Copyright Theory in a Digital World

The Marginal Cost and Open-Access controversies have had substantial effects on the debate about the pricing of digital content. Unfortunately, all existing studies of pricing of digital content, have not explored the full ramifications of Marginal Costs and Open-Access.

The article: a) shows that contrary to some “open-access” theories in the literature, copyright law is necessary – for incentives, for trade (transfer, pledging, sale, documentation) in IP rights, and to preserve social order (to reduce crime, breaches of contracts and torts); b) introduces new elements of marginal cost analysis in the pricing of digital content; c) illustrates how the present mispricing of digital content contributes to illegal online filesharing, d) illustrates how the various elements of Marginal cost analysis can be used to allocate resources for enforcement of IP rights.