Protecting property rights in works of authorship spurs creative innovations

By Sandra Aistars & Mark Schultz
December 4, 2015

Earlier this week the Center for the Protection of Intellectual Property (CPIP) at George Mason University School of Law released a new white paper, Copyright Principles and Priorities to Foster a Creative Digital Marketplace, by Sandra Aistars, Devlin Hartline, and Mark Schultz. The authors suggest principles and priorities for Congress to consider as it embarks on the next phase of its review of the Copyright Act.

The authors also give a brief overview of the constitutional origins of copyright protection, explaining how the premise of our copyright system—that authors’ rights and the public good are complementary—comports with the dominant natural rights philosophy in the early American Republic. They then examine several ways in which the copyright system fulfills its purpose, as envisioned by the Founders, by driving innovation in the creative industries.

The following is an excerpt from the Introduction.

 

The Founders’ belief that protecting property rights in works of authorship would spur creative innovation was prescient

painting-lightbulbToday, copyright drives innovation in the creative industries and in other industries as well, providing tremendous economic benefits to our economy. The outputs of the creative industries serve as the inputs that spur the creation of many innovative goods and services. Authors collaborate with technology partners not only to distribute their works, but often to create them. Sometimes storytelling itself leads to scientific discoveries and technological innovation. More and more frequently, the presumed distinction between creators and innovators is vanishing as individuals and firms simultaneously generate creative works and innovative technology.

Examples of this symbiotic relationship between creative and innovative industries are abundant. For the recent film Interstellar, director Christopher Nolan collaborated with physicist Kip Thorne to convincingly depict how light travels near black holes. The mathematical analysis and computer programs produced in order to render imagery for the film resulted in discoveries regarding black holes that Thorne intends to publish in scientific journals.

James Cameron spent years and millions of dollars developing the technologies required to bring his vision for the movie Avatar to the screen. His work required a number of groundbreaking, state-of-the-art technologies, such as new types of cameras, leaps forward in 3-D imaging, and great advances in performance-capture technology, which are continuing to benefit professional filmmakers as well as other businesses. Before Avatar, Cameron developed patented technology to assist with underwater filming for the movies The Abyss and Titanic. George Lucas similarly invented to create, pioneering such technology as the THX sound systems now common in movie theaters.

Such advances also benefit amateur creators. Many of the techniques and technologies now used by amateur filmmakers and musicians on sites like YouTube were originally motivated, created for, tested, and perfected by professional filmmakers and musicians.

Similarly, Getty Images, a leading creator and distributor of still imagery, video footage, and music, was the first company to license digital imagery online. Investing more than $450 million, it has developed and deployed tools to allow users to intuitively search for, license, and download images for use online and in traditional publishing and broadcasting settings. Getty licenses over 200,000 images a day (more than 2 images per second) and serves over one million customers. This thriving commercial marketplace is possible because Getty has developed the technological tools to efficiently set license terms via automated digital transactions.

This sort of innovation is simply part of everyday business in the creative industries. For example, the publishing industry invests millions of dollars in research and development (R&D), infrastructure, skilled labor, and other resources to create, publish, distribute, and maintain scholarly articles on the internet. Publisher Reed Elsevier began development of its online publishing platform, ScienceDirect, in 1995, beta tested it in 1997–1998, and finally rolled it out in 1999. The company invested $26 million in initial development costs and made an initial investment of $46 million to create the digital archives.

Since then, Reed Elsevier has spent hundreds of millions of dollars shifting to digital production and publication of journals. This includes paying developers to code, scan, and beta-test platforms, purchasing hardware and machinery, R&D, ongoing maintenance, and enhancements. Currently, it maintains over ninety terabytes of digital storage capacity from which an average of ten million active users from 120 different countries download nearly 700 million articles per year. More than 1.5 million articles in science, technical, and medical fields were published in 2009 alone.

Creative businesses are developing new tools for their readers as well. The New England Journal of Medicine employs a full-time staff of medical illustrators to redraw and recompose all of the images submitted by authors. A recent feature pioneered by the journal is a 3D video animation of all of the medical images that allows the images to be rotated on multiple axes for different perspectives. The benefits to medical and biochemical researchers for their own innovative work are obvious.

Creative communities contribute greatly to the U.S. economy. In 2010, the U.S. Patent and Trademark Office found that copyright-intensive industries provided 5.1 million jobs in the United States and that every two jobs in these industries supported an additional one job elsewhere in the economy. Education levels, wage levels, and the ability to lead economic recovery in copyright-intensive industries outpaced those in non-IP-intensive industries.

Globally, copyright is a driver of economic benefits. Analyzing forty-two national studies of the economic contributions of the copyright industries, the World Intellectual Property Organization (WIPO) found in 2014 that countries with an above-average share of gross domestic product (GDP) attributed to the copyright industries have rapid economic growth and above-average national employment. This should not be surprising, given the important role property rights play in creating efficient markets, encouraging product differentiation and competition, enabling division of labor, and spurring investments by entities beyond the original creator.

Additionally, WIPO found that there are strong and positive relationships between the contributions of the copyright industries to GDP and many indicators of socio-economic performance. For example, countries with greater GDP attributed to the copyright industries have greater government effectiveness, more freedom from corruption, and greater innovation and competitiveness.

These insights are confirmed by empirical and comparative research examining how artists respond to copyright incentives (or to the lack thereof ). Jiarui Liu, a fellow at Stanford’s Center for Internet and Society, conducted an empirical study of market incentives and the intrinsic motivations of musicians in China—a country with one of the highest piracy rates in the world—in order to ascertain how musicians respond to copyright incentives and how markets are transformed where copyright protection essentially does not exist.

Based on analysis of industrial statistics and extensive interviews with individuals in the Chinese music industry, Liu concludes that “copyright incentives do not function as a reward that musicians consciously bargain for and chase after but as a mechanism that preserves market conditions for gifted musicians to prosper, including a decent standard of living, sufficient income to cover production costs and maximum artistic autonomy during the creative process.”

Liu’s interviews reveal how piracy has distorted the Chinese music industry, much to the detriment of musicians and audiences alike. These experiences offer a glimpse of how the marketplace for music might look in the U.S. if copyright protection was weaker. Liu reports that, in China, royalties have ceased to be a meaningful source of income to musicians. As a result, musicians have to focus on other income sources to make ends meet, such as ringback tones, overseas sales, live performances, jingle-writing, merchandizing, and second jobs.

Liu notes that pop artists in China often have their creativity stifled by the demands of their patrons. Many commercial sponsors focus more on celebrity appeal than on artistic merit, and in some cases this leads to replacing musicians in bands with models judged to be more attractive and commercially viable. While the influence of commercial sponsors is not so fully expressed in the U.S., many other changes observed by Liu in China are already beginning to take hold here as well. As musicians are less able to rely on royalties to make a living, they spend less time on their craft and more time searching for alternative sources of income—much to the detriment of audiences.

To read the full white paper, please click here.

 

About the Center for the Protection of Intellectual Property

The Center for the Protection of Intellectual Property (CPIP) at George Mason University School of Law is dedicated to the scholarly analysis of intellectual property rights and the technological, commercial, and creative innovation they facilitate.

The Author

Sandra Aistars

Sandra Aistars is Clinical Professor at Antonin Scalia Law School, George Mason University, leading the law school’s Arts & Entertainment Advocacy Program. She also serves as Senior Scholar and Director of Copyright Research and Policy at the law school’s Center for the Protection of Intellectual Property (CPIP).

Sandra Aistars

Mark Schultz is a Senior Scholar and Director of Academic Programs at the Center for the Protection of Intellectual Property (CPIP). He also serves as an Associate Professor of Law and Director of Faculty Development at Southern Illinois University. Professor Schultz writes and speaks frequently around the world about the importance of legal institutions that support the creative and innovative industries.

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