1. Copyright laws for digital transformation, yes please!

Copyright laws for digital transformation, yes please!

Referring to my latest blog on how copyright laws should be designed to support growth, there is clearly a new focus on growth rather than on a singular stakeholder interests in today’s copyright reform debate. Those who resist changing the status quo and hence question digital upgrades of copyright to facilitate adoption of new technologies, tend to resort to arguments such as ‘threat to creativity’, ‘exploitation of creators’, and ‘digitization is against culture’.

However, there is a growing acceptance among policy makers that a digital copyright reform is a necessity, not an option. The socio-economic benefits associated with increased digitization of industries, including creative sectors, are too great to neglect: A change of policy could drive economic growth, increased competitiveness, and job creation.

This new focus on growth is especially well captured in the Hargreaves Report from 2011:

“When the Prime Minister commissioned this review in November 2010, he did so in terms which some considered provocative. The Review was needed, the PM said, because of the risk that the current intellectual property framework might not be sufficiently well designed to promote innovation and growth in the UK economy. In the five months we have had to compile the Review, we have sought never to lose sight of David Cameron’s “exam question”. Could it be true that laws designed more than three centuries ago with the express purpose of creating economic incentives for innovation by protecting creators’ rights are today obstructing innovation and economic growth? The short answer is: yes.”

Taking a look at the three arguments that I listed above against a change, we recognize the first one, i.e. the argument that technology advances should threaten creativity, dates back in history. Gramophones, for instance, were questioned by Composer John Phillip Sousa to the US Congress: “…these machines are going to ruin the artistic development of music….the vocal chord will be eliminated by process of evolution, as was the tail of a man when be came from the ape…”. My question is: Did they, really?

The second argument, i.e. the risk that new technology unfairly exploits creators, is constructed around creators’ right to fair remuneration. Insiders who call for this argument fail to recognize the simple fact that most commercial arrangements today regulate creators’ rewards contractually. Let me make my point clear: Creators must definitely be remunerated, but while copyright sets the standard and protects, the actual remuneration to creators should typically be negotiated outside the copyright statue. A digital copyright reform is neither about weakening creators’ rights, i.e. the copyright standard, nor about reforming contractual or employment arrangements.

Finally the argument that digitization of the creative industry is against culture, would decrease creators incomes, industry revenues or reduce jobs. In fact, in a longitudinal study analyzing the impact of digitization on the Norwegian Music Industry between 1999 and 2009, conclusion was that total annual industry revenues grew from 1.4 BNOK to 1.9 BNOK, i.e. a growth of 36%; the number of music artists increased by + 28%; and the per capita inflation adjusted annual artist income increased by +66% over the period studied.

Each of the arguments above have been raised for a long time, but as indicated in my previous blog the tide has finally turned and time has come to learn from the past and to avoid making the same mistakes.

So, what’s next?
A vital link exists between copyright and the degree of availability of lawful (licensed and exempt) digital content. Unfortunately, the digital creative transition in Europe is quite underdeveloped and this disturbing situation should be one of the key considerations in future digital copyright reforms. The obvious question is what policy outcomes should a digital copyright reform deliver? Ericsson has identified a few copyright-related barriers which hinder the digital transformation, i.e. the key root causes of the market-supply failure of lawful digital content. These are:

1. Deliberate limited availability of lawful digital content, i.e. windowing.
2. High degree of technology specificity of copyright, licensing, and exceptions.
3. Unreasonable transaction costs (licensing effort) that makes digital content offerings to consumers unnecessarily expensive.

The three types of copyright-related barriers mentioned above are the key determinants of prevailing market behavior and licensing conduct, and hence dictate the pace of transformation of the lawful digital creative market. Removing or mitigating these digital barriers in prevailing copyright regimes is the defining basis for any progressive digital copyright reform.

Digital Transformation, yes please!

To find out more please read my latest paper The Tide is Turning.

Written by Rene Summer

Director of Government and Industry Relations Rene is responsible for policy, formulation and promotion research in the areas of telecom regulation, TV-broadcast regulation, media regulation, copyright, advertising, state aid and consumer privacy.

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