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Copyright 4 Creativity (C4C) and Kennisland organised this debate to exchange views between stakeholders and policy-makers on how the Netherlands can take a lead in making copyright fit for the digital age, in light of the copyright debate on 5 November in the Second Chamber.

The presentations of the Copyright 4 Innovation debate on 8 September in The Hague are available below and on our YouTube channel. The participants list is available here [PDF].

Handke, C., Bodó, B., & Vallbé, J. J. (submitted). The Value Of Online Licenses For Recorded Music. Journal of Cultural Economics.

A fundamental question in cultural industries is how to cope with the widespread use of digital ICT for unauthorized copying. Over 15 years ago, the explosive growth of the file-sharing network Napster put the issue on the agenda of policy-makers and stakeholders. So far, neither private nor public copyright enforcement measures have resolved the issue.

This paper discusses whether a compensation system (CS) for recorded music – endowing private Internet subscribers with the right to download and use works in return for a fee – would be welfare increasing under current market conditions. It reports the results of a discrete choice experiment conducted with a representative sample of the Dutch population consisting of 4,986 participants. The Internet penetration rate in the Netherlands is 95%, one of the highest worldwide (Eurostat 2014). The Netherlands also entertain a system of levies on copying technology, so that basic elements of a CS should be familiar to many residence.

We find that applied only to recorded music, a mandatory CS could increase the welfare of rights holders and users in the Netherlands by over €600 million per year (over €35 per capita). This far exceeds the current sales value of recorded music of ca. €144 million. Even if a CS were to substitute all of the current sales of recorded music and provided no cost savings, it could simultaneously increase user welfare and rights holder revenues at a price that constitutes a reasonable surplus split. According to our results, this is achieved over a broad range of CS user fees, for example between ca. €1.74 and €9.25 for a CS that is mandatory for all households with Internet subscription.

Some market conditions in the Netherlands make this result particularly noteworthy. On the one hand, during data collection unauthorized private copying from unlawful sources was not outlawed in contrast to some other European countries. On the other hand, the digital market for recorded music in the Netherlands is relatively advanced. In 2012, the year preceding data collection, the digital market in the Netherlands already accounted for 31% of all revenues in the primary market for recorded music, in which authorized services make copies of recordings available to end-users (IFPI 2013). Given lower average retail prices for digital copies, the share of ‘digital’ in unit sales would be higher. Music subscription services and ad-supported online music services accounted for 54% of digital revenues. Residents of the Netherlands thus report substantial willingness to pay (WTP) for participation in a compensation system covering recorded music, in spite of (1) virtually no legal risk associated with private copying from unlawful sources at the time of data collection, and (2) availability and widespread use of authorized digital music services and in particular music subscriptions.

The paper is structured as follows: section 2 briefly discusses digitization in the copyright industries and the literature on CS. Section 3 describes the application and limitation of contingent valuation methods to value untraded goods and discrete choice experiments in particular, and provides information on the method and data used in this paper. Section 4 describes basic results and section 5 presents estimates the effect of several CS options on user welfare and rights holder revenues. Section 6 discusses a number of limitations and extensions to our assessment. Section 7 presents main conclusions.

 

 

 

The failure of the Fire Phone has been widely cited as the reason for Amazon’s disastrous quarter, but a darker cloud has settled over the world’s biggest online retailer. The core of Amazon’s business—its original reason for being: selling books and other media—has grown wobbly. The problem: many people no longer want to buy stuff. They’d rather rent.

Amazon is not alone. This long-predicted shift in consumer priorities–from ownership to access—also seems to be taking a bite out of Apple, another business that depends on convincing people to buy things. For companies built on the practice of purchasing media, it’s time to reexamine basic assumptions.

During the last quarter, Amazon’s North American sales of media—books, music, movies, games—grew five percent compared to the same time a year ago. This may sound respectable. But that figure turns out to be the lowest year-over-year growth in North American media sales in more than five years, says Colin Gillis, an analyst at Wall Street outfit BGC Financial.

“Given the dispute with book publisher Hachette, it is hard to not view that the very public dust up had a negative impact on media sales, both from the decision to stop selling certain book titles and a possible backlash against Amazon from readers,” Gillis says.

The problem: many people no longer want to buy stuff. They’d rather rent.

But according to Amazon, a leading culprit is something that at least sounds much more innocuous: textbooks. “As you look at our North American media growth rates, one thing that we are seeing is certainly a shift from a textbook standpoint from purchase to rental,” Amazon CFO Tom Szkutak told analysts on Thursday. More customers also are renting rather than buying digital media, Szkutak said.

The irony is that in both cases, these are problems Amazon created for itself. Textbook rentals have exploded in part because Amazon makes it so easy. Instead of a would-be renter and lender having to track each other down one-on-one, the owner of a used text book can simply put it up on Amazon. (It’s a model textbook publishers hate, because they only make money on new book sales, which is one reason textbook prices are going through the roof).

Similarly, Amazon has made streaming media so easy that the practical incentive to buy diminishes. Renting or buying digital video from Amazon, for example, never has to involve a download. You never really have to “have” it. It simply streams from Amazon’s cloud to apps, browsers, and over-the-top internet TV boxes. The setup would seem to work to Amazon’s favor because you’re still paying Amazon money—but not as much, perhaps, as you’d pay to own.

A Bite Out of Apple

At the same time as the stock market started hammering Amazon on Friday, a report surfaced that Apple was having its own problems with owning. The Wall Street Journal, citing anonymous sources, reported that digital music sales on iTunes had declined 13 percent to 14 percent since the start of the year. This worries the music industry, the Journal said, because Apple is the world’s biggest seller of music.

If fewer people are buying music from Apple, fewer people are probably buying music, period. The reason is obvious, and much as with Amazon, it’s a problem Apple is largely responsible for creating. The rise of streaming music apps wouldn’t be possible without powerful, portable, connected digital devices that have access to significant bandwidth for transferring data quickly. In other words, the iPhone is very much responsible for streaming becoming a viable, popular way to consume music. As the Journal notes, Apple acknowledged this trend with its purchase of Beats Music, a deal that included both its headphone and streaming music businesses.

In a recent New York Times Magazine piece, writer Dan Brooks lamented the loss of a certain kind of cultural identity deeply tied to the ownership of music: the record collection. The culprit: streaming music services that give everyone everywhere access to nearly every song ever recorded:

The bad news is that we have lost what was once a robust system for identifying kindred spirits. Now that we all share the same record collection, music snobs have no means to recognize one another. We cannot flip through a binder of CDs and see a new friend, a potential date. By making it perfectly easy to find new music, we’ve made it a little more difficult to find new people.

The irony, Brooks notes, is that streaming has brought once obscure music out of hiding: searching for tiny acts is as easy as searching for the biggest Top 40 stars. But it’s not only hipster obscurantism that streaming has upended. The most mainstream tech companies, the ones that have made access versus ownership easier than ever, are now experiencing their own losses because they’ve helped make accessing easier than owning. The only winners here seem to be consumers.

Well, except for one thing: If no one gets paid, nothing gets made.

via Apple and Amazon Have a Problem: People Don’t Want to Buy Stuff Anymore | WIRED.

5-Year Suspended Sentence For S. Africa’s First Online Pirate – Slashdot.

Comcast Wants to Monitor and Convert Pirating Subscribers | TorrentFreak.

Comcast Wants to Monitor and Convert Pirating Subscribers | TorrentFreak.

Sony and Disney begin streaming movies still in theaters in a bold move against piracy | The Verge.

Sony and Disney begin streaming movies still in theaters in a bold move against piracy | The Verge.

As a result, a steady stream of new movies is constantly nudging incumbents to make way at theatres. That makes the first week the biggest contributor to box-office collections. With the box office skewed thus, movies reach television as early as four weeks of hitting theatres. In other words, producers have obliterated the business model of their once formidable enemies.

via Bollywood no longer talks of piracy; but ignoring dangers of online can be costly – Page3 – The Economic Times.

Excellent study on the Dutch file-sharing scene.

highlights:
About one in five people who download from illegal sources had in the past year bought a CD or LP that they had previously downloaded from an illegal source. The same was found for DVDs, Blurays and for printed books. The opposite – downloading a book from an illegal source that had been previously purchased in print – is also very common. This shows that for a substantial group of
consumers printed books and e-books are complementary.

People who download from an illegal source are more frequently also consumers from legal sources, and they are more likely go to concerts and the cinema and to purchase derived products Respondents who had downloaded music, films, series, games and books from illegal sources in the past year were more likely to use legal channels as well. Only in the case of music purchased on CDs or LPs, however, no difference is observed between those who had on occasion downloaded from an illegal source in the past year and people who had never done so. The differences are particularly marked in the case of paid-for downloading and streaming from a legal source: respondents who have never downloaded from an illegal source are also little inclined to pay for online content. The survey also showed that people who had, on occasion, downloaded from an illegal source in the past year bought more music and film merchandise and went to concerts or the cinema more often.

The survey shows that roughly one third to half of the respondents would not be interested in the latest download from an illegal source if it would not be available for free. The rest have an average maximum willingness to pay that is close to the normal selling price. Similarly, about one third of all book readers are interested in and willing to pay to borrow e-books from a library or bookshop, there being a slight preference for libraries and for a flat rate per year rather than a price per title borrowed.

http://www.ivir.nl/publications/poort/Filesharing_2012.pdf’

Excellent study on the Dutch file-sharing scene.

highlights:
About one in five people who download from illegal sources had in the past year bought a CD or LP that they had previously downloaded from an illegal source. The same was found for DVDs, Blurays and for printed books. The opposite – downloading a book from an illegal source that had been previously purchased in print – is also very common. This shows that for a substantial group of
consumers printed books and e-books are complementary.

People who download from an illegal source are more frequently also consumers from legal sources, and they are more likely go to concerts and the cinema and to purchase derived products Respondents who had downloaded music, films, series, games and books from illegal sources in the past year were more likely to use legal channels as well. Only in the case of music purchased on CDs or LPs, however, no difference is observed between those who had on occasion downloaded from an illegal source in the past year and people who had never done so. The differences are particularly marked in the case of paid-for downloading and streaming from a legal source: respondents who have never downloaded from an illegal source are also little inclined to pay for online content. The survey also showed that people who had, on occasion, downloaded from an illegal source in the past year bought more music and film merchandise and went to concerts or the cinema more often.

The survey shows that roughly one third to half of the respondents would not be interested in the latest download from an illegal source if it would not be available for free. The rest have an average maximum willingness to pay that is close to the normal selling price. Similarly, about one third of all book readers are interested in and willing to pay to borrow e-books from a library or bookshop, there being a slight preference for libraries and for a flat rate per year rather than a price per title borrowed.

http://www.ivir.nl/publications/poort/Filesharing_2012.pdf’

“As for my incarceration. Was it worth it? NO.”“Nothing is worth losing your freedom, would I do it again … hmmm I don’t know. I learned so much from it. Without it I wouldn’t have learned HTML and PHP. Both of which I use on the website I made for the Robotics teams I used to Mentor. They probably won’t want a felon to Mentor the kids.”

via IMAGiNE BitTorrent Group Sysop Speaks Out as He Heads to Prison | TorrentFreak.

For another 10 years, Universal Pictures content will not be seen on Netflix.

Universal inked a deal with HBO on Monday that gives HBO exclusive rights to all Universal films for another decade. This is an extension of a previous exclusive agreement and means, essentially, that rival services like Starz and Netflix won’t be getting ahold of Universal’s movies anytime soon.

The extension is likely a reaction to Netflix’s agreement with Walt Disney pictures for exclusive access to Disney animated features and films until 2016. But HBO may not be able to compete on the same level as Netflix. HBO was called “the closest thing Netflix has to a direct competitor” by a Forbes contributor on Monday, but close to Netflix it is not.

via HBO Signs Deal With Universal, Continues To Make Life Difficult For Netflix, Consumers.For another 10 years, Universal Pictures content will not be seen on Netflix.

Universal inked a deal with HBO on Monday that gives HBO exclusive rights to all Universal films for another decade. This is an extension of a previous exclusive agreement and means, essentially, that rival services like Starz and Netflix won’t be getting ahold of Universal’s movies anytime soon.

The extension is likely a reaction to Netflix’s agreement with Walt Disney pictures for exclusive access to Disney animated features and films until 2016. But HBO may not be able to compete on the same level as Netflix. HBO was called “the closest thing Netflix has to a direct competitor” by a Forbes contributor on Monday, but close to Netflix it is not.

via HBO Signs Deal With Universal, Continues To Make Life Difficult For Netflix, Consumers.

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