arsclist COPYRIGHT, CONGRESS, DUE DILIGENCE, AND COASE

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COPYRIGHT, CONGRESS, DUE DILIGENCE, AND COASE
by Frank Forman
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[This was rejected by The Chronicle of Higher Education and The New York
Times. I think it is comprehensible. If not, please let me know. And if my
ideas are wrong, let me know also.

[Steal the ideas. Distort my meaning. Claim it as your own. But spread the
message. This piece is hereby in the public domain, though I may succeed
in getting it published under my name. --Frank]

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 is
to 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.

----------------------
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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