Innovation Policy Post

A new study on the economic benefits of exceptions to copyright law released in Europe today by CCIA could help as policy makers around the world make decisions on how to balance copyright policy. The outcome of this study is particularly interesting for EU lawmakers, which are in the process of defining a complex innovation agenda until autumn 2010. This innovation agenda will be connected to an ambitious "Digital Agenda" and to a far-reaching policy agenda, called "Europe 2020".

EU Innovation Agenda
The EU is to convene a group of 'innovation commissioners'. The innovation agenda will support the digital agenda and the 2010 agenda.

At the center of the European debate on how to get the innovation agenda right, is the understanding that IPR protection is highly important and needs to be more Europeanized -- like in the area of patents.

But there is another side to the story, which is unfortunately nearly forgotten in Europe – the case for nations to have balanced copyright policies – not just crackdown on piracy.  Balance means rightsholders should have protections and a fair return on their investment. But it also means innovative industries should not be crushed in some over zealous attempt to enforce copyright in new ways.

This new EU copyright study by SEO Economic Research took a very conservative approach in the first attempt to quantify the economic contribution of Internet-related businesses, news organizations and others that benefit from conventional intellectual property rights, while also depending on the exceptions. The calculation is conservative in the sense that the total added value is very likely higher. But because of difficulties in finding fresh, reliable data from 2009 and because of the inability to obtain data from certain European countries at all, there is likely additional value not being calculated by SEO’s prudent approach.

EU Copyright Study Results
The study found the value added from industries dependent on copyright exceptions amounts to Euro 1.1 trillion, or 9.3 percent of the EU’s GDP. Nearly 9 million people are employed in industries relying on exceptions or limitations, amounting to 4 percent of all EU employees. These employees earned Euro 307 billion in wages and salaries.

The study also found that between 2003 and 2007 industries relying on exceptions and limitations grew 3 percent faster than the EU economy, using numbers taken from Akker, I., et al. (2010).

These findings largely correspond to the conclusions made in the study ‘Fair use in the US economy’ released in April that measured the economic value of industries relying on fair use in the United States.

According to this study, these exceptions are boosting economic growth with fair use-related industry value added amounting to 16.2 percent of the total current U.S. GDP. This stands in contrast with the EU where the exceptions-related industry contributions to GDP seem to be smaller. It is worthwhile to mention that the US study categorizes sectors that extensively depend on the Internet as ‘core industries’ highlighting that their economic activities depend in large measure on the concept of fair use.

I do hope that this study will make a difference in shaping the innovation agenda. Europe has a fantastic research and innovation basis and even more so potential. To narrow the potential in the area of IPR-related policies down to IPR protection alone, will miss a huge business potential,which will come from exceptions and limitations - this is even more true in the business ecosystem of the Internet.

Better Data Is Long Overdue
Many of those who depend on copyright exceptions also depend on copyright protections. Mart Kuhn, a law student at George Washington University who is interning at Public Knowledge, wrote in a July 6 post that what makes this situation more complex is the lack of solid, helpful data on either the real prevalence or the real effects of online copyright infringement.”

GAO recently debunked the numbers the entertainment industry had long touted on copyright piracy.

Then there is the evidence that peer-to-peer Internet traffic, which could include file sharing that could be infringement, is going down. At an Obama administration event this month to promote stricter copyright enforcement procedures, Keith Epstein of AT&T said that his company’s Internet traffic has doubled since 2007, but peer-to-peer traffic has decreased.

The CCIA EU study should help with the lack of hard data to date.

Erika Mann,
Executive Vice President CCIA