Winners and Losers in Content

Any specific regulation or law normally produces winners and losers. Consider the impact of copyright law. You might instinctively assume that when copyright produces more revenue, the result is more content production.

Some might argue the relationship between revenue and creative output is not so simple. In other words, less copyright protection arguably can lead to more content production by at least some producers.

Broader copyright may thus entail a trade-off between two marginal effects: More original works from new authors along one margin, but fewer original works from the most popular existing authors along a second, argues Glynn S. Lunney, Jr. of the Tulane University School of Law.

If the second effect outweighs the first, then more revenue (produced by greater copyright protection) may lead to fewer original works. Conversely, less revenue (produced by less copyright protection) may lead to more original works, albeit by newer artists.

“While this may seem radically counterintuitive, it also happens to be true,” Lunney argues.  

Lunney studied the relationship between copyright protection, revenue, and creative output, by looking at file sharing and the parallel fall in music industry revenue.

Looking at songs in the top fifty of the Billboard Hot 100 from 1985 through 2013, Lunney found that the sharp decline in music industry revenue that paralleled the rise of file sharing was associated with fewer new artists entering the market, but also more hit songs, on average, by those new artists who did enter.

Moreover, because the second marginal effect was larger than the first, the decline in revenue since file sharing began was associated with a net increase in the number of new hit songs.

“Thus, for the music industry, the rise of file sharing and the parallel decline in revenue has meant the creation of more new music,” says Lunney.

Those findings will provide little comfort in some quarters. As with many other phenomena related to the Internet ecosystem, more usage does not translate directly into “more revenue” for some participants, even if it means more revenue is earned by other participants.

In other words, there are some winners and some losers.
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