2013 Copyright a contrario

Paper abstract accepted for the 2013 SERCI Conference in Paris, July 8-9 2013.

***** An updated version of this paper is available in French at this address: Droit d’auteur a contrario http://www.culturelibre.ca/recherches-juridiques/droit-dauteur-a-contrario/ *****


Copyright, caught in a digital maelstrom of perpetual reform and shifting commercial practices, exacerbates tensions between cultural stakeholders. On the one hand, copyright seems to be drowned in Canada and the USA by the role reserved to exceptions by the legislature and the courts granted to certain institutions. On the other, these institutions, such as libraries, are keen to navigate digital environments by allocating their acquisitions budgets to digital works.

Beyond the paradigm shifts brought by digital technologies, one must recognize the conceptual paradox surrounding digital copyrighted works. In economic terms, they behave naturally as public goods, while copyright attempts to restore their rivalrousness and excludability. Within this paradox lies tension, between the aggregate social wealth spread by a work and its commoditized value, between network effects and reserved rights. How can markets emerge if we are not able to resolve this tension?

After discussing some theoretical aspects described above, this paper will attempt to cast new light on user rights (as posited by the Supreme Court of Canada in 2004) and other emerging concepts in copyright. In particular, the making available right will be analysed from the perspective of the library community. The goal is to express how libraries can fit in a distribution chain of cultural products through the two copyright tools at their disposal: licences/limitations and exceptions.

NOTE: This page presents complementary information to my paper and it may be considered an incomplete draft. As an advocate and believer in open science, I aim to make my work available as quickly as possible in whatever form it takes, in order to receive feedback.

LAST UPDATED: 2013-07-03 @ 21:30

Title: Copyright a contrario

1. Zero price in efficient markets of information goods
2. Will fair use/dealings really destroy copyright markets?
3. Emerging models in librarianship
4. Towards « bibliotheconomics »

In this paper, I want to point out the emergence of an alternative model to foster efficient markets of digital information works protected by copyrights (henceforth: works). In fact, I hope to address some issues raised by Marcel Boyer (2012) with regards to the role of fair use/dealings in the emergence of a market or market like institutions.

1. Zero price in efficient markets of information goods

Efficient markets operate when price equals marginal cost of production. Because works are non-rival and non-excludable, marginal cost is thought to be zero. Because of this, a typical market may not emerge.

First best optimum (Boyer, 2012, p.17-8)

A benevolent state with access to all relevant information, in a perfect and complete information universe, could make appropriate payments directly to authors for their specific works created from the significant exercise of their talents, judgment, and labour, and disseminate the works produced to all citizens as users. The benevolent State in doing so would make the maximum possible dissemination of these works and ideas, would thereby [p.18] promote the emergence of a situation described by Justice Binnie7 as “… a balance between, on the one hand, promoting the public interest in the encouragement and dissemination of works of the intellect and the arts and, on the other hand, obtaining a just reward for the creator . . . ,” and would contribute to the optimal development of the arts and sciences. To use the language of economic theory, this situation corresponds to a first-best optimum.

This is an interesting option, but information is unfortunately incomplete or imperfect. The State may not be fully aware of a creator’s talent or how her works wil be received by the public. It may not be possible to reach the first best optimum.

The second best optimum occurs through property rights and the third best optimum through means to limit transaction costs, namely collecting societies. As Boyer (2012, p.43) concluded:

The characteristics of a second-best optimum were described as follows: in order to remain as close as possible to the first-best optimum in the al- location of resources, it is necessary to create property rights that allow authors to collect a sufficient portion of the value of their works to provide incentives and rationales for exerting their creative efforts (labour and intel- lectual effort, talent and judgment). The possibility of reproducing original works at virtually zero cost makes it difficult to enforce property rights, thereby further increasing transaction costs: the potential market thus col- lapses with ultimately harmful effects on the creation of quality original works. To counter these harmful effects, a way must be found to reduce transaction costs.
This leads us to the characterization of what we might call a third-best optimum in the allocation of resources to the production and dissemination of works: to favour, through copyright pools, a significant reduction in transac- tion costs by simplifying exchanges between creators and users through the sale of a single non-discriminatory blanket licence for access to a large pool of works; to encourage the search for a generally acceptable way of estab- lishing the competitive price of reproducing works; and finally to promote the design of efficient (inexpensive) mechanisms through which users and creators can make transactions freely while respecting each other’s rights in a fair and balanced manner, in other words by emulating the operation of a

Boyer uses this rationale to conclude that because the third best optimum is the only viable one, it is advisable to limit the « collapse » of existing institutions that cater to it by casting fair use/dealings as a mechanism set within a tight framework.

In the current technological and institutional context, the third-best op- timum probably represents the best that can be done. For this, we need four elements : first, a method for determining the competitive price for the reproduction of original works protected by copyright, with fair and balanced protection of the rights of both authors and users; second, an effective (inexpensive) rights management mechanisms to promote the max- imal distribution and dissemination of works; third, a significant reduction in exclusion by marketing a single set of similar but differentiated and ap- propriately designed licences for access to a vast pool of works and this, without broadening the fair dealing exemption; and fourth, a requirement that specific organisations pay for their appropriately designed licence(s) on behalf of their respective constituencies. (Boyer, 2012, p.44)

2. Will fair use/dealings really destroy copyright markets?

This paper aims to address some issues raised by Marcel Boyer (2012) with regards to the economic analysis of fair dealing/use and, in particular, his argument as follows:

Regarding the effect of the dealing on the market for the works, this article will argue first that the preferred copyright policy should be to create properly designed efficient market-like mechanisms and institutions to favor copyright transactions, such as blanket licenses priced through copyright boards acting as surrogate for markets, and second that the first step in allowing a constrained optimum in production and dissemination of original works to emerge is to prevent its collapse. This collapse could result, under a more liberal interpretation of the fair dealing exception than is desirable, from the withdrawal of the object for which such blanket licenses are or could be issued. Hence, it is important to consider among the effects of the dealing on the works the possibility that a liberal interpretation of the [page 9] exception might lead to the destruction in whole or in part of the emerging market-like mechanisms and institutions.(Boyer, 2012, p,8-9)

Boyer’s analysis focusses on reprographic rights while the emerging right is the « making available » right or the « access-right » introduced in art. 8 of the WIPO Copyright Treaty of 1996.

Article 8: Right of Communication to the Public

Without prejudice to the provisions of Articles 11(1)(ii), 11bis(1)(i) and (ii), 11ter(1)(ii), 14(1)(ii) and 14bis(1) of the Berne Convention, authors of literary and artistic works shall enjoy the exclusive right of authorizing any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them.7

We will discuss this point in much greater detail in the next section.

Boyer’s case presents fair use/dealings as the only replacement to the reprographic right.

Boyer’s paper makes broad conclusions without analyzing the specific parameters of actual markets for works.

3. Emerging models in librarianship

Digital licensing vs. fair dealings

Libraries have opted to negotiate digital access licences directly with publishers for vast portions of their catalogues. These licences cover the right to use works as well as access to the digital files of the work. This approach is vastly superior to the previous model of reprographic rights which implied that institutions had to purchase a physical copy (or somehow locate one) in addition to obtaining a reprographic collective licence.

One important point to consider is that deploying a fair use/dealings policy within a public institution carries some level of cost. Wages must be paid to employees digitizing or manipulating works. Computers are required, as are rooms, electricity and a union-mandated coffee break every now and then. The point is that any rational right-holder can always bid to supply access services (document + use right) that costs less than operating a fair use/dealing policy at a cost set somewhere above their marginal cost of production (set, in theory, at zero) and below the cost of operating the fair use/dealing policy.

Another issue relates to licensing approaches to ebooks (see this OECD study).

Open access as a first best optimum

In the case of publicly funded universities employing researchers seeking funding from State agencies for their research, it seems that governments are remunerating creators to provide their works – which is the first best optimum if the works are made available under open access.

How to manage public domain works?
Some National Libraries are imposing a paywall to fund the access to digitized public domain materials. How can law & economics inform this policy decision?

4. Towards « bibliotheconomics »

According to Le Petit Robert, the French word « bibliothéconomie » dates back to 1839 and refers to the science that defines the organisation and management rules of libraries (« Science qui définit les règles d’organisation et de gestion des bibliothèques »). As with its literal translation « librarianship », it is being slowly replaced with « information science ». I would like to recapture this word and instill it with a new meaning within the context of economic research in copyright issues. May bibliotheconomics become the economic research in copyright issues facing libraries.

Actually, librarianship does not seem to care much about economics, and even less law and economics, with a few notable exceptions (such as Salaün and the « chantier en économie du document« ).

Efficiency: how much should a society invest in its libraries? Can libraries be used to shape markets of works?

Modeling: private goods v. public goods; market failures; externalities; social wealth…

Fair use/dealings: invest in (orphan) works, signal preferences on how to operate digital markets (free market research); price optimisation

Partial Bibliography

Boyer, Marcel, The Economics Fair Use/Dealing: Copyright Protection in a Fair and Efficient Way (July 5, 2012). Review of Economic Research on Copyright Issues, 2012, 9(1), 3-46. Available at SSRN: http://ssrn.com/abstract=2101080

More detailed bibliography available here.

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