Abstract

The idea of alternative compensation methods for recording artists has gained increasing popularity as Internet copying has started to seriously threaten record sales. We start this article by looking at the general theory on alternatives to copyright royalties and show that recording artist income is in practise not dependent on record sales. Then we move forward and map the features of the current alternative proposals and construct yet another iteration of a levy-based compensation method. As an example, we analyze what our model would imply for Finland. In the end we reflect on the idea of a levy-based compensation method to the current predictions of technical advances in communication networks and note that the traditional copyright royalty model is seriously threatened by tremendous personal copying covering practically all the music ever created. We conclude this article by discussing what this will mean for the alternative compensation proposals and the music industry in general.

Abstract

This paper argues that the emphasis by policy-makers on creativity and economic growth in the creative industries, fostered by copyright law, is not well grounded and cultural economics gives little support for these policies.

Abstract

I propose and implement a method to divide the collection of private copy remuneration between the authors of text and the authors of images. I propose that the division should be based on the economic value added by text and images in the original work. Using a unique dataset of books and magazines copied in Spain, I estimate the economic value of each item, text and image, according to different characteristics of the written creative work. My estimates indicate that the average economic value of the images is between 6.35% and 20.00% of the average economic value of the text. These numbers are close to estimates that simply use the proportion of space occupied by images to proxy their economic value.

Abstract

The record industry has become emblematic in debates on reforming copyright law. Economists have mainly studied the extent to which a surge in unauthorised copying is destroying the industry by displacing demand for authorised copies. The effect of technological change on industry structure has received little attention. This paper presents evidence for an extraordinarily high number of market entries by small record companies during a severe recession in the German market for phonograms. This finding is more consistent with a restructuring of the record industry in the context of technological change - i.e. creative destruction - than with plain destruction due to diminished appropriability. If that is the case, isolated attempts to reinforce copyright protection could be misguided. They should be complemented by efforts to promote innovation within the record industry.

Abstract

In the modern theory of innovation, monopoly plays a crucial role both as a cause and an effect of creative economic activity. Innovative firms, it is argued, would have insufficient incentive to innovate should the prospect of monopoly power not be present. This theme of monopoly runs throughout the theory of growth, international trade, and industrial organization. We argue that monopoly is neither needed for, nor a necessary consequence of innovation. In particular, intellectual property is not necessary for, and may hurt more than help, innovation and growth. We show that, in most circumstances, competitive rents allow creative individuals to appropriate a large enough share of the social surplus generated by their innovations to compensate for their opportunity cost. We also show that, as the number of pre-existing and IP protected ideas needed for an innovation increases, the equilibrium outcome under the IP regime is one of decreasing probability of innovation, while this is not the case without IP. Finally, we provide various examples of how competitive markets for innovative products would work in the absence of IP and critically discuss a number of common fallacies in the previous literature.

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.

Abstract

Our objective in this paper is to develop a methodology to infer from the behaviour and choices of broadcasters the "competitive" value they attach to the use of music, more precisely sound recordings, and to derive from such an inferred value the proper "competitive" copyright payments to be made to authors, composers, performers, and makers of sound recordings. We illustrate the methodology by applying it to Canadian data. The background is provided by the statement of case and supporting proof presented in the 2004 proceedings before the Copyright Board of Canada on the commercial radio tariff. The results called for a significant increase in copyright payments by Canada's commercial radio industry: the proper competitive copyright payments should be substantially more than double what the industry was paying at the time of the hearings.

Abstract

This Panel concerns possible lessons for European copyright practitioners learned from the North American experience. I pose two key questions that arise from our existing copyright tariff setting processes: 1) do we need regulatory intervention to achieve appropriate prices?; and 2) how has the process worked so far and how can we make the process better?

Abstract

Promoting Intellectual Property Rights (IPRs) is of particular importance to nations engaging in significant innovation. The existing literature relating to software piracy research is typified by the use qualitative methods to analyse the impact of IPRs on software piracy. Most concern themselves with a handful of important macroeconomic factors in an effort to identify whether they possess any explanatory power, employing qualitative frameworks for analysis. More contemporary research has given greater attention to the role of key regulatory variables on software piracy using econometric methods. In this paper, the relationship between foreign political pressure, IPR regulatory reforms and software piracy is considered. We estimate a model of software piracy as a function of bi-lateral pressure and investment (where US 301 reporting is the proxy for bilateral pressure, and capital investment the proxy for bi-lateral investment), Scientific investment, trade dependence and government effectiveness. The models are estimated using data from 80 countries over nine years. The study responds to the dearth of research employing dynamic panel estimations in estimating the impact of IPR reforms on software piracy. The findings suggest out of cycle review and US 301 reporting are pertinent factors potentially moderating software piracy.

Abstract

The existing economic theory of copyright collectives, or copyright management organizations (CMOs) is strongly focused on the benefits of sharing of transaction costs. Here, we appeal to the contractual environment of CMOs to offer a different perspective. Copyright collectives form contracts at two principle points along the supply chain. First, there are the contracts between the collective's members themselves (the copyright holders) for distribution of the collective's income. And second there are the licensing contracts that the collective signs with users of the repertory. Using standard economic theory, the paper argues that there are significant efficiency benefits from having copyrights managed as an aggregate repertory, rather than individually, based on risk-pooling and risk-sharing through the contracts between the members themselves. Similarly, there are also aggregation benefits (at least in terms of the profit of the CMO) of licensing only the entire repertory, rather than smaller sub-sets. Both of these theses are defended by appealing to existing economic theory literature in related fields. Interestingly, there is a link between these two theories of the efficiency of aggregation which lies at the heart of the theory of syndicates, and the characteristics that imply that the group (or syndicate as a whole) can be considered as a valid "representative", sharing the same preferences as each individual syndicate member.

Abstract

Courts, commentators, and even casebooks mistakenly assume that intellectual property laws are fundamentally utilitarian and thus the relevant objective for intellectual property laws is maximizing social welfare. Economic theories of intellectual property dominate while rights-based theories and other alternatives struggle to remain relevant in the discourse. This essay accepts that intellectual property laws are consequentialist, but it mounts a challenge to the utilitarian theories that dominate. Following the path set by Amartya Sen in the area of development economics and borrowing heavily from the Sen's analytical and normative framework - the Capabilities Approach, this essay begins to develop a human flourishing theory for intellectual property.

Abstract

This study sheds light on the relatively recently emerged new business models employing open source activities in the software industry. We analyze data from 73 Finnish OSS companies' product type (i.e. proprietary vs. OSS product) and license type (i.e. the copyleft vs. non-copyleft licenses)choices. Our data indicate that firm ownership structure has a major influence on software firms' business strategies. Family owned firms tend to rely on the traditional proprietary software in their product selection, whereas diffusely held companies are more likely to supply OSS products. We also find that more service oriented firms are likely to offer more complementary products and further supply their products more often under the OS licenses. Moreover, the market trends concerning a firm's software products affect the license type decisions of the software firms. Consistent with the international data on the dominance of the Apache server that is released under the non-copyleft license, we find that servers are more likely to be licensed under the non-copyleft license. Our estimation results further suggest that a more restrictive form of open source licenses, the copyleft license, is used more often in those companies that have participated in open source software development projects. This finding is consistent with earlier studies that have found that more than 70% of the OSS development projects employ the GPL copyleft license.

Abstract

This paper examines data on the effects of Internet peer-to peer (P2P) file sharing activities on music purchasing. The data was obtained from a survey commissioned by Industry Canada to "inform Industry Canada's policy development work" regarding copyright law reform in Canada. The paper focuses on an important survey question which has not yet been analysed. Analysis of survey responses suggests that P2P file-sharing is a substitute for legitimate music purchases and has strong negative effects on legitimate music purchases. This contradicts the results of earlier analysis of the data commissioned by Industry Canada first published on Industry Canada's website in 2007 (Andersen and Frenz, 2007), and then subsequently revised and republished as Andersen and Frenz (2010).

Abstract

The first decade of the new millennium has been the decade of digital distribution for media products. All products that can be digitized have either been affected, or will soon be. Since the early days of the Internet, piracy has emerged as an important threat to media firms. But new technology also brings an opportunity for firms to engage in new models of pricing. Many of these new forms of pricing produce revenue that is not readily attributed to particular owners, making it necessary for sellers to create new methods for sharing revenue, or pie-splitting. Affected industries have mobilized to enact a number of non-market responses, including recent efforts to induce Internet Service Providers to control the flow of unpaid content through their pipes. This essay reviews the threats, opportunities, and challenges to media firms that have emerged over the past decade, with attention to piracy, pricing, pie-splitting, and pipe control.

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.