A 'Golden Age' for the Creative Sector? The Effect of Digitisation and the Spread of the Internet on Creative Industries
31 Pages Posted: 7 Oct 2017
Date Written: August 28, 2016
This paper seeks to test the hypothesis that digitisation of content (e.g. music, film and books) and the spread of the Internet over the past 25 years, together with copyright law exceptions, have enabled a “golden age” for creativity. Large technology companies have for some time promoted this golden age hypothesis, claiming that these developments have reduced the costs of producing and distributing creative content and thereby led to a golden age for content or creative industries. This claimed renaissance period for content has further been used in policy-making processes around the world to support the case for weaker copyright law.
In this paper we try to test the golden age hypothesis using data that has become available over the past 20 years. The reason we do this is that a more cautious view of the impact of content digitisation and the spread of the Internet predicts an offsetting opposite effect, namely that it has reduced the effective level of protection offered by copyright law, and weakened the position of creators, by enabling greater market bypass or piracy, thereby reducing sales, investment and output in the creative sector, and increasing the need for greater copyright protection to restore economic welfare.
This paper tests whether content digitisation and the spread of the Internet has been associated with a golden age for content industries by looking at data from around the world on sales, investment and employment in creative industries - key drivers of economic welfare. We look at trends in these variables both before and during the process of content digitisation and the spread of the Internet. We do this in three sections, addressing three sub-questions as follows:
1. Has there been a Golden Age for Sales? For this we review the general evidence available on sales of music and film from around the world both before and during the process of content digitisation and the spread of the Internet, and develop a focused case study on sales of music in Canada. 2. Has there been a Golden Age for investment? In this section we review recent analysis from the UK measuring trends in investment in copyright goods both before and during the process of content digitisation and the spread of the Internet. 3. Has there been a Golden Age for Employment? We then finally look at recent analysis by the US Commerce Department on employment in copyright intensive industries in the US both before and during the process of content digitisation and the spread of the Internet.
All the above evidence tends to refute the golden age view. It appears that the lower costs of copying due to the spread of digitisation and the Internet lowered the effective rate of copyright protection, or increased the ease of market bypass and piracy, and offset any positive effect that the spread of digitisation and the Internet may have had in lowering the costs of supply of legitimate production, and therefore increasing sales. At the same time copyright law was weakened by the introduction of immunities, or safe harbours and exceptions for internet intermediaries this in turn substantially weakened the ability of rights holders to enforce their rights in digital music distribution, leading to a rapid growth in market bypass involving both unauthorized, and “under-authorized” or “forced“ use at below sustainable market prices.
Keywords: Intellectual property, Copyright Law, economics
JEL Classification: K11, K29
Suggested Citation: Suggested Citation