|Title:||Forever Minus a Day? Calculating Optimal Copyright Term|
|Citation:||Pollock, R. 2009. “Forever Minus a Day? Calculating Optimal Copyright Term”. Review of Economic Researchon CopyrightIssues 6(1); 35-60.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|Linked by:||Garcia and McCrary (2019)|
|About the Data|
|Data Description:||This study uses existing data from various studies, including the Gowers (2006) review, the Congressional Research Service report prepared in relation to the Copyright Term Extension Act (Rappaport, 2002), from Liebowitz in his submission to the Gowers review on behalf of the IFPI (International Federation of the Phonographic Industry) and PwC’s report to the Gowers (2006) review on behalf of the BPI (British Phonographic Industry).|
|Data Type:||Secondary data|
|Secondary Data Sources:|
|Data Collection Methods:|
|Data Analysis Methods:|
|Cross Country Study?:||Yes|
|Government or policy study?:||No|
|Time Period(s) of Collection:||
The optimal term of copyright has been a matter for extensive debate over the last decade. Based on a novel approach we derive an explicit formula which characterises the optimal term as a function of a few key and, most importantly, empirically estimable parameters. Using existing data on recordings and books we obtain a point estimate of around 15 years for optimal copyright term with a 99% confidence interval extending up to 38 years. This is substantially shorter than any current copyright term and implies that existing terms are too long.
Main Results of the Study
In this paper the authors have developed a simple dynamic model for analysing copyright term. In Proposition 1 they derived a single, simple, equation that defined optimal term as a function of key exogenous variables. Using the estimates for these variables derived from the available empirical data they obtained a point estimate for optimal copyright term of approximately 15 years (with a 99% confidence interval extending up to 38 years). To the authors' knowledge this is the first such estimate which is properly grounded, both theoretically and empirically.
- The author created a model where he calculated the optimal copyright term in terms of dependent variables like "cultural decay" (which is the depreciation rate of cultural works), discount rate (interest rate), and proportion of available surplus that is deadweight loss, among others.
- The author found that the copyright term was decreasing in all three variables so when cultural decay, discount rate, and or proportion of surplus that is deadweight loss increased; there was a decrease in optimal copyright term length.
- The author stated that 15 years would be the optimal copyright term and that with 99.9% confidence could say that the optimal copyright term length was under 50 years and with 99% confidence under 38 years.
- Thus concluded that the current copyright term length is too long and should be decreased in order to maximise social welfare.
Policy Implications as Stated By Author
Copyright term is probably the most important aspect of the overall ‘level’ of copyright. The estimate obtained for optimal term (15 years) is far below the length of copyright in almost all jurisdictions. Furthermore, while an exact point estimate is obviously subject to considerable variation due to the uncertainty in the underlying parameters, the authors have confirmed using a variety of robustness checks that current copyrights are almost certainly too long. This implies that there is a significant role for policymakers to improve social welfare by reducing copyright term as well as indicating that existing terms should not be extended. Such a result is particularly important given the degree of recent debate on this exact topic. Policymakers could increase social welfare by decreasing current copyright term and definitely should not extend it.
Coverage of Study
|Level of aggregation:||Economic model|
|Period of material under study:||2002-2006|