EU study: more exclusive rights = worse economy

For the first time, the European Commission has undertaken a study on a copyright-like law to determine whether it does more harm than good — and they've concluded that giving copyrights to people who compile databases actually hurts the database industry.

Europe has had exclusive ownership for "non-original databases" (databases of factual material, like search-engine indexes of the web, or phone books, or similar) for a quarter-century. The first person to compile a database gets a 50-year monopoly over that kind of database, others can't copy it (and in some cases, they're not even allowed to re-create it from scratch).

In the US, there is no such protection. There's increasing pressure to force the US and the rest of the world to adopt database rights, but until now, no government had looked at whether the US model or the European model actually generates more databases and more investment in databases. Which is weird, since the point of giving out exclusive rights in databases is to stimulate investment in and creation of databases.

When you actually compare the US and EU database industries to assess whether more property right hurt or help the database industry, it's clear that no rights are better than lots of rights. Letting the first company that compiles a database control all the uses of that database for half a century means that there's less competition and less innovation. In the US, no database rights have yielded the largest databases in the world (Amazon, Google, the Internet Archive, etc) and more investment in and more profits from databases.

So the big question is: now that the EuroCrats have figured out that more rights equals less economy, are they going to stick to their guns and continue to make faith-based economic policy, or will they start to empirically evaluate future copyrights on the same basis?

[W]hile the report is a dramatic improvement, traces of the Commission's older predilection for faith-based policy and voodoo economics still remain.

The Commission coupled its empirical study of whether the Directive had actually stimulated the production of new databases with another intriguing kind of empiricism. It sent out a questionnaire to the European database industry asking if they liked their intellectual property right – a procedure with all the rigour of setting farm policy by asking French farmers how they feel about agricultural subsidies.

Yet the report sometimes juxtaposes the two studies as if they were of equivalent worth. Perhaps this method of decision-making could be expanded to other areas. We could set communications policy by conducting psychoanalytical interviews with state telephone companies – let current incumbents' opinions determine what is good for the market as a whole. "What is your emotional relationship with your monopoly?" "I really like it!" "Do you think it hurts competition?" "Not at all!"