Innovation Asymmetry: Why The Copyright Industry Always Freaks Out About New Technologies

from the copyright-and-innovation dept

A few weeks ago, I was in Washington DC to moderate a panel concerning the intersection of innovation and copyright. One of the panelists, law professor Michael Carrier whose work we've mentioned before, talked about an interesting concept to explain why many people in the "copyright industries" freaked out about new innovations, rather than recognizing their opportunities. He referred to it as "innovation asymmetry" and he's now expanded on the idea over at the Disruptive Competition Project's blog.

I define the innovation asymmetry as an overemphasis on a technology’s infringing uses and insufficient appreciation of its noninfringing uses. Why is there such an asymmetry? Because infringing uses are immediately apparent, quantifiable, and advanced by motivated, well-financed copyright holders. Noninfringing uses, in contrast, are less tangible and less apparent at the onset of a technology.

The costs of infringing uses can be quantified. They roll off copyright owners’ tongues: $250 billion in losses to the U.S. economy each year from IP infringement. 750,000 jobs lost annually from infringement. It doesn’t matter if the figures are correct. For even if they are completely disproved, the mere articulation of numbers promises a precision that is difficult to dislodge from the audience’s consciousness.

On the flip side, the power of potential innovation is much harder to quantify.

In contrast, noninfringing uses are less tangible, less obvious at the onset of a technology, and not advanced by an army of motivated advocates. First, they are less tangible. Noninfringing uses are difficult to quantify. How do we put a dollar figure on the benefits of enhanced communication and interaction? Estimates of future noninfringing uses will be less powerful than the actual, hard-dollar figures presented by copyright owners.

Second, they are more fully developed over time. When a new technology is introduced, no one, including the inventor, knows all of the beneficial uses to which it will eventually be put. The path of history is replete with inventions for which nobody foresaw the eventual popular and revolutionary use.

He then lists out a whole series of inventions where the inventor was completely wrong in how their invention would be used. In some ways, this is a modified form of loss aversion. People often strongly prefer avoiding losses to acquiring gains. But it goes a bit further than that, because Carrier correctly notes that you can look at what's around and try to "quantify" those losses, making them feel more "real" even if they're not. But the opportunities and advancements that these innovations almost always enable are things that are less obvious, even to the inventors, even if they always show up eventually.

So you have a classic form of "information asymmetry" in that you can believe you have real information about the potential losses, but not have the information on the very large gains, leading many to simply focus on the losses rather than the gains. That leads to misguided attacks on the technology, moral panics and the like. Carrier hopes that by explaining this concept, more will begin to actually be aware of it, rather than automatically be swayed by the fear mongering.

When policymakers and courts consider copyright law, they must take into account the innovation asymmetry. For if they do not, innovation will suffer. And we will not even know what we have lost.