The Society for Economic Research on Copyright Issues

Review of Economic Research on Copyright Issues (RERCI)

RERCI Articles

Digital Rights Management and Hardware Market Power

Review of Economic Research on Copyright Issues, 13(2), 25-65, 2016

Jin-Hyuk Kim and Michael Waldman

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Abstract

Digital Rights Management (DRM) is employed by firms as a way of reducing illegal copying. In this paper we investigate the idea that it can also be associated with an increase in market power in the hardware market. In our main analysis content and hardware are complementary goods, where there are multiple hardware sellers and one of the hardware sellers owns a DRM technology that can be developed into a DRM system that makes legal content incompatible with hardware that does not employ the system. Our primary result is that the hardware producer who initially owns the DRM technology may employ closed DRM to gain market power in the hardware market because this is an efficient way to monetize its initial ownership of the technology. We also show that, depending on whether or not the content developer has positive bargaining power, the introduction of DRM may or may not result in an increase in content development. In addition to investigating these ideas in a number of related theoretical settings, we also consider the social welfare aspects of the argument and discuss its relevance for understanding the early history of Apple's iPod.

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Capabilities, Spillovers, and Intellectual Progress: Toward a Human Flourishing Theory of Intellectual Property

Review of Economic Research on Copyright Issues, 14(1/2), 1-38, 2017

Brett M. Frischmann

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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.

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The Economic Effects of Digitization on the Administration of Musical Copyrights

Review of Economic Research on Copyright Issues, 10(2), 55-67, 2013

Ruth Towse

Downloads:  1136


Abstract

Digitization has had a profound effect on the management of musical copyrights in terms of data requirements and has vastly increased the volume of transactions: both impacts have raised net costs of administration to collecting societies. This paper explores these points using information provided by PRS for Music, the UK's collecting society managing musical rights and considers them in the wider context of moves on the political front to increase competition in rights management as well as to promote multi-territorial licensing within the EU. An important question for economists is whether the natural monopoly argument for single national collective rights management using blanket licensing still holds up with digitization of music and management of musical rights. This paper suggests that collaborative concentration may be preferable to competition.

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The Relative Effectiveness of Global Anti-Piracy Policies

Review of Economic Research on Copyright Issues, 2018, 15(1), 1-19

Tylor Orme

Downloads:  1132


Abstract

In recent decades, the problem of illegal downloading of copyrighted material has emerged as a major concern for governments across the globe. Many countries have implemented policies to limit the impact of online piracy on revenues of creative industries. These policies, while important for a broad range of industries, have been particularly lobbied for and supported by the motion pictures industry. Film production and distribution companies have repeatedly asserted that effective anti-piracy policy is crucial to their continued success. This paper seeks to evaluate whether the anti-piracy regimes in OECD countries have been effective. It also seeks to determine whether there are patterns to the types of policies that have been especially effective or ineffective.

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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

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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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Unauthorized Copying and Copyright Enforcement in Developing Countries: A Vietnam Case Study

Review of Economic Research on Copyright Issues, Vol. 4, No. 1, 87-96, 2007

Koji Domon and Kiyoshi Nakamura

Downloads:  1122


Abstract

At present, Vietnam is regarded as the most notorious country regarding copyright infringement. China, joining WTO in 2001, has since implemented strict copyright measures. Even though Vietnam has laws covering intellectual property rights, enforcement is almost non-existent. We investigated how unauthorized P2P file-sharing affects copyright infringement in Vietnam. We assumed, before visiting Vietnam, that P2P file-sharing was more popular than pirated CDs and DVDs. However, few people there knew of its existence. Even when they did, they were unwilling to use it. Another astonishing fact was how pirated CDs play a role in promoting singers who relied on stage performances. Singers were not eager to support copyright enforcement. In this paper we consider these situations and explain how such behavior is commonplace in Vietnam.

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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

Downloads:  1122


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?

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Piracy and the Demand for Films: Analysis of Piracy Behavior in French Universities

Review of Economic Research on Copyright Issues, Vol. 3, No. 2, 15-27, 2006

David Bounie, Patrick Waelbroeck and Marc Bourreau

Downloads:  1118


Abstract

The purpose of this article is to identify which, if any, segments of the movie business have suffered from digital piracy. We use a sample of 620 university members including undergraduate students, graduate students and professors to assess the effect of digital piracy on legal demand. A large percentage of respondents get pirated movies from a variety of channels (on P2P networks, intranet, by physical means. . . ). Surprisingly, approximately one third of the pirates declared that watching pirated movies increased their demand for films (for instance, it led them to rent or purchase videos that they would not have rented or purchased otherwise). Using regressions analysis, we find no impact of piracy on theater attendance, and a strong impact on video rentals and purchases. However, movie piracy has no impact on video rentals for respondents who use pre-paid pricing schemes at video-stores.

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Creativity and the Economics of the Copyright Controversy

Review of Economic Research on Copyright Issues, Vol. 6, No. 2, 5-12, 2009

Harold Demsetz

Downloads:  1116


Abstract

The debate about copyright law centers on the apparent tradeoff between the creation of new works and the extent to which these works are used once they are created. Economics has been employed explicitly and implicitly to bolster positions taken by those involved in this debate. I do not directly join this debate here, but what I will say is relevant to it. My objectives are different, to draw attention to the neglect of creativity by economists and to describe some of the unique problems this neglect poses for those who use traditional economic models to explain and support the positions they take in this debate. It is no intent of mine to discourage the use of traditional economic models but, rather, to urge greater care in their use.

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The Four P's of Digital Distribution in the Internet Era: Piracy, Pie-Splitting, and Pipe Control

Review of Economic Research on Copyright Issues, Vol. 7, No. 2, 3-20, 2010

Joel Waldfogel

Downloads:  1096


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.

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Piracy of Intellectual Property: Past, Present, and Future

Review of Economic Research on Copyright Issues, 10(2), 1-26, 2013

Ian Novos and Michael Waldman

Downloads:  1094


Abstract

The last few decades have seen enormous growth in piracy of copyrighted goods and, in particular, an enormous growth in piracy of creative works that employ a digital format. In this paper we discuss classic theory related to the piracy issue, provide a brief history of the growth of piracy over the last few decades, and then discuss issues concerning the present situation. We conclude with speculation concerning the future of piracy, where one of our main points is that, at least for the developed world, there are important reasons for believing that piracy is likely to continue to grow.

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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

Downloads:  1089


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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Music-Use Tariffs, Options, Regulation and Bargaining

Review of Economic Research on Copyright Issues, 2019, vol. 16(1/2), pp. 40-67

Frank Mathewson, E. Jane Murdoch and Gerry Wall

Downloads:  1083


Abstract

This paper discusses the connection between rate regulation and bargaining out- comes. We consider the case of licensing musical works for radio broadcasting. Our model illustrates the impact when music broadcasters can switch to a talk format. Using a generalized Nash bargaining setting, we interpret the revenue sharing rules established within the regulatory regimes in the US and Canada. In any negotiations over a sharing rule with the collectives that own the musical works rights, the ability of broadcasters to switch from a music to a talk format constitutes the threat point for the broadcasters. Using US and Canadian data for 2014 and 2015, we derive the bargaining weights that would generate the same revenue flows for broadcast- ers and collectives as those produced under the shadow of a copyright regulatory regime. These numerical examples show a higher weight to collectives than appears from the stated tariff rates.

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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:  1083


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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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:  1078


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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