US economic research finds copyright should be more robust in the digital age

September 23, 2016

As the Productivity Commission delivers to Government what’s expected to be a controversial report into Intellectual Property today, research from the US questions the push for relaxing Australia’s copyright rules.

The Chief Economist of Washington’s Phoenix Center for Advanced Legal and Economic Public Policy Studies, Dr. George S. Ford, has weighed into Australia’s current copyright debate, declaring that in the digital age, copyright rules should be even stricter than before.

Dr Ford, who is visiting Australia to present the center’s latest research, Fair Use in the Digital Age, told a Sydney gathering, “Where many advocates suggest that copyright rules should be relaxed because we have moved into the digital age, our economic modelling clearly shows that the opposite is true. See this fair-use-in-the-digital-age-infographic.

“The characteristics of digital technologies that advocates cite for expanded copyright ‘flexibility’ (e.g. lower costs of copying, distribution, and production) actually suggest that the rules around copyright should be made stronger — particularly in smaller markets that have high rates of copyright theft and high costs of enforcement, among other factors. Additionally, our paper suggests, at a minimum, that the thinking on changing copyright’s current rules requires much more research.”

The Productivity Commission, in its draft report, recommended Australia adopt a US copyright exception known as Fair Use – which in that country has allowed digital tech giants to digitise copyright material without permission or payment. The content industries oppose such changes.

Dr Ford says more research is needed, “Fair Use advocates prominently cite two studies that purport to show significant economic gains from more generous policies on copyright exceptions and limitations: A Counterfactual Impact Analysis of Fair Use Policy on Copyright Related Industries in Singapore; and The 2015 Intellectual Property and Economic Growth Index: Measuring the Impact of Exceptions and Limitations in Copyright on Growth, Jobs and Prosperity.

“My own detailed analysis of these two studies unearthed a number of fatal defects, to put it mildly, that render the studies meaningless for policy purposes, and reveal a profound lack of respect for policymakers engaged in the difficult task of considering proposed changes to copyright law.

“Regardless of whether a country employs a fair use or fair dealing model (as Australia does), the key policy question remains: Where should a responsible policymaker focus his or her energy in reforming copyright policies for the Digital Age? Should they reduce theft by strengthening copyright protection and enforcement, or should they expand exceptions and limitations in ways that may offer some benefits but also may weaken the incentives to create new works?

“According to my review of the evidence and a new economic model of the U.S. fair use legal regime, I believe that policymakers should focus first on significantly reducing theft, and that any discussion of expanding or altering provisions related to copyright’s exceptions and limitations must be accompanied by better enforcement of copyright than currently exists,” Dr Ford said.

“Intellectual property laws support substantial economic activity and rouse the creative energies of humankind. Stakeholders seeking to modify them are within their rights to advocate for their favoured outcomes. Emotional positions are certainly influential, but if net improvements in society’s well-being are desired the discourse on policy must eventually turn to rigorous, analytical, and credible research. Intellectual property laws deserve nothing less.”

Media enquiries and interviews:

Sue Nelson
Head, Communications and Media Relations
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