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Review of Economic Research on Copyright Issues (RERCI)

RERCI Articles

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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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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Royalty Rate Setting for Sound Recordings by the United States Copyright Royalty Board: The Judicial Need for Independent Scholarly Economic Analysis

Review of Economic Research on Copyright Issues, 12(1/2), 1-15, 2015

David R. Strickler

Downloads:  194


Abstract

Judges who set copyright royalty rates through litigation, like all trial Judges, are constrained by the evidence and testimony. Thus, we can only determine rates that are supported by the record. For the record to be sufficient, testifying economists must be able to apply a sufficient body of work in the economics of copyrights. In my address to the 2015 SERCI Congress, I emphasized the judicial need for continued and comprehensive research in this field, so that testifying economists can provided a foundation for our determinations. In this article, I explore such issues in more detail.

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The Economics of Copyright Levies on Hardware

Review of Economic Research on Copyright Issues, 10(1), 20-35, 2013

Patrick Legros and Victor A. Ginsburgh

Downloads:  193


Abstract

The fight against illegal music downloading has taken many forms. Beside legal prosecution (Hadopi in France, for example), many countries have chosen to tax blank tapes and CDs, both to reduce their use for illegal copying, but also to redistribute the proceeds to content providers. This has become less effective, since now illegal copying is stored on hardware devices, such as smartphones, computers, MP3 players, and external hard disks. We provide an economic analysis of the effects of copyright levies on hardware used to access original content. A first effect is to decrease the consumption of both illegal and legal content. We show that in a static model, content providers can hardly be compensated, and therefore are made worse off by the levy. We also consider a dynamic model where current sales contribute to the reputation of the content provider, and to his future revenues. A levy on hardware tends to penalise 'young' content providers in terms of reputation acquisition.

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Revenue Sharing as Compensation for Copyright Holders

Review of Economic Research on Copyright Issues, Vol. 8, No. 1, 51-97, 2011

Richard Watt

Downloads:  189


Abstract

Essential inputs are an important topic of debate for economics. One common essential input is intellectual property, in the form of either patents or copyrights, which the producers of goods and services for final consumption must necessarily purchase from the input supplier. The ensuing monopoly power of the input supplier leads in many cases to controversial outcomes, in which social inefficiencies can occur. In much of the literature on the economics of intellectual property, it is assumed that the right holder is remunerated either by a fixed payment or by a payment that amounts to an additional marginal cost to the user, or both. However, in some significant instances in the real-world, right holders are constrained to use (or may choose to use) a compensation scheme that involves revenue sharing. That is, the right holder takes as remuneration a part of the user's revenue. In essence, the remuneration is set as a tax on the user's revenue. This paper analysis such remuneration mechanisms, establishing and analysing the optimal tax rate, and also the Nash equilibrium tax rate that would emerge from a fair and unconstrained bargaining problem. The second option provides a rate that may be useful for regulatory authorities. The model is calibrated against a (hypothetical) scenario in which the copyright holders in music are paid a regulated share of the revenue of music radio stations, a topic that is presently at the fore-front of the economics of copyright pricing.

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P2P and Piracy: Challenging the Cultural Industries' Financing System

Review of Economic Research on Copyright Issues, Vol. 1, No. 2, 55-69, 2004

Joelle Farchy

Downloads:  187


Abstract

Digital technology makes sophisticated means available to the general public for copying works with an equal level of quality to the originals and at increasingly lower prices. Unrestricted copying deprives producers and creators of a share of their potential earnings on the sale of originals. The whole of the traditional system for financing cultural creation could be at risk. There are three mainstays to the conventional financing system: the production of private goods, direct appropriability of revenues, temporary monopoly of exclusive rights. Each one has been called into question by P2P. Content has properties that are growing ever more similar to public goods, raising the question of whether public financing might be possible. Direct appropriability in customary markets is becoming ever more difficult, raising the question of whether new forms of appropriability might be possible, both direct and indirect. Exclusive rights are becoming increasingly ever harder to enforce, raising the question of other possible institutional solutions. To date, the solutions geared to tackling these issues have been largely defensive, and aimed at maintaining the old system's core characteristics (direct appropriability and exclusive rights) through DRM. However, a brief foray into economics literature can reveal some original alternatives solutions even if each one has its advantages and its drawbacks.

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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:  184


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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Intellectual Property Rights and Cultural Heritage: The Case of Non-Cumulative and Non-Degenerative Creation

Review of Economic Research on Copyright Issues, Vol. 1, No. 2, 97-117, 2004

Veronique Chossat and Christian Barrere

Downloads:  184


Abstract

This paper studies the case of cultural and creative goods that onstitute both private and common heritage assets and analyses the difficulties involved in protecting them by the means of IPRs. The specificities of non-cumulative and non-degenerative creative heritage assets prevent any universal model of protection and thus the building of a market of IPRs. The standard model of property rights is partially irrelevant depending on the specificities of cultural heritage assets. So strategic behaviours concerning the uses of cultural heritage assets can arise. Two creative industries are studied: Haute Couture and French Grande Cuisine.

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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

Downloads:  175


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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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:  174


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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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

Downloads:  173


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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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:  169


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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Technological Transformation, Intellectual Property Rights and Second Best Theory

Review of Economic Research on Copyright Issues, Vol. 4, No. 2, 5-28, 2007

Richard G. Lipsey

Downloads:  161


Abstract

Over the last decade, the research interests of myself and my co-authors have concerned economic growth, technological change and general purpose technologies - pervasive technologies that transform our whole society. Our many publications culminated in Economic Transformations: General Purpose Technologies and Long Term Economic Growth by Richard Lipsey, Kenneth Carlaw and Cliff Bekar (hereafter LCB). This work has only incidentally raised issues concerning intellectual property rights (IRPs). So what I will cover in this paper is first a brief survey of some of the historical parts of LCB. Then, I give some general discussion of economic policy with emphasis on second best issues and, finally, some of the IPR issues that arose incidentally in our work.

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Intellectual Property and the Efficient Allocation of Social Surplus from Creation

Review of Economic Research on Copyright Issues, Vol. 2, No. 1, 45-67, 2005

Michele Boldrin and David K. Levine

Downloads:  159


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.

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Copyright Enforcement and Quality Differentiation on the Internet

Review of Economic Research on Copyright Issues, 10(2), 27-54, 2013

Marine Lefort

Downloads:  158


Abstract

Right-holders can create differences between their cultural goods to attract consumers with varying levels of willingness to pay. Some Internet intermediaries propose similar choices but do so without authorization. In this paper, we present a theoretical model of copyright piracy in which a rightholder competes in price with an Internet intermediary in a leader-follower game. The Internet intermediary provides two types of streaming goods (with and without restrictions). Copyright and intellectual property rights on the Internet are subject to ex-post adjudication. This means that enforcement can lead to uncertainty regarding Internet intermediaries' liability. We analyze how copyright enforcement and quality differences impact price competition. Our analysis suggests that law uncertainty plays a role in an intermediary's decision to enter the market, and thus that quality has an impact on law enforcement efficiency.

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Digital Technology, Price Discrimination, and Copyright Duration Extension

Review of Economic Research on Copyright Issues, Vol. 7, No. 2, 39-55, 2010

Michael Y. Yuan

Downloads:  152


Abstract

Many countries have yet to decide whether extend copyright duration. Technological changes were cited by a U.S. Senate report to support duration extension. This study adds to the assessment of the validity of the technological argument by simulating the effect on optimal copyright duration of increased price discrimination caused by digital technology. Simulation of a model of information product market indicates that increase of price discrimination on high-end market calls for shorter copyright duration; that on low-end market may support extension, if the discrimination benefits consumers, and otherwise work against it. It further suggests price discrimination on low-end market increases welfare and supply of original information products but that on the high-end market may either increase or decrease them.

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