Virtual Markets for Virtual Goods: An Alternative Conception of Digital Copyright

The Internet and Copyright Law are particularly ill-suited to each other. One is designed to give as much information as possible to everyone who wants it; the other allows authors, artists and publishers to earn money by restricting the distribution of information. The beneficiaries of copyright law are lobbying for the re-design of computers and the Internet to enforce “content control” and “digital rights management” (DRM). These technologies are intended to make copyright workable again by re-imposing limits on access to information goods, but they carry high direct and indirect social costs. One alternative, which has generally received much less attention and legislative support than DRM, is to allow free distributions of works, while restructuring digital copyright law so as to remunerate authors in ways which avoid those exclusive rights models which are incompatible with the Internet. This paper introduces the notion of a “virtual market” — a decentralised, publicly-funded mechanism which rewards digital authorship and artistry, without restricting flows of information. The virtual market is a sort of “looking-glass reflection” of a real marketplace. Some of the legal and economic implications of these systems are considered, along with some of the practical and technological aspects of their implementation. The article concludes that virtual markets avoid the very high artificial scarcity (“deadweight loss”) and infrastructure costs associated with DRM, and should be seriously considered as a public policy alternative to strengthening copyright laws.