Copyright Issues in Digital Media

[Pages:10]CONGRESS OF THE UNITED STATES CONGRESSIONAL BUDGET OFFICE

A

CBO PA P E R

AUGUST 2004

Copyright Issues in Digital Media

? Eyewire/Photodisc/Getty Images

A

CBO

PAPER

Copyright Issues in Digital Media

August 2004

The Congress of the United States O Congressional Budget Office

Preface

Rapid technological progress in information technologies poses new issues for copy-

right law. Today, a digital file can be copied and instantaneously distributed worldwide through the Internet, thus potentially depriving the copyright holder of revenue from licensed sales. As a result, holders of copyright on creative works in digital format are contesting the right of consumers to make personal copies of copyrighted materials. At the same time, consumers are beginning to chafe at copyright owners' use of digital technologies to prevent or deter copying and other unauthorized uses of copyrighted works.

As digital processing grows more powerful and the high-speed distribution of digital content becomes more pervasive, the debate over copyright issues--in particular, whether copyright law has achieved the appropriate balance between incentives to engage in creative activity and the social benefits that arise from the widespread use of creative works--is likely to intensify. Yet the implications of any change to copyright law extend beyond the producers and consumers of copyrighted material to society at large. Investments in the computer hardware and communications industries, for example, are linked in part to the availability of creative content in digital form. How the current copyright debate is resolved, therefore, is likely to influence the growth of those related sectors of the economy. Potential revisions to copyright law may also have an impact on broader social concerns such as individual privacy.

Revisions to copyright law could impose mandated costs on producers and consumers of copyrighted material, as well as the providers of goods and services used in conjunction with copyrighted works. This Congressional Budget Office (CBO) paper reviews current copyright law in the United States and considers the unique aspects of digital technology's challenge to that law. It also examines the prospects for a market-based resolution to copyright disputes over digital content and explores the effect of potential revisions to copyright law on economic efficiency and equity. While this analysis suggests some issues and concerns that the Congress may wish to consider during its deliberations about any changes in copyright law, in keeping with CBO's mandate to provide objective, impartial analysis, the paper makes no policy recommendations.

Nathan Musick of CBO's Microeconomic and Financial Studies Division wrote this paper under the supervision of Roger Hitchner and David Moore. Helpful review and comments were provided by Robert P. Murphy, CBO's General Counsel; Julie H. Topoleski of CBO; Robert M. Hunt of the Federal Reserve Bank of Philadelphia; and Robert Kasunic of the U.S. Copyright Office. The assistance of external reviewers implies no responsibility for the final product, which rests solely with CBO.

iv COPYRIGHT ISSUES IN DIGITAL MEDIA

Juyne Linger edited the paper, and Christine Bogusz proofread it. Angela McCollough prepared the tables and graphs. Maureen Costantino designed the cover, produced the figures, and prepared the paper for publication. Lenny Skutnik produced the printed copies, and Annette Kalicki prepared the electronic versions for CBO's Web site ().

August 2004

Douglas Holtz-Eakin Director

CONTENTS

Summary vii

1

The Current Copyright Debate 1 Disputed Control of Copyrighted Works 1

New Obstacles to Copyright Enforcement 2

Potential Impact of Copyright Law Revisions on Innovation and Economic Growth 3

2

Copyright Law and Technological Change 9 The Rights of Copyright Holders 9 Limitations on the Rights of Copyright Holders 9 Unsettled Areas of Copyright Law 11 Copyright Law Modifications for Digital Media 11 Technology's Continuing Challenge to Copyright Law 14

3

Copyright and the Economics of Intellectual Property Regulation 21 The Regulation of Intellectual Property 21

More Efficient Copyright Markets: Price Discrimination and Technology 23

4

Economic Implications of Prospective Legislative Action 27 Forbearance 27 Extend Compulsory Licensing to Digital Content 33 Revise Copyright Law 34

vi COPYRIGHT ISSUES IN DIGITAL MEDIA

Table 4-1.

Primary Effects of Broad Options for Modifying Digital Copyright Law 28

Figures 1-1. 2-1.

Distribution of Gross Revenues Across Core Copyright Industries, 2002 4

Annual Change in Value of Recording Industry Shipments,

1987 to 2003

19

Boxes

1-1.

Interpreting Gross Revenue Data

5

2-1.

Protection Afforded to Collections of Facts

10

2-2.

Recent Legislative and Judicial Responses to Copyright Issues

Arising from the Digitization of Creative Works

12

2-3.

Is It Legal to Use a Computer to Make a Copy of a Music CD?

15

2-4.

A Particular Technology's Challenge to Fair Use

16

2-5.

Peer-to-Peer File-Sharing Networks

18

4-1.

Internet File-Sharing: Trends and Attitudes

30

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download