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
    tomxp411 (profile), 24 Apr 2013 @ 9:07am

    Base term on half-life of a product

    Okay, so Copyright is intended to induce creative output by paying the people who create stuff.

    So there are two conflicting priorities: we want the creator to earn as much as he can for a work, but we want a work to go in to the public domain while it's still relevant.

    I really, really like the way Id software did this with Doom and Quake: once the product was no longer commercially relevant, Id opened up the source code to the public domain - but kept the game data closed. So anyone could create a new game engine that would run the Quake levels, or they could use the original Quake engine to power their own, original game.

    So here's my proposal:

    Copyright lasts 10 years (give or take), unless you continue to exercise your copyright. You can exercise your Copyright one of several ways:
    1. Publish a sequel to your product.
    2. Adapt your product to a new medium. (Make a movie from a book. Make a comic from a movie. Novelise a comic. Create a video game based on a book or movie.)
    3. Significantly revise and re-release your work. (Textbooks, for example, will go through many revisions before their utility is exhausted.)

    If a publisher simply puts something out there and abandons it, then after a decade it's public domain.

    In all cases, the extension would have to be a fair commercial effort: so you can't, for example, add 2 deleted scenes to a DVD, run a limited print of 100, and call that a revision.

    The idea here is to make the publisher put their money where their mouth is: if they really believe a work is still commercially viable, then they should spend time and money to keep it active. If they're not willing to spend the money it takes to create new artistic works from an existing property, then the work should go in to the public domain to allow other people to create new works.

    I'm interested in the fairness of this model: does it reward the creators enough? Does it allow a work to go in to the public domain soon enough? Too soon? Let's not get hung up on the details of how the specific registration or extensions would work.

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