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Review of Economic Research on Copyright Issues (RERCI)

RERCI Articles

Digital File Sharing and the Music Industry: Was There a Substitution Effect?

Review of Economic Research on Copyright Issues, Vol. 2, No. 2, 41-52, 2005

Norbert J. Michel

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Abstract

Several empirical studies exist that measure the impact of filesharing services on music sales, and most suggest that there was a negative impact on sales. Still, most of these studies do not examine (at the household level) whether consumers substituted out of music and into movies. This paper uses micro-level data from the Consumer Expenditure Survey (1998 through 2003) to test for this possible substitution effect. The data do not support the hypothesis that music consumers spent less on music because they spent more on either movie tickets or prerecorded movies (purchases or rentals).

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Copyright, Evidence and Lobbynomics: The World after the UK's Hargreaves Review

Review of Economic Research on Copyright Issues, Vol. 8, No. 2, 65-100, 2011

Benjamin Mitra-Kahn

Downloads:  325


Abstract

This paper tries to convey the problems we government economists face in weighing up the evidence around copyright policy, and how the academic and grey literature plays a role in this. This is with particular reference to the recent review of the IP framework in the UK - the Hargreaves Review - and the reforms which are now being planned. The paper outlines the proposed changes and tries to raise the research questions which will need to be answered for Government to take these reforms forward. My primary aim in this paper is to emphasise that we are looking for help in gathering this evidence, and secondly to show that the institutions of Government can make it very hard for us civil servants to find all the relevant answers, as we often don't know who to ask, or have the time to ask. I try to illustrate this by going through one aspect of the evidence we believe we have, and look in some detail at a very influential piece of 'lobbynomics' on the cost of infringement. The purpose of this is to share the view from the other side of the policy debate, and to invite the reader inside the bubble that can be government policy making, all the while trying to get out of said bubble.

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Music Product as a Durable Good and Online Piracy

Review of Economic Research on Copyright Issues, Vol. 3, No. 2, 53-66, 2006

Sougata Poddar

Downloads:  315


Abstract

Music is typical experience good and the formats in which music is available; for example, CDs and cassettes or downloaded files are durable in nature. Using these two typical characteristics of the 'music product', in this paper, we develop an analytical framework to study the economic implications of online music piracy. On one hand, we show that no protection against piracy is never optimal for the legitimate music producer; on the other hand, we show that complete protection against piracy may not always be the best option; the decision on the degree of limiting piracy depends on the extent of the informational value of music downloads, cost of piracy and the quality of the downloaded music and as a result a partial protection can be optimal to the music producer.

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The Economics Fair Use/Dealing: Copyright Protection in a Fair and Efficient Way

Review of Economic Research on Copyright Issues, Vol. 9, No. 1, 3-46, 2012

Marcel Boyer

Downloads:  309


Abstract

The Canadian Copyright Act (R.S.C., 1985, c. C-42) includes several exceptions to the exclusive right of copyright holders. Among the most important are the provisions concerning "fair dealing", which state that the use of a copyright protected literary or artistic work for the purposes of private study, research, criticism or review, or news reporting does not constitute a violation of copyright. Our objective in this paper is to characterize the role and nature of this exception from the standpoint of contemporary economic theory and analysis and in the light of the recent Supreme Court of Canada decision on this subject (CCH Canadian Ltd. v. Law Society of Upper Canada, [2004] 1 S.C.R. 339, 2004 SCC 13). We propose in the conclusion a market based approach to maximize the dissemination of works while avoiding unnecessary recourse to the fair dealing exception.

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Competition Policy, Patent Pools and Copyright Collectives

Review of Economic Research on Copyright Issues, Vol. 8, No. 2, 3-34, 2011

Nancy Gallini

Downloads:  309


Abstract

This paper analyzes and compares two types of cooperative agreements that combine Intellectual Property (IP): patent pools and copyright collectives. I evaluate antitrust policy in three environments in which owners of the intellectual property (IP): (1) are vertically integrated into the downstream (product) market; (2) face competition in the upstream (input) market and (3) own downstream products that do not require a license on the pooled IP but compete with products that do. Although patent pools and copyright collectives differ in purpose, membership size and market conditions, their efficiency implications are qualitatively similar in each of the three situations. Therefore, a uniform rather than IP-specific competition policy is appropriate for pools and collectives, thus lending economic support for the approach followed by antitrust authorities toward IP-related cooperative agreements.

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Copyright from an Institutional Perspective: Actors, Interests, Stakes and the Logic of Participation

Review of Economic Research on Copyright Issues, Vol. 4, No. 2, 65-97, 2007

Antonina Bakardjieva Engelbrekt

Downloads:  306


Abstract

This article investigates recent developments in copyright, proceeding from a participation-centred comparative institutional approach (Komesar, 1994). Following institutional theory, the approach implies conceiving of the market, the political process (legislatures and administrative agencies) and the courts as alternative decision-making processes in the area of copyright law and policy. It emphasises the importance of institutional choice, based on careful comparison of the modalities for participation of different interests in these processes.
Novel digital and information technologies influence the conditions for participation in copyright decision-making at all levels and unsettle previously established institutional equilibriums. In the wake of the Infosoc Directive, a dynamic process of institutional adjustment seems to be unfolding in the Member States of the European Union whereby a variety of private, public and mixed institutional schemes for interpretation and enforcement of the new digital copyright are emerging, seeking to reconcile the interests of a variety of old and new stakeholders. This dynamism is interpreted as a search for appropriate decision-making institution to mitigate the consequences of an expansive legislative copyright policy as materialized in the Infosoc Directive and to re-establish a balance of rights and obligations. It is argued that the institutional design of these schemes and the modalities for actor participation will be crucial for their sustainable success and seem therefore to deserve more careful scrutiny. At the same time, the conservative force of institutional legacies is emphasized as a factor deterring institutional innovation.

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Transactions Costs and Administered Markets: License Contracts for Music Performance Rights

Review of Economic Research on Copyright Issues, Vol. 3, No.1, 61-74, 2006

Michael A. Einhorn

Downloads:  297


Abstract

Performance rights organizations (PROs) provide transactional efficiency for music users and copyright owners by negotiating contracts, collecting revenue, and paying royalties for the rights to publicly perform musical compositions, thereby replacing their need to deal individually with one another in bilateral licensing. Historically, performance rights for catalogued works have been made available to users through blanket licenses, which convey the rights to perform, or have performed on licensed premises, all registered works in the corresponding catalog of registered works. While blanket licenses may enhance transactional efficiency, the same licenses are sometimes recognized as anticompetitive restrictions that compel each user to make an all or nothing choice that may force acceptance of a full license contract in place of a less inclusive alternative that may actually be preferred. Competitive concerns at the Antitrust Division of the U.S. Justice Department regarding blanket licensing at ASCAP and BMI led to a separate series of Consent Decrees for each of the two major PROs in the U.S.
To explore the disparate claims of economic efficiency, the paper finds that concepts from public utility regulation may be particularly helpful. Three characteristics are considered: where prices are subsidy-free, whether license provision is a natural monopoly, and whether any competitive submarkets can be structurally separated from the regulated core.

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Should We Put Them in Jail? Copyright Infringement, Penalties and Consumer Behaviour: Insights from Experimental Data

Review of Economic Research on Copyright Issues, Vol. 1, No. 2, 81-95, 2004

Anna Maffioletti and Giovanni Battista Ramello

Downloads:  294


Abstract

The purpose of this paper is to deepen the knowledge of consumer behaviour in information goods markets, taking as a reference the sound recording market. In particular, its aim is twofold: on the one hand it attempts to get new insights on consumers paying special attention to their willingness to pay and to purchasing behaviour; on the other hand it wants to find out whether the recently adopted increase in legal measures against consumers by industries can have positive effects on lowering copyright infringement and raising legal demand. Using experimental methods, we elicited individual preferences in legal and burned CDs. We used hypothetical as well as real choices. Our experimental results suggest that lawsuits can effectively lower the rate of copying because they raise the probability of being caught by consumers and thus punished. However, they do not necessarily raise legal sales since the measured consumer willingness to pay is generally lower than the market price for legal products. Consequently, increased copyright enforcement may only lead to demand withholding.

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The Recording Industry's Digital Dilemma: Challenges and Opportunities in High Piracy Markets

Review of Economic Research on Copyright Issues, Vol. 2, No. 2, 83-94, 2005

Brett Keintz

Downloads:  290


Abstract

Globally, the recording industry has experienced significant revenue decline and piracy growth within the last five years. In some countries like the United States, piracy is comprised mainly of the illegal sharing of digital recorded music files such as MP3s. In other countries like Spain, recorded music piracy is dominated by the physical production and sale of CD-Rs by organized crime networks. While there have been a number of legislative and law-enforcement changes made in many countries across the globe, these defensive efforts have at best served to slow piracy's growth. The next step for the recording industry is to develop a recorded digital music strategy for each country in an effort to restore revenue growth and reduce piracy by offering consumers a compelling digital music value proposition. In this paper, I explain why.

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The Past and the Future of the Economics of Copyright

Review of Economic Research on Copyright Issues, Vol. 1, No. 1, 151-171, 2004

Richard Watt

Downloads:  290


Abstract

The economics of copyright as such has certainly come of age. About 70 years has passed since the very first time that economists gave serious thought to the copyright system, although it has been only during the last 20 years that the literature has flourished. In this paper an overview of the general topic of the economics of copyright is given, and the areas that have already be touched upon are discussed. Then, a speculative answer is attempted to the question of what the near future will hold.

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Dissemination Must Serve Authors: How the U.S. Supreme Court Erred

Review of Economic Research on Copyright Issues, 10(1), 1-19, 2013

Wendy J. Gordon

Downloads:  279


Abstract

The US Congress has enacted expansions of copyright which arguably impose high social costs and generate little incentives for authorial creativity. When the two most expansive statutes were challenged as unconstitutional, the US Supreme Court rebuffed the challenges, partly on the supposed ground that copyright law could legitimately seek to promote non-authorial interests; apparently, Congress could enact provisions aiming to support non-creative disseminative activities such as publishing, or restoring and distributing old film stock, even if authorial incentives were not served. Such an error might have arisen because of three phenomena (in economics, history, and law, respectively) that might easily be misunderstood but which, when unpacked, no longer lead plausibly to a stand-alone embrace of disseminator interests. The purpose of this article is to analyse and comment on this error from several relevant points of view.

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Copyright: A Plea for Empirical Research

Review of Economic Research on Copyright Issues, Vol. 3, No. 2, 3-13, 2006

Ivan P. L. Png

Downloads:  279


Abstract

I review empirical research into the economic impact of copyright law. A key difficulty is that there is little systematic measurement of creative output and copying: there are only fragmentary statistics for the various industries. Studies of U.S. copyright registrations provide conflicting results: one shows that small changes in fees have large impacts on renewals, while another shows that many movies and books have long lives. All but one studies find that music piracy - whether conventional or digital - has hurt legitimate CD sales. Studies of extensions of copyright duration yield conflicting results: one focusing on U.S. registrations finds no effect, while a multi-country study finds that extensions are associated with substantial increases in movie production. I conclude with directions for future empirical research.

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Digital File Sharing and Royalty Contracts in the Music Industry: A Theoretical Analysis

Review of Economic Research on Copyright Issues, Vol. 3, No.1, 29-42, 2006

Norbert J. Michel

Downloads:  277


Abstract

Although several researchers have examined the impact of copying in other contexts, relatively little theoretical work exists that allows for the presence of a profit maximizing music industry as an intermediary between the creators of intellectual property and consumers. This paper develops a simple theoretical model of interactions between artists who create original musical compositions, record labels that distribute them, and consumers who have the option of copying rather than buying music. The model provides testable price and demand equations and suggests that file sharing may have been undertaken by consumers who were previously not in the market for music.

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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

Downloads:  274


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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OSS Production and Licensing Strategies of Software Firms

Review of Economic Research on Copyright Issues, Vol. 2, No. 2, 111-125, 2005

Heli A. Koski

Downloads:  272


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.

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