Eternal Copyrights, Net Present Value, And Incentives
Imagine you’re a new parent at 30 years old and you’ve just published a bestselling new novel. Under the current system, if you lived to 70 years old and your descendants all had children at the age of 30, the copyright in your book – and thus the proceeds – would provide for your children, grandchildren, great-grandchildren, and great-great-grandchildren.
But what, I ask, about your great-great-great-grandchildren? What do they get? How can our laws be so heartless as to deny them the benefit of your hard work in the name of some do-gooding concept as the “public good”, simply because they were born a mere century and a half after the book was written? …
No, it’s clear that our current copyright law is inadequate and unfair. We must move to Eternal Copyright – a system where copyright never expires, and a world in which we no longer snatch food out of the mouths of our creators’ descendants. With eternal copyright, the knowledge that our great-great-great-grandchildren and beyond will benefit financially from our efforts will no doubt spur us on to achieve greater creative heights than ever seen before.
Mr. Hon went further, arguing that “Eternal Copyright should be retroactively applied so that current generations may benefit from their ancestors’ works rather than allowing strangers to rip your inheritance off.”
Mr. Hon’s proposal it not original, however. It matches the analysis from the economists’ amicus brief in filed an Eldred v. Ashcroft. That brief explains that the Copyright Term Extension Act’s 20-year extension of copyright terms increased the net present value of a copyright by less than 1%—an amount too small to effectively incentivize new works. The economists made Mr. Hon’s argument almost a decade before he did:
The CTEA’s extension for existing works could in theory have an effect on creators of new works, by creating an expectation that, in the future, Congress would extend copyright even more, and that this extension would apply retroactively to existing works. The maximum impact on incentives from this effect, however, is trivial because the current copyright term already has nearly the same present value as an infinite copyright term. Granting a perpetual copyright would increase compensation by at most 0.12% (at a 7% interest rate), or less once declining revenues are taken into account.
But is there no upside to a perpetual copyright? In a world where Shakespeare’s works were still protected by copyright, they might not be as widely studied as they are. One can imagine that without freely available Shakespearean classics, modern-day authors would be incentivized to write sufficiently great prose to compete for valuable space in high-school English texts. Does the free availability of eminent, public domain literature inhibit the creation of for-profit future classics? How can a 21st century would-be Shakespeare compete with the 17th century Shakespeare when the latter’s works are free? Perhaps Tom Wolfe’s works would have been different.