We have recently made publicly available a short report repositioning the debate on copyright. The report titled “Copiright and creation: repositioning the argument” can be downloaded here.
The report was motivated from the publication of a report from LSE Media project making a case against the current proposed form of legislation in the UK for protecting intellectual property rights in the digital domain, the UK Digital Economy Act. This report has several drawbacks in methodology that raises questions as to the validity of parts of the argument made in their call for a review. In presenting their argument overlook some of the existing evidence from analysis of the impact of the implementation of IPR policies and our report makes an effort to reposition his work in the literature, which in turn will help policy makers in taking informed decisions.
The debate on copyright has been approached from different empirical perspectives. There is an existing research with more than ten papers using surveys, aggregated data and/or transaction data. It is true that at some extent the results are not conclusive but still most of the articles signal a negative correlation between file sharing and sales. One of the main problems of LSE report was the literature review. It is based on the evidence of one article (this one which we also strongly criticised in here) using clickstream data. It implies that all the conclusions of the report may be flawed.
Moreover, the report has other flawed conclusions. For instance, considers the concert revenues as relevant for the recording industry, which is a totally different source of revenues with totally different cost structure, for instance it does not have economies of scale. It also interprets the results of recent evaluation on Graduated Response Anti-Piracy (see here) exactly in the opposite direction as the authors did. Finally, makes the strong assumption than all the creative industries are affected by digitalisation in the same way. It is clear that videogames or books are not consumed in the same way of music. There is still a preference for reading in paper and videogames depends on platforms, allowing to introduce strong restrictions for copying them.
Finally, as Liebowitz (see here) we strongly believe that creators should be treated as any other worker and hence the work should be well-protected, even in the case it is not economically efficient.
“If we could create an economically efficient copyright law, would we want to do so? ... Even though economists typically argue in favor of efficiency my answer here is that society should not favor an economically efficient copyright law. Efficiency would lead to disparate and inferior treatment for the creators of copyrighted works compared to workers in other types of industries. My concern is rooted in the very basic concept of “fairness” that arises when, in the name of economic efficiency or social welfare maximization, a particular market would need to treat its labor component differently than other markets treat their labor components”
To conclude we agree with LSE report that an in-depth economic and legal evaluation of regulations legitimate and valuable. However, the motivation for this evaluation is exactly the opposite of the LSE report. We should evaluate whether with the current legislation the creators and copyright holders can efficiently protect its rights.