When Ronald Coase passed away last year, it occurred to me that no one had really applied a Coasian framework to the characterisation of copyright regimes. I had been interested in these since reading Larry Lessig’s book, Remix. Remixing is where users take original content (such as the Harlem Shake) and put it in new forms. A famous example of remixing is this video.
Well I have a new (still preliminary) paper on the subject that provided some results that I must admit I hadn’t expected starting out. Here is the abstract:
This paper examines an environment where original content can be remixed by follow-on creators. The modelling innovation is to assume that original content creators and remixers can negotiate over the ‘amount’ of original content that is used by the follow-on creator in the shadow of various rights regimes. The following results are demonstrated. First, traditional copyright protection where the original content creators can block any use of their content provides more incentives for content creators and also more remixing than no copyright protection. This is because that regime incentivises original content creators to consider the value of remixing and permit it in negotiations. Second, fair use can improve on traditional copyright protection in some instances by mitigating potential hold-up of follow-on creators by original content providers. Finally, remix rights can significantly avoid the need for any negotiations over use by granting those rights to follow-on innovators in return for a set compensation regime. However, while these rights are sometimes optimal when the returns to remixing are relatively low, traditional copyright protection can afford more opportunities to engage in remixing when remixing returns are relatively high.
Basically, it turns out remix rights have a very desirable feature — they obviate the need for negotiations over content re-use: follow-on creators choose optimally (in the Coasian sense) whether to exercise those rights. However, it is still the case that in some circumstances, most surprisingly, where remixing is more valuable, that traditional copyright protection (where original content providers determine the extent of use) can lead to more remixing because it incentivises original content providers to generate content worthy of remixing.