Promoting Innovation and Economic Growth: The Special Problem of Digital Intellectual Property

Mar 1, 2004
There has been an explosion in the popularity of downloading and transmitting high-value digital content, triggered by the growth of the Internet and the evolution of peer-to-peer systems. At the same time, there is a substantial disconnect between public attitudes toward copyright and the letter of the law, and growing concern among copyright-holders over the erosion of their rights. The National Academy of Sciences has identified the phenomenon at the center of these developments and labeled it the "digital dilemma": The same technologies that allow the creation and manipulation of digital content (as well as its perfect reproduction and nearly free distribution) can also be used to prevent access to digital content. The result is a major policy debate between those who seek to protect their rights in digital content and those concerned about the public access to content that has traditionally been guaranteed under copyright law. In this emerging digital world, what, if anything, should be done to ensure that authors, artists, songwriters, and musicians have adequate incentives to create content? And what, if anything, should be done to protect the public's access rights, developed in the physical world, in order to encourage innovation and dissemination and to enhance the public domain? This report from the Digital Connections Council (DCC) of the Committee for Economic Development presents a different view of this "digital dilemma." Because of CED's mission to foster economic growth, the DCC has focused on the economic impact of copyright protection in the digital age and the potential economic effects of proposals for change. The report briefly explores the history of copyright law, revealing that legal protection of the rights of creators has always been explicitly balanced against protection of ongoing innovation. The DCC brings the perspective of the second innovator -- the creator of new social value based on existing copyrighted works -- to bear, noting that every creator owes a debt to what has come before. For this reason, our intellectual property systems are based on providing incentives to both create new material and to make such material open to the public for use for subsequent creation. The report then discusses current proposals for legislative and regulatory change, focusing on requests by the content distribution industries for technical copy protection mandates. Such mandates would have substantial effects on the information technology and consumer electronics industries in this country, on innovation, and on the economic growth that stems from the freedom to innovate.
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