Yet Another Study Shows That Weaker Copyright Benefits Everyone

Source: TechDirt

Economists Felix Oberholzer-Gee and Koleman Strumpf have written some previous papers on this subject, but they’ve just come out with a new working paper on how weaker copyright protection benefits society (pdf file). Michael Geist has an excellent overview and summary of the paper. To understand the key points made by the paper, you need to understand the purpose of copyright — something that many people are confused about. It’s always been about creating incentives to create new works. Copyright maximalists and defenders of strengthening copyright laws always suggest that without copyright, there would be much less creative output, because there would be much less incentive to create. History has shown that to be false. If you look back at the age when all creative output had to be registered to be covered by copyright, studies showed that only a very small fraction of content creators even bothered, because copyright wasn’t the incentive. It’s only now, when copyright is automatic, that people seem to think that copyright is somehow necessary.

But the paper shows why this isn’t true, and highlights a few points that we’ve made repeatedly over the years. Even if there are fewer “album” sales, more people are creating more music than ever before in history, and more people are making some money from the production of music — even if it’s not from album sales directly:

Overall production figures for the creative industries appear to be consistent with this view that file sharing has not discouraged artists and publishers. While album sales have generally fallen since 2000, the number of albums being created has exploded. In 2000, 35,516 albums were released. Seven years later, 79,695 albums (including 25,159 digital albums) were published (Nielsen SoundScan, 2008). Even if file sharing were the reason that sales have fallen, the new technology does not appear to have exacted a toll on the quantity of music produced….

Similar trends can be seen in other creative industries. For example, the worldwide number of feature films produced each year has increased from 3,807 in 2003 to 4,989 in 2007 (Screen Digest, 2004 and 2008). Countries where film piracy is rampant have typically increased production. This is true in South Korea (80 to 124), India (877 to 1164), and China (140 to 402). During this period, U.S. feature film production has increased from 459 feature films in 2003 to 590 in 2007 (MPAA, 2007).

So the idea that file sharing has somehow damaged creative output is simply not supported by the numbers. At the same time, the paper also makes the other point that we’ve made: that as infinite goods spread more widely, it only tends to increase the ability to make money from other scarce complements. After going through a few different studies, the paper notes:

As these results show, income from the sale of complements can more than
compensate artists for any harm that file sharing might do to their primary activity. We
are not aware of empirical work that has looked at these effects in industries other than
music. But the potential of complements to provide ancillary income is certainly not
unique to the music industry. In film, for instance, the International Licensing Industry
Merchandisers’ Association (LIMA) estimates that Hollywood derives $16 billion annually from sales of entertainment merchandise, a figure that exceeds the value of
ticket sales (Film Encyclopedia, 2008).

The role of complements makes it necessary to adopt a broad view of markets
when considering the impact of file sharing on the creative industries. Unfortunately, the
popular press — and a good number of policy experts — often evaluate file sharing looking
at a single product market. Analyzing trends in CD sales, for example, they conclude that
piracy has wrecked havoc on the music business. This view confuses value creation and
value capture. Record companies may find it more difficult to profitably sell CDs, but
the broader industry is in a far better position. In fact, it is easy to make an argument that
the business has grown considerably. Figure 7 shows spending on CDs, concerts and
iPods. The decline in music sales — they fell by 15% from 1997 to 2007 — is the focus of
much discussion. However, adding in concerts alone shows the industry has grown by
5% over this period
. If we also consider the sale of iPods as a revenue stream, the
industry is now 66% larger than in 1997
…. Technological change will often lead to changes in
relative prices and shifts in business opportunities. Focusing exclusively on traditional
streams of revenue to arrive at a sense of how new technology changes welfare will
typically be misleading.

This looks like another great addition to the literature on the overall economic impact of “file sharing” and copyright. How much do you want to bet Congress will ignore it?

10 Comments Yet Another Study Shows That Weaker Copyright Benefits Everyone

  1. Avatarbob catchpole

    “Weaker Copyright Benefits Everyone.” Does that include photographers?

    How does weaker copyright benefit those, like photographers, whose livelihood depend on being able to license their copyright?

    Copyright isn’t just about sharing music files, or greedy record companies. Countless creative people around the world, photographers included, depend totally on their copyright in order to make a precarious living. How would weakening copyright help them survive?


  2. AvatarMichel Bauwens

    Hi Bob, I’ve asked the FC Forum people, via their mailing list, if there are any reports on that aspect.

    My sense is that it is probably the same. In france, only 1,000 people can live from copyright, and that was the case even before digital sharing, so the copyright system is not working for most creators and I’m assuming this is so for photographers. I’m also assuming that the dynamic that unknown creators benefit from exposure, and thus sharing, would be the same.

    I could be wrong, and would welcome any pointers. The main concern of the free culture movement is to find a synergy between the need of creators to make a living, and the need of the public to share creation, using moderate copyright that benefits creators instead of intermediary corporations.


  3. Avataraugusto

    New paper? Your link is to a paper from 2009, and the paper, if I don´t remember wrong, does not generalize to all productions, sticking instead to the cases of music and movies.

  4. Avatarbob catchpole

    Hi Michel,

    Your comments are appreciated. You say, “The main concern of the free culture movement is to find a synergy between the need of creators to make a living, and the need of the public to share creation…” Most creators would support this. They would also say that it’s important to agree and establish an alternative model before weakening the copyright system on which their livelihood currently depends.

    In seeking to get rid of something bad, there’s an obligation to come up with an alternative. At the moment “Weaker Copyright Benefits Everyone” is unfortunately untrue.


    The main concern of the free culture movement is to find a synergy between the need of creators to make a living,

  5. AvatarMichel Bauwens

    VIA Walter van Holst, FC Forum mailing list:

    “First of all, the livelihood of a lot of photographers does not depend on their ability to license their copyright. A lot of photography work is commissioned. And yes, that usually does not give the artistic autonomy one may crave, but it does not necessarily make it lack creativity all of a sudden.

    Secondly, any professional photographer knows that if a photograph contains objects that are under copyright, in quite a few jurisdictions such a photograph may have to be cleared with those copyright holders. Copyright introduces transaction costs that are often prohibitive for new work. So a weaker copyright may very well benefit photographers.

    Lastly, professional photography as the sole source of income for specialists is going the way of the dodo, regardless of what is happening in copyright. Photography could be a prime example of digital technology removing the barriers of entry to a market to such an extent that for all practical intents and purposes a talented amateur (photography still requires talent, regardless of equipment) will do fine in a great number of situations where you otherwise would hire a professional photographer. No matter how weak or strong copyright is, the full-time professional photographer, especially the artistically autonomous kind, will become as rare as the full-time professional novelist. No amount of copyright will stop this.”

  6. AvatarMichel Bauwens

    Jim Killock, Open Rights Group, via FC Forum mailing list:

    I think this question shows the poor framing of the below article.

    Flexible copyright is not weaker: it is stronger.

    Why? Because flexibility affords permission, leeway, legitimacy; it can legally control or permit as appropriate.

    Thus flexibility aids the long term survival of copyright as a system.

    If you’d like an analogy: do engineers generally consider cast iron or steel as stronger? And which is more flexible?

  7. Avatarbob catchpole


    Walter van Holst’s points are deeply unconvincing!…

    Point 1 – it would be hard to find a photographer that agrees. That’s why the overwhelming majority value and retain their copyright.

    Point 2 – the example he gives might happen in 0.01% of cases. Why highlight something so insignificant?

    Point 3 – he confirms the economic precariousness of creators today, which is the point I’ve been making all along…


  8. Avatarbob catchpole


    Jim Killock’s comments reveals how important it is that a campaign for change understands concepts and aims. “Weaker”? “Stronger”? “More flexible”? Time for clarity…


  9. AvatarMichel Bauwens

    thanks Bob. Regarding point 1, this is exactly the approach of creative commons, to give creators the choice and make copyright more flexible; regarding point 3, though the digital revolution has increased precarity in some aspects, it also predates it, and it brings other advantages, hence a mixed reality. The difference remains between choices that either sabotage technology (DRM) and illegalize human sharing/cooperation behaviours; and approaches that seek solutions within the new social and technological realities.

  10. Avatarbob catchpole

    Thanks Michel, I agree we need to acknowledge the new technological realities and create on new rules.

    Culture only evolves if it is shared. Humans have been sharing for countless generations. Culture is our most valuable achievement – physical, intellectual, emotional, spiritual. But it has always had to be paid for, one way or another. The new realities require us to find new ways of supporting this phenomenal effort.

    Apologizing for a solution that “does not give the artistic autonomy one may crave” (Walter van Holst, above) reveals a lack of understanding of the needs of creators…

    Happy new year, Bob

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