Some Evidence on the Relationship Between Copyright and Profit

How do copyright laws affect creativity? Do stronger laws increase profitability — and, therefore, do they increase creativity? If musicians/filmmakers/authors/software designers/etc. etc. etc. don’t have the strong incentive of copyright protection, will they create less or inferior work?

These question are both broad and long; many great minds have wrestled with them, and will continue to do so. Our recurring guest bloggers Kal Raustiala and Chris Sprigman regularly discuss copyright; Levitt touched on it here, and we discussed copyright protection in this podcast.

Now, in a new working paper (abstract; PDF) called “Copyright and the Profitability of Authorship: Evidence from Payments to Writers in the Romantic Period,” Megan MacGarvie and Petra Moser take up the argument: 

Scott Turow, President of the American Authors’ Guild, warned that regimes that weaken copyright, such as digital piracy may cause the “slow death of the American author” (Turow 2013). Empirical analyses of file sharing, however, reveal no significant effects on the quantity or quality of recorded music (Oberholzer-Gee and Strumpf 2009; Waldfogel 2013), which suggests that the importance of copyright protection may be overstated.

So what do the authors find? They used a change in British copyright law to measure the effects and magnitude:

Proponents of stronger copyright terms have argued that stronger copyright terms encourage creativity by increasing the profitability of authorship.  Empirical evidence, however, is scarce, because data on the profitability of authorship is typically not available to the public.  Moreover at current copyright lengths of 70 years after the author’s death, further extensions may not have any effects on the profitability of authorship. To investigate effects of copyright at lower pre-existing levels of protection, this chapter introduces a new data set of publishers’ payments to authors of British fiction between 1800 and 1830. These data indicate that payments to authors nearly doubled following an increase in the length of copyright in 1814.  These findings suggest that – starting from low pre-existing levels of protection – policies that strengthen copyright terms may, in fact, increase the profitability of authorship.

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  1. Michael Peters says:

    Isn’t this kind of a tautology? Increasing the monopoly increases the profits of the monopolist? It doesn’t answer the original questions about increasing creativity, quality or quantity of artistic works. While it’s hard to quantify a lot of those things, it’s also worth pointing out that the person who owns the copyright (especially in the case of recorded music) is not the artist, but a company using the artist to make money.

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    • Gordon Brooks says:

      It also seems that this study does not address any kind of threshold, after which the extension of copyright no longer makes any appreciable difference. As an author and songwriter, I would be quite happy with the law as it stood when I graduated high school, with a 26-year once-renewable term, for a total of 52 years.

      In my opinion, the current law grants far too long a term for the good of either creators of artistic works or of the general public.

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    • James says:

      One problem here is that quality & creativity are subjective. Certainly in my personal & purely subjective opinion, the quality of contemporary art & music is close to zero (or possibly even negative :-)). Other people evidently have different opinions.

      Then there’s technology changing the ease of production & distribution. These days it’s possible to record video & music at small cost, and to distribute them (along with self-published ebooks) with little or no effort, so it would hardly be surprising to find that quantity is increasing. But when your iTunes download or Amazon ebook has a total of 6 downloads in the course of a year, you might think those distribution channels lack a certain something. The average ebook apparently earns its author less than $300 (http://www.mikecooper.com/2013/04/average-e-book-earned-just-297-last-year/ ), and that average is certainly driven higher by the ebook sales of already-successful writers.

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      • Joe J says:

        Only 300? Except you are ignoring that once written it continues to sell, so in the authors lifetime, say 50 years. it becomes 15,000. not bad for the average.

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  2. Voice of Reason says:

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    • Michael Peters says:

      Even the existence of copyright in the US was debated by the founding fathers with some against it. Now, I’m personally in favor of it for artistic works, but in a very limited sense, not this crazy Mickey Mouse copyright situation we find ourselves in.

      Also, the fact that you think there could really exist digital content that can’t be copied shows you don’t understand technology. If it can be read or played, it can be copied.

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    • Søren Furbo Skov says:

      “If an artist wishes to make his/her work public for all to enjoy, that is his/her right, and it might further their career or lead to them making better work that isn’t impeded by the constraints of commercialism, who knows? But the fact is that it isn’t our place to decide what that artist should do with his/her work.”

      And nobody suggests that. However, once it has been shared with others, prohibiting what they can do with it is a limitation of their freedom of speech. If this is to be decided on the basis of “right versus wrong”, limitations of free speech is wrong.

      “To rob of them of [copyright protection] would be the same as closing the doors to a company and shutting them down without their permission.”

      No, it wouldn’t be the same. If you close a company, you limit what the owners can do with their property, e.g. they are no longer free to use their factory to produce goods. If you abolish copyright, the writer of a song are free to do whatever they want with their song. They can still perform it, they can still make CD’s with it, they just can’t force others to treat it in certain ways. The two situations are not analogous, because intellectual goods can be copied without harming the original.

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  3. carlosmx37 says:

    If an artist is really good,will be rich,even if His work is copied .
    I do explain,…if-example-,.an singer-composer writes really terrific pieces to be treasured by lots and lots of fans,he profits even if all his music is widely pirated and known inmediately after first listened at internet.

    yeah!,..the very dedicated fans pay for the personal presentations,concerts,signing the original album,etc..
    Naturally,overpaid executives at traditional record companies,are the ones to sue and complain that people only want one song and do not buy the entire album .

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    • Enter your name... says:

      > If an artist is really good,will be rich,even if His work is copied .

      Which explains why Stephen Foster died in poverty. And Vincent van Gogh. And Franz Schubert. And Edgar Allan Poe, whose life is the source of the “starving artist” concept.

      Oh, wait. Maybe being a really good artist doesn’t guarantee being rich.

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      • carlosmx37 says:

        Enter,
        Im referring to internet times.When somebody has acces to millions of possible buyers of his-her work.
        Naturally,somebody makes something-a painting,a book,sculpture,music-,and Do believe that his master piece is unique,and worth to be compared with best work of Michelangelo,Bob Dylan or Van Gogh!,..

        Mmm,..Im recalling that even Wagner complained of piracy,and that his editor said that last wonderful piece of music was sold only to a small number of orchestras,..,and in reality,somebody bought first partiture,send to hand-copy to an poor student of music,.made several copies more,…..some other musician was “inspired” for some movement,..changed something,.voila!,..appears a more “pop” version for waltzing!..naturally,the new version sold more copies of partitures…

        Nothing new under the sun,unfortunately for artists who want to live entirely of royalties.

        You must make your own , better,version.And charge for personal readings of your book,playing of your music,implementing of your software.

        Good afternoon.!

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  4. Steve Laurette says:

    Yeah, copyright is overrated. That’s why I got Freakonomics and Superfreakonomics for free from Bit Torrent. (J/K)

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    • carlosmx37 says:

      The paper version of freakonomics is an entirely different product respect the one could get for free at internet.
      My copy in spanish was a gift to me,bought at “libreria de el sotano”,mexico city, from a friend´s wife who knows Im an avid reader of many things,and asked my preferences,to the boy at the book store where I use to spend some afternoons.

      Knowing this woman that I do hate expensive wrapping,She took the time to let pass 2011 Xmas,and using a recycled bag from a very known department store ,included an choco bar,and gave it to me,when she saw me sad for a personal problem.

      Sorry for including a very personal happy moment,…just to say that the internet version of freakonomics,-that I had already read half the book ,anyway-..cannot be wrapped in a marvelous recycled bag!..and in mexico city,badguys take wallets,cellhones,watches at subway,…..but never a book!

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  5. Mike B says:

    The important thing to measure is not the author’s profits, but the benefits to society as society, through the government, is granting limited time monopolies that provide a greater social benefit from the availability of new works than the social cost of having people have to pay for new works.

    If the additional work produced from additional copyright does not significantly increase social good then there encouraging those persons to create said works is misdirected effort.

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  6. David Leppik says:

    Profitability isn’t the same as productivity, and creativity is even more different. And then there’s quality, which isn’t the same as creativity.

    Consumers of art want high quality, with enough production (and novelty, related to creativity) to keep them from being bored. High profitability may be an indicator of barriers to entry for new artists, which is bad for most artists as well as consumers.

    Some art forms, like music and poetry, have low enough barriers to entry that anyone can do it on the weekend. These will always exist even if there’s no money to be made. Others, like high production value movies, can’t be done without a great deal of coordinated, full-time effort. They require high profits, and strong copyright is one way to get there. (But see Bollywood for an example of profitable movies in the midst of heavy piracy.)

    If you want great art, it doesn’t follow that you want policies that encourage strong copyright, or even high profits. Your best bet is policies and technologies which minimize barriers to entry and barriers to distribution.

    Look at how short films are being affected by Vimeo, YouTube, low-cost video recorders (e.g. HDTV-resolution cell phones), and low-cost video editing software. Ten years ago you had to be a real enthusiast to see short films. These days it’s almost too easy. And while the number of awful YouTube videos is huge, there are still far more– and better– high-quality videos than there used to be.

    What’s more, because many of these videos are made by people who don’t care about copyright royalties, you see a huge amount of creative re-mixing.

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  7. Julien Couvreur says:

    Interesting study.
    That said, profitability to authors should not be the reason for considering intellectual property legitimate.
    To take the point to the extreme, slavery may be profitable to slave owners, but that does not inform whether humans should be treated as property.

    What I found most interesting when reading about the history of intellectual property (such as Boldrin and Levine’s Against Intellectual Monopoly) is how little evidence there is that IP laws produce a net benefit for society.
    Also, the origins of copyright and patent laws are a history of seeking privileges and monopoly grants from the crown.

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  8. neilwilson says:

    What difference does studying copyright law make?

    In the US, we will continue to extend copyrights for a long, long time.

    Disney will never allow Mickey Mouse to go into the public domain!

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