The Society for Economic Research on Copyright Issues

Review of Economic Research on Copyright Issues (RERCI)

RERCI Articles

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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Copyright in the Digital Age; Benefiting Users and Creators?

Review of Economic Research on Copyright Issues, Vol. 8, No. 2, 55-64, 2011

Peter Jenner

Downloads:  419


Abstract

Copyright is supposed to establish a mechanism under which content users contribute to creators' income, thereby providing incentives for creators to create new and original content for end-users to consume. However, in the current digital environment one can suggest that this arrangement is breaking down. The necessary flow of content is not being achieved in such a manner as to provide a satisfactory flow of revenue back to the creators, or is it vice versa? It can also be argued that the copyright system is not providing enough revenue for distributors to provide the sort of services that users would like with the current pricing structures, use restrictions and rights complexity demanded by the major controllers of music copyrights. In this essay I consider the current state of affairs regarding the copyright system, and its effects for all participants along the value chain for protected content.

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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:  408


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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Restricting Access to Books on the Internet: Some Unanticipated Effects of US Copyright Legislation

Review of Economic Research on Copyright Issues, Vol. 5, No. 1, 23-53, 2008

Paul A. David and Jared Rubin

Downloads:  386


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.

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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:  385


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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The 'Competitive' Value of Music to Commercial Radio Stations

Review of Economic Research on Copyright Issues, Vol. 4, No. 2, 29-50, 2007

Paul Audley and Marcel Boyer

Downloads:  381


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.

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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:  381


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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Efficiency Considerations in Copyright Protection

Review of Economic Research on Copyright Issues, Vol. 1, No. 2, 11-27, 2004

Marcel Boyer

Downloads:  378


Abstract

Many countries are revisiting their Copyright law in the light of new communication and information technologies, which make possible the generalized digitization of copyrighted material and in so doing hallenge the protection and enforcement of copyrights. As the laws are modified to adapt to this new environment, the foundations of copyright have been questioned. I claim here that the affirmation and protection of a strong and transparent copyright framework is a second best efficient institutional arrangement to foster cultural development and diversity and promote the emergence of new market-like institutions reducing the costs of transactions between creators and users.

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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:  376


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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Value Based Pricing of Music

Review of Economic Research on Copyright Issues, 12(1/2), 16-25, 2015

T. Randolph Beard, George S. Ford and Michael L. Stern

Downloads:  375


Abstract

In the regulatory setting of rates for statutory-licensed music services, the question of value-based versus cost-based rate setting for the component-rights of a musical performance arises. In this article, we have demonstrated this value-or-cost question is a distinction without a difference. Starting with the value-based concept of second-best (or Ramsey) prices, we end with a result prescribing that cost differences should be fully reflected in compensation across the inputs to the music recording. Each price is set so that the costs are covered, no more and no less.

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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:  375


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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Radio Airplay, Digital Music Sales and the Fallacy of Composition in New Zealand

Review of Economic Research on Copyright Issues, Vol. 7, No. 1, 67-81, 2010

Mehnaz Bandookwala

Downloads:  371


Abstract

I examine the effect that radio airplay has on the sale of digital music in New Zealand. This effect is also likely to influence the behavior of various music industry participants, including the record companies, radio industry and listeners. I find that on an industry level, radio airplay has no significant effect on the sale of digital music. However, on average, an increase in radio airplay of a given song is predicted to increase sales of that song, which is the so-called exposure effect. The discrepancy between the aggregate and individual effects is explained by the existence of the fallacy of composition: An increase in the airplay of a particular song usually happens at the expense of another song's airplay, and so if more airplay does give greater sales of a given song, so less airplay will reduce the sales of competing songs, leading to ambiguous aggregate effects. It is also true that while individual songs compete with other songs for airplay, the radio industry competes with other activities and products consumed by listeners. Increases in the total airplay may not increase total sales, as the listener's decision regarding digital single purchase is now made with consideration of their non-music consumption goods, and budget and time constraints.

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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

Downloads:  365


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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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:  363


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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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:  360


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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