2 See Negroponte (1995).

3 See Stanbury & Vertinsky (forthcoming).

4 See Susan Delacourt, "Losing interest," Globe and Mail, April 1, 1995, pp. D1, D5.

5 Of course, other levels of government also produce/own material subject to copyright, including the judgments of provincial courts. Many of the points made in this paper apply to them as well.

6 I take it that copyright protection is afforded to "personal intellectual creations." According to Reichmann (1992, p. 341), copyright consists of "soft protection on soft conditions for [a] long period of time" for literary and artistic work -- in contrast to "hard protection on hard conditions for [a] short period of time" for applied scientific discoveries (patents for inventions). I understand that the core concern of copyright law is in regulating efforts to engage in competitive publication activities to protect the author/owner's economic rights and also to preserve the integrity of the work itself.

7 Thus I wish to avoid a discussion of copyright policy in general and how it may need to be modified in light of the new CITs and how people relate to them.

8 By this term I mean that it is both technologically feasible and economically efficient to protect copyright material.

9 I take this to include the decisions and orders of regulatory/administrative agencies as well as the decisions of the Courts.

10 For several decades, the policy statements of the federal Minister of Transport were among the most important documents specifying the rules of the game with respect to the regulation of airlines in Canada. Some were made in he House of Commons, others were contained in speeches to other audiences.

11 Professor Jacques Fremont states that recently the federal government has brought an action for violation of its copyright against a commercial enterprise which reproduced statutes.

12 I use the phrase copyright material to refer to all types of intellectual property produced by the federal government which is or could be subject to copyright protection under the rules as they presently exist.

13 I assume that private sector creators/owners of copyright material seek to maximize the economic rent from their existing material or from efforts to create copyright material.

14 Recall that the social function served by copyright is to create and protect producers property rights in the product of their creativity so as to offer an incentive to produce more creative work. It is to over-come a market failure, the absence of individual property rights in certain forms of creative work. Generally, see Mackaay (1992a).

15 Of course, unproductive employees or contractors may be fired, but they will not be sued to recover money paid for unproductive time.

16 While the "outputs" of the core functions of government are immensely valuable, in many cases they are best thought of as "intermediate" goods in the production of the "final products" valued by the members of the society. Not all of these have a market value. That is why the GNP is a flawed proxy of real standard of living.

17 The essence of civil society is a set of widely agreed rules to govern relations among individuals and between individuals and the state (because it has the unique power of legitimate coercion in a democracy).

18 In all cases of government intervention, the real choice is between imperfectly functioning markets (e.g., due to market failure) and imperfectly functioning government intervention. (Yes, there is such a thing as "government failure".) See Cowen (1988), De Jasay (1989), Mitchell & Simmons (1994).

19 Collective goods -- even pure public goods -- need not be produced by government. Even the operations of Statistics Canada could be contracted-out to privately -owned firms given the same legal authority to obtain the data. Further, the distribution of the final product (intelligible data) can be contracted-out to private firms. However, government must finance public goods and arrange for their supply. Generally, see Schmidtz (1991).

20 Recall that a few years ago Statistics Canada raised the price of its publications to recover more of its costs.

21 For example, as a condition of the free licence of its copyright, the federal government might well require that the English text of statutes or regulations be accompanied by the official French version and vice-versa.

22 In general, Canadians tend to focus too much concern on the distribution of income instead of allocative efficiency.

23 Then only normal profits can be earned and the optimal volume of output will be produced. Scarce resources will be allocated efficiently (Pareto optimality).

24 A Decima survey in July 1994 indicated that one-third of Canadian households have P.C. A Gallup poll of 1014 Canadian adults in April 1994 found that 38.6% had personal computers in their home or office (Globe and Mail, May 31, 1994, pp. B1, B24). A poll of 1610 Canadian adults conducted in November 1994 found that 39% currently own a computer at home while 27% of those who do not said they will "probably" or "definitely" purchase one in the next year (Maclean's, January 2, 1995, p. 24).

25 A knowledgeable observer estimates that only 20% of PC users in Canada have modems and only 20% of those are hooked up to online services (Globe and Mail, November 15, 1994, p. B30).

26 Subsection 5 of S.79 re abuse of dominant position specifies that "an act engaged in pursuant only to the exercise of any right or enjoyment of any interest derived under the Copyright Act, Industrial Design Act, Patent Act, Trade Marks Act or any other Act of Parliament pertaining to intellectual or industrial property is not an anti-competitive Act." However, S.32 specifies that where patents or trademarks have been used to limit competition unduly, the Attorney General may obtain an Order from the Federal Court of Canada requiring a wide range of actions deemed necessary to prevent the misuse of the patent or trademark.

27 Some obvious examples include the telephone, jet aircraft, television, and the personal computer.

28 This is done by creating transferable, exclusive rights (Mackaay, 1992a, p. 58). However, this monopoly right must be constrained in various ways (scope, duration) to limit the market power conferred on the creator/owner of the intellectual property. A trade-off must be made between the need to stimulate efforts to create new information and the need to limit the monopoly power of exclusivity. Mackaay (1992a, p. 58) argues that "To function effectively as a property right, the creator's right should produce rewards proportional to the interests of the creation to users as measured by their willingness to pay for it." Where a particular type of information has strong public good characteristics, willingness to pay is very difficult to ascertain in markets.

29 Over protection of intellectual property rights can inhibit the rate of diffusion of an innovation.

30 "The electronic signals [0s and 1s] constituting a work in digital form don't know (until they are interpreted by the computer and software processing them) whether they are parts of a song, a picture, a text, a program, or a motion picture, they can, in fact be more than one kind of work" (Samuelson, 1994a, pp. 24-25).

31 A digital transmission may result in a multiplication of copies -- unlike sharing of a physical copy of, say, a book. This appears to be a threat to copyright owners. Yet Samuelson (1994b, p. 24) suggests that they can control such potential abuse by means of the exclusive reproduction rights.

32 Later in the article, Barlow (1994) admits he is more optimistic about our ability to protect intellectual property in cyberspace than much of his article suggests: "Solutions will emerge. Nature abhors a vacuum and so does commerce." Further, "the life forms of information are evolving methods to protect their continued reproduction." Also, "Once a program becomes central to your work, you want the latest version of it, the best support, the actual manuals, all the privileges attached to ownership."

33 Full motion video requires 4.6 billion bps capacity (Forbes, March 28, 1994, p. 116). An ordinary pair of twisted copper wires, the ones used over the last mile to connect residences into the telephone network, have a capacity of 64,000 bps.

34 In 1993, the U.S. had 5904 host computers on the Internet yet 13 of the 53 countries on the list had none: Bangladesh, Bulgaria, China, Columbia, Indonesia, Pakistan, Peru, Philippines, Russia, Saudi Arabia, Sri Lanka, United Arab Emirates and Uruguay (Staple, 1993, Table 1b).

35 Staple (1993, p. 49) states that "the global network now consists of over 600 million telephone lines and more than 1.2 billion terminals in approximately 190 countries." Of the 53 countries listed in Telegeography, 1993, the range of telephone lines per 100 population was from under one (Bangladesh, China, India, Indonesia, Pakistan, Sri Lanka) to over 50 (Canada, Denmark, France, Norway, Sweden, Switzerland, United States) (Staple, 1993, Table 1a).

36 The National Science Foundation spends about $24 million p.a. to operate the backbone of the Internet in the U.S. for the research and scientific communities (Maclean's, January 17, 1994, p. 43). This subsidy is to end shortly.

37 Existing copyright law focuses on the distribution of physical objects (material objects) in which a work is fixed. Digital transmission consists of bit streams which most people do not regard as physical objects (see Samuelson, 1994b, p. 22). But these bit streams travel through physical media (even the air is a medium). And they can only be stored in a physical medium. So how is it that Samuelson (1994b, p. 22) argues "all digital copies are, by their very nature, immaterial."

38 In the old days of print technology, the power and pervasiveness of an idea was seen in its widespread use without attribution. The idea had become so much part of our intellectual furniture that its creator was no longer honoured -- let alone paid. This process is unavoidable regardless of how ides are transmitted.

39 See the discussion in Samuelson (1994b).

40 This is what Barlow calls the "obstinately physical."

41 Mackaay (1992a) identifies the following rights associated with property: (1) Non-transferable rights exclusivity (the right to decide about use and actual use (subject to socially imposed constraints -- usually in the form of law), and the right to yield resulting from use. (2) Transferable rights -- alienability -- capacity to give or sell the property.

42 Note that "copyright law does not grant owners rights to control all performances and displays of their works, but only public performances and displays of those works" (Samuelson, 1994b, p. 23).

43 This is done, however, in some cultures. Among certain tribes of Native Indians on the BC Coast, for example, certain stories -- which are only transmitted orally -- are the recognized property of certain persons or families. There are generally effective social sanctions for the misuse of such intellectual property. Barlow is evidently unaware of this fact for he states that because stories were not "frozen in print, to so called `moral' right of story-tellers to own the tale was neither protected nor recognized."

44 Earlier, Barlow (1994) argues that traditional intellectual property law focuses on protecting the expression of ideas -- usually in a physical form -- rather than the ideas themselves. Ideas themselves have been "considered to be the collective property of humanity." Thus "one didn't get paid for ideas, but for the ability to deliver them into reality."

45 Think of a microchip or a microprocessor. Their raw materials component is tiny. The value added is essentially knowledge.

46 This is not to say that some firms cannot lose millions when their phone service is interrupted.

47 Using computer networks to distribute information may impose less stress on the environment than traditional print media.

48 It has been observed that the fastest growing type of information is information on other types of information and how to gain access to it.

49 Of course, the message may be composed on a computer which is not online at the time of creation, and then sent later.

50 Generally, see Mackaay (1994) who corrects Reichman (1992).

51 What good is fame and fortune after one's death? However, beneficiaries of James Dean's estate can testify to the proposition that a timely death can create wealth for those who inherit his property -- including his intellectual property.

52 Although it is common to describe transaction costs as a form of "market failure" this is not the case for it is not possible to imagine a world in which transaction costs are zero.

53 This is the difference between total social benefits and total social costs.

54 According to Samuelson (1994b, p. 23), Congress intended to limit the scope of reproduction rights in the copyright law "to copies that were substantially permanent or stable to permit the work to be perceived or reproduced for more than a transitory duration."

55 In his conclusions, Barlow (1994) states that "encryption will be the technical basis for most intellectual property protection." This is no easy task, see Anderson (1994).