Review of Economic Research on Copyright Issues (RERCI)

RERCI Articles

More Music in Movies: What Box Office Data Reveals About the Availability of Public Domain Songs in Movies from 1968-2008

Review of Economic Research on Copyright Issues, Vol. 9, No. 2, pp. 31-54, 2012, Illinois Public Law Research Paper No. 11-23

Paul J. Heald , Peibei Shi, Jeffrey Stoiber and Qingyao Zheng

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A previous empirical study suggested that as copyrighted songs transitioned into the public domain they were used just as frequently in movie soundtracks as when they were still legally protected.That study, however, did not account for the number people who viewedeach movie in the theater. Since the debate over copyright term extension centers on the continuing "availability" of works as they fall into the public domain, a better measure of the availability of songs in movies would account for the relative box office success of the movies in which the songs appear. The present study collects box office data for hundreds of movies from 1968-2008 in which appeared hundreds of songs and concludes that public domain songs were heard by just as many people in movie theaters before and after they fell into the public domain.

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Enforcement Sharing and Commercial Piracy

Review of Economic Research on Copyright Issues, Vol. 3, No.1, 83-97, 2006

Dyuti S. Banerjee

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This paper uses a strategic entry-deterrence framework to analyze the effects of enforcement sharing between the government and the monopolist in dealing with commercial copyright piracy. The monopolist is the incumbent firm and is responsible for monitoring the illegal operations of a commercial pirate, the possible entrant, who illegally reproduces and sells unauthorized copies of the monopolist's product. The monopolist bears the monitoring cost and the government is responsible for setting a penalty. We show that even when enforcement is shared the socially optimal penalty may result in no piracy in equilibrium only if the government is sensitive to piracy.

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Remarks to the SERCI Panel on Regulatory Copyright Tariff Setting

Review of Economic Research on Copyright Issues, 14(1/2), 45-54, 2017

Gerry Wall

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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?

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Copyright Auctions and the Asset Value of a Copyright Work

Review of Economic Research on Copyright Issues, 13(2), 83-99, 2016

Ruth Towse

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Research on the economic history of copyright and music publishing turned up an unusual source of data on the value of copyrights, namely detailed accounts of public auctions of musical items that were held in London between 1794 and 1960 of, inter alia, copyrights and the engraved plates from which musical works were printed. The standard contract between song writers/composers and music publishers in the 19th century bought out all rights and therefore the sale of the plates was also the sale of the copyright to the work, enabling the new owner to print and distribute the work. The sales also facilitated entry into and exit from the industry.
This paper describes the historical circumstances of copyright and the market for printed music and presents some of the more notable data, with calculations of their present day values. Though insufficient for a full statistical analysis, the paper provides some hard evidence of the asset value of copyright in musical works as perceived by the music publishers of those times. The paper also suggests a basis for further research.

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Indirect Copyright Infringement Liability for an ISP: An Application of the Theory of the Economics of Contracts under Asymmetric Information

Review of Economic Research on Copyright Issues, 2018, 15(2), 57-79

Richard Watt and Frank Mueller-Langer

Downloads:  208


Under current copyright law in many countries, Internet Service Providers (ISPs) can be found liable for the traffic on the websites that they host. While the ISPs themselves are not undertaking acts that infringe copyright, indirect liability asserts that they either contribute to, or encourage in some way, infringing activities, and thus they are liable to claims of indirect involvement by the affected copyright holders. The present paper explores indirect liability in a standard principal-agent setting, where both moral hazard (the act of monitoring) and adverse selection (differential costs of monitoring over ISPs) are present. The model considers the kinds of contracts that could be signed between the copyright holders (acting through a collective) and the ISPs (acting individually). We specify the contracts that are self-selecting and incentive compatible for the set of feasible scenarios.

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Sunk Costs, Free-Riding Justifications, and Compulsory Licensing of Interfaces

Review of Economic Research on Copyright Issues, Vol. 1, No. 2, 29-53, 2004

Net Le

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This paper addresses two popular arguments against a compulsory license of software interface, using risk analysis methodology. These concerns are the non-recovery of sunk costs and the threats posed by free riders. My argument is that while both concerns are legitimate, they are remediable. The purpose of the law is not to allow the incumbent to recover its 'sunk costs', but to give sufficient incentives for it to innovate. These two incentives are the monetary incentives (finding fair access fees and stimulating cooperation with the entrants after the license) and the time incentive (finding a period during which refusal to license is acceptable). With respect to the fair amount of access fees, it is better to provide a mechanism so that the licensor and the licensee can negotiate the fees themselves, rather than to impose a strict method of fee calculation. If the monetary incentives alone are sufficient to generate motivation for innovation, the time incentive should not be used.

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Europe's Lost Royalty Opportunity: A Comparison of Potential and Existing Digital Music Royalty Markets in Ten Different EU States

Review of Economic Research on Copyright Issues, 11(2), 60-91, 2014

Roya Ghafele

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A comparison of existing online revenues collected from digital music licenses and the potential royalty market for online music, suggests an inadequate royalty market capture within the European Union. An estimate of the 2012 market for digital music royalties in ten different E.U. countries indicates this market could have been well over €18 billion. However, only €116 million were reported by corresponding Collective Rights Management Organizations in that same year. The three largest digital music royalty markets (U.K., Germany and France) comprise around €11 billion. Yet, the corresponding Collective Rights Management Organizations (PRS for Music, SACEM and GEMA) generate only €95 million in royalty revenue from all online media. The gap between existing and potential royalties is tremendous and suggests that E.U. Member States have not come to grips yet with the internet. Their existing business models, paired with a regulatory environment rooted in the 19th century rationale of the Berne Convention has not been supportive of grasping the opportunities provided by a disruptive technology. By consequence, artists do not receive the royalties they deserve, commercial users are exposed to prohibitive license fees and non-commercial users suffer from adequate legal alternatives to digital piracy.

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Cartel Sustainability and Piracy in a Vertically Differentiated Oligopoly

Review of Economic Research on Copyright Issues, 11(1), 9-31, 2014

Iacopo Grassi

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In recent years economic literature has deeply analyzed piracy and copyright violation. Nevertheless most of the contributions focus on the study of digital markets and monopoly. In this paper we concentrate on the effect the entry of a pirate may have in a vertically differentiated duopoly where originally two firms compete producing a high quality and a low quality good. We show that, under general conditions payoffs of firms might increase with piracy, since piracy may support collusion between the two firms producing the original goods and the collusive profits of the firms in presence of piracy may be bigger than the profits of Nash without piracy. This result may explain the reason why in some markets, like the fashion market, where the producers of the original brands basically control the supply chain of the sector, piracy and production of high quality fakes is huge.

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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

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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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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

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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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The Spanish Copyright Commission (Section I) Within the European Legal Framework

Review of Economic Research on Copyright Issues, 14(1/2), 39-44, 2017

Raul Rodriguez

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Directive 2014/26/EC foresees that EU member States shall ensure that disputes between collective management societies and users concerning, in particular, existing and proposed licensing conditions or a breach of contract can be submitted to a court, or if appropriate, to another independent and impartial dispute resolution body where that body has expertise in copyright law. The Spanish Copyright Commission (Section I) aims to be that body in Spain. In order to reach this objective, the Commission has been empowered with new functions that will probably reduce the existing conflicts related to copyright licensing.

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Intellectual Property: How the Right to Keep it to Yourself Can Facilitate Dissemination

Review of Economic Research on Copyright Issues, Vol. 2, No. 2, 17-23, 2005

William J. Baumol

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The fundamental conflict in the goals of intellectual property (IP) policy is the apparent incompatibility of protection of the creator and ease of dissemination. Copyrights and patents seem to favor the first goal and conflict with the second, but patents have actually helped to resolve the conflict by transforming the IP into a tradable commodity. As a result, many patent proprietors actively promote use of their IP by others, even direct competitors. Patent licensing is a major revenue source for many firms. Patent pools institutionalize remunerative sharing of IP. Even from their medieval beginnings, patents were used to encourage dissemination and they continue to serve that purpose directly via disclosure requirements. So, perhaps with some redesign and innovative usage, copyrights can help to reconcile the two apparently conflicting goals - provision of incentives for both creative activity and widespread use of its products.

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The Limits of Indirect Appropriability in Markets for Copiable Goods

Review of Economic Research on Copyright Issues, Vol. 2, No. 1, 19-37, 2005

Justin P. Johnson and Michael Waldman

Downloads:  193


An extensive literature has developed that argues that in many settings the social welfare costs of copying or piracy are limited because of the presence of indirect appropriability. Indirect appropriability is the idea that original good producers can appropriate some of the value derived by the consumers of copies because of the return that buyers of original units receive from allowing copies to be made. In this paper we discuss the limitations of indirect appropriability, where the two we focus on are the "flooding" of the copy market and substitutability between new units and copies. We also discuss the ramifications of our analysis for real world markets.

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Introduction to RERCI Vol 14(1/2)

Review of Economic Research on Copyright Issues, 14(1/2), 0, 2017

Richard Watt

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Introductory comments to the present issue of the journal.

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Optimal Copyright Over Time: Technological Change and the Stock of Works

Review of Economic Research on Copyright Issues, Vol. 4, No. 2, 51-64, 2007

Rufus Pollock

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The optimal level for copyright has been a matter for extensive debate over the last decade. Using a parsimonious theoretical model this paper contributes several new results of relevance to this debate. In particular we demonstrate that (a) optimal copyright is likely to fall as the production costs of 'originals' decline (for example as a result of digitization) (b) technological change which reduces costs of production may imply an increase or a decrease in optimal levels of protection (this contrasts with a large number of commentators, particularly in the copyright industries, who have argued that such change necessitates increases in protection) (c) the optimal level of copyright will, in general, fall over time as the stock of work increases.

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