Economics of Copyright and Digitisation

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Report: The Economics of Copyright and Digitisation: A Report on the Literature and the Need for Further Research. UK's Strategic Advisory Board for Intellectual Property Policy (SABIP), 2010



Here are some of the key points from the summary:

"A first essential insight of the economics of copyright is that copyright relates to a trade-off. On the one hand, standard economic theory predicts that in a free market, fewer creative works would be supplied than would be socially desirable. A copyright system may mitigate this problem. On the other hand, economic analysis implies that, like any statutory intervention, copyright entails costs in addition to its intended benefits. An important aspect of these costs is that copyright restricts the use of protected works, including use for follow-up creations.

The short-run and long-run effects of copyright may differ substantially. In the short run, copyright benefits rights holders at the expense of users. In the long run, the benefits associated with any additional supply due to copyright protection may more than offset the access costs of users so that copyright may offer a net welfare improvement for all stakeholders (i.e. a Pareto improvement).

This long-run perspective provides no comprehensive, general case for copyright, however. Because users include follow-up creators, copyright is not unequivocally beneficial to creators and excessive copyright protection could even diminish the supply of copyright works. Even if one were to disregard consumer interests – for example in some natural rights perspectives – an efficient copyright system still has to strike a balance between divergent interests." (


By Glyn Moody at