Fair Use: Worth More To The Economy Than Copyright?

from the take-that,-RIAA dept

I've been doing some research over the last few months into the economic impact of products where intellectual property protections are either ignored or non-existent, to see how the economics plays out. I'll have a lot more to say on this in the future, but the impact is really impressive in ways that you wouldn't necessarily expect. What's impressed me the most is how large the impact is -- in that the overall benefits to the economy in those cases are often staggering in nature. Yet, most of the press focuses on bogus one-sided reports on the impact of "piracy" which never seem to take into account any of the beneficial economic impacts of having producers purposely ignore intellectual property restrictions. It appears that some tech companies are getting a little sick of the bogus reports coming out of the BSA, RIAA and MPAA as well... so they've decided to release their own study, showing that the economic benefit of fair use is much, much bigger than the economic impact of copyright. In fact, the report shows that the "fair use industry" generated $2.2 trillion of value for the economy, while the copyright industry only generated $1.3 trillion. You can read the full report (pdf file) yourself.

The report is put out by the Computer and Communications Industry Association, of which Google, Yahoo and Microsoft are members. There's little doubt that the report is just as biased as the reports on piracy numbers -- but really what this report highlights is how bogus the numbers are in the piracy reports. You can put out a report that'll show just about any "loss" or "gain" if you get to set the assumptions and conveniently ignore certain things and double count other things. In this case, the CCIA was fairly rigid in using WTO approved methodology for how countries are supposed to count the value added for the copyright issue -- they just applied it to industries that are based on fair use in some way or another. You can certainly quibble with how they pick which industries are enabled by fair use, but at no worse a level than how the copyright lobby defines the importance of copyright-based industries. Either way, though, if the copyright industry is going to keep publishing its bogus reports, it's hard to fault the CCIA for using the same methodology to show how much more important fair use is. The next time anyone cites the bogus piracy numbers, they should at least be forced to acknowledge these numbers on the value of fair use as well as a counterweight. They may be bogus, but they're equally bogus to the piracy numbers. In the meantime, it's probably also worth noting that Microsoft is on both sides of this debate -- as an active member of the BSA which is famous for its bogus numbers, as well as a member of the CCIA. Apparently, the company is a little confused on its position on copyright.


Reader Comments (rss)

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  1.  
    identicon
    Sanguine Dream, Sep 13th, 2007 @ 7:22am

    It's not confusion...


    In the meantime, it's probably also worth noting that Microsoft is on both sides of this debate -- as an active member of the BSA which is famous for its bogus numbers, as well as a member of the CCIA. Apparently, the company is a little confused on its position on copyright.


    It's called playing both sides. That way when the smoke clears no matter who is on top Microsoft is on the winning side.

     

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  2.  
    identicon
    RandomThoughts, Sep 13th, 2007 @ 7:31am

    Hey, smart people give to both Dems and Repubs, so no matter who wins they will be set.

    Fair use is obviously legal. Piracy isn't. Why should economic advantage change what is right or wrong?

     

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  3.  
    identicon
    Andy, Sep 13th, 2007 @ 7:57am

    Since when does legality define what is right or wrong? Piracy is only "wrong" because there is law that defines it as such. If there was no law, would it still be wrong?

     

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  4.  
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    Ajax 4Hire, Sep 13th, 2007 @ 8:18am

    Re: Yes, wrong is wrong.

    Whether you get a government body to issue a "law" or not does not change what is right and wrong.

    Laws are for people who have no morals.
    You cannot legislate good behavior or morals.

    This means that the laws passed by government are simply warnings. You violate the law and the government will step in and met out a consequence.

    The government laws are only for those who are too stupid to recognize what should and should not be done.

    Let the example of stupid government laws begin.

     

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  5.  
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    Anonymous Coward, Sep 13th, 2007 @ 8:21am

    Re:

    It would still be something that you would, in some cases, be ashamed of doing right to the face of the creator. But not in others.

     

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  6.  
    identicon
    hegemon, Sep 13th, 2007 @ 8:24am

    Re:

    Illegal vs Legal != to Wrong vs Right

    The law exists simply because there is (supposedly) and economic necessity for it. Economic advantage should definately change what is illegal/legal when it comes to intellectual property. If it can be shown that the traditional "wisdom" concerning copyright is wrong, and/or that the current economic copyright laws are unnecessary, there should certainly be an adjustment in the law.

    Right and wrong are, in this case subjective. You may say "stealing is wrong, therefore piracy is wrong." The next person may say that it is wrong to limit a person's access to art and culture based on their economic position.

     

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  7.  
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    Maxillarypun, Sep 13th, 2007 @ 9:17am

    Fair Use != Piracy

    Pretty much piracy is wrong. Taking/copying stuff without permission (piracy) is considered wrong unless the creator has said it's ok to take/copy his/her stuff, which then makes it permissible and therefore not piracy. The problem is that the RIAA and MPAA want to take fair use applications and call them piracy, even though the fair use applications are protected by law. And then they want to inflate the "loss" that they suffer. And really, saying they are protecting the artists is laughable since the artists see little to none of the profit anyway.

     

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  8.  
    identicon
    Anonymous Coward, Sep 13th, 2007 @ 9:26am

    Get a clue you tool

    So I can create copyright for fair use? Sweet, how much a year does that pay a year, Mike? Your Marxist views of economy are not welcome in U.S. I urge to give away free advisertising for your website. Why not? It would be for the greater good of those companies, and could keep prices down on their products. Sounds good. Greater good for all.

     

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  9.  
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    DeathsPal, Sep 13th, 2007 @ 9:41am

    "The next person may say that it is wrong to limit a person's access to art and culture based on their economic position."

    The problem it this is not based on what the next person might say.... It's not based on what the "People" want... It's based on what Corporations in their infinite wisdom believe is most profitable!

    and also "Illegal vs Legal != to Wrong vs Right"

    More like "Illegal vs Legal != to Loss vs Profit"

    And the biggest thing that burns me is that this argument is not about Theft! (Piracy in is true form is wrong!) It is about protecting ones rights as in being able to backup the $2500 copy of CS3 you just bought or using a copy of the CDs from the $100 box set you just bought in your car so the originals don't get trashed or stolen. Or using copies of the Veggie tales DVDs you payed $20 bucks at wall-mart for in you kids room so the don't get covered with grape jelly. But th law says this is wrong to protect your investment... Never mind what it says about outright theft.

     

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  10.  
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    Kyle, Sep 13th, 2007 @ 9:44am

    Re: Get a clue you tool

    His views certainly are welcome in the US, since you don't speak for the entire country. Besides, why assume that his views are in any way Marxist simply because he's suggesting a reevaluation of how our country handles intellectual property?

    Let's take a look at the part of the Constitution that sets up the basis of IP law in the US:

    "The Congress shall have Power to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."

    It's very specific that "intellectual property" protections in this nation exist only "to promote the Progress of Science and the useful Arts" and are NOT considered to be inherent, property-equivalent rights.

    So if it can be shown that copyright is doing more harm than good to the Progress of Science and the useful Arts, then under the law of our land, it should be either abolished (at the extreme) or at least modified and loosened in order to reestablish its reason for existence.

    You don't need exclusive copyright or patents to make money. Red Hat and IBM make a buttload of money off of Linux without it.

     

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  11.  
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    Nick (profile), Sep 13th, 2007 @ 9:53am

    Re: Get a clue you tool

    Mike gives away free analysis to acquire paying customers for customized analysis. AC, you know your angle is too extreme and the Founding Fathers would look down on your rhetoric.

     

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  12.  
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    chris (profile), Sep 13th, 2007 @ 10:11am

    Re: It's not confusion...

    microsoft has to play both sides because microsoft is going into a new business: entertainment computing.

    the traditional, and successful, business of corporate and consumer computing is served by supporting anything that encourages people to use computers. having strong fair use means more digital everything (imaging, music, video, etc.) which creates the need for more people to use more computers to do more things, hopefully all on windows PCs and devices using office and internet explorer.

    the new business of entertainment computing, or the PC as the source of entertainment, means establishing solid relationships with the big content companies. people aren't going to plug their PC's into their TV's if the PC can't help do what the TV is already doing: serving up content. content companies hate fair use. they hate anything that doesn't involve us paying them, again and again.

    so, MS has to remain as true as it can to it's traditional business (the one that made it rich), while making inroads in to it's new business (the one that will keep it rich). it's a tough line to walk.

     

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  13.  
    identicon
    Anonymous CowHerd, Sep 13th, 2007 @ 11:00am

    Re:

    So Murder wouldn't be "wrong" if it wasn't legally defined as such?

    *shakes head*

    We're guaranteed a right to life, to take that away would be a denial of that right, thus it is wrong. The law has little to do with it, other than as an enforcement measure.

    I am not saying the same applies to copyright. This is merely a response to your first question.

     

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  14.  
    identicon
    Jack, Sep 13th, 2007 @ 11:03am

    Founding Fathers

    Benjamin Franklin, a renowned inventor of his time, intentionally did NOT patent his inventions. The original Open Source guy?

     

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  15.  
    identicon
    rawalex, Sep 13th, 2007 @ 11:25am

    The numbers don't tell the story

    Creating value is one thing... but the value has to be created and given to those who produce the copyrighted material, otherwise the material wouldn't get produced to start with. Without the copyrighted material, there would be ZERO value on either side.

    If you pay nothing to produce software, and you sell it for $50, you are making 100% profit. But that profit isn't paying to create more software, but rather to keep the guy selling the stolen content living the high life, buying fast cars and equally fast women. The software company gets nothing, and as a result have less interest in creating the next great work.

    If people want to give away something for free, they should create something of their own, spend their time and effort to make it, and then give it away.

     

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  16.  
    identicon
    Overcast, Sep 13th, 2007 @ 11:27am

    Yeah, perhaps it's worth more to the public, the arts, the economy.

    But that's completely irrelevant. The RIAA and MPAA are paying politicians GOOD money to insure their old rusty business model stays the uncontested RULER of the media universe.

    And that's what REALLY matters.

    lol

     

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  17.  
    identicon
    Anonymous Coward, Sep 13th, 2007 @ 11:33am

    Re: The numbers don't tell the story

    Absolutely. Fair use is just money straight out of the pockets of musicians. I don't care about record companies, but artists are hard working people. That illusion that they are not is such a lie. What is the point of creation if there is no money in it? I mean you cannot live off of other's enjoyment of your work.

     

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  18.  
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    Mike (profile), Sep 13th, 2007 @ 1:14pm

    Re: Get a clue you tool

    So I can create copyright for fair use?

    I don't know what this means.

    Your Marxist views of economy are not welcome in U.S

    Again, I'm confused. How is it "Marxist" to ask for less centralized gov't regulations? How is it is "Marxist" to say let the free market sort this out without gov't intervention?

    I urge to give away free advisertising for your website. Why not? It would be for the greater good of those companies, and could keep prices down on their products. Sounds good. Greater good for all.

    You seem to be confused. I've not talked about "greater good". I've talked about what allows the business to make more money, in ways that involve treating their customers right. I'm not sure why you believe that's "Marxist." It's not.

     

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  19.  
    identicon
    Anonymous Coward, Sep 13th, 2007 @ 1:34pm

    Re: Re: The numbers don't tell the story


    I don't care about record companies, but artists are hard working people.


    That is pretty much the popular opinion. The artist should get paid for what they but the record companies are stacking the deck as high as they can by paying politicians to create a series of laws that would basically give record companies (not artists and not listeners) absolute control over music to the point where it would be "illegal" to do "unlawful" things with music and they would have the ability to change the definition of "illegal" and "unlawful" on a whim.

    Plain and simple the record executives have realized that they needs musicians a WHOLE LOT MORE than musicians needs them. Kinda like the person that abuese their spouse in order to hide their own insecurities.

    If the all the major record labels just dissapeared over night musicians would just have to figure out another way to get there music out to the fans but what if music itself dissapeared? Those record executives would have to get real jobs.

     

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  20.  
    identicon
    Mischa, Sep 13th, 2007 @ 1:44pm

    Re: Re: The numbers don't tell the story

    There are pleanty of people who create for the sake of creation. They might like the fact that they can make money off of it but that isn't why they do it.Also, no one is saying musicians are lazy, we are saying that companies don't need to earn money from something that was created 20+ years ago.

     

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  21.  
    identicon
    Anonymous Coward, Sep 13th, 2007 @ 1:51pm

    Those who argue against fair use, it has been protected by law and by the courts, and in the concept is in the constitution, so it is impossible to remove the right.

     

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  22.  
    icon
    Mike (profile), Sep 13th, 2007 @ 2:06pm

    Re: The numbers don't tell the story

    Creating value is one thing... but the value has to be created and given to those who produce the copyrighted material, otherwise the material wouldn't get produced to start with. Without the copyrighted material, there would be ZERO value on either side.

    There's are a few huge, and incorrect, assumptions implicit in that statement. First, the assumption that the value is a single, indivisible unit and it "all" needs to go to one party -- either the creator or the users. That's simply false. The second false assumption is that without copyright, the creator cannot get value. That's flat out incorrect and easily proven as false. Finally, the last false assumption is that without copyright material doesn't get produced. That's simply false.

    The reasons are easy to understand. The benefits of content are divisible, and you can portion out some benefit to the creators and plenty of benefit to the users. That doesn't require copyright either. There are plenty of ways for the creator of content to benefit without copyright. And those benefits will often drive the production of the content, so the argument that there is no incentive without copyright is laughably false.

    If you pay nothing to produce software, and you sell it for $50, you are making 100% profit. But that profit isn't paying to create more software, but rather to keep the guy selling the stolen content living the high life, buying fast cars and equally fast women. The software company gets nothing, and as a result have less interest in creating the next great work.


    This is a weird and very specific example where you set up a lot of parameters. Real life is quite different. Even if you have someone selling the counterfeit version, there's benefits in buying from the legitimate provider -- for example, support and regular updates are two important reasons. In fact, the software company often has even MORE incentive to keep innovating so that they can provide additional value and services beyond what the counterfeiter can provide. And, if they can tie that additional value back to a service, then it's much more difficult for additional counterfeiting to take place.

    If people want to give away something for free, they should create something of their own, spend their time and effort to make it, and then give it away.

    And if companies want to get better promotions and have happier customers who want to promote their products to others for them so they can have a bigger market and make more money, they should encourage their users/fans/customers to share the infinite components of their product, while setting up a business model to sell the scarce components.

     

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  23.  
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    Mike (profile), Sep 13th, 2007 @ 2:08pm

    Re: Re: The numbers don't tell the story

    Fair use is just money straight out of the pockets of musicians.

    How? Fair use is usually in cases where no money would have been exchanged anyway. If anything it's beneficial to the musicians as they're going to get more attention for the fairly used portion.

    I don't care about record companies, but artists are hard working people. That illusion that they are not is such a lie.

    Whoever said they were lazy? Not I.

    What is the point of creation if there is no money in it? I mean you cannot live off of other's enjoyment of your work.

    Why must so many people make the false assumption that without copyright (or with fair use) there's no money to be made? It's flat out false.

     

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  24.  
    identicon
    Thomas, Sep 13th, 2007 @ 10:10pm

    Two Wrongs Make a Right...

    So, does this mean that Techdirt will stop bitching about the RIAA's biased reports now that they endorse biased reports? Otherwise it would be hypocrisy and I'm sure Techdirt wouldn't want to take hypocritical positions. Would they?

     

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  25.  
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    Mike (profile), Sep 14th, 2007 @ 12:24am

    Re: Two Wrongs Make a Right...

    So, does this mean that Techdirt will stop bitching about the RIAA's biased reports now that they endorse biased reports? Otherwise it would be hypocrisy and I'm sure Techdirt wouldn't want to take hypocritical positions. Would they?

    I hardly "endorsed" the biased report. I pointed out that it was biased. But I pointed out that it was equally as biased as the other side, so I just suggested for fun that if someone wants to quote one of these studies to support their position, they should also have to quote the other one.

    That's not endorsement -- it's pointing out how lame it is.

     

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  26.  
    identicon
    Anonymous Coward, Sep 14th, 2007 @ 12:31am

    Re: Re:

    So Murder wouldn't be "wrong" if it wasn't legally defined as such?

    *shakes head*


    So murder would be "right" if it was legally defined as such?

    *shakes head*

    No, legality doesn't define morality either way.

     

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  27.  
    identicon
    pat, Sep 14th, 2007 @ 12:33am

    yarr....?

    just a note, evry one is calling copyingselling music for personal profit "piracy", but it shouldn't be called that, no crime has been commented on the high seas

    http://en.wikipedia.org/wiki/Piracy

     

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