On Sun, Dec 14, 2003 at 06:24:34PM -0600, Aaron Swartz wrote:
How do we determine how much to pay out (and thus how much to charge)?
We want to pay back whatever sales are lost due to the Internet, but
that's very difficult to calculate. First, not all sales lost are the
Internet's fault (sales could be dropping because nobody likes the
music being put out, the price points, or some other reason). Second,
not all Internet downloads are lost sales (many people download songs
because it's easier/cheaper than buying).
It gets worse when the Internet becomes the dominant medium for
downloading songs, since we have nothing to compare against.
Anyone have any ideas?
Hi Aaron, I can make a few comments here. They may or may not be helpful. And
I'll ignore the transitional issues, jumping straight into a world where there
is no guidance from precedent about the correct "market size" for culture.
One class of solutions involves picking a tax rate, and then seeing how much
revenue you get. Cultural industries, taxpayers and (if the tax is a levy)
electronics/telco companies take turns yelling "higher", "lower", "higher" at
politicians. Cross your fingers and hope that you get a decent equilibrium.
IIRC, Neil advocates something like this.
Another kind of mechanism is survey-driven. You get focus groups of consumers
together, and ask them how much they'd be willing to pay to avoid losing
access to various cultural goods. This method is called "contingent
valuation", and is widely used to value other kinds of public goods, such as
environmental assets. There are some complications in applying it to
an ACS, but these may not be insurmountable. The outcomes of the
contingent valuation process can be used to set the tax rate for the ACS on
an ongoing basis. Of course, you need to find a neutral, disinterested
observer to design the survey process :). This sort of process
might work well with Terry Fisher's model of the Copyright Office as a
planning agency with an "unavoidably vague criterion: sustaining a vibrant and
flourishing entertainment culture".
It's also possible to rely on direct public input. There are several
voting-to-decide-the-size-of-the-pie models:
* ask people how much levy money per capita should go to artists, then take a
median number
* tell people how big the levy was this year, then ask them if it should be
higher or lower next year (if consumers were rational, this would be very
similar to median voting)
* let people make donations to the ACS pie with a 100% tax credit (Alan Toner
suggested this particular approach)
There are some results in the economics literature which suggest that the
first two options could produce Pareto-optimal outcomes (Bowen 1943, de
Trenqualye 1998). Whether or not you could actually get sensible votes out of
a population on a topic like this, is probably a question of norms :).
These three options seem to form a kind of continuum, with increasingly good
information about the "optimal" level of taxation, but decreasing political
and implementational plausibility. In an ideal world, one would have different
countries experimenting with all three approaches, to get some genuine data
about their real world implications.
References
* Bowen, H. (1943). The interpretation of voting in the allocation of economic
resources. Quarterly Journal of Economics 58(1), 27--48.
* de Trenquayle, P. (1997). An extension of Bowen's dynamic voting rule to many
dimensions. Social Choice and Welfare 15(1), 141--159.
--
Peter Eckersley
Department of Computer Science &
IP Research Institute of Australia http://www.cs.mu.oz.au/~pde
The University of Melbourne