Transaction costs and copyright: time for clear thinking

Before buying a used copyright
clearance person, do make sure
that non-one else has prior rights ...

"Not entirely sober" is how one of the IPKat's readers described himself when he sent in the following thoughts:

"The UK Government’s Copyright Consultation [noted on this weblog here] describes the process of clearing rights as economically negative, pure and simple. However, there are a great many people who earn their livings from clearing rights. It is a thriving service industry, employing thousands of people who are happily paying taxes ['Happily'? Merpel has her doubts ...] and spending their wages. Every time that the Government seeks to reduce “transactional costs”, there is less work for the rights-clearer to do. This might benefit the licensor and the licensee, but what about the service industry in the middle? It might be best to spend less time clearing rights, but it would be wrong to say that there are no negative economic consequences in reducing “transactional costs”. 

Compare, for example, David Cameron’s beloved financial sector – they produce nothing, but merely provide a service of shifting money around. A complete economic understanding of copyright should surely include the accompanying service industries. People who mock this idea should first check whether they too do not earn their living by providing such a lowly service industry".

The IPKat recalls that service industries have not always had an easy time of it. Just think of all those scribes who were laid off when printing was introduced. Indeed, even in his own kittenhood he records the existence of another honourable profession -- the telephone operator -- whose services were indispensable for anyone seeking to call a friend or colleague outside their own town, never mind outside the jurisdiction. Having said that, rights clearance can have some positives too: apart from bringing legitimacy to otherwise infringing acts, it often has the effect of reuniting rights owners with rights which they did not know they had. One might call it a sort of low-grade third-party due diligence exercise.

Merpel says, be quiet, Kat -- the voice which is called for here is that of the Katonomist, Doctor Nic.  She at least knows a thing or two about economics and might have some more useful things to say about an issue which has been raised because of the economic impact of the UK government's proposals.