The Board on Science, Technology and Economic Policy (STEP) of the National Academy of Sciences (NAS) requests co-funding for a project on The Impact of Copyright Policy on Innovation in the Digital Era. We have identified the issues surrounding copyright as critical to our program in Digital Information Technology and the Dissemination of Knowledge but the debate surrounding copyright has been informed by more heat than light. This is an effort by the NAS to bring a more rational and systematic approach to discussions of copyright by expanding research in this area and by identifying a community of researchers with interest and knowledge of copyright to inform broader policy discussions. They would begin by commissioning three background papers: 1) a review of existing literature on the costs and benefits of copyright and related Intellectual Property Rights (IPR) policies; 2) A baseline estimate of the magnitude and categories of U.S. economic activity affected by copyright together with a discussion of the range of business models dependent on its protection; and 3) a theoretical analysis of how copyright might stimulate or inhibit innovation, collaboration, and creativity. The project will also create a public Web site to post papers, comments, and other discussion items regarding copyright. In the spring, NAS would host a day and a half workshop to address and prioritize a range of research topics and methodologies. We are being asked to cover half of the budget. Several Sloan staff would attend this workshop because so little rigorous work has been done in this area, and we believe issues of copyright and intellectual property cut to the heart of our program in Digital Information Technology and the Dissemination of Knowledge.