The Music Value Gap and the Cross Subsidy to The Information and Communications Technology (ICT) Industry from The Recorded Music Industry in Canada

15 Pages Posted: 20 Mar 2019

See all articles by George Robert Barker

George Robert Barker

Australian National University; Wolson College, University of Oxford; Law and Economics Consulting Associates Ltd

Date Written: February 26, 2019

Abstract

This paper develops measures of both:

- The extent of the value gap in Canada’s recorded music industry, and
- The size of the cross subsidy from Canada’s recorded music industry to internet service providers (ISPs) and other actors in the Information and Communication Technology (ICT) industry.

These outcomes are both the result of decisions to adopt a weak copyright liability regime for the Internet in Canada that creates immunities from copyright liability for ISPs and ICT infrastructure firms.

On the value gap in Canada’s recorded music industry, previous work has measured the gap between actual Canadian recorded music revenues and what they would have been had they kept up with Canadian inflation and GDP growth:

• By 2017 the annual recorded music value gap was over Cd$1.6 billion.
• The cumulative total Canadian recorded music value gap since 1997, or total lost, or foregone revenues in Canada over the twenty-year period, is around $19.3 billion.
• The average annual increase in the music industry Value Gap from 1997 to 2017 in Canada was $82 million per annum and
• The value gap has continued to grow, despite growth in streaming music revenues driving a slight increase in nominal revenues. Growth Canadian music market is still less than the rate of inflation and real GDP growth rate in the rest of the economy.

On the cross subsidy from Canada’s recorded music industry to Internet service providers (ISPs) and other actors in the Information and Communication Technology (ICT) industry this paper shows:

- The cross subsidy from the recorded music industry in Canada to online Ad networks’ advertising revenues was around CAD 82 million per annum in 2017. This is the estimated revenues of online Ad Networks derived from unauthorised music acquisition activity in 2017.

- The cross subsidy from the recorded music industry in Canada to internet infrastructure services firms is estimated to be as high as CAD 2.1 billion per annum in 2017. This is based on the total amount of internet services revenues that might be attibuted to unauthorised file sharing of copyright content.

Keywords: Intellectual Property, Copyright Law, Economics

JEL Classification: K11, K29

Suggested Citation

Barker, George Robert, The Music Value Gap and the Cross Subsidy to The Information and Communications Technology (ICT) Industry from The Recorded Music Industry in Canada (February 26, 2019). Available at SSRN: https://ssrn.com/abstract=3343546 or http://dx.doi.org/10.2139/ssrn.3343546

George Robert Barker (Contact Author)

Australian National University ( email )

Canberra, Australian Capital Territory 0200
Australia

Wolson College, University of Oxford ( email )

Linton Road
Oxford, OX2 6UD
United Kingdom

Law and Economics Consulting Associates Ltd ( email )

Level 9 Chifley Tower
2 Chifley Sq
Sydney, New South Wales 2000
Australia
+61405 394 193 (Phone)

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