The goal of copyright law is to stimulate creation
Copyright law is based on the wisdom that “you cannot compete with free”. If an author creates a work, and others give that work to readers for free, the author is likely to have a hard time making money with the work.
(Or so the theory goes. There are many authors who do exactly that; they give free access to their works and rely on secondary means to generate income — think rock bands that sell access to their concerts after an audience has been formed by free access to their works. But that aside.)
This informal rule describes what economists call “market failure”: the market reaches an undesirable result in the distribution of goods or services, as perceived by the public. Politicians fear that this market failure will drive potential authors away from producing creative works.
Where the free market fails to improve society, the government must intervene. For instance, in the case of a natural distaster that disrupts the distribution of goods (market failure), many governments step in and give gratis food to those who claim to need it.
This government intervention, although doing good on the whole, typically has negative side-effects. In the example of the disaster area, the government’s actions undermine the livelihoods of local producers who are just as stricken as their potential buyers, and whose chances of survival are largely dependent on there being a market in the first place. Since food is free in this situation, the local producers of food go bankrupt.
So when a government battles market-failure, it must make very sure that the negative side-effects are worth it. For instance, it is not the government’s task to ensure certain business models survive. If a local producer in a disaster area cannot compete with the free food handed out, that’s just tough luck. The government has to weigh two bads against each other, and choose the least among them. And although it would be nice of such a government to also support the local producers, for instance through the means of subsidies, it is by no means morally required to do so.
In the case of creative works, governments try to combat market failure by censorship; people and organisations other than the authors of those works are forbidden to copy those works. The right to copy belongs to the authors.
It is obvious that censorship is a bad thing, and it is only one of the many bad side-effects of copyright law. Nevertheless, most current governments feel that the potential good of copyright outweighs the very real negatives.
The reasoning behind the desire to combat market failure in the creative arena by introducing copyright law seems to be as follows:
- It is good to have works that the public can disseminate.
- In order to stimulate the creation of works, the authors should be given a chance to recoup their investments.
- In order for authors to recoup their investments, they should be able to publish their works in exchange for money/goods/services.
- At this point market failure occurs.
- In order to combat market failure, we make it illegal for the public to disseminate the works…
- … unless they have bought the authors’ permission to do so.
Another aspect of copyrights is that they often can be traded entirely. It is not uncommon in some areas of the creative world that publishers buy all or most of the copyrights, or negotiate extremely far-reaching licenses.
There is a myth surrounding copyright that say that authors deserve to earn their livelihoods with their works. Note that this is not how copyright law works. Copyrights give an author the means to try and monetize their works, but this right does not guarantee that every author will make a living of producing works; and it is definitely not the meaning behind the law to have copyrights act as a generator of social welfare. The authors get their copyrights, but they themselves have to make sure these copyrights then turn into money.
The reality is that very few authors who write for money actually earn their livelihoods through their copyrights. The reasons for this are a result of how the markets work, and are manifold and outside the scope of this article. Suffice it say that buyers also have a say in the market, and are willing to invest only a certain amount of money in the creation of works. Also, many third-parties are involved in the production of works that also need to be recompensed.
In the above the terms “author,” “reader,” “writing,” and “publisher” are used as generic terms; they may for instance also refer to composers and record labels.