The Society for Economic Research on Copyright Issues
Aims & Scope
Review of Economic Research on Copyright Issues, 2018, 15(2), 57-79
Richard Watt and Frank Mueller-Langer
Under current copyright law in many countries, Internet Service Providers (ISPs) can be found liable for the traffic on the websites that they host. While the ISPs themselves are not undertaking acts that infringe copyright, indirect liability asserts that they either contribute to, or encourage in some way, infringing activities, and thus they are liable to claims of indirect involvement by the affected copyright holders. The present paper explores indirect liability in a standard principal-agent setting, where both moral hazard (the act of monitoring) and adverse selection (differential costs of monitoring over ISPs) are present. The model considers the kinds of contracts that could be signed between the copyright holders (acting through a collective) and the ISPs (acting individually). We specify the contracts that are self-selecting and incentive compatible for the set of feasible scenarios.Click to read more.
Review of Economic Research on Copyright Issues, 14(1/2), 39-44, 2017
Directive 2014/26/EC foresees that EU member States shall ensure that disputes between collective management societies and users concerning, in particular, existing and proposed licensing conditions or a breach of contract can be submitted to a court, or if appropriate, to another independent and impartial dispute resolution body where that body has expertise in copyright law. The Spanish Copyright Commission (Section I) aims to be that body in Spain. In order to reach this objective, the Commission has been empowered with new functions that will probably reduce the existing conflicts related to copyright licensing.Click to read more.
Review of Economic Research on Copyright Issues, Vol. 1, No. 2, 29-53, 2004
This paper addresses two popular arguments against a compulsory license of software interface, using risk analysis methodology. These concerns are the non-recovery of sunk costs and the threats posed by free riders. My argument is that while both concerns are legitimate, they are remediable. The purpose of the law is not to allow the incumbent to recover its 'sunk costs', but to give sufficient incentives for it to innovate. These two incentives are the monetary incentives (finding fair access fees and stimulating cooperation with the entrants after the license) and the time incentive (finding a period during which refusal to license is acceptable). With respect to the fair amount of access fees, it is better to provide a mechanism so that the licensor and the licensee can negotiate the fees themselves, rather than to impose a strict method of fee calculation. If the monetary incentives alone are sufficient to generate motivation for innovation, the time incentive should not be used.Click to read more.
Review of Economic Research on Copyright Issues, Vol. 9, No. 2, pp. 31-54, 2012, Illinois Public Law Research Paper No. 11-23
Paul J. Heald , Peibei Shi, Jeffrey Stoiber and Qingyao Zheng
A previous empirical study suggested that as copyrighted songs transitioned into the public domain they were used just as frequently in movie soundtracks as when they were still legally protected.That study, however, did not account for the number people who viewedeach movie in the theater. Since the debate over copyright term extension centers on the continuing "availability" of works as they fall into the public domain, a better measure of the availability of songs in movies would account for the relative box office success of the movies in which the songs appear. The present study collects box office data for hundreds of movies from 1968-2008 in which appeared hundreds of songs and concludes that public domain songs were heard by just as many people in movie theaters before and after they fell into the public domain.Click to read more.
Review of Economic Research on Copyright Issues, Vol. 1, No. 1, 65-69, 2004
It is hard if not impossible to quantify all the economic effects of press and publishing, arts, design, software and all other copyright-based sectors. Copyright sectors first of all produce value added and generate income; they create employment and contribute to the balance of payments. But the products and services have much wider implications and positive external effects on the economy than can be measured by adding up value added produced and employment generated. It is often tried to capture those more far reaching effects in general terms such as the 'knowledge economy' filled with 'creative workers' (see, for instance Florida, 2002). There is certainly truth in the general perception that creativity, which is the stuff, materialized in the goods and services produced by the copyright-based industry, can change the economy and have an influence on the well being of everybody. But it is impossible to capture this perception in hard numbers. Quite well doable however is to capture the measurable parts of the economic contribution in numbers. What I present in below is a measurement of value added and employment of the copyright-based industry in the Netherlands over the past decades. I will also briefly present numbers on the contribution of the copyright-based sector on imports and exports.Click to read more.
Review of Economic Research on Copyright Issues, Vol. 1, No. 1, 83-92, 2004
William J. Baumol
Licensing of copyrighted material can contribute to welfare. But what fee is socially desirable fee? The owner's marginal cost of licensing is often near zero, but P = MC = 0 is arguably neither equitable nor an efficient incentive for further creative activity. Here two fee-setting approaches are described, assuming copyright rules are pre-established and determine the holder's earnings, absent licensing. One approach is Ramsey pricing, theoretically second best and able to preserve the copyholder's earnings. The second is 'parity pricing', as derived in the price-regulation literature, which can ensure effective free entry into commercial use of the licensed material.Click to read more.
Review of Economic Research on Copyright Issues, Vol. 2, No. 1, 39-44, 2005
William R Johnson
Technological changes over the past two decades have made it easier to distribute and to copy intellectual property. Creators and owners of intellectual property have responded to these changes with a variety of creative pricing strategies. The paper reviews some of these pricing innovations. Two broad categories of innovations are explored: those that facilitate price discrimination and those that exploit complementarities between different types of creative works.Click to read more.
Review of Economic Research on Copyright Issues, 11(1), 9-31, 2014
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.Click to read more.
Review of Economic Research on Copyright Issues, 13(2), 83-99, 2016
Research on the economic history of copyright and music publishing turned up an unusual source of data on the value of copyrights, namely detailed accounts of public auctions of musical items that were held in London between 1794 and 1960 of, inter alia, copyrights and the engraved plates from which musical works were printed. The standard contract between song writers/composers and music publishers in the 19th century bought out all rights and therefore the sale of the plates was also the sale of the copyright to the work, enabling the new owner to print and distribute the work. The sales also facilitated entry into and exit from the industry.
This paper describes the historical circumstances of copyright and the market for printed music and presents some of the more notable data, with calculations of their present day values. Though insufficient for a full statistical analysis, the paper provides some hard evidence of the asset value of copyright in musical works as perceived by the music publishers of those times. The paper also suggests a basis for further research.
Review of Economic Research on Copyright Issues, Vol. 6, No. 2, 13-29, 2009
Olivier Bomsel and Heritiana Ranaivoson
The digitization of copyrighted goods and the dematerialization of their distribution over the Internet have caused a weakening of copyright, a key institution of the creative industries. One reason is that, during the broadband roll-out, copyright enforcement costs have become superior to the estimated benefits of copyright. This paper analyses the causes of this situation and suggests how a graduated response to infringers can decrease copyright enforcement costs.
The paper starts with a review of the economic literature on copyright that focuses on its industrial aspects. It then analyses how, all along the distribution vertical chain, the consumer's impunity provides incentives to free ride on copyright, which rapidly increases copyright enforcement costs. It finally depicts the graduated response mechanism and the voluntary agreement that initiated this system in France. In conclusion, the increase in the cost of free-riding for the final consumer should lead to a decrease in copyright enforcement costs and to higher returns in the creative industries.
Review of Economic Research on Copyright Issues, 13(2), 66-82, 2016
Gerry Wall and Bernie Lefebvre
With the lack of direct markets to examine, copyright setting agencies often adopt a total proxy approach whereby other markets are used to formulate benchmark prices. In this paper, we utilize a "downstream" market to estimate the value to a commercial "rights user" of distant television signals. This "partial proxy" approach has two advantages: it uses data drawn from the distant signal market (i.e. vertical market information) and it uses actual market pricing data from buyers and sellers of programming content.
Using this data, we derive estimates of the wholesale market value of distant TV signals. Based on our analysis we find that the current per signal payment to distant signal rights-holders (as certified by the Copyright Board of Canada) is less than the actual market value of those signals.
Review of Economic Research on Copyright Issues, Vol. 3, No.1, 83-97, 2006
Dyuti S. Banerjee
This paper uses a strategic entry-deterrence framework to analyze the effects of enforcement sharing between the government and the monopolist in dealing with commercial copyright piracy. The monopolist is the incumbent firm and is responsible for monitoring the illegal operations of a commercial pirate, the possible entrant, who illegally reproduces and sells unauthorized copies of the monopolist's product. The monopolist bears the monitoring cost and the government is responsible for setting a penalty. We show that even when enforcement is shared the socially optimal penalty may result in no piracy in equilibrium only if the government is sensitive to piracy.Click to read more.
Review of Economic Research on Copyright Issues, 11(2), 60-91, 2014
A comparison of existing online revenues collected from digital music licenses and the potential royalty market for online music, suggests an inadequate royalty market capture within the European Union. An estimate of the 2012 market for digital music royalties in ten different E.U. countries indicates this market could have been well over €18 billion. However, only €116 million were reported by corresponding Collective Rights Management Organizations in that same year. The three largest digital music royalty markets (U.K., Germany and France) comprise around €11 billion. Yet, the corresponding Collective Rights Management Organizations (PRS for Music, SACEM and GEMA) generate only €95 million in royalty revenue from all online media. The gap between existing and potential royalties is tremendous and suggests that E.U. Member States have not come to grips yet with the internet. Their existing business models, paired with a regulatory environment rooted in the 19th century rationale of the Berne Convention has not been supportive of grasping the opportunities provided by a disruptive technology. By consequence, artists do not receive the royalties they deserve, commercial users are exposed to prohibitive license fees and non-commercial users suffer from adequate legal alternatives to digital piracy.Click to read more.
Review of Economic Research on Copyright Issues, Vol. 6, No. 2, 1-4, 2009
The year 2009 has come to an end, and with it this second issue of the sixth volume of the Review of Economic Research on Copyright Issues, or RERCI. It has, at least in the opinion of the Managing Editor, been an extremely productive six first years of the life of this journal, and it has moved from its inception in 2004 as a start-up hoping to find a foothold in the competitive world of academic economics journals, to what I believe is now a widely recognised source of rigorous academic work on the very particular topic of the economics of copyright.Click to read more.