FC: Copyright update: Term extension act, webcasting royalty fees

[Declan McCullagh <declan () well com>]

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Date: Tue, 19 Feb 2002 10:51:48 -0500
To: declan () well com
From: Jonathan Zittrain <zittrain () law harvard edu>
Subject: Eldred v. Ashcroft goes to Supreme Court

Declan,

The Supreme Court has granted cert in Eldred v. Ashcroft, taking up our 
challenge to the Sonny Bono Copyright Term Extension Act of 1998, which 
among other things retroactively extended the term of copyright for 
existing works by another 20 years, to 95 years.  The case will likely be 
argued sometime next fall.

See <http://cyber.law.harvard.edu/cc/> for a history of the case, though 
it's not yet updated to reflect today's decision.  ...JZ

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Subject: re: back of the envelope copyright analysis
Date: Wed, 20 Feb 02 14:36:31 -0600
From: Zimran Ahmed <zahmed () gsb uchicago edu>
To: <declan () well com>

Hi Declan:

As the Supremes looking into the constitutionality of the Sonny Bono
copyright extension act, I thought you might be interested in a quick
back of the envelope analysis I did not the cost of copyright on society.
And while retroactive copyright extension clearly does nothing "promote
the progress of science and useful arts", I also try to quantify what a
"limited time" might be. At author life (70 yrs) +70 years, at 5%
discount, the net present value of "limited time" is 99.9% equal to
"unlimited time".

All the best,

Zimran

********

http://www.winterspeak.com/columns/022002.html

The copyright tax
Wednesday Feb 20th, 2002

Jim Valenti asked Lawrence Lessig "who does it harm if Mickey Mouse is
under copyright for 1,000 yrs?" Lessig struggled to answer, but here's
some math that points us in the right direction.
Let's look at music sales. This year, $763M CDs were sold in the US,
average price $15. Price elasticity for CDs (in New Zealand--all I could
find on google) is -0.5. Assume it's the same in the US. Marginal cost
for music (a la Napster) is $0 (note--this is marginal cost, not average
variable cost, so chill out about up front costs).

You do the math and come up with the following graph:

Graph:
http://www.winterspeak.com/cdtax.gif

What does this mean? If music was available at marginal cost, total good
to society would be $25,740M, all of it going to consumers. As things
stand, society only gets $22,890M, split evenly between producers and
consumers. There's a dead weight loss (i.e. money that's burnt to collect
this "tax") of $2,857M. This means that market for music is $2,857M
smaller than it would be in an efficient market. This is equivalent to a
copyright tax rate of about 12% (income tax efficiency is about 20% I
think). So, for CDs, you can claim each additional year of copyright
costs society $2,857M in dead weight loss.

But this is just for a single year. Copyright currently lasts for authors
life plus 70 years (and counting). So, let's treat this as a 140 year
annuity of $2,857M at a 5% discount rate. Calculating the present value
gives you: 19.978 * $2,857M = $57,078M. This is the present value of the
cost to society of a 140 year copyright tax. Coming back to Valenti, if
this was increased to 1000 years, it would cost society approximately the
same amount, since costs that far in the future are so deeply discounted
they fall to zero (i.e. present value multiplier at 1000 years = present
value multiplier at infinite years = 20).

So from a financial standpoint, the length of copyright currently might
as well be infinite, as it costs society approximately that much. This
clearly goes against the "for limited duration" section in the
constitution. So when someone asks you "who does extending copyright
hurt?" you can answer "everyone, to a tune of about $3B a year just for
music." You could also add that the economic length of copyright is
currently essentially infinite. Any argument for extending copyright
further is about control, not incentive to produce, since it's impossible
to increase the incentive to produce any more.

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From: GerardPer () aol com
Date: Thu, 21 Feb 2002 08:38:46 EST
Subject: FYI: Copyright Royalty Fees for webcasting
To: declan () well com, politech () politechbot com
CC: ratkinson () dlcppi org

Perhaps your readers are interested in this.

ref:  http://www.loc.gov/copyright/carp/webcasting_rates.html



Rates and Terms for Statutory License For Eligible Nonsubscription Services
to Perform Sound Recordings Publicly by Means of Digital Audio Transmissions
("Webcasting") and to Make Ephemeral Recordings of Sound Recordings

On February 20, 2002, the Copyright Arbitration Royalty Panel ("CARP")
delivered its report recommending rates and terms for the statutory license
for eligible nonsubscription services to perform sound recordings publicly by
means of digital audio transmissions ("webcasting") under 17 U.S.C. §114 and
to make ephemeral recordings of sound recordings for use of sound recordings
under the statutory license set forth in 17 U.S.C. §112. (Read details on
proceeding.)

Appendix A of the report sets forth the royalty rates recommended by the
CARP.

Appendix B of the report sets forth the terms recommended by the CARP to
govern the statutory license.

The CARP report will be reviewed by the Copyright Office, which will
recommend to the Librarian of Congress whether to accept, reject or modify
the rates and terms set forth in the report. The Librarian must accept or
reject the report no later than May 21, 2002.




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