Kretschmer (2012)

From Copyright EVIDENCE

Advertising Architectural Publishing of books, periodicals and other publishing Programming and broadcasting Computer programming Computer consultancy Creative, arts and entertainment Cultural education

Film and motion pictures Sound recording and music publishing Photographic activities PR and communication Software publishing (including video games) Specialised design Television programmes Translation and interpretation

1. Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare 2. Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)? 3. Harmony of interest assumption between authors and publishers (creators and producers/investors) 4. Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption) 5. Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)

A. Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right) B. Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction) C. Mass digitisation/orphan works (non-use; extended collective licensing) D. Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability) E. Fair remuneration (levies; copyright contracts) F. Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Source Details

Kretschmer (2012)
Title: Does Copyright Law Matter? An Empirical Analysis of Creators’ Earnings
Author(s): Kretschmer, M.
Year: 2012
Citation: Kretschmer, M. (2012). Does Copyright Law Matter? An Empirical Analysis of Creators’ Earnings. An Empirical Analysis of Creators’ Earnings (May 21, 2012).
Link(s): Open Access
Key Related Studies:
Discipline:
Linked by:
About the Data
Data Description: Empirical evidence from secondary sources regarding authors earnings.
Data Type: Secondary data
Secondary Data Sources:
Data Collection Methods:
Data Analysis Methods:
Industry(ies):
Country(ies):
Cross Country Study?: Yes
Comparative Study?: Yes
Literature review?: No
Government or policy study?: No
Time Period(s) of Collection:
  • Until 2012
Funder(s):

Abstract

Copyright matters to creators. The claim has pervaded copyright jurisprudence and economic analysis for over 200 years. Creative production would not take place without the incentive of artificial scarcity that copyright law provides. Authors and artists would starve.

Professor Breyer (as he then was) wryly remarked in The Uneasy Case (1970, at 324): “It is, of course, conceivable that some prospective Miltons have given up writing after learning that Milton’s daughter was destitute, but it is unlikely.”

This article surveys what the empirical data actually say about the way creators live. The argument proceeds in three steps.

First, the relationship of copyright and contract law is conceptualised, starting from an analysis of contracts concluded in a pre-copyright environment (Milton 1667; Schiller 1791). The extent of statutory dependence is then scrutinised for typical sources of earnings of creators at the beginning of the 21st century.

Second, empirical evidence on creator earnings in developed cultural markets is reviewed. It is shown that the bottom 50% of composers/songwriters earn less than 5% of the total income of the population of composers/songwriters; the bottom 50% of literary authors earn under 10% of total income; the bottom 50% of visual creators earn about 10% of total income. Median incomes are close to the poverty line. The top 10% of creators receive a disproportionally large share (visual creators: 45% of total income; literary authors: 65% of total income; composers/songwriters: 80% of total income).

Finally, possible interpretations of these data in the light of Landes & Posner’s “harmony of interest” assumption (An Economic Analysis of Copyright Law, 1989) are considered and rejected. Creators (authors, performers) and investors (publishers, producers) have conflicting interests, and copyright law does not harmonise but exacerbate these.

The article concludes that copyright law empirically fails to secure the financial independence of creators. If it works as an incentive for some, this may be based on a systematic cognitive mistake.

Main Results of the Study

  • There were 3 main themes of the paper, firstly the author started by outlining the conceptual relationship between copyright law and contracts by looking at two different types of contracts. One between an author and the publisher and the other between a footballer and the club. The author goes on to make the point that contracts between the author and publisher would exist even without copyright citing the contract between the footballer and the club as an example of that type of contract.
  • Takes a closer look into the utilitarian rationale of copyright, and suggests a shorter term copyright.
  • Secondly the author move on to contrast income of different types of creators with copyright contracts (using data from various different surveys and data sources) with income from all UK employees. The author found that the income from copyright industries was significantly less on average and far more unequal compared to income from all employment and that most artists gained large amounts of income from non-copyright sources like teaching. The author also added that artists’ income was very unstable and more creators try to embark on a career than are able to sustain them.
  • Strong competition for author and lower consumer prices was suggested as a solution to motivate creators.
  • Large number of artists make their money from non-copyright works
  • Author highlights the large gap between what the top creators, in both visual and literary markets, earn compared to the rest, continues to conclude that copyright makes this gap between distributions worse.
  • Lastly the author critiqued the “harmony of interest assumption” outlined by Landes and Posner in 1989. The author concluded that for superstar creators the market works well, they can either choose to shift risk to commercial intermediary and the publisher can also choose to share risk through a royalty contract or absorb it using a buyout. This however is not true with non-bestselling creators as they have less market power and face large amounts of competition. This conflicts with the “harmony of interests assumption” and also empirical evidence in the paper contradict the idea that copyright provides financial independence for creators partly also due to superstar affect.


Policy Implications as Stated By Author

Author suggests that copyright law does not matter in the context of creators earning so could be efficient to rethink the role of copyright.

Coverage of Study

Coverage of Fundamental Issues
Issue Included within Study
Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare
Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?
Green-tick.png
Harmony of interest assumption between authors and publishers (creators and producers/investors)
Green-tick.png
Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption)
Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)
Coverage of Evidence Based Policies
Issue Included within Study
Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right)
Green-tick.png
Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction)
Mass digitisation/orphan works (non-use; extended collective licensing)
Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability)
Fair remuneration (levies; copyright contracts)
Green-tick.png
Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Datasets