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.

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.

Abstract

Unlike television broadcasters, who must negotiate with the copyright owners before they can broadcast movies, radio broadcasters need not negotiate with the copyright holders for the sound recordings broadcast on radio. In the United States radio broadcasters have no obligations whatsoever to the copyright owners of the sound recordings (although they do have obligations to the copyright holders of the music contained in the sound recording). The reason for this discrepancy appears to be that radio broadcasters have argued, and it is generally accepted, that radio play benefits record sales and thus there is no need for radio broadcasters to purchase the rights to broadcast the sound recording. This impact of radio play on record sales is commonly referred to as a "symbiotic" relationship between these two industries. Yet there appears to be no systematic examination of this relationship. In this paper I present evidence indicating that radio play does not benefit overall record sales. There are obvious implications for copyright. I also examine, by way of comparison, television's negative impact on the movie industry.

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.

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.

Abstract

Droit de suite entitles visual artists to a percentage share of the resale price every time their works are resold over a given time span. The legal systems of the world do not universally accept the concept of droit de suite, and its economic efficiency has been a matter of debate for a few decades. In this paper, we model a work of art as a lottery to investigate experimentally the impact of this right on the art market. We find evidence that a number of known behavioral biases in decisions under uncertainty affect a seller’s willingness to accept. In light of our results, we conclude that the interaction of these biases and droit de suite can reduce the number of transactions in the art market to a larger extent than previously suggested in the literature.

Abstract

This paper analyses the impacts of the recent discussion to extend patentability to computer-implemented inventions, i.e. to allow software patents, in Europe. Based on two surveys among the German software sector referring to the use and importance of IPR in the year 2000 and 2004, the analysis finds that the share of companies using patents in the software sector remains constant, but the relevance of this instrument increased significantly for the active users of patents. Based on a set of hypotheses on the determinants for the use of patents, we also find changes. The size bias of patent use increased, whereas there is a dichotomy between using patents and following the open source model in the software sector and not a convergence, as has been suggested by the anecdotal evidence of some large multinationals. These changes in the software sector generate several new challenges for policy makers responsible for the IPR regime relevant for software in addition to the still unsolved question of extending patentability to software in Europe.

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.

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.

Abstract

The quest for interoperability of interactive TV has been a major concern of the EU Institutions. Its policy foundations were built on the enabling role of open standards, whose peculiar standardization process should guarantee affordable and widespread intellectual property rights. After having received considerable public support and financial funds, the interactive TV roll-out appears disappointing, and the diffusion of the main concerned standard, the multimedia home platform, stagnates. We conduct a comprehensive analysis of the main market facts and passages of interactive TV policy, to derive a multifaceted assessment of its technological, economic and institutional drivers. Several important issues stand out. Besides the inner complexity of the policy, a few normative inconsistencies and conflicting aims adversely impacted its feasibility. Several logical ambiguities also dampened the correct choice of instruments. In particular, the existing literature clarifies two main points: open standards cannot be uncritically assimilated to open source software, and the role of open standards along the broadcasting value chain is largely unexplored. Consequently, their effects here might differ from those experienced in traditional information and communication technologies markets. Finally, a certain evidence of regulatory capture of the EU policy-maker emerges.

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.

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.

Abstract

This article discusses the implications of the intellectual property system as applied to software, especially the use of patents, for innovation in developing countries; it also assesses the possible consequences of the appearance of free software and a new intellectual property system in the innovation process in countries such as Brazil; finally, it attempts to analyse the new dimension of intellectual property as well as its context in the current debate on 'global patents' as opposed to a more flexible copyright system. Some of the questions discussed are: Is a more flexible copyright system an instrument to promote technological innovation? Does the reduction of the income of some software companies in developed countries point toward an exhaustion of the sales model of user licenses for software? What are the threats and opportunities for the new business model based on free software and copy left in Brazil? Can the motivations for the use and development of free software promote the Brazilian software industry?

Abstract

This article explores methods and issues in measuring the contributions of copyright industries to national economies. It reveals the importance of copyright value creation, identifies copyright industries and activities that make economic contributions, discusses problems of measurement, compares methods used and reveals difficulties in comparability of existing research, and provides suggestions for improving and undertaking future research.

Abstract

In July of 2002, the World Intellectual Property Organisation organised a working group of economists to study the methodologies that are appropriate when attempts are made to measure the economic contribution of copyright to a national economy, with the final objective being to produce a guide-book that will enable future studies to be made, all within a common methodological framework. Dimiter Gantchev, a consultant with WIPO, was encharged with the task of writing the resulting Guide-book.