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

From: Declan McCullagh (declanat_private)
Date: Thu Feb 21 2002 - 07:59:44 PST

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    Date: Tue, 19 Feb 2002 10:51:48 -0500
    To: declanat_private
    From: Jonathan Zittrain <zittrainat_private>
    Subject: Eldred v. Ashcroft goes to Supreme Court
    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
    Subject: re: back of the envelope copyright analysis
    Date: Wed, 20 Feb 02 14:36:31 -0600
    From: Zimran Ahmed <zahmedat_private>
    To: <declanat_private>
    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,
    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:
    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.
    From: GerardPerat_private
    Date: Thu, 21 Feb 2002 08:38:46 EST
    Subject: FYI: Copyright Royalty Fees for webcasting
    To: declanat_private, politechat_private
    CC: ratkinsonat_private
    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
    Appendix A of the report sets forth the royalty rates recommended by the
    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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