The Society for Economic Research on Copyright Issues

Review of Economic Research on Copyright Issues (RERCI)

RERCI Articles

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:  715


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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DRMS: A New Strategic Stake for Content Industries: The Case of the Online Music Market

Review of Economic Research on Copyright Issues, Vol. 2, No. 2, 53-67, 2005

Joelle Farchy and Heritiana Ranaivoson

Downloads:  714


Abstract

DRMS are often described as essential in the development of the legal online supply of content, notably of music (In this paper, we do not study the cases of sites that sell pre-recorded music, such as Amazon). That is why they are becoming a crucial stake for the whole recovering music industry. In the first section, we will precise the strategic role of DRMS. The market for DRMS in the online music supply is a very recent one, but it is expected to grow rather fast. Moreover, DRMS are becoming the heart of the online music value chain. The aim of this paper is to study the technological competition between the firms that try to impose their standard on the growing market of DRMS. Because this competition relies on the lack of interoperability and on a possible monopolization, we find that the results of this competition may not benefit the content industries.

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Introduction: Copyright and the Publishing of Scientific Works

Review of Economic Research on Copyright Issues, Vol. 7, No. 1, 1-6, 2010

Richard Watt

Downloads:  712


Abstract

This paper is the introduction to the symposium "Copyright in Academic Publishing".

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Competitive Strategy of Proprietary Software Firms in an Open Source Environment

Review of Economic Research on Copyright Issues, 2020, vol. 17(1), pp. 38-59

Edmond Baranes, Cuong Hung Vuong and Mourad Zeroukhi

Downloads:  702


Abstract

This paper analyzes the competitive strategy of a proprietary software (PS) firm in the presence of open source software (OSS) where the copyright holder has granted software users access and use of OSS without any obligation regarding source code disclosure and royalty payments. The OSS is developed by volunteer programmers, while the firm incurs costs to hire programmers to build the PS. The firm has a quality advantage because, first, it can provide professional technical support and promotion, and second, it is difficult for the OS community to collaborate for the production and maintenance of the OSS. The analysis is based on two scenarios: (1) the OSS is available free of charge; (2) the OSS is distributed by fringe vendors who can provide OSS quality upgrades. We find that both types of software can coexist in equilibrium. Furthermore, despite the fact that PS enjoys a quality advantage, it will optimally set a lower quality than OSS. The comparative statics show that a change in each market parameter can lead the firm to simultaneously increase (or decrease) both the PS price and quality. We consequently evaluate the impact on the firm's profit and consumer surplus.

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Cartel Sustainability and Piracy in a Vertically Differentiated Oligopoly

Review of Economic Research on Copyright Issues, 11(1), 9-31, 2014

Iacopo Grassi

Downloads:  700


Abstract

In recent years economic literature has deeply analyzed piracy and copyright violation. Nevertheless most of the contributions focus on the study of digital markets and monopoly. In this paper we concentrate on the effect the entry of a pirate may have in a vertically differentiated duopoly where originally two firms compete producing a high quality and a low quality good. We show that, under general conditions payoffs of firms might increase with piracy, since piracy may support collusion between the two firms producing the original goods and the collusive profits of the firms in presence of piracy may be bigger than the profits of Nash without piracy. This result may explain the reason why in some markets, like the fashion market, where the producers of the original brands basically control the supply chain of the sector, piracy and production of high quality fakes is huge.

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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:  697


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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Economists' Topsy-Turvy View of Piracy

Review of Economic Research on Copyright Issues, Vol. 2, No. 1, 5-17, 2005

Stan J. Liebowitz

Downloads:  695


Abstract

Although it was once considered inevitable that unauthorized copying would harm copyright owners, it is now understood that this is not necessarily the case. The concept of indirect appropriability played an important role in shaping this newer understanding. In recent years, however, many economists seem to have taken the message from this new understanding too far, seeing gains to the copyright owners from unauthorized copying in every nook and cranny of the economy, when in reality the instances of such gains are likely to be rather limited. The current literature on this subject, which consists mainly of theoretical models, seems to be badly out of kilter. In this paper I attempt to explain some of the problems and try to provide the outlines of what I believe to be a more balanced and nuanced view of copying. It emphasizes the importance of examining various institutional and behavioral details of individual markets, which are often overlooked by researchers.

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Licensing and Royalty Contracts for Copyright

Review of Economic Research on Copyright Issues, Vol. 3, No.1, 1-17, 2006

Richard Watt

Downloads:  692


Abstract

This paper reviews briefly how the owner of the copyright to a creation can best market access to that right to licensees under a variety of assumptions concerning the market. After an introductory section, the paper considers a situation of full certainty, in which the value of the final product that is sold by licensees is fully deterministic. In that setting, we consider a very simple model in which the copyright holder himself may or may not compete with the licensee in the final product market. Above all, it is shown that a linear form for the royalty contract always suffices in equilibrium. After that, a model with certainty as to the market value of the final product is developed. In this model, we consider Pareto efficient sharing contracts, and it is shown that now a linear form is unlikely to suffice. Throughout (i.e. in both sections), we shall be interested in exactly when a linear royalty contract is efficient, since these types of contract are so prevalent in the real world.Finally, as an introduction to the papers contained in the symposium, I devote a few words to each of them in turn.

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The Measurement of Copyright Industries: The US Experience

Review of Economic Research on Copyright Issues, Vol. 1, No. 1, 17-25, 2004

Steve Siwek

Downloads:  691


Abstract

This paper outlines the experiences of the economist who elaborated the studies on the economic importance of copyright for the US economy.

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Accounting for Creativity: Lessons from the Economic History of Intellectual Property and Innovation

Review of Economic Research on Copyright Issues, 2020, vol. 17(1), pp. 1-37

B. Zorina Khan

Downloads:  689


Abstract

Social progress depends on the realization of inventive ideas, and economic history provides valuable lessons about creativity in technology and culture. The empirical study of over one hundred thousand innovative individuals who obtained patents, copyrights, and prizes, sheds light on the relationship between institutions, incentives, and transformative ideas and expression, over the past two centuries. The European growth model assumed useful knowledge was scarce, and top-down administered innovation systems offered rights and rewards to "exclusive" groups. By contrast, American policies regarded creativity as widely distributed in the general population, and further promoted "inclusive" market-oriented mechanisms that fostered diversity in ideas and outcomes. The evidence suggests that property rights in patents facilitated markets in ideas, and ensured that returns were aligned with productivity and market demand. Whereas, such administered systems as innovation prizes and publisher's copyrights in the "creative industries" benefited the few rather than overall social welfare.

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Compulsory licensing for radio-play of music in India: Recent history and economic context

Review of Economic Research on Copyright Issues, 2020, vol. 17(1), pp. 60-77

Megha Patnaik

Downloads:  687


Abstract

Compulsory licensing of sound recordings is practiced in different countries, though the trajectories and rationale for arriving at this framework may differ. Developing countries often introduce measures to protect "infant" industries, but policy persistence can make subsequent changes hard. In 2010, the Copyright Board of India passed an order prescribing 2% of net advertising revenues to be paid by radio stations as compulsory license fees to copyright owners, citing the infancy of the private radio industry and the lack of access to music in India. Since the original order, the private radio industry has matured in size, coverage and listenership. Access to music today is facilitated through a far-reaching radio network, as well as widespread mobile and internet usage. The original order will be reviewed in September 2020. Given the maturation of the private radio industry over the past decade, this paper recommends India transitioning to the perspective considered for countries with mature radio industries. But how can the regulator determine the fair price of music closest to that found in a competitive market? Several strategies demonstrated in the literature can be used to establish a baseline valuation, following which adjustments can be made to account for any spillovers between the two industries.

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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:  684


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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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:  682


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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DRMS, Economics, Copyright and Competition Law: The Australian Experience - The Economic Implications of Stevens v Sony

Review of Economic Research on Copyright Issues, Vol. 3, No. 2, 67-82, 2006

Yee Lim

Downloads:  679


Abstract

This paper will examine the Sony Playstation litigation in Australia where Sony claimed the device it used in its Playstation consoles was a technological protection measure ('TPM'). The outcome of the High Court of Australia decision is somewhat different from similar litigation run by Sony in other countries. Section 3 of this paper will examine the economics of TPMs and in particular, the device which Sony claimed in its Australian litigation was a TPM. It will reveal that copyright owners such as Sony already possess strong market incentives to implement TPMs and that the level of competition is inversely related to the incentive to protect works through TPMs. Section 4 of the paper will introduce the competition law landscape in Australia and it will analyse, within the context of Australia's competition laws, the device used by Sony which it claimed was a TPM. It will demonstrate that the use of the device by Sony is arguably conduct in breach of s46 of the Trade Practices Act 1974. Section 5 will examine the role of the law in Australia in terms of incentivising the use of TPMs.

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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:  676


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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