Copyright and patents in the time of crowdfunding

Many things were already said about how Internet makes distribution faster and cheaper and how this is putting under the question rationale for copyright and patents. But Internet through facilitation of crowdfunding is changing also the money flow around the production itself, changing the nature of the investment which arguably has to have a protection of exclusivity to return on the investment. Crowdfunding is changing this because it allows creators to skip the investment-return cycle and directly fund the creation from its users. As such, copyright and patents are obsolete.

In practice, the reason why copyright and patents1 exist is that often production and distribution costs of some creative work are so high that a large upfront investment is required. This investment is often too large for creators themselves, so they partner with some sort of a publisher organization. This organization wants (higher) assurance that its investment will be returned and an established way is through copyright and patents which creators pass over to the organization for the organization to exclusively monetize the creation. The organization gets for this service an award, share of the profits from the monetization. To be truthful, those organizations do often provide additional services, like promotion and many other needed services which creators might not be too familiar with themselves.

Proponents of copyright and patents argue that those rights do exist primarily to incentivize creators to create, but in practice we see that this is not really true. We can see people everywhere who create because they love to create, because they want to tell or give something to other people. But yes, creators do have to life from something.

It is important to remember what are downsides of copyright and patents. All creations are based on past creations by other people. More creations are available for everybody to build upon, more new creations there can be. This is why copyright and patents had to historically find the right balance between being long enough for investments to return and profits to grow, but as short as possible to allow other people to build upon as soon as possible. Sadly, power to exclusively monetize has proven too attractive for organizations to give up, so in 20th century we have seen extensions of this time period which now extend even after the death of original creators. This should not be too surprising though, as we have just to remember again that creators pass over the rights to organizations, which then collect the profits.

While Internet is making distribution of creations cheaper and it is turning business models around, costs of the production can still be too high for creators themselves. But crowdfunding is turning even this around. For example, on Kickstarter, currently the most popular crowdfunding website, creators propose their projects and required budgets to realize them. Those budgets can include everything, from material costs to awards creators want for themselves. People (“the crowd”) can then decide whether they like the project and back (fund) the project if it reaches the given budget before the deadline. For the (co)funding of the project, backers are often promised something in exchange, some result of the project. Once the project reaches the budget and the funding deadline, creators get the funding, can create the project and backers get the results.

Such model of funding of production effectively puts copyright and patents under the question. Creators in advance decide what is the incentive they require to create the project, together with all other costs. Once the project’s budget has been meet they can realize the project and results can enter into the public domain, available for others to build upon and propose other projects. In this way we can all achieve better and faster innovation while still allowing expensive productions to occur.

  1. Trademarks, moral rights, and some other intellectual property rights have arguably still some reason to exist. Especially as a defensive measures. [return]
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