THE ECONOMIC EVALUATION of ALTERNATIVES TO DIGITAL COPYRIGHT

A certain air of controversy has arisen around copyright law, as a result of its interactions with digital technology. The body of literature claiming that existing copyright laws are economically sub-optimal is growing rapidly. Some authors are even claiming that it would be better to have no copyright system at all, while others argue that alternatives, such as various forms of public funding, would be preferable to exclusive rights in literary and artistic works. This paper explores the economic differences between a system of consumer-regulating copyright based on “digital rights management”, and alternatives based on public funding. I argue that the distinctions are sufficiently intricate that they elude any simple modelling technique. Instead, this paper attempts a semi-analytic comparison which weighs a set of different factors which may favour either copyright or the alternatives. When these are summed, it is concluded that well-designed systems of public funding may well produce better social welfare outcomes than DRM-based copyright.