Economic effects of term extension for sound recordings

April 30th, 2015 by Barry Sookman Leave a reply »

Last week the government announced an extension to the term of protection for performers and makers of sound recordings, increasing the term from 50 years to 70 years. In doing so, the Government exhibited respect for artists and their music and decided to act before their valuable recordings fell into the public domain.

Michael Geist was quick to criticize the announcement, claiming it could cost Canadian consumers “millions of dollars” and that it would result in fewer works entering the public domain. In support of his claims, Geist referred to several “studies”.

The renowned economist, Prof. George Barker, just published a report Debunking Common Myths: The Economic Effect of Copyright Term Extensions for Sound Recordings and a blog post,  thoroughly examining each source Michael Geist relied on. Prof. Barker concluded that each of the cited sources had fundamental flaws, economic theory and data did not support the assertions made by Geist, and further, the “studies” forming the basis of Geist’s opposition to the term extension were rejected in the EU, the U.K., and in Australia in their decisions to extend copyright term protection in those jurisdictions.

Prof. Barker concluded:

This report examined and debunked four myths about the likely economic consequences of copyright term extension following the Canadian government’s recent Budget announcement on April 21, 2015. The four (4) myths are as follows:

Myth 1: Heavy Costs to Consumers in Royalty Payments.

Myth 2: Royalty Payments Will Be Sent Out of the Country.

Myth 3: No Additional Incentive for Creativity.

Myth 4: Less Entering the Public Domain.

In each case we have shown why economic theory and data do not support these conclusions. These common mistakes in economic analysis have however been revived from the 2005-9 UK and EU debate, and the 2005 Australian debate on term extension. In each of those cases, these arguments were considered and rejected by policy makers in deciding to extend the term of copyright. The same should be true for Canada. Term extension is an efficient way to restore returns to investment in creativity, which was devastated by the growth of digital piracy from 2000. By increasing returns, and therefore the incentive to invest in creativity, term extension will help increase the supply of new creative goods, enhance consumer choice, competition, and quality, and lower prices in the long run. It will also help to enhance incentives to invest in, and market existing creative goods, and to maintain and enhance their quality, safeguarding our cultural past and musical legacy, while enriching both the present, and the future.

For more information about the term extension, see Term extension and respect for artists: a reply to Michael Geist and Canada to extend copyright term for artists and record producers.

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