Bureau Of Economic Analysis Shows Why Copyright Terms Should Be Greatly Diminished

from the half-life-of-economic-usefulness dept

We've pointed a few times in the past to a chart from William Patry's book, looking at how frequently copyright was renewed at the 28 year mark back when copyright (a) required registration and (b) required a "renewal" at 28 years to keep it another 28 years. The data is somewhat amazing:
As you can see, very few works are renewed after 28 years. Only movies, at 74% are over the 50% mark. Only 35% of music and only 7% of books tells quite a story. It makes it quite clear that even the copyright holders see almost no value in their copyrights after a short period of time. It appears that the Bureau of Economic Analysis is coming to the same conclusion from a different angle. As Matthew Yglesias notes, as part of its effort to recalibrate how it calculates GDP, the BEA is considering money spent on the creation of content an "investment" in a capital good, which needs to be depreciated over the time period in which it is valuable. Frankly, I'm not convinced this is the smartest way to account for money spent on the creation of content, but either way, the BEA's analysis provides some insight into the standard "economic life" of various pieces of content, which match up with the chart above in many ways.
The most ephemeral cultural works turn out to be musical records, which depreciate at a staggering annual rate of 26.7 percent—meaning they earn a huge share of their lifetime income in their first year of release, and only a tiny number of works have a meaningful level of back-catalog sales. Television shows come next, depreciating at a 16.8 percent rate. Then you have books at 12.1 percent. Movies turn out to be far more durable than TV, music, or books, depreciating only at a fairly low 3.8 percent rate.
While books and music flip flop from the chart above, movies seem to be the only one, in both measurements, that have a particularly long economic life. Yglesias wonders if that's also about to change for movies, especially as studios are forced to move away from windowed releases.
The reason for that, presumably, is that movie studios are quite sophisticated about selling the same product repeatedly. First in theaters, then in DVD and pay TV stations, then to cable networks, and with simultaneous rollouts happening abroad. My guess is that when the BEA looks back in five or 10 years, they're going to find that they've miscalibrated this number because the movie industry is facing substantial business-model transformation on precisely this point. The rise of on-demand entertainment options and the falling quantity of films produced in any given year is putting pressure on traditional market segmentation practices, and this number may not hold up.
I'm not sure if that's really going to be true, especially since one of the advantages of on-demand systems like Netflix is that they open up a wide back catalog to viewers. Prior to the VCR, that was non-existent, and even with the VCR, the back catalog was limited to what a video store could hold, and old products were regularly on the chopping block. So I could see how movies could still have an extended economic life.

Still, as Andy Howard noted in alerting us to this story, this actually gives us yet another tool for evaluating a more reasonable copyright term. If the Bureau of Economic Analysis is saying that the economic life of a piece of music is just a few years, after which it's basically a zero, it seems silly, pointless and counterproductive to keep that work locked up under copyright. Instead, it would make tremendous sense to move it into the public domain, where it might be useful. As we had just discussed recently, when works are in the public domain, it often inspires more creativity as people build on the original work. From an economic standpoint, all of the time between the end of the economic life of a work and when it finally goes into the public domain is simply a massive loss to society and culture.

Filed Under: copyright terms

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  1. icon
    PaulT (profile), 24 Apr 2013 @ 7:45am


    "Notice he talks about a falling quantity of movies being produced"

    My thought as well, and I'd like to see his data for that. Everything I've seen suggests that numbers are rising in all areas from theatrical (659 released in the US vs. 601 in 2011 and 356 in 2001 according to Box Office Mojo when I just checked) to foreign (niche markets like Bollywood and Nollywood always seem to be rising from what I read). With the explosion in digital and indie/no budget filmmaking, it seems unlikely that this area is dropping either. A quick glance at the wiki pages for Sundance suggest that fewer films have been submitted in 2012 than 2011, but the 2011 figure was huge compared to the 2008 festival (the next previous wiki page that lists the number), although that's only one indication of independent film production, let alone foreign production that never gets actively sold overseas.

    It's possible that he has access to figures that us mere mortals don't see or that I've made a few assumptions that are incorrect, but I'm seeing facts that contradict him. Especially if you look at film as an international including medium rather than cherry picking criteria to favour the legacy American producers. It would be very nice to see what these claims are based on, and whether the criteria are fair to non-Hollywood filmmakers.

    Regarding this part of the comment:

    "putting pressure on traditional market segmentation practices"

    I should damn well hope so, though hopefully he's referring to the fact that trying to artificially apply segmentation that only existed due to geography or differences in standards is doomed to failure in the modern marketplace. As I always maintain, offering the same level of on demand service to the rest of the world as the US enjoys is going to be a big step toward killing casual piracy. Removing artificial windowing would also be a massive step.

    As for other media, I always think there needs to be a balance. One of the major problems with the current system is that everything is copyrighted unless people opt out, and that the term of that is extended indefinitely by those who can profit most from it. Often leaving less successful or orphaned works to literally rot in vaults.

    I usually maintain that a 20 year automatic copyright, with a limited number of options for the creator to renew, is a reasonable compromise - though the exact terms can vary depending on the medium and subject of discussion. I'm yet to hear a reasonably argued opposition that doesn't devolve into arguments about abolishing copyright or stupid claims that reducing copyright is only motivated by piracy.

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