The Society for Economic Research on Copyright Issues

Review of Economic Research on Copyright Issues (RERCI)

RERCI Articles

Bestselling Musical Compositions (1913-32) and Their Use in Cinema (1968-2007)

Review of Economic Research on Copyright Issues, Vol. 6, No. 2, 31-60, 2009

Paul J. Heald


Abstract

Some economists assert that as valuable works transition from copyrighted status and fall into the public domain they will be underexploited and their value dissipated. Others insist instead that without an owner to control their use, valuable public domain works will be overexploited or otherwise debased. This study of the most valuable musical compositions from 1913-32 demonstrates that neither hypothesis is true as it applies to the exploitation of songs in movies from 1968-2007. When compositions fall into the public domain, they are just as likely to be exploited in movies, suggesting no under-exploitation. And the rate of exploitation of these public domain songs is no greater than that of copyrighted songs, indicating no congestion externality. The absence of market failure is likely due to producer and consumer self-regulation.

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Decreasing Copyright Enforcement Costs: The Scope of a Graduated Response

Review of Economic Research on Copyright Issues, Vol. 6, No. 2, 13-29, 2009

Olivier Bomsel and Heritiana Ranaivoson


Abstract

The digitization of copyrighted goods and the dematerialization of their distribution over the Internet have caused a weakening of copyright, a key institution of the creative industries. One reason is that, during the broadband roll-out, copyright enforcement costs have become superior to the estimated benefits of copyright. This paper analyses the causes of this situation and suggests how a graduated response to infringers can decrease copyright enforcement costs.
The paper starts with a review of the economic literature on copyright that focuses on its industrial aspects. It then analyses how, all along the distribution vertical chain, the consumer's impunity provides incentives to free ride on copyright, which rapidly increases copyright enforcement costs. It finally depicts the graduated response mechanism and the voluntary agreement that initiated this system in France. In conclusion, the increase in the cost of free-riding for the final consumer should lead to a decrease in copyright enforcement costs and to higher returns in the creative industries.

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RERCI

Review of Economic Research on Copyright Issues, Vol. 6, No. 2, 1-4, 2009

Richard Watt


Abstract

The year 2009 has come to an end, and with it this second issue of the sixth volume of the Review of Economic Research on Copyright Issues, or RERCI. It has, at least in the opinion of the Managing Editor, been an extremely productive six first years of the life of this journal, and it has moved from its inception in 2004 as a start-up hoping to find a foothold in the competitive world of academic economics journals, to what I believe is now a widely recognised source of rigorous academic work on the very particular topic of the economics of copyright.

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Law and Innovation in Copyright Industries

Review of Economic Research on Copyright Issues, Vol. 6, No. 1, 61-82, 2009

Matthew J. Baker and Brendan Michael Cunningham


Abstract

The impact of copyright law on innovation is a topic of much debate. We use quarterly data on aggregate copyright applications in both the U.S. and Canada to estimate an empirical model of copyright applications. We measure changes in the breadth of copyright protection by tabulating outcomes of important court cases and new statutes pertaining to copyright protection. We find that the flow of applications exhibits a small but significant positive response to court decisions broadening copyright protection. We also find that applications: 1) respond negatively to increases in registration fees 2) move counter-cyclically 3) have a strong seasonal component and 4) may increase as computing technology becomes more widely available.

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Forever Minus a Day? Calculating Optimal Copyright Term

Review of Economic Research on Copyright Issues, Vol. 6, No. 1, 35-60, 2009

Rufus Pollock


Abstract

The optimal term of copyright has been a matter for extensive debate over the last decade. Based on a novel approach we derive an explicit formula which characterises the optimal term as a function of a few key and, most importantly, empirically-estimable parameters. Using existing data on recordings and books we obtain a point estimate of around 15 years for optimal copyright term with a 99% confidence interval extending up to 38 years. This is substantially shorter than any current copyright term and implies that existing terms are too long.

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Should Different Information Economies Have the Same Duration of Copyright?

Review of Economic Research on Copyright Issues, Vol. 6, No. 1, 13-33, 2009

Michael Y. Yuan


Abstract

Copyright has been increasingly internationalized and, recently, more and more harmonized. However, there has been little theoretical study of international copyright. This paper develops and analyzes a non-cooperative two-country model of copyright, where two countries trade in information goods and each with an open and competitive information goods industry sets copyright policy to pursue self-national interest. The model suggests that an increase in demand for information goods in a country calls for longer copyright protection in this country and shorter protection in its trading partner; decreases in fixed or per-product creative costs in a country with lower such costs call for marginally shorter protection; and an improvement in the economies of creative scale in a country with better economies of creative scale calls for marginally longer protection. Understanding these rational responses of nations to changes in creative technologies and markets should be helpful for international copyright-policy making.

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Profitable Piracy in Music Industries

Review of Economic Research on Copyright Issues, Vol. 6, No. 1, 1-11, 2009

Koji Domon and Tran D. Lam


Abstract

This paper considers how optimal copyright enforcement is affected by the development of those media industries promoting musicians. Accounting for situations in both developing and developed countries, we point out two cases, a strictly convex and a strictly concave profit function with respect to the level of copyright enforcement. In the first case a copyright holder prefers a minimal level of enforcement under immature media industries, and a maximal level of enforcement under mature ones. This means that optimal copyright enforcement switches from minimum to maximum along with the development of media industries. In the second case, optimal copyright enforcement gradually increases concomitant with the development of media industries. If there are various levels of singers, a conflict regarding optimal copyright enforcement among them is more sever in a convex case than in a concave one.

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Open Standards and Interoperability in EU Digital TV: Economics and Policy Issues

Review of Economic Research on Copyright Issues, Vol. 5, No. 2, 45-70, 2008

Nicola Matteucci


Abstract

The quest for interoperability of interactive TV has been a major concern of the EU Institutions. Its policy foundations were built on the enabling role of open standards, whose peculiar standardization process should guarantee affordable and widespread intellectual property rights. After having received considerable public support and financial funds, the interactive TV roll-out appears disappointing, and the diffusion of the main concerned standard, the multimedia home platform, stagnates. We conduct a comprehensive analysis of the main market facts and passages of interactive TV policy, to derive a multifaceted assessment of its technological, economic and institutional drivers. Several important issues stand out. Besides the inner complexity of the policy, a few normative inconsistencies and conflicting aims adversely impacted its feasibility. Several logical ambiguities also dampened the correct choice of instruments. In particular, the existing literature clarifies two main points: open standards cannot be uncritically assimilated to open source software, and the role of open standards along the broadcasting value chain is largely unexplored. Consequently, their effects here might differ from those experienced in traditional information and communication technologies markets. Finally, a certain evidence of regulatory capture of the EU policy-maker emerges.

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Visual Artists' Resale Royalty: An Application of the Principal and Agent Model

Review of Economic Research on Copyright Issues, Vol. 5, No. 2, 37-43, 2008

Maryam Dilmaghani


Abstract

The visual artist's resale royalty right entitles an artist to a percentage of the price received by subsequent owners when her works are resold. Adopted by the integrity of EU countries in 2006, the question of the Federal recognition of this right in the US is currently discussed. Economic analysis of this right mostly concluded its inefficiency. In this paper we examine the issue from the stand point of incentives provided by each legal framework, with and without this right, for the artists. We argue that an optimal mechanism designed to implement a maximum level artistic effort in the society coincides with the adoption of this right.

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The Emergence of Musical Copyright in Europe from 1709 to 1850

Review of Economic Research on Copyright Issues, Vol. 5, No. 2, 3-18, 2008

Frederic M. Scherer


Abstract

This paper, written for a conference of the Society for Economic Research on Copyright Issues, explores the history of copyright protection for musical compositions. The first modern copyright law did not cover musical works. The role of Johann Christian Bach, Ludwig van Beethoven, and Johann Neopmuk Hummel in securing legal changes is traced. How Giuseppe Verdi exploited the new copyright law in Northern Italy is analyzed. The paper argues that Verdi, enriched by copyright protection, reduced his compositional effort along a backward-bending supply curve. However, his good fortune may have had a demonstration effect inducing other talented individuals to become composers. An attempt to determine the impact of legal changes on entry into composing is inconclusive. The paper shows, however, that a golden age of musical composition nevertheless occurred in nations that lacked copyright protection for musical works.

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The Incentives for Contributing Digital Contents Over P2P Networks: An Empirical Investigation

Review of Economic Research on Copyright Issues, Vol. 5, No. 2, 19-35, 2008

Fabrice Rochelandet and Tushar K Nandi


Abstract

In this paper, we examine the determinants of sharing behaviour by envisaging two types of behaviour, namely contribution against free riding. In doing so, we evaluate the theoretical predictions about reciprocity and altruism in the presence of non-rival goods and anonymity. We use a probit model and primary data from a survey that collects information about P2P sharing behaviour of more than 2000 individuals. Our econometric results suggest that the motivations for contributing are poorly determined by rational self-interested behaviour. We then envisage policy implications in terms of copyright enforcement and business.

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Considering the Risk Dimension in the Administration of Copyright

Review of Economic Research on Copyright Issues, Vol. 5, No. 1, 75-87, 2008

Ana Maria Tetrel


Abstract

In the law and economics literature of copyright, the economic function of collecting societies has been principally treated as a way to diminish transaction costs. However, another possible function, the transfer of risk as a function of collective administration has been, relatively, ignored. Through risk analysis, an author will be able to determine which method of administration of protected rights is most beneficial to him. Due to information asymmetries, authors and users bear a number of risks. These risks can be transferred to a collecting society which is in a better position to bear them more efficiently and to better administer the protected rights.

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Exclusion, Competition and Change: The Shifting Boundaries of the Television Market

Review of Economic Research on Copyright Issues, Vol. 5, No. 1, 55-74, 2008

Giovanni Battista Ramello and Francesco Silva


Abstract

The aim of this work is to analyse the evolution of pay-TV as an example of the dynamics that characterise the media sector and in which copyright has played a pivotal role. In one simplified representation, we can identify two crucial levels on which the market is shaped: that of content, governed by copyright, and that of distribution. Control over each of these levels offers, in different ways, leverage for orienting the market, and has thus been an object of the strategies of firms. On the whole we can say that the innovation path characterising media markets extends beyond the purely technological sphere to also embrace the market as an "organisational technology" for production and exchange. Hence, the competitive process, so important for defining the market configurations, must be discussed from an intertemporal perspective in which technological choices, the regulatory framework and control of copyrights can be viewed as both exogenous and strategic variables manipulated by firms to obtain profits.

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Restricting Access to Books on the Internet: Some Unanticipated Effects of US Copyright Legislation

Review of Economic Research on Copyright Issues, Vol. 5, No. 1, 23-53, 2008

Paul A. David and Jared Rubin


Abstract

One manifestation of the trend towards the strengthening of copyright protection that has been noticeable during the past two decades is the secular extension of the potential duration during which access to copyrightable materials remains legally restricted. Those restrictions carry clear implications for the current and prospective costs to readers seeking "on-line" availability of the affected content in digital form, via the Internet. This paper undertakes to quantify one aspect of these developments by providing readily understandable measures of the restrictive consequences of the successive modifications that were made in U.S. copyright laws during the second half of the twentieth century. Specifically, we present estimates of the past, present and future number of copyrighted books belonging to different publication-date "cohorts" whose entry into the public domain (and consequent accessibility in scanned on-line form) will thereby have been postponed. In some instances these deferrals of access due to legislative extensions of the duration of copyright protection are found to reach surprisingly far into the future, and to arise from the effects of interactions among the successive changes in the law that generally have gone unnoticed.

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The Economics of Copyright Law: A Stocktake of the Literature

Review of Economic Research on Copyright Issues, Vol. 5, No. 1, 1-22, 2008

Ruth Towse, Christian Handke and Paul Stepan


Abstract

This article is a survey of publications by economists writing on copyright law. It begins with a general overview of how economists analyse these questions; the distinction is made between the economics of copying and the economic aspects of copyright law as analysed in law and economics. It then continues with sections on research on the effects of copying and downloading and the effects of unauthorised use ('piracy') and ends with an overall evaluation of the economics of copyright in the light of recent technological changes. Economists have always been, and still are, somewhat sceptical about copyright and question what alternatives there are to it. On balance, most accept the role of copyright law in the creative industries while urging caution about its becoming too strong. And although European authors' rights are different in legal terms from the Anglo-American copyright, the economic analysis of these laws is essentially the same.

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