|Title:||Copying and Copyright|
|Author(s):||Hal R. Varian|
|Citation:||Varian, H. R. (2005). Copying and copyright. The Journal of Economic Perspectives, 19(2), 121-138.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|Linked by:||Handke (2015), Liebowitz (2005)|
|About the Data|
|Data Description:||Economic models and business models|
|Data Type:||Primary and Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
Today most newly created textual, photographic, audio, and video content is available in digital form. Even older content that was not "born digital" can relatively easily converted to machine-readable formats. At same time, the world has become more networked, making it easy to transfer digital content from one person to another. The combination of technological progress in both digitization and computer networking has been a challenge for traditional ways of managing intellectual property. Some observers have even questioned whether current models for intellectual property can or should survive in a digital world. For example, there is widespread concern about piracy of popular music and film, both via the network and via bootleg CDs and DVDs. There is also concern about the economic viability of the current model for scholarly publication, or, for that matter traditional forms of publishing such as newspapers and TV network news. These developments have led to a revival of interest in the economics of copying and copyright. In this brief review we examine some of the economic issues in this area, and describe some of the insights that have emerged from this work. We end with some reflections on alternative business models for provision of creative works.
Main Results of the Study
- If the copyright term is increased to T + Delta T, society loses the benefits from competition that would have accrued during the period T. On the other hand, extending the term makes the production of intellectual property more profitable, increasing the supply of works. The optimal term balances out these two effects.
- A clever monopolist might use pre-emptive pricing and set an initial price low enough to discourage sharing. In the limit-pricing equilibrium, the surplus is shared between the monopolist and the consumer. This outcome is due to the fact that the possibility of sharing operates like a competitor for the monopolist, constraining the price that it can charge. Since the monopolist’s price and profit is increasing in the transactions cost of sharing, the monopolist would like these transactions costs to be as large as possible. Hence, it would be interested in seeing greater enforcement of antipiracy laws, technologies that make it costly to copy and similar measure that make copying more costly to consumers.
- Now that most information is born digital and that digital information is typically very easy to copy and distribute, it is conceivable that copyright laws may become almost impossible to enforce. Some business models might help sellers supporting themselves in an environment without effective copyright: 1) Make the original cheaper than a copy; 2) Make a copy more expensive than the original; 3) Sell physical complements; 4) Sell information complements; 5) Subscriptions; 6) Sell a personalized version; 7) Selling works with digital fingerprints (encoding the identity of the purchaser); 8) Advertise oneself; 9) Advertise other things; 10) Monitoring; 11) Site licenses; 12) Media tax; 13) Ransom; 14) Pure public provision; 15) Prizes, awards and commissions
- Copyright is a second-best solution to intellectual property provision. Perhaps the ultimate saving grace is that the same technological advances that are making digital content inexpensive to copy are also helping to reduce the fixed cost of content creation. Hundreds of thousands of people are giving away digital content, from blogs to garage video to open source software. The increased availability of content due to the reduction in the cost of creating and distributing it will presumably increase competition and reduce the price consumers pay for legitimate access to content.
- It is highly unlikely that free content alone will meet all of society’s needs for content. However, free content together with some combination of the business models described in this work and traditional copyright may do an adequate job of satisfying society’s demand for information goods.
Policy Implications as Stated By Author
According to the author, since the monopolist’s price and profit is increasing in the transactions cost of sharing, the monopolist would like these transactions costs to be as large as possible. Hence, it would be interested in seeing greater enforcement of antipiracy laws, technologies that make it costly to copy and similar measure that make copying more costly to consumers
Coverage of Study
|Level of aggregation:||Economic models|
|Period of material under study:||Not stated|
|Level of aggregation:||Business models|
|Period of material under study:||Not stated|