedly did the same thing in the 1930s for its Red Velvet Cake, both stories are likely bogus. Google nieman waldorf recipe). It was just not worth it to her to pay out $250 for the privilege of scanning in the book and putting it on her site.

Apparently some people like this book. My friend did, and one copy was recently offered on http://www.bookfinder.com for $350. Personally, I'd rather have the cookie recipe and $100 in change (one old man's rant--the Veatch book to me--is another man's freedom fighter). Not enough people thought the book was worth even the cover price to keep it in print. Yale, I am sure, has no intention of reprinting it.

The transaction costs for what is of little or no economic value are too great. You have to find the current copyright holder, who may not bother to respond, or say no, or charge $250. The costs being too great, the Coase theorem, which says it doesn't matter who owns the copyright in the *absence* of these transaction costs, does not hold. It does matter, and it matters more than just the political transfer of a rights from one pocket (the public with its stake in having works enter the *public* domain) into another (the publishers). It means that the "Progress of Science and useful Arts" is being hampered and not promoted, since books that would have are not getting a second life.

What to do? Let anyone reprint an old book, old meaning twenty years, provided he determines that the book is no longer in print. If the book is younger than that and not in print, he must conduct a "due diligence" search to track down the current copyright owners. He must ask the publisher, and the publisher must respond. If the publisher has vanished, he must make a "diligent" effort to find out who bought out the publisher. He must not have to pay $200 to have someone else do the search for him. If the book is younger than twenty years and the copyright holder says no or wants $250 and that's too much, it's just too bad. Our would - be reprinter has to wait out the twenty years to see if the book is still in print. And in print means selling a certain number of copies, not just being printable on demand for an outrageous sum. (We'd better get moving here, before on-demand publishers start hiring lobbyists.)

Finally, in the case of free-lance articles in magazines and newspapers, I'd allow the editor to keep the article on the website if he fails to track down the author after a diligent search, after five years. We've all got to keep moving. I might prefer that all newspaper articles enter the public domain after ten years, but that won't happen. Publishers are indeed too organized, but they have transaction costs, too, and should be allowed to keep free-lance articles on their sites.

Lot's of controversy here: I myself don't want anyone using the copyright laws to keep embarrassing things out of the public domain. (I can't decide about J.D. Salinger's letters.) Information does want to be free, but it also has to be paid for, which is why there is a copyright law in the first place. We all know how organized publishers are, but academics and others are getting organized too. The converse of the Coase theorem -- in the *presence* of heavy transaction costs, it matters greatly how the copyrights are drawn up-- makes the case for letting low value books go back into the public domain cheaply.


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Frank Forman is an economist at the U.S. Department of Education, is speaking on his own, and is the author of _The Metaphysics of Liberty_ (Dordrecht: Kluwer Academic, 1989).

 
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