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
    special-interesting (profile), 25 Apr 2013 @ 2:22am

    The economic analysis is a great way to approach the eternal copyright problem. These types of articles (however over my head) is one of the reasons this site is cool. This is the type of rational, logical, scientific way to prove the point that current copyright policy is a drain on the economy. A culture of profitability needs something/things to build on.

    Eventually its likely that the present legacy based media industries will implode because they refused to change. (happens all the time) It would be wise to document the real reasons as they will surely blame everyone but themselves. (its them darn pirating fools!)

    Since the study was based with 1958-9 data there are many new technology factors, of which some are pointed out, that will affect any current analysis. On-line and mail media sales have changed the way we view movies and other content greatly.

    The observation (that its questionable) of money spent on content creation applied as capital investment seems apt. Some authors write a 600 page novel over a month spending just a few hours a day only 3 days a week but might claim otherwise. Others take 7 years working 18 hour days over a work of love and devotion. The IRS would have a fit in either case. Most authors don't care and keeping track is too much a bother.

    Its well known that the economic lifetime of books is over in the first year or so. The big surprise for me was finding that Maps were at 48% renewal. Especially since maps are out of date very quickly. Of course that may have changed negatively over the years also.

    The falling quantity of movies was interesting also. What happened to the low budget movie? Star Wars IV (the first movie) was a low budget movie with low budget special effects. (although considered good in its day) In speculation this may be a time based local effect that was happening during the 1948-9 time period compared to the next few years. (not enough data to be clear)

    The only constant is that MPAA figures should be totally ignored. Who knows what Hollywood accounting distortions will pop up for whatever current rational. (Wow they change so rapidly. A bad signal for consistency.)

    Using the data given its safe to offer that a 40 year total term would be more than generous and a great improvement for culture to boot. Assuming that Fair Use Rights are expanded and better protected.

    However. Society and culture are directly dependent on the use and sharing of content (whatever the source or format) during the lifetime of its citizens. Culture, and the sharing of it, is much more important than any economic rational. The value to us is healthy cultural growth via technology and innovation and that is whats most important to society.

    Considering this; what ultimate terms would be acceptable to both society and authors. Each have opposing viewpoints. (notice that publishers are not mentioned, yet)


    Reactionary,

    Everyone seems to have their own interpretation of how long limits should exist. (Wow, culturally speaking, that is so healthy!)

    Currently its a personal opinion (the shorter the monopoly the better) that a ultimate limit of 28 years. 14 with conditional, creative commons like, extensions to 28 and more conditions (only for treaty satisfaction until 40 years and then only until treaties can be modified to 28 years). Its not quite arbitrary in that it allows a huge time span for the author to dally with and yet guarantees that the works enter the Public Domain (Rights) well within the lifetime of an average citizen. The only reason the terms might sound appealing is that they are based on the original copyright act.

    Many a post mentioned copyright terms of less than 10 years. Its fine with me as long as the rational is culturally based. What we are hopefully aiming for is nothing less than continual cultural revolution. (in a good way) A society with a culture of sharing ideas and knowledge has a higher IQ than otherwise. It is up to society itself to determine the rules. (its scary if a government even has an opinion)

    Increasing the fees for every reapplication might also be a good tactic. If a work was not producing revenue it would fall back within Public Domain Rights.

    When it comes to the bump and grind; No copyright at all is preferable to present law. When cultural IQ and societies growth potential is considered... Its that important. Democratic American Culture of freedom of expression (whatever the format) is the greatest achievement, and foundation of, western civilization. To throw it away for, the likes of present Hollywood, ideals of fakery and illusion allows the intrusion of everything it stands against.

    Interesting how once Hollywood stood for clear dreams and bright ambition has now become muddied with cloudy falseness and dark lies. Special interest groups are like hired political assassins. (very dirty work) And accounting methods have been sullied forevermore.

    Not mentioned are the inevitable abuses of trademark law as exemplified by Disney. All the Disney characters are trademarked in perpetuity and will NEVER enter Public Domain Rights. The fee (250/year?) is nominal compared to the permanent monopoly it grants. Batman, Superman, etc... all trademarked and no derivative work can use them ever.

    Limiting a trademark to one per company does not work well since every movie and TV show is a corporation itself for the obvious reasons of limited liability. But there may be some merit to this.

    Have thought about is a bit and only solution might be to let society decide by vote if a trademark is being used properly for identification or abused just to perpetuate a monopoly on content. Any other ideas? Would there be room for a trademark abuse court?

    Tomxp411.

    The copyright continuation rational that was dependent on production of new derivative work was refreshing. The 10 year limit is fair and reasonable also. The attitude “make the publisher put their money where their mouth is” is great.

    Textbooks would hopefully run into some ultimate time limit because they sometimes are updated continuously for 40 or more years. (and still going and any firm, worth their salt, would do so in perpetuity if a monopoly was at stake)

    The concept of 'out of print' will soon be obsolete and already is for books issued in only electronic form.

    DRM is evil in almost every way. The great danger DRM represents is not just inconvenience but the loss of knowledge. A book or video that has DRM will quickly become unreadable/un-viewable as new hardware is purchased and this has happened to anyone who bought any media over the years. Its understandable that consumers are angry about it.

    What we need for out society to survive (yes its that important) is a DRM that can be broken easily. Or none at all. Any electronically stored media is, like a delicate not quite permanent glass flower, easily crushed or destroyed. Backups and copies are a necessary consequence of any attempt at permanence.

    Its a valuable, important Nobel goal for a society and its culture to enter a realm of semi permanence. If we allow all our teaching, learning, educational or entertainment/edutainment materials be put under DRM (or physical) lock and key... how will we live and learn?

    It might be that any culturally advanced society would outlaw DRM in any form.


    Reading the comments for this article was very enjoyable.

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