Economics

The $2.2 trillion fair use (U.S.) economy

Mike Linksvayer, September 12th, 2007

The Computer and Communications Industry Association has released a study claiming that the value added in the United States by industries dependent on fair use is $2.2 trillion dollars annually, or one sixth of the U.S. economy, apparently almost 70% more than than value added by copyright industries, as measured by other recent studies. From the release:

“As the United States economy becomes increasingly knowledge-based, the concept of fair use can no longer be discussed and legislated in the abstract. It is the very foundation of the digital age and a cornerstone of our economy,” said Ed Black, President and CEO of CCIA. “Much of the unprecedented economic growth of the past ten years can actually be credited to the doctrine of fair use, as the Internet itself depends on the ability to use content in a limited and nonlicensed manner. To stay on the edge of innovation and productivity, we must keep fair use as one of the cornerstones for creativity, innovation and, as today’s study indicates, an engine for growth for our country

The Fair Use exception to U.S. copyright law, as codified in Section 107 of the U.S. Copyright Act of 1976 states, “The fair use of a copyrighted work … is not an infringement of copyright.” Fair use permits a range of activities that are critical to many high technology businesses such as search engines and software developers. As the study indicates, however, fair use and related exceptions to copyright are crucial to non-technology industries as well, such as insurance, legal services, and newspaper publishers. The dependence of industries outside the high-tech field illustrates the crucial need for balanced copyright law.

While the particular numbers arrived at by the study may be challenged (it is the first attempt to quantify the fair use economy in this way and the CCIA is composed of interested parties), the overall points highlighted above (emphasis added) are extremely compelling.

Given the demonstrated criticality of fair use to the economy and the steady diminishment of fair use, is there any reason to believe the current balance is optimal? Even moreso outside the U.S., where fair dealing and other exceptions to copyright are less liberal than fair use.

This is one place where Creative Commons comes in. CC licenses make it easy to grant permissions beyond the scope of fair use (and without ever restricting fair use), shifting the balance by completely voluntary action. This is not lost on leading companies in the fair use economy. For example, at least five CCIA members have provided support for Creative Commons — Google, Microsoft, Red Hat, Sun, and Yahoo!.

Those are huge, important companies, but a fraction of a $2.2 trillion fair use economy, and that’s not counting the world outside the U.S. Consider joining these leaders — your business, or your job, may depend on it.

Our annual fall fundraising campaign starts next month, so keep the above in mind.

If your company is or should be interested in contributing to our corporate commoner giving program, please contact our development coordinator at melissa@creativecommons.org.

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Economic Analysis

Mike Linksvayer, December 7th, 2005

Caltech economics professor Preston McAfee appears to be mad as hell about high journal and textbook prices, and he’s doing something about it. He’s published a complete Introduction to Economic Analysis textbook under a Creative Commons license. See his page about the license and high textbook prices:

Why open source? Academics do an enormous amount of work editing journals and writing articles and now publishers have broken an implicit contract with academics, in which we gave our time and they weren’t too greedy. Sometimes articles cost $20 to download, and principles books regularly sell for over $100. They issue new editions frequently to kill off the used book market, and the rapidity of new editions contributes to errors and bloat. Moreover, textbooks have gotten dumb and dumber as publishers seek to satisfy the student who prefers to learn nothing. Many have gotten so dumb (“simplified”) so as to be simply incorrect. And they want $100 for this schlock? Where is the attempt to show the students what economics is actually about, and how it actually works? Why aren’t we trying to teach the students more, rather than less?

In addition to including a prominent CC license notice in the textbook PDF, the license is briefly mentioned in the subject text in the context of explaining sources of monopoly, page 2517 (emphasis added):

Copyright
also confers a monopoly for a supposedly limited period of time. Thus, the
Disney Corporation owns copyrights on Mickey Mouse, copyrights which by law
should have expired, but have been granted an extension by Congress each time
they were due to expire. Copyrights create monopoly power over music as well
as cartoon characters, and Paul McCartneyTime-Warner owns the rights to the song “Happy
Birthday to You,” and receives royalties every time it is played on the radio or
other commercial venue. This book is copyrighted under terms that expressly
prohibit commercial use but permit most other uses.

Via the Freakonomics blog, which includes links to additional data from McAfee about journal prices.

Also check out the Science Commons Publishing Project.

Update: Thanks to a suggestion from Luis Villa hardcopies of Introduction to Economic Analysis are now available at Lulu.

Update: The current version of the textbook contains the correction noted above regarding “Happy Birthday” ownership. Thanks to Gordon Mohr for pointing out the error in a comment below.

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