Economic Analysis Of Copyright Law

In the global economy,copyright has become the foundation of many industries such as music,publishing,film,broadcasting and software.It has great influence on many other economic activities as well.Copyright as a powerful engine for economic growth has created employment and incentives to industries.In the 300 years after birth of copyright,there are no other intellectual properties like copyright that have undergone such great impact of technology progress and social demand. Therefore,the research into the economic theories behind the copyright rules for more efficient modification and legislation of copyright has special practical significance.The paper systematically expounds on the economic theories behind the copyright legal rules and comments on them.It points out some implication of economic theories on copyright revision.The paper analyses economic reasons for copyright scope,fair use rule,and collective administration of copyright.Methods used are normative analysis,cost-benefit analysis,game theory,incentive theory.The paper systematically discusses the property theory,balance theory,and price discrimination theory and points out copyright as a kind of property is just one possible way to correct market failure,an important but complementary way.The paper discusses the economic reasons for the copyright scope and its implication upon social welfare.Fair use doctrine is specially analyzed for its importance in copyright system.The paper points out that in the digital and network era the reconstruction of fair use doctrine should follow the principle of balance,that is balance the cost and benefit of the society.Digital and network technology presents both opportunities and challenges to collective administration.In the new era, collective administration is still necessary.In the end,the paper explains challenges presented by digital and network technology to copyright,reasons of copyright expansionists,our country's revised copyright rules in response to the technology developments and its loopholes.The paper has three parts besides introduction and conclusion.The first part includes the first chapter and the second chapter.The first part is about the economic reasons for the existence of copyright.The part discusses copyright basics and market failure theory,game theory,and property theory of copyright.It explains the three major schools of thoughts on copyright:incentive theory,complementary role of copyright,and price discrimination facilitation theory of copyright.The second part is about economic analysis of copyright rules.The part is composed of chapter three and four.The third part is about copyright issues in digital network era.It has just chapter five.The first chapter is basics for copyright economic analysis.The chapter first clarifies the relationship of copyright and authorright.It then introduces the copyright definition,characteristics,history and expansion trend today.Then the chapter discusses economic theories for the existence of copyright such as market failure theory,property theory,and game theory.The second chapter analyses the three schools of thoughts on copyright including cost-benefit analysis,other incentives and price discrimination.First, copyright as property has its cost and benefits.The benefits include:incentives to authors,reduction in transaction cost.The costs include:monopoly pricing,negative influence on future creativity,license cost and enforcement cost.Copyright is necessary incentive for intellectual production but costs and benefits balance must be taken into account.There are other incentives such as subsidy and rewards,first move advantage,digital management,indirect appropriability,contract and etc.The more support for these incentives,the less important copyright.In the end,copyright can facilitate price discrimination.Thus modification of copyright should follow the principle of promoting price discrimination in order to create incentives to authors but at the same time balance interests of concerning parties especially the social progress.The third chapter is economic analysis of copyright scope.It uses cost benefit approach of the second chapter to analyze major copyright principles:limits on copyright subjects,copyright term,and limits on copyright exclusivity.Copyright subjects have to meet the requirements of originality,idea/expression distinction,and material form.Every copyright has a term.Limits on exclusivity include independent creation,compulsory license,and fair use.The function of copyright is to create incentives to works.Without copyright,works production will not be sufficient. Copyright has costs and benefits.If costs of copyright protection outweigh benefits, then works shall not be covered by copyright.The principle of cost and benefits can be seen in copyright rules here and there.The chapter introduces the general rules of fair use and then presents the economic theories for the existence of fair use.The doctrine of fair use is to achieve the balance of costs and benefits of copyright system and to promote its efficiency.Because of the high prohibitive transaction cost and positive externalities,market failure occurs.Fair use is a corrective response to the market failure.It can promote the dissemination of information while not reduce the incentives of the writer.From cost and benefit perspectives,social benefits can outweigh cost incurs from reduced incentives to the authors.Fair use restricts the authors' monopoly.From economic analysis perspective,high protection to the author can lead to anti-common tragedy.The existence of copyright promotes the dissemination of knowledge.The chapter points out impacts of digital and network technology on copyright fair use and guidelines to follow when meeting the challenges.Impacts of digital and network technology on copyright fair use are:first, digital technology changes the way works are created;second,digital technology widens copyright scope;third,there is no special rule of fair use for digital technology. Fair use reconstruction in digital network environment should consider the balance of interests,the incentives to authors and social progress.Fair use in digital internet era will still exists because factors which will lead to market failure such as negotiation cost,externality,and anti-dissemination purpose are still there.Besides,based upon Matthew Sag,the paper analyzed the relationship between copyright scope and social welfare for the reference of copyright policy makers.The fourth chapter is economic analysis of collective administration.The chapter introduces the origin,definition,characteristics,and functions of collective administration.Collective administration is set up upon the demand of administration. Collective administration the system that with authorization by the right holder,the copy right collective administrative organization can centralized execute the right holder's relevant rights and neighboring rights.Collective society is a bridge between the users and the right holders.It is an indispensable system for right holders to imPlement their rights.Collective administration administers copyright property, mainly small rights of them.Collective society is a non-profit organization,mostly monopolistic.It has non-governmental,semi-governmental,and governmental styles. Because of the popularity of digital and network technology,the way for copyright works usage and dissemination has changed a lot.The balance of copyright has been upset.Digital technology has also provided technology support for collective society. The economic analysis of collective administration shows the collective society can guarantee the payment to the right holders for others' usage of the works.From users' perspective,it reduces cost and information and facilitates the obtainment of license. Collective administration is still necessary in digital era because it can employ digital management to reduce cost and increase efficiency too.There will be transaction cost exist in the digital era and collective administration can reduce it.Besides,collective administration can realize scope economy and solve the problem of information asymmetry.The fifth chapter analyzed characteristics of digital network era including digitalization,media convergence,broadband communication and globalization. Digital technology has great impact upon copyright:digital technology releases the material form dependence,supports perfect copies,gets rid of major difficulties of copying,and changes traditional economic concepts applied in the field.Because of the characteristics of digital network era,some raise the issue of expand copyright for the reason of increasing incentives to the production of public goods.The opponents hold that expansion will erode social interests.The development of digital technology and expansion of copyright make price discrimination easier and price discrimination has to some degree reduces the deadweight loss brought by copyright.In the network era,network effects reduce the demand of copyright protection.But every institution has its costs,where copyright system should be heading for and which way is right should be determined by the deeply rooted principle of copyright system of balance. In the end the chapter analyzes the current copyright protection of our country and points out that in response to the new technology developments our copyright law sets forth communications right,data base and multi-media protection as compilation works,technology protection measures protection and collective administration. There are still problems as to communications right,temporary copy and data base protection.