The Questionable(?) Economic Structure of Intellectual Property Law

I am exactly 38 pages into the Landes-Posner Economic Structure of Intellectual Property Law and I have just read something that makes me question whether some of their other reasoning might be similarly shaky.

They’re discussing a feature of some copyright systems under which an author has a right to reclaim the copyright after 35 years (in the American system) or to claim a royalty on a later resale of their work (in some other systems). Their argument is that “giving” authors these inalienable rights is actually bad for authors. In exchange for a right that may only vest 35 or more in the future, the author is forced to give up some money now. For a literally starving artist, food money on hand now would beat royalties 35 years from now. With this I generally agree. But I think they push the point too far when they write:

Economic analysis suggests, contrary to intuition, tat these laws reduce the incentive to create intellectual property by preventing the author or artist from shifting risk to the publisher or dealer. He is prevented because he cannot contract away his right of reclamation. A publisher who must share any future speculative gains with the author will pay him less for the work, so the risky component of the author’s expected remuneration will increase relative to the certain component. If risk-averse, the author will be worse off as a result.

So far, so good. (This line of analysis is why economic defenses of reclamation rights tend to emphasize that what authors loses in bargaining freedom now they will gain by receiving rights in the future at a time when they have more power to demand a better deal. The defense must concede that the rule of inalienability is a restriction on the author’s present freedom.) But then they push on:

And if he dies before the event that vests his right (the passage of thirty-five years, in the case of the recapture right, or the resale of his work, in the case of droit de suite), he will have received no part of the value of the copyright that survived that event, since he was not permitted to sell that value.

A bridge too far for the Dr. Evil and the Mini-Me of the economic analysis of law. The chance that the author might die before exercising the recapture right increases the value of that right in the hands of a potential purchaser. In the negotiations over the sale of the original copyright, the author should be able to demand slightly more from the publisher in exchange for this possibility. Thus, authors in general receive slightly more as a result of the possibility of death before recapture. Some authors—those who live to exercise the recapture right—receive both this “slightly more” and the recapture right itself. Other authors—receive only the “slightly more.” They didn’t receive much of the value of value of the copyright surviving the recapture event, but they were compensated up from for part of the value.

Landes and Posner’s own reasoning from the first part of the analysis shows why their last sentence is untrue. Their point is that making the recapture right inalienable deprives authors some some value. If death, however, bars the recapture right, then an author is in effect permitted to alienate the posthumous recapture right. By their reasoning, giving back that (partial) alienability should benefit authors. Trying to make that possibility into a further screwing over of the author is like trying to drink out of the second end of the straw.

Now, the analysis is slightly more complicated if the recapture right is devisable or otherwise does not vanish at death. (The United States renewal term, for example, passes under an unalterable quasi-intestacy regime to the author’s widow(er), children, and next of kin.) In this case, Landes and Posner are technically correct that the author “receive[s] no part of the value of the copyright that survive[s] that event,” since he was not compensated up front by the publisher for the recapture right and is dead by the time it is exercised. But in this case, the author leaves (or is forced to leave) the recapture right to his family, and so can count its value among the assets he gives to them. He might therefore reduce his voluntary devises to them by its expected net present value, leaving him more wealth to devise as he pleases or to spend during his lifetime. The reasoning is different, but the end result is similar.

The problem with inalienable recapture rights is that they are inalienable. Given that fact, introducing the possibility that the author might die before exercising them cannot hurt the economic interests of the author. It either makes things slightly better for authors (the first case above) or it has no net effect (the second).

Have I missed something here? Working through the reasoning has been enough to convince me. Then again, working through their reasoning seems to have been enough to convince Landes and Posner, so what does that really prove?