Centre for Intellectual Property and Information Law (2006)
|Centre for Intellectual Property and Information Law (2006)|
|Title:||Review of the Economic Evidence Relating to an Extension of the Term of Copyright in Sound Recordings|
|Author(s):||Centre for Intellectual Property and Information Law|
|Citation:||Centre for intellectual property and information law. (2006). Review of the Economic Evidence Relating to an Extension of the Term of Copyright in Sound Recordings. University of Cambridge|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|Linked by:||Gowers (2006)|
|About the Data|
|Data Description:||The study draws on theoretical and empirical data sources from multiple disciplinary fields but with an emphasis on Economics of copyright.
This includes an overview of economic theory of copyright.
The study also identifies various empirical studies of issue directly and indirectly relevant to proposed copyright term extension.
The study also draws on the limited but "suggestive" empirical data relating to term extension namely: Brooks (2005) and Covey (2005).
|Data Type:||Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||Yes|
|Government or policy study?:||Yes|
|Time Period(s) of Collection:||
The aim of this study is to provide the Gowers Review with an independent assessment of the economic evidence bearing on proposals to extend the term of copyright in sound recordings. The issue raised before the Review is whether the term of copyright in sound recordings in the UK (and implicitly this would require an alteration at EU level) should be increased.
Main Results of the Study
- Benefits consist of welfare from new works created because of higher levels of expected revenue under the longer term. Costs consist of the increased deadweight losses stemming from restricted access to existing and future work due to the extension.
- Investment in current artists should be based upon the prospects of profits, not the availability of past ones. Therefore retrospective term increases will have no effect upon the creation of new work.
- Extension will increase the net present value of revenues for new works by 1% or less. While some authors argue that this small increase might, in some circumstances, result in a disproportionate reaction, nothing in the empirical evidence suggests that this is the case as regards current levels of production in the record industry.
- Given the small size of this increase, the large number of works already being produced and the likely size of the deadweight loss (particularly in relation to historical works) it is our view that a term extension will likely result in a net loss to UK society as a whole.
- Increasing copyright term increases revenues to the record industry. For retrospective extensions the 2% increase in the present value of revenues (being approximately 160 million pounds) suggested by PwC would seem plausible while for prospective extensions the figure would likely be 1% or lower.
- Existing literature gives little indication as to how revenues would be distributed however our research did indicate that featured recording artists would likely benefit to some extent from such an extension with typical royalties rates around 5–15%.
- Existing economic theory plausibly suggests that the extension of copyright term increases costs to consumers (consumers should be construed in a wide sense to include all users of recorded music including bars, film-makers, broadcasters etc). While the immediate cost of prospective extension is likely to be small, the immediate cost of an extension applied to existing works would likely be significant.
- Increasing copyright term in the UK from 50 to 70 (or 95 years) is likely to have a significant, negative effect, on balance of trade.
- The theoretical arguments that some incentive is required to induce publication, archiving and preservation activities in relation to old works seem to us to be plausible. However the review does not find that the need for such incentives would justify giving existing copyright holders an extended term of protection in the original work.
- Modern systems of law regard the protection of established rights as fundamental. That is, once granted, modern legal systems rarely reduce existing entitlements. The effect of the principle of respect for established rights is that it is much easier to extend copyright term than to reduce it (so much so that term extensions are likely to be 'irreversible').
- If term were not extended and research over the next ten years showed this lack of extension to have been a mistake then it would be relatively easy to correct this error by introducing a term extension.
Policy Implications as Stated By Author
"Any decision to extend term should be based on stronger evidence than one to keep term at its current level."
"Secondly, the prudent policy-maker faced with uncertainty should prefer a course of inaction so as to keep options open and await better and more precise data. Thus, the case for an extension would have to be especially compelling to make it preferable to keeping term at its current length. This, combined with our conclusion that the case for term extension is, in fact, weak, it would be particularly inadvisable, given our present state of knowledge, for a rational policy-maker to extend the term of copyright in sound recordings."