The Role of Consumer Sovereignty in the Digital Information Age: The Intersection of Copyright, Communications and Antitrust Law

Abstract

In the digital age, the information sector resides at the intersection of three important areas of law, copyright, communications and antitrust. A recent analysis from the National Research Council entitled Copyright In the Digital Era: Building Evidence For Policy recognizes that the private incentive that copyright is intended to afford to creators and artists must be balanced by broad public interest benefits, identifying three areas of concern that correspond to these three areas of law.

• Copyright: Creativity – innovation and fair use to reflect the principle that copyrighted materials should be available not only for personal use, but as the building blocks on which creativity rests.

• Communications: Efficiency – optimal economics, network effects, transaction costs, technological change.

• Antitrust: Control of market power – consumer surplus, artist income, supra-competitive profits.

The NRC concluded that the knowledge base for policymaking in the copyright area is “poorly informed by objective data and empirical research” but that has not stopped the flood of court cases (and bills introduced in congress) to “fix” the problems that cut across all three areas of law.

This paper reviews the arguments and outcomes in a number of prominent cases,some of which fall into several areas of the law, to develop key themes

Communications Act Open Internet Order Comcast-NBC, Cabelvision v. Viacom ABC v. Aereo Fox v. Dish

Copyright/Patent Grokster Kirstaeng Pandora v. ASCAP, BMI Alice Bank ABC v. Aereo Fox v. Dish

Antitrust Comcast-NBC, E-book Price Fixing Pandora v. ASCAP, BMI Cabelvision v. Viacom The paper argues that a dramatic increase in consumer sovereignty is the key to the effectiveness of the digital revolution in generating benefits for the public. Evidence on usage patterns is provided to demonstrate dramatic changes, changes that threaten dominant incumbents (music labels and publishers, book publishers, broadcast networks).

Second, while it is frequently asserted that old law is standing in the way of new technology, these cases demonstrate that traditional principles that have withstood the test of time remain vitally important to promote competition, innovation, economic growth and public welfare.

The value of three principles is described in terms of the court materials -- access in communications, balance in copyright, and fair competition in antitrust.

Keywords: copyright, market power, access

JEL Classification: D60, K21,K23, K39, L86