Pasquale on Copyright Externalities

By Eric Goldman

Frank Pasquale has posted an article called The Law and Economics of Information Overload Externalities to SSRN. I’m not sure the title really captures the article, so don’t make the decision to read/not read it based on the title.

The article reminds us that the world cannot be simply divided into copyright producers and copyright producers. At minimum, there’s a third category of copyright intermediaries (let call them categorizers) that match producers with consumers. Search engines are the most prominent example of categorizers, and Google Book Search is the paradigmatic matching dilemma.

Accordingly to Frank, categorizers play an essential role in society because copyright’s production incentive cntributes to information overload, which hinders access to all copyrighted works. However, categorizers invariably make copies in the categorization process, so copyright law can prevent categorizers from providing their social benefits. Accordingly, Frank argues that copyright law should take the social benefits of categorization into account.

The abstract:

“Environmental laws are designed to reduce negative externalities (such as pollution) that harm the natural environment. Copyright law should adjust the rights of content creators in order to compensate for the ways they reduce the usefulness of the information environment as a whole. Every new work created contributes to the store of expression, but also makes it more difficult to find whatever work one wants. Such search costs have been well-documented in information economics. Copyright law should take information overload externalities like search costs into account in its treatment of alleged copyright infringers whose work merely attempts to index, organize, categorize, or review works by providing small samples of them. They are not free riding off the labor of copyrightholders, but rather are creating the types of navigational tools and filters that help consumers make sense of the ocean of expression copyrightholders have created.

By modeling information overload as an externality imposed by copyrighted works, this article attempts to provide a new economic justification for more favorable legal treatment of categorizers, indexers, and reviewers. Information overload is an unintended negative consequence of copyright law’s success in incentivizing the production and distribution of expression. If courts grant content owners the right to veto categorizers’ efforts to make sense of given fields of expression, they will only exacerbate the problem. Designed to promote the progress of the arts and sciences, copyright doctrine should privilege the efforts of those who make that progress accessible and understandable. Categorizers fill both those vital roles.”

UPDATE: Brett Frischmann has some interesting comments.