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This clearly benefits wealthy owners of IP (disney, movie studios, game publishers, etc) over small-time artists (self-published authors, small bands, etc) since the period of time that IP protection remains an economic choice is strongly tied to the value of the IP.

E.g., if you write a book and realize $5,000 in sales per year, then 10 * 2^x=5000 where x is 8.97, so you only enjoy 8 years of revenues ($40,000) and you've paid Σ(1->8) 10 * 2^x = $5,100 for the privilege, for a net $34,900 or 6.98x the yearly royalty value.

If Dreamworks sees $500M a year in Minions merchandising, then 10 * 2^x=500,000,000 where x = 25.56 and so Dreamworks realizes 25 years of revenues ($12,500,000,000) and pays Σ(1->25) 10 * 2^x = $671,088,620 for the privilege, for a net $11,828,911,380 or 23.66x the yearly royalty value.

This is backward, in my opinion.

▲ nine_k a day ago | parent | next [-]

Big acts grossing colossal figures can continue that for a longer time. But the growth of the fee is exponential, while sales never grow exponentially for indefinite time. I can agree that the base of 2 may be too low; let's take 4 instead.

Let's assume that Dreamworks are so good that they get $500M a year for a particular IP. For 10 years they enjoy free coverage.

But even if on year 25 of coverage they would still have been making some money on the franchise, next year they go badly into the red.

The code:

  def fee(y): 
    return 0 if y <= 10 else 10 * 4 ** (y - 11)

  def total_fee(y): 
    return sum(fee(yy) for yy in range(1, y + 1))

  def total_revenue(years, yearly_revenue=500_000_000): 
    return yearly_revenue * years

  def balance(y):
    f = total_fee(y) / 1_000_000
    r = total_revenue(y) / 1_000_000
    return "%2d %8.1fM %8.1fM %6.1fM" % (y, f, r, r - f)

  for y in range(21, 27):
    print(balance(y))

Output:

  21     14.0M  10500.0M 10486.0M
  22     55.9M  11000.0M 10944.1M
  23    223.7M  11500.0M 11276.3M
  24    894.8M  12000.0M 11105.2M
  25   3579.1M  12500.0M 8920.9M
  26  14316.6M  13000.0M -1316.6M

As we see, the optimum total revenue is achieved after 23 years of protection, and then it goes down fast, turning negative on year 26.

And this is for a mega-popular franchise, that makes half a billion every year in a row for more than two decades. It's a very rare hit, comparable to Star Wars maybe, or the Mickey Mouse. Most IPs don't stay so staunchly popular for this long.

You can try playing with the parameters and check outcomes for different revenue shapes and fee bases.

▲ nayuki a day ago | parent | prev [-]

It's not backward. It means that wealthy IP owners pay more tax to society for the privilege of earning more!

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nwiswell a day ago | parent | next [-]

Small owners of IP get to enjoy less value from their creations due to weaker IP protections. That's backward.

Moreover the amount of tax paid as a fraction of total value realized is actually lower for the large owner of IP because the total tax payment is dominated by the final years, but the total revenue is determined by the number of years. In the example above, we had:

$5,100 / $40,000 = 12.75% tax for the small author, and

$671,088,620 / $12,500,000,000 = 5.37% tax for Dreamworks.

The ratios would be even worse if the small author could've just barely justified the 9th year. Pretty much unconscionable.

The fact that we're collecting tax from IP is not interesting. We have progressive income tax for this purpose.

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jmward01 a day ago | parent | next [-]

So your argument is that something that takes in 500m in its useful lifetime shouldn't net the creator more than something that takes in only 100k in its useful lifetime? Yes, big content X that churns out mega movies that have more staying power than indy film y would make more money, but now instead of that mega company X holding onto everything for 10 lifetimes they are forced to releases it. If this is structured to kick in with normal lifespans accounted for then it shouldn't really hurt the indy side of things.

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nwiswell a day ago | parent [-]

My argument is

1) that something that takes in 500m in its useful lifetime should not be subject to a lower tax rate than something that takes in only 100k in its useful lifetime (in fact it should be subject to a higher tax rate, in line with income tax policy);

2) something that takes in 500m should not automatically be entitled to a longer useful lifetime than something that takes in 100k.

Unfortunately both things are true for this proposal. #1 can be ameliorated by offering an income tax credit, but #2 is fundamental.

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nine_k a day ago | parent [-]

I honestly don't understand why #2 is bad. Can you please explain the logic and values behind your reasoning? No irony here, just a desire to learn.

	▲	nwiswell 9 hours ago \| parent [-]
		Because it drives inequality. We're proposing a policy that explicitly benefits large owners of capital over small ones. Inequality is a natural outcome of capitalism, and critically it will get worse without limit unless there is significant policy intervention (ref. Capital in the Twenty-First Century). Existing progressive income taxes are not sufficient, even in Europe where they are far more aggressive. So from a policy perspective, this is exactly the opposite of what is desired.

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nine_k a day ago | parent | prev [-]

I'd like to remind that IP protection does not solely exist to benefit authors. It exists to benefit the society as a whole. That is, not only the writers and actors, but also the readers and viewers. The original post, if you take a look, is about an obvious disbalance of the benefits the IP holders of old games receive vs the lost benefit of the society from preserving these games. Many games are works of art, on par with books an movies, a part of society's cultural heritage.

Unlike physical property, "intellectual property" requires quotes, and does not enjoy a constitutional protection, all for a good reason.

My proposal has a few benefits that, to my mind, outweigh the shortcomings.

* It is very simple. There's no room for any shenanigans, small print, etc.

* It is very uniform. It applies to every kind of IP (of the same class) equally. Again, no room or need for small print.

* It has a large enough free grace period, longer than the peak periods when most movies make the large box offices, most books have the first 2-3 successful reprints, most games have initial sales + DLC sales, etc. For most folks, nothing changes, because their revenues from a particular IP go to zero or near-zero by the end of the grace period.

* It's guaranteed to terminate the IP protection sooner or later, and most of the time, sooner. No demand curve stays exponential forever; the fee stays exponential as long as it takes.

* It does not depend on any accounting. No box office numbers to smear, no audience sizes to inflate. No matter how much you earn, you can pay for the protection as long as you care to afford it.

* It protects the most valuable / profitable IP preferentially. If something is really really huge, and people keep asking the authors to shut up, take their money, and produce moar, that thing can stay protected for longer. When most people stop caring enough, it becomes pointlessly costly to keep protecting it. This benefits the few that care though, the librarians and archivists of the world, and the new creators who now can build freely on top of the things that went to public domain.

So no, the small author just does not have to pay anything, small authors are just protected for 10 years for free, and may buy half a decade of protection cheaply if they care. But after that, they should admit that this particular cow is not worth milking forever.

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tedunangst a day ago | parent | prev [-]

It means big movie studios simply wait for small authors to give up and then release adaptations without royalty payments.