If copyright changes are the dead rat we have to eat with our otherwise-tasty Trans-Pacific Partnership meal,* it is worth knowing a bit more about that rat.
To do that, we have to go back to first principles on copyright and its purpose.
Copyright exists so that new works can be created. Without a way of securing a return on what can be a fairly substantial investment of time and effort, artists would be less likely to make that investment.
Without copyright, plenty of authors and musicians would still create for the love of creation. But would you invest a few hundred million dollars into producing a new movie if everybody could switch to bootlegged copies as soon as someone got a copy of the first print? I did not think so.
Instead of viewing copyright as an off/on switch, economists view it as a continuum. The strength of copyright can vary both in duration and in the accommodations made for fair use. A copyright term that ends 70 years after the author’s death is stricter than one that ends 50 years after the author’s death. And a copyright regime that makes extensive exemptions for derivative or parody works, or for limited copying for academic purposes, is less strict than one with few fair use or fair dealing exemptions.
For economists, everything is about trade-offs. And copyright is no different. When copyright is stricter in duration, tougher in enforcement or less flexible in terms of fair use, the returns to an artist creating a new work are higher.
But, at the same time, the costs of creating a new work are higher when copyright is stricter. Why? Because everything builds on everything else.
The four chord sequence that makes up Pachelbel’s Canon in D is copied in hundreds of songs. In a YouTube clip viewed almost 27 million times, Australian musical comedy group The Axis of Awesome runs through dozens of modern songs showing how their basic chord structures simply follow the Canon.
In a world with much stronger copyright, the musicians who followed Pachelbel would have needed to have sought a licence from his heirs. And The Axis of Awesome could not have used snippets from each of their songs to make their own derivative but fundamentally original and transformative work.
The concept of a copyright strong enough to cause such problems seems absurd. But Larrikin Music only a few short years ago successfully sued Australian band Men At Work for the 11-note flute sequence in Down Under, which paid homage to a 1930s Australian folk tune.
How strong should copyright be? If it is too weak, returns to new creation will be too low and too few new works will be created; too strong, and it’s too hard to create new works. There will then be a sweet spot where any increase or decrease in copyright’s strength will do more to hinder new creation than to encourage it.
Arthur Laffer famously drew a curve on a napkin showing there’s a tax rate that maximises the government’s tax take and that even higher tax rates would reduce revenues. Fortunately, few countries get on the wrong side of the Laffer curve: It is expensive to get that one wrong. But George Mason University economist Alex Tabarrok drew a similar curve for intellectual property, suggesting the US is rather too strict.
And what evidence we have suggests Mr Tabarrok was right.
Simple time discounting suggests artists get very little from term extensions that happen 50 years after their deaths. An extra 20 years’ copyright protection after your death increases the value of your intellectual property by less than 1% – unless you are already rather old.
A thousand inflation-adjusted dollars per year, 90-110 years from now, is worth about $150 today. It is doubtful many new novels are written, or new films produced, because of that extra fraction of a percentage point in value.
But we can see the costs of lengthy copyright terms. The University of Illinois’ Paul Heald shows that 94% of the New York Times best-sellers from 1913-22 are available as e-books and that 98% of those books are in print. Only 27% of the bestsellers from 1923-32 are available as e-books and 28% are not in print at all.
The difference? The 1923 US copyright wall created by the 1998 copyright term extension. Anyone can issue a new edition of a book written in 1922, or an e-book or audiobook for that matter. Books produced since 1923 are locked up until 2018.
Pride and Prejudice and Zombies, the wonderful zombie-enhanced novel adapting Jane Austen’s classic, could not easily exist if copyright were too long in duration. But the new film version of Pride and Prejudice and Zombies, which opened in US cinemas last week, would also be unlikely to exist without copyright.
Even if it were the case that extending copyright terms were the right thing to do to encourage new works’ creation, that case has to be prospective and forward looking. But extensions to the term of copyright are generally retrospective, adding protection to already existing works.
Where the point of copyright is to bring new works into existence, it is hard to explain why greater protection should be given to works that have already been created.
The rat we must eat, on copyright, is a 20-year term extension. It will be phased in but will be partially retrospective. Works already in the public domain will not come back under copyright protection. But it will take longer for works to come into the public domain. And that impoverishing of the public domain seems to do more to hinder new creation than it does to encourage new work.
There is no plausible economic rationale for the term extension – especially as it applies to works that have already been created. But it is the price of a trade deal with the Americans. If the Congress fails to ratify the TPP, I hope that that part of the deal can be renegotiated.
* On balance, the meal is probably worth eating. The salmonella-level fears raised by TPP protestors seem rather overblown. But the case for TPP seems less clear-cut than promoters suggest too.