Copyright and the Perfect Curve

I. THE "PROGRESS" PROBLEM Everyone agrees that the purpose of the copyright system is to promote progress.' At the same time, though, skepticism about the law's ability to define the substance of progress runs deep within copyright case law and theory. Legal decisionmakers and scholars have quite properly doubted their own ability to evaluate artistic or literary merit, and have worried that efforts to do so would result in an inappropriately elitist and conservative standard.2 In addition, there is room for substantial debate about whether the metaphor of forward motion leaves out other important measures of what "progress" is or might be.3 This agnosticism about prospects for value-neutrality has led copyright law and scholarship to eschew debates about the substance of progress in favor of debates about rule structures for enabling progress. Steeped in jurisprudential and scientific traditions that prize process and method, both in themselves and as proxies for value-neutral decisionmaking, we have decided that even if we cannot say what progress is, we can say something about the system of rules and entitlements that is most likely to promote it. This strategy, though, assumes that the substance of progress is independent of the legal structure designed to produce it. If it is not-if entitlement structures play a role in determining the kinds of new works that will be produced-then we cannot escape making decisions about substance, and it is folly to pretend otherwise. This Essay argues that the assumption that "progress" is qualitatively independent of the underlying entitlement structure is wrong. In particular, I shall argue that a shift to a copyright rule structure based on highly granular, contractually enforced "price discrimination" would work a fundamental shift, as well, in the nature of the progress produced. The critique of the contractual price discrimination model, moreover, exposes deep defects in the use of neoclassical "law and economics" methodology to solve problems relating to the incentive structure of copyright law. What is needed, instead, is an economic model of copyright that acknowledges the central role of unpredictability in the creative process. Part II introduces the contractual price discrimination model and critically examines the premises on which it is based. Part III considers the larger institutional and distributional implications of a shift to contractual price discrimination. It argues that the current system of imperfect controls produces important public benefits-important substantive components of "progress"-that the contractual price discrimination model does not accurately value and would not itself produce to the same extent. Part IV concludes that the need to preserve these benefits, which stem from the inherent complexity and unpredictability of the creative process, requires both a very different structure for copyright law and a very different approach to the task of constructing economic models. II. THE CONTRACTUAL PRICE DISCRIMINATION MODEL Copyright law conceives and promotes progress in two distinct but related ways: First, it seeks to increase both the quantity and quality of creative output. Second, it seeks to broaden public access to creative works.4 Advocates of the contractual price discrimination model argue that it is superior to the traditional copyright framework on both measures. This Part examines these arguments, and identifies important areas of uncertainty in the model's empirical and predictive claims. The two "progress" goals exist in substantial tension with one another. The incentives that copyright law supplies to authors operate by restricting public access to and use of creative works. More specifically, the access restrictions enable copyright owners to charge prices above the marginal cost of producing additional copies of their works. The result is that there are consumers who want to purchase copies of the work, but are only willing (or able) to do so at a price lower than the monopoly price but higher than the work's marginal cost. …