Varian (2005)

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

Varian (2005)
Title: Copying and Copyright
Author(s): Hal R. Varian
Year: 2005
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:
Discipline:
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:
Industry(ies):
Country(ies):
Cross Country Study?: No
Comparative Study?: No
Literature review?: No
Government or policy study?: No
Time Period(s) of Collection:
  • Not stated
Funder(s):
  • NSF grants 9979852 and 0331659

Abstract

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

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

Datasets

Sample size: 3
Level of aggregation: Economic models
Period of material under study: Not stated


Sample size: 14
Level of aggregation: Business models
Period of material under study: Not stated