Economics and copyright reform: aspects of the EC Directive☆
Introduction
In 1996, countries which are members of World Intellectual Property Organisation (WIPO) agreed two new treaties, the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT). These are the first intellectual property treaties to address the digital network environment, and they require national legislatures to bring in measures to:
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create a new exclusive right in favour of copyright owners, including sound recording producers and performers, to make their works available on-line to the public (known as the making available right);
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prohibit the circumvention of copyright protection (TPMs technological protection measures); and
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prohibit tampering with rights management information (DRM digital rights management).
In Europe, the European Union has addressed compliance of these international obligations of its member states by means of Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society, the so-called ‘Copyright Directive’, finalised in 2001. Member states are now reforming (many have reformed) their national copyright law in compliance with the Directive.
The purpose of this paper is to provide a general overview of how economic thinking may be applied to these legal changes and to consider what advice an economist is able to offer to the policy-maker who has the task of implementing copyright reform. Often when policy-makers consult economists, it is because they hope to get some definite figures of the costs and benefits on which to base their choices. That a very tall order in the case of these reforms. Moreover, it is important to understand the basis on which such figures are generated. The paper begins with a general overview of the different approaches that may be taken in considering the economic effects of copyright reform and then discusses how these approaches may be applied to the specific reforms required by the WIPO Treaties, using the music industry as a case study.
Section snippets
Economics and copyright––different approaches
The analysis of the economic impact of the changes to copyright law (such as those mandated by the EC ‘Copyright’ Directive) is derived from a more general analysis of the economic aspects of copyright. It is important to define at the outset the different approaches that may be taken.
There are several distinct topics under the general heading ‘economic aspects of copyright’:
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The economic purpose of copyright.
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The economic justification of copyright law.
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The economic outcomes of copyright law on
Copyright reform
We now turn to how these economic ideas may be applied to the question of copyright reform. How could the economist advise on the legal changes necessary to implement the WIPO Treaties and the EU Directive?
Empirical evidence: applying economics to policy choices
Piracy (or unauthorised use, as it should properly be called) is the fuel for the fire of copyright reform and its extent and ‘economic importance’ motivate the WIPO Internet Treaties and the EC Copyright Directive. In this Section, I discuss the well-known industry figures on music piracy and the causal implications that are read into them. It takes only elementary economics to criticise them but unfortunately, no-one has yet undertaken the task of doing a proper measure.
Conclusion
It is clear from looking at the issues around implementing the WIPO Treaties and the EC Directive that they are overly complex and interventionist and that it is very difficult to imagine their economic consequences. There is apparently a view among the drafters of Treaties and Directives that the anticipated consequences work out––pass a law and people will behave according to its intent. I believe that, as a result, unintended consequences are not considered (Towse, 2001). An unintended
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Cited by (0)
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This paper was presented at the CTI conference Copyright and Software Patents, December, 2003. Parts of the papers are based on my Report commissioned by Industry Canada ‘Assessing the Economic Impacts of Copyright Reform on Performers and Producers of Sound Recordings in Canada’.