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DIGITAL COPYRIGHT: THE END OF AN ERA1
by Dr Martin Kretschmer
Reader in Intellectual Property; Joint Director, Centre for Intellectual Property Policy
& Management, Bournemouth University (www.cippm.org.uk)
Visiting Professorial Fellow, Queen Mary Intellectual Property Research Institute,
University of London
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Europe is rushing into the trap of digital copyright laid by the Digital Millennium
Copyright Act (DMCA), at the very moment when an increasingly restless public is
probing the rationale of American copyright law. In the US Supreme Court appeal in
Eldred v Ashcroft (15 January 2003)2, the majority judges hinted that repeated
extensions of copyright law may have been unwise, even if they could not challenge
the powers of Congress. Justice Breyer argued in a blistering dissent that copyright
statutes may seriously, and unjustifiably restrict the dissemination of speech,
information, learning, and culture while not providing any decisive incentives to the
creator.
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In 2003, digital copyright will finally arrive in Europe with the much delayed
implementation of the Directive “on the harmonisation of certain aspects of copyright
and related rights in the Information Society” (2001/29/EC). Europe is about to follow
the Digital Millennium Copyright Act of 1998 in ratifying the 1996 Internet treaties of
the World Intellectual Property Organization (WIPO).3 According to some of the
imminent provisions, selling all region DVD players will become illegal; copying
lines of electronic literature for research, parody or criticism can be prevented by
contractual terms of the right owner; librarians will have to monitor what is being
copied on their premises; and participating in P2P networks may land you in prison
(UK draft implementation).
The legislative strategy of these draconian copyright interventions was conceived in
the early 1990s, before the introduction of Netscape’s Navigator in 1994, the browser
that turned the Internet almost overnight into a mass communication and electronic
commerce medium. In 1994, about 1 million computers were directly connected to
the Internet (so-called Internet hosts, the most widely accepted measure of Internet
adoption). The 2002 World Telecommunication Development Report identifies about
140 million Internet hosts, rising daily. Unauthorised copying accounts for a
significant part of the traffic from these hosts, with trade organisations reporting
apocalyptic figures. According to IFPI, the global lobby organisation of the music
1 Forthcoming in
European Intellectual Property Review (2003). An earlier version of this paper was
delivered at a Heinrich-Böll-Stiftung Intellectual Property Policy conference, Berlin, 8 November
2002.
2
Eldred v. Ashcroft Attorney General, 537 U.S. (2003) S.Ct. 01-618, challenging the constitutionality
of the 1998 Sonny Bono Copyright Extension Act, extending the term by 20 years to 70 years
post
mortem auctoris, and to 95 years for “works for hire”. The court held by a seven to two majority that
the Act was constitutional.
3 DMCA: Pub. L. No. 105-304, 112 Stat.2860 (1998), relevant provisions codified at 17 U.S.C. sec.
1201-04. WIPO Internet Treaties: World Intellectual Property Organisation Copyright Treaty (1996);
World Intellectual Property Organisation Performances and Phonograms Treaty (1996).
2
industry, one in three songs in circulation is pirated (www.ifpi.org); for the software
producers, the Business Software Alliance claims annual losses in the region of $23
billion in Europe alone (www.bsa.org).
If digital material can be manipulated into ever new shapes of untraceable origin, if
every local copy becomes a master of global reach, is it not indisputable that we need
a radical shake-up of copyright laws? The legislative proposals of the digital
copyright agenda focus on “the industry’s right to say NO in the on-line
environment”, as the president of a multinational record company told me about their
lobbying efforts during the 1990s.4 Following the WIPO Internet Treaties of 1996, a
combination of three legal measures hope to achieve this: extending exclusive rights
(as opposed to entitlements to remuneration), privileging technological locks
(securing these rights), and targeting copyright users (as opposed to commercial
competitors).
In this article, it is argued that this legislative strategy is fundamentally ill-conceived,
and bound to fail. Rather than demanding the right to say NO, right owners should
have focused on rewards from an inevitable YES. A small royalty percentage on
content traffic revenues generated for Internet Service Providers (ISPs) and
telecommunications firms would have been the obvious legal innovation. The
resources of existing copyright law should have been targeted at unauthorised
commercial exploitation by competitors. It is predicted that the failure of the digital
agenda to secure widely acceptable and enforceable exclusivity to content owners will
4 This study is reported in M. Kretschmer, G. M. Klimis and R. Wallis, “Music in Electronic Markets:
An empirical study” (2001)
New Media & Society 3(4), 417-441.
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prove a turning point in the history of copyright. In the near future, investor and
creator rights will be treated as separate issues, with the next generation of copyright
laws rejecting the current premise of information control.
A whiff of desperation
In some ways, the imminent new European copyright laws are already an act of
desperation. In countries where the norms of the digital agenda have been in force for
some years, they have not succeeded in stemming the tide of digital copying (e.g.
United States). Globally, there are very few successful business models for the on-line
distribution of copyright materials. Exceptions include proprietary financial and legal
information services (e.g. Bloomberg or Lexis-Nexis, relying on continuous updates
often in real time), academic publishers (with a small and highly profitable customer
base and often unsatisfactory terms of access), Internet radio stations (which in some
jurisdictions have been able to take advantage of blanket non-exclusive licences), and
pornography. Mass market consumer offerings, such as the Napster phenomenon in
2000, were driven back underground. Short of turning the Internet into an Intranet of
licensed content servers (a solution proving unsustainable in China), copying appears
here to stay.
In the conclusion of his recommendations, Enrico Boselli, the rapporteur of the
second reading of the Information Society Directive in the European Parliament wrote
tersely (14 December 2000): “In the last three years, the information society has
evolved in the direction of ever-more advanced solutions which could scarcely have
been imagined in 1997, the year in which the Commission’s proposal for a directive
was drawn up... It is, therefore, desirable that the directive be adopted as rapidly as
possible, since if not it may become prematurely outdated.”
Boselli’s argument sounds like a stand for legislative caution. If the evolution of
technology and consumer behaviour is still dynamic, regulatory intervention may
need to be cautious, reaching out for a new normative consensus.5 Instead, the
European Parliament recommended a rapid implementation of the Information
Society Directive, with a transposition date into national law set for 22 December
2002 (18 months after its adoption by the European Council). In the face of still
vigorous disagreement, major national drafters such as the UK Copyright Directorate,
and the German Justizministerium had to admit that there was “no prospect” of
meeting the date -- even though they had adopted the legislative route of least
resistance, focusing on minimal amendments to existing copyright laws. Indeed the
transposition date passed with only two EU member states (Denmark and Greece)
succeeding in implementing the directive.
The Digital Agenda: where did it come from?
An international policy process that results in norms that threaten to be “prematurely
outdated” before their implementation cannot count as an unqualified success. Why
5 For an opposite view, see J. Reinbothe and S. v. Lewinski, “The WIPO Treaties 1996: Ready to
Come into Force” (2000) E.I.P.R. 199-208. The authors praise the WIPO Internet Treaties which
“instead of reacting to developments in technology and in the market, prepared the ground for the
functioning of the new services of the information society with due respect for intellectual property”.
The article is peculiar in dressing up extensions of copyright in the language of progress.
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did the digital agenda take the shape it did? The first mass market digital carrier was
the music CD launched in 1983. Software fell under copyright law with the US
Software Protection Act 1980 which strongly influenced the EC Software Directive of
1991 (91/250/EC). During the 1980s, some software vendors began to experiment
with copy protection technologies, but soon even Microsoft abandoned such
measures. Widest distribution of software seemed the most promising route to
commercial adoption (and thus revenues).
A Green Paper by the European Commission of 1988 (“Copyright and the challenge
of technology”) usefully reflects the debate at the time. Bernhard Posner, then at the
helm of the copyright unit, summed up the Commission’s approach: “Creative artists,
industrialists and consumers alike share common needs and interests. One cannot live
without the other. As the pace of technological innovation quickens, copyright will in
future serve the interests of right holders best by generating new resources of
remuneration and by stimulating interest in and demand for products, rather than by
acting as a restrictive or prohibitive instrument.”6
Despite these premises, the Green Paper is one of the first policy documents
advocating a technological lock as the general counter-measure to digital copying. For
example, a binding legal instrument is proposed “requiring the introduction ... of
regimes making the possession of digital audio tape commercial duplicating
equipment dependent upon a licence to be delivered by a public authority and the
maintenance of a register in respect of licensed equipment”, backed by sanctions
under criminal law.
A life experiment for this policy was the US Audio Home Recording Act 1992 that
required a serial copy management system in all digital audio recording devices
(DAT), allowing only first generation copies. Additionally, technologies whose
“primary purpose” was to circumvent copy restrictions were prohibited. As an early
implementation of the digital agenda, the law proved a failure. Music studios
routinely circumvented the copy management system. Consumers simply refused to
upgrade their homes to DAT equipment, instead retaining unrestricted cheap analogue
tape recorders or increasingly experimenting on the personal computer (PC) with
audio compression techniques, such as the MP3 standard.
Right holder circles soon came to view the general purpose PC linked to the Internet
as duplicating equipment that would respond to closely circumscribed, industry issued
copy management systems -- extending the DAT strategy of creating a closed circuit
of licensed content. The earlier approach of stimulating demand was abandoned: If
the only legitimate content available is copy protected, people will eventually be
prepared to pay for it. Transgressors will live to regret their actions as criminals.
The proposals of the Clinton/Gore task force on the National Information
Infrastructure (1994-5)7 accepted this right holder blueprint for a global regime of
6 B. Posner, “Purposes and scope of the Green Paper on Copyright and the Challenge of Technology”,
pp. 2-8 in F. Gotzen (ed.) (1989),
Copyright and the European Community: The Green Paper on
Copyright and the challenge of new technology, Brussels: Story Scientia, at 8.
7 Report of Working Group on Intellectual Property (chaired by B. Lehman), Information Infrastructure
Task Force,
Intellectual Property Rights and the National Information Infrastructure (Sept 1995): the
NII White Paper.
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digital copyright, rejecting the compulsory licenses of cable re-transmissions models
in favour of an exclusive right, covering Internet transmission. Criminal sanctions
were devised against the importation, manufacture, distribution of circumvention
devices, as well as against the provision of circumvention services and the removal of
copyright management information. This was later reflected in the language of the
WIPO Internet Treaties (1996), requiring contracting states to provide “adequate legal
protection and effective legal remedies” against circumvention technologies.
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[Textbox] Some memorable digital copyright provisions
Digital copyright protects the technology that protects the law that was to protect
creative material in the first place. According to section 1201 of the Digital
Millennium Copyright Act 1998 (DCMA, the US implementation of the WIPO
Treaties) wilful circumvention of copy-protection measures to gain access or copy can
be punished on first offence with a fine of $500,000 or a five year prison sentence,
raising on second offence to $1m or up to 10 years in prison. The first DCMA anti-
circumvention cases have been played out in court, dealing for example with the
publication of the DeCSS code decrypting DVD movies (
Universal City Studios v.
Corley 2001) or a Russian program circumventing copy protection on Adobe’s
electronic book software, a criminal case (
United Stated v. Elcom Ltd. 2002).
The European Information Society Directive explains under Recital (48) that devices
or activities “which have a commercially significant purpose or use” should not be
deemed to be “primarily designed” to enable or facilitate circumvention. Only the
latter, member states must prevent under Article 6(2). Thus the general purpose PC
should remain on the European market. European criminal sanctions are generally set
lower. The UK draft8 (s.296ZB) provides for a fine and/or up to two years prison if
circumvention affects “prejudicially” the right owner’s interests. The new German
law9 (§108b) provides for a fine, or up to three years imprisonment if circumvention
takes place for commercial gain.
The WIPO Internet Treaties of 1996 expressly permit the development of “new
copyright exceptions and limitations that are appropriate to the digital environment”
(Agreed Statement to Article 10). “Fair use” exceptions generally allow certain user
activities without the right owner’s consent. Under the WIPO Treaties, existing
exceptions, such as the German
Schranke of “illustration for teaching and scientific
research” (§52a)10, or the UK “fair dealing” defence of “criticism or review ” (section
30), can be carried forward into the digital environment if they conform to a so-called
three-step-test in that they are confined to (1) special cases, which (2) do not conflict
with a normal exploitation of the work, and (3) do not unreasonably prejudice the
legitimate interest of the authors (Article 10, paragraph (1)). However, with digital
right management technology almost every exploitation can be normally licensed, and
8 Issued for consultation 7 August 2002.
9 Passed 11 April 2003.
10 The proposed new §52a became the main battle ground of the revised German law. Academic and
educational publishers placed large advertisements against a draft that permitted the inclusion of
published works on school or university intranets. The Christian Democrats (CDU/CSU) demanded the
deletion of §52a altogether. In the event, the exception was retained but limited to “parts” of works for
scientific research, and “small parts” for educational use.
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any unauthorised copy for teaching, research or review may be against the economic
interests of the right holder.11 Thus the scope of possible exceptions is very narrow.
Additionally, it is not clear how the user can take advantages of exceptions if the
copyright material is already technologically locked.
The European Information Society Directive forgoes straight away the already limited
opportunity to explore new user rights in the digital environment. It prescribes an
exhaustive list of 20 possible exceptions, member states of the European Union may
introduce or maintain. No new exceptions can be introduced nationally, if the
information society should develop unexpected services! Only one exception is
mandatory: temporary reproductions as “integral and essential” part of a technological
process (Article 5(1)). This covers so-called “cache” copies which Internet hosts make
in the process of transmission or PCs in the process of accessing web sites. Thus
Internet Service Providers do not have to acquire licences for the material accessed
through their services.
If copy protection technologies prevent users from exercising their statutory freedoms,
say if no non-encrypted version of a scientific journal article is available on the
market, the Directive allows member states to overrule copy protection through
appropriate measures (Recital 52) -- provided the encryption is not part of an on-
demand service (Article 5(5)). There is no “fair use” for copy protected on-demand
services, full stop. When a person who thinks she should benefit from a copyright
exception, is unable to access a work, she “may issue a notice of complaint to the
Secretary of State” who may issue such directions “to the copyright owner as appear
to the Secretary of State to be requisite or expedient” (proposed new section XXX of
the UK draft implementation). The new German law includes a similar provision for
specific benefits available to social, charitable and educational institutions (§95b). In
practice, it can be predicted that these cumbersome procedures will be bypassed.
Users may simply take advantage of unauthorised copies, technically turning into
pirates.
Under §53 of the German draft, digital private copies for domestic non-commercial
use will remain permitted. Existing UK law is more favourable to the music industry,
an important exporter, and does not have such a general exception. The German draft
does not explain how private copying, for example of a CD or DVD, should take
place where the work is copy protected. Exclusive rights protected by a technological
lock can override these general user freedoms. However, copyright owners will be
required to clearly label copy protected products, perhaps facilitating informed market
choices by consumers.
The UK draft amendments include a particularly draconian provision which is not
required by the Directive. According to the proposed new section 107(3A), a person
11 The three-step-test is taken from Article 9(2) of the Berne Convention where it defines permitted
exceptions to the reproduction right
only. The compulsory licence available under Article 11bis(2)
(communication to the public, including by broadcasting) of the Berne convention would not appear to
pass the WIPO hurdle. The compulsory licence available under Article 13(1) (reproduction of musical
works in sound recordings) seems inconsistent even on Berne’s own terms. Indeed the European
Parliament in an unsuccessful amendment to the Information Society Directive tried to narrow the
three-step-test even further. For good analyses, see Th. Heide, “The Berne Three-Step Test and the
Proposed Copyright Directive” (1999), E.I.P.R. 105-109; B. Hugenholtz, “Why the Copyright
Directive is Unimportant, and Possibly Invalid” (2000), E.I.P.R. 499-505.
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communicating a work to the public without consent of the copyright owner, commits
an offence if the owner’s interests are affected “prejudically”. This would appear to
cover private individuals participating in P2P file-sharing networks because large
numbers will have access to unauthorised copies stored on domestic PC hard discs,
affecting the right owner’s ability to sell legitimate copies. Again, the sanction can be
“imprisonment for a term not exceeding two years or a fine, or both”. Kazaa users be
warned.
[end of Textbox]
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A legitimacy gap has opened
Copyright law always has limited the amount of control right owners can exercise via
the concept of exclusive rights.
First, right holders have never been able to fully prevent access to the works they
own. In the phrase coined by US scholar Jessica Litman in an early polemic against
the digital agenda, there is no “exclusive right to read” (1994).12 Similarly, under
traditional copyright provisions (such as the “first sale” doctrine, or the “exhaustion of
right” concept), right owners often cannot prescribe what a user can do with the copy
of a work after sale. The user may bin a bad book, pass on a good CD, or re-sell a
piece of merchandise. In many countries, there are compulsory licences for radio
broadcasts and cable re-transmission of copyright works.
Secondly, certain user freedoms are explicitly endorsed by copyright laws, such as
copying for the purpose of criticism or review, copying for the purpose of scientific
enquiry or personal study, copying for the purpose of reporting news. For example,
the US has a flexible multi-purpose concept of “fair use” covering activities that can
be undertaken without the consent of the copyright owner; the UK has some closely
circumscribed “fair dealing” defences; Germany relies on the strange concept of
Schranken [literally “barriers”] to owner controls.13
Thirdly, under all copyright laws, protected works eventually fall into the public
domain. This may take a long time for works written by young creators, such as
Stravinsky’s
Sacre du Printemps of 1913 that will stay in copyright until 2041, 70
years after the composer’s death. But eventually, every product in the creative domain
can be copied, adapted and distributed by anybody who cares to effect such
circulation, leading to significantly cheaper prices for competing copies of classic
works.
12 J. Litman, “The Exclusive Right to Read” (1994), 13
Cardozo Arts & Ent. L.J. 29
13 It has been argued that owner control is also balanced by its limit to the specific “form of
expression” (e.g.
Eldred v. Ashcroft, 537 U.S. (2003) S.Ct., majority opinion delivered by Ginsburg J,
at 6). According to this reasoning, copyright does not extend to ideas, procedures, methods or
mathematical concepts (cf. TRIPS, Art. 9(2); WIPO Copyright Treaty, Art. 2), and thus does not
unduly restrict third party expression. This doctrine is muddled either way, because it is difficult to
conceive of an idea that is not expressed, or because copyright extends in practice beyond “actual
language or notation” (as Laddie, Prescott and Vitoria hold:
The Modern Law of Copyright, 3rd ed.,
2000, at 98).
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The digital agenda blatantly attacks this trade off. Recital (3) of the Information
Society Directive acknowledges fundamental principles of law, “especially of
property, including intellectual property, and freedom of expression and the public
interest”. However, in the text of the Directive, the principles of freedom of
expression and public interest (which underpin the traditional copyright exceptions)
are largely handed over to the right owner. Under the digital agenda of exclusive
rights, research of material made available via on-demand services can be
contractually prevented by the right owner (Article 6(4)). This amounts to the
possibility of a perpetual copyright. If the argument in this article is right, this
outcome will not happen in practice, either because right owners will make more
acceptable licences available, or because copyright user will simply ignore the
licensing terms. This however begs the question whether a provision that turns
fundamentally desirable engagement with cultural materials into pirate activity can be
acceptable law.
In the second half of this article, some principles will be introduced that should guide
the development of the next generation of copyright laws.
Creators and Investors: an unholy alliance
Property claims can be defined negatively as rights to exclude. Access to property
becomes conditional on the discretionary decision of the owner. Property entails the
right to say NO. It is widely accepted in economic theory that property rights are
justified if they prevent a so-called “tragedy of the commons”.14 For example, fish
stocks held in common are liable to deplete because there is no individual owner who
has an incentive in their preservation. From a public interest perspective, property
rights should not be more far-reaching than needed to achieve this purpose. In the
case of intellectual property, in particular, they should not encroach on others’
“freedom of expression” more than is necessary to incentivise creative expression in
the first place.15 A second family of property justifications comes from John Locke’s
notion of men’s “natural” entitlement to the fruit of labour, and from the Hegelian
notion of rights as the expression of personality.16 The form and scope of acceptable
rights under these premises is somewhat elusive. In particular, it is not clear how far
other people’s expression can be justifiably limited by “natural” property claims.
In a typical response to the seminal Commission Green Paper of 1988 “Copyright and
the challenge of technology”, Margret Möller, a civil servant in the German Ministry
of Justice, attacks the concept of copyright as a balance of property and user interest.
Among other things, the Commission evaluated the effect home-taping had on the
audio-visual industry -- as any serious policy maker should. The Green Paper argues
in favour of preserving private copying exceptions off-set by a compensatory levy
scheme, a new rental right (introduced with the 1992 Rental Directive, 92/100/EC)
plus a technological copy lock on digital audio equipment. But according to the
author lobby, this already was far too permissive.
14 The phrase stems from G. Hardin, “The Tragedy of the Commons” (1968), 162
Science, 1243-1248.
15 For a widely cited incentive analysis, see W. Landes and R. Posner, “An Economic Analysis of
Copyright Law” (1989), 18
Journal of Legal Studies, 325-366.
16 John Locke (1690),
Second Treatise of Government, chapter five; G. W. F. Hegel (1818-1831),
Vorlesungen über Rechtsphilosophie.
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Möller: “[The Commission] reflects on the admittedly high rate of home taping of
protected works (97%) and on the damage to the rightowners. Insofar, the
Commission is of the opinion that home taping off-air even benefits the rightowners
because they become popular by it and are more in demand. The Commission then
speculates on how often privately copied phonograms or videograms are used for
listening or viewing. Needless to say that all these reflections are more or less
irrelevant from the point of view of author’s rights.”17
A trade-off between the audio-visual industry, consumer electronics and consumer
interests may be appropriate under the Anglo-American copyright approach but not
under the European concept of the author’s intrinsic personal and economic links to
her work. In the notorious phrase of Prof. Schricker, then director of the influential
Max-Planck-Institute for Intellectual Property in Munich, by engaging in economic
evaluation, the 1988 Green Paper shows “un droit d’auteur sans auteur”, author’s
rights without authors. Thus the absolutist conception of author rights ties in with the
exclusive rights demanded by the digital agenda.
The rhetoric of property rights contributes little to determining the appropriate scope
of copyright. It glosses over fundamental differences of interest at the heart of claims
to the fruits of creative endeavour. I shall now unbundle the concepts of creator and
investor which have formed an unholy alliance in modern copyright law. The
argument is presented from premises which attempt to capture widely held views in
modern societies. Then conclusions are drawn on principles for a reform of copyright
law.
Thesis 1: There is no unified category of right owners, covering creators (authors) and
investors (producers).
Creators have four main interests:
to see their work widely reproduced and distributed
to receive credit for it
to earn a financial reward relative to the commercial value of the work
to be able to engage creatively with other works (in adaptation,
comment, sampling etc).
Regarding the structure of author rights, this leads to three conclusions:
The creator has little to gain from exclusivity (it prevents widest
distribution; it prevents access to other works; it does not ensure
financial reward)
The creator has little to gain from transferability (under normal
contractual practices, particularly in the media, the creator will be
bought out in a one-off commercial transaction)
The creator has a lot to gain from the so-called
droit moral (a kind of
creative trade mark, ensuring integrity of origin).18
17 Margret Möller, “Author’s Right or Copyright”, pp. 9-20 in Gotzen [note 1 above], at 18.
18 The
droit moral was introduced with the Rome revisions (1928) of the Berne Convention (1886), the
cornerstone of the international copyright regime: Article 6
bis provides for the right to claim first
authorship of a work (paternity right) and the right to object to any distortion, mutilation or other
modification which would be prejudicial to the honour or reputation of the author (integrity right). The
10
In the past, these wishes could only be met under considerable economic
inefficiencies (mainly caused by the costs of administrating rights). Digital
technology offers new possibilities of tracing use and rewarding the creator.
Transforming collecting societies into regulatory bodies answering to society at large
(not only right owners) may be the best way forward.19
Thesis 2:
Investors want exclusive and transferable property rights, to extract maximum
returns from their investments. Exclusive rights, however, come at a cost to society.
Useful works become more expensive than they would have been (this
is a direct consumer loss).
Works become available for creative engagements only on the terms of
the right holder (this is a loss of cultural diversity, innovation
and critique).
Automatic returns from a backcatalogue of works subsidise existing
large right holders, creating an entry barrier to the creative
industries (this is an anti-competitive effect).
Regarding the structure of copyright as property right, this leads to one conclusion:
Investors should be granted exclusive terms of protection only as a
response to market failure: i.e. where without the incentive of
exclusivity, a work in the “useful arts” would not be produced at
all.
The normal exploitation cycle of cultural products suggests that a short exclusive term
would be sufficient. If the first statutory copyright, the English Act of Anne of
1709/10, granted a term of 14 years (renewable once), the faster dissemination and
exploitation environment of digital technologies would suggest an even shorter term.
Star creators
Many creators have demanded control over their artistic output which, they say, can
only be ensured through exclusive rights. In commercial practice, however, artistic
control is only available to a few star creators whose bargaining power is sufficient to
benefit from the transferability and exclusivity of rights. The interests of star creators
are thus similar to investor interests. They benefit disproportionally from the current
copyright system:
Figures provided in the 1996 UK Monopolies and Mergers Commission Report on
the British Performing Right Society (PRS) show that 80% of author members earned
less than £1000 from performance royalties for 1993 distributed in 1994; and that
10% of authors received 90% of the total distribution. Similarly, according to German
droit moral is distinct from copyright as an economic property right in that it cannot be transferred or
waived.
19 I have argued this point in detail in M. Kretschmer, “The Failure of Property Rules in Collective
Administration: Rethinking copyright societies as regulatory instruments” (2002), E.I.P.R 126-137.
11
music copyright society GEMA’s yearbook 1996/7, 5% of members received 60% of
the total distribution. I have calculated that in Germany and the UK between 500 and
1500 composers can live substantially of copyright royalties. There are indications
that such winner-take-all markets are prevalent in most cultural industries. For the
US, Tebbel has claimed in a 1976 study that only 300 self-employed writers can live
of the copyright system.20 For 90% of authors, the copyright system does not provide
a sufficient reward. The creative base of a modern society is supported by other
means.
Early in their careers, many creators wish to become known by all available means,
including being copied without permission. Piracy is welcome if source credits are
given. Once creators have become famous, they typically perform a U-turn. Their
monetary interests suddenly can compete with investors, aligning both in their
defence of exclusive rights. “Take a stand for creativity. Take a stand for copyright.”
implored a petition to the European Parliament signed by 400 recording artists in
1999. “We make our living through our music. The music that we create touches the
lives of millions of people all over the world. Our creativity and our success depend
on strong copyright protection. We now need your help.”21 This dubious harmony of
interests remains the official industry line in its piracy campaign: “Ultimately, if
creators do not get paid, you will not get music” (John Kennedy, President and Chief
Operating Officer, Universal Music International, Letter to the
Financial Times, 23
January 2003).22
Lorenz curve23
20 J. Tebbel,
The Book Business in the US (1976), The Modern World: Reactions Vol. 3.
21 Petition “Artists Unite for Strong Copyright”, led by Jean Michel Jarre with the assistance of IFPI
(19 January 1999), signed by among others Boyzone, the Corrs, Robbie Williams, Tom Jones, Eros
Ramazotti, Mstisalav Rostropovich, Barbara Hendricks, Die Fantastischen Vier, Aqua and Roxette.
Note that Robbie Williams recently declared that Internet music file sharing is “great” (MIDEM music
trade fair, Cannes, January 2003).
22 The German publishers’ campaign against the copyright exception for teaching and scientific
research (§52a) argued: “If copies of books are free, nobody will buy originals. If nobody buys
originals, nobody will publish books or journals. The result: If nobody publishes, Germany’s thinkers
will soon have to look for a different employment” (Advert
Frankfurter Allgemeine Zeitung, 31 March
2003).
23
Performing Rights, UK Monopolies and Mergers Commission, HMSO Cm 3147 (1996).
12
Future gazing
By advancing the proprietary conception of copyright to its limits, the digital agenda
is leading to a re-examination of the premises of copyright. We are at the end of a
period of expansion, stretching back to the Act of Anne, the author laws of the French
revolution, and the great intellectual property conventions of the late 19th century.
In his dissent in
Eldred v Ashcroft, Supreme Court judge Breyer follows a brief by a
group of economist, including five Nobel laureates, suggesting that a copyright term
of life plus 70 years provides 99.99% of the value of protection in perpetuity; i.e.
virtually perpetual copyright economically speaking.24 Summing up his constitutional
analysis of the 1998 Sonny Bono Act extending the US copyright term by 20 years,
Breyer concludes: “This statute will cause serious expression-related harm. It will
likely restrict traditional dissemination of copyrighted works. It will likely inhibit new
forms of dissemination through the use of new technology. It threatens to interfere
with efforts to preserve our Nation’s historical and cultural heritage and efforts to use
that heritage, say, to educate our Nation’s children. It is easy to understand how the
statute might benefit the private financial interests of corporations or heirs who own
existing copyrights. But I cannot find any constitutionally legitimate, copyright-
related way in which the statute will benefit the public.”25
Within a generation, I predict that Judge Breyer’s views will have become the new
orthodoxy; and the laws of the digital agenda a temporary aberration. Copyright laws
will change, so as to be unrecognisable. There will be short burst of exclusivity,
encouraging fast exploitation, followed by a remuneration right for the life time of the
creator. Criminal law will retreat to the traditional domain of unauthorised or
deceptive commercial exploitation. As we reflect, digital copyright at the turn of the
millennium will have marked the end of an era.
24
Amici Curiae brief of George A. Akerlof, Kenneth J. Arrow, Timothy F. Bresnahan, James M.
Buchanan, Ronald H. Coase, Linda R. Cohen, Milton Friedman, Jerry R. Green, Robert W. Hahn,
Thomas W. Hazlett, C. Scott Hemphill, Robert E. Litan, Roger G. Noll, Richard Schmalensee, Steven
Shavell, Hal R. Varian, and Richard J. Zeckhauser (20 May 2002).
25 537 U.S. (2003); Breyer, J., dissenting, at 26.
13
April 2003, Martin Kretschmer (mkretsch@bournemouth.ac.uk)
