Prof. Joel Waldfogel's essay in Digitopoly.

By Joel Waldfogel On Nov 15, 2011

Since the appearance of Napster a dozen years ago, intellectual property rights have effectively been substantially weakened. Unfettered stealing has caused revenues to the recorded music industry to tumble by roughly a third. While this reversal has prompted academic chin-scratching over its cause, most observers now agree that consumers' ability to steal music undermines firms' ability to sell it. The woes of the recorded music industry, along with fears of the movie, television, and book industries, have led many to advocate stronger legal protections for intellectual property, including private lawsuits, and threats of disconnection from Internet service.

While the question of whether stealing undermines selling is of vital interest to the recorded music business, it is arguably not the only important question for evaluating the success of intellectual property rules. The purpose of copyright laws is to provide incentives for the creation of new works. Weakened intellectual property protections present a threat consumers as well as producers: if producers cannot appropriate sufficient revenue to cover their costs, they may stop bringing new products to market, causing harm to consumers as well as producers. Keeping this in mind focuses attention on a different question: what has happened to the volume - and quality - of new works since Napster?

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