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 @ 11:09am

    Re: Interesting, but is it still relevant?

    You're getting in to the "long tail," which is a relevant discussion.

    Some people have argued that there's still value in the long tail.

    Starship Troopers, for example, was published in 1959, and adapted to a movie in the mid 90's. When you consider the time it takes to make a movie, you have to figure that the producers bought the option sometime in the early 90's... more than 30 years after the book was published.

    So there's definitely some value in older works... but in that case, why aren't we seeing more adaptations of books from the 20's or even the 19th Century?

    To be honest, I think a lot of the arguing over Copyright is nonsense: as you pointed out, it is so cheap to "print" a book today that the cost is effectively zero. Even 5 year old books can be had for less than $5 in e-book form. To be honest, I don't see the problem in letting people continue to own their works as long as they're doing something with them.

    I think a bigger problem is abandoned and orphaned works: so many books, movies, and computer programs have disappeared from the market because the publisher went under and nobody has seen fit to re-publish those works. In the computer software world, we call this "abandonware", and people distribute it anyway - but they occasionally land in hot water because of it.

    Take the Infocom text adventure games, for example: there are a few that can't be re-released because there's not a clear owner of the works. And so everyone is afraid to do anything with it, fearing they might be sued.

    Personally, I think Copyright reform efforts should focus less on the term of Copyright and more on a "bill of rights" for Copyright users:

    1. Address orphaned works and ensure that they will never be lost to society.
    2. Ensure customers' rights to own their copy of a work that is purchased on physical media or with DRM.
    3. Change the DMCA rules regarding copy protection to allow out of print works to be preserved for society's benefit.
    4. Ensure that a work, once published, can never go out of print, "put in the vault", or otherwise pulled out of publication or made rare just so the publisher can hike up the price.

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