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EK 7.3.1N Widespread access to digitized information raises questions about intellectual property.
On this page, you learn about how technology allows for perfect copies at no cost and why that matters.
In the old days, making a copy of something required a physical medium: paper, cassette tape, CD, videotape, DVD, etc. But now anyone can post a copy of something online and anyone else can read, listen to, or watch the content directly from the net.
What that means to copyright holders is that in the old days, they didn't have to worry about individuals copying something for their friends. The cost limited the number of such copies anyone would make. (In the case of books, it was generally cheaper to buy another copy of the book than to photocopy it.) Also, before computers, the copies were never perfect. Each copying introduced noise (static, fuzz, etc.). So copyright holders ignored individual copying, and focused their attention on people with bulk copying facilities who sold large numbers of copies illegally. But today, the big threat to copyright holders is individuals, especially when the individual posts the illegal copy on the web rather than just emailing it to people they know personally.
Marginal cost means the cost of making one more copy of something, once you already have everything you need to do the copying.
Economists say that in a perfect free market, because of competition, the price of anything quickly falls to match the marginal cost. But if all airplane tickets cost only their marginal cost, the airline would lose money because of the very large fixed costs. That's why they sell first class tickets to persuade those who can afford not to take the lowest price to pay more than the marginal cost.
Now think about copyrighted works. In the Internet era, the marginal cost of one more copy of a book, song, or movie is effectively zero. So, the purpose of copyright is to prevent a perfect free market through legal restrictions.
That's a slogan that arose in the early days of the Internet, to argue against copyright. Since everyone can copy everything so easily, according to this argument, the idea of artificially restricting such copying is doomed to failure; copyright is obsolete. But in a zero marginal cost world, copyright is also more important than ever! In the old days, copying was limited by the physical cost. Now there's nothing but copyright allowing artists to support themselves.