Oct 182012
 

Authors Roya Ghafele and Benjamin Gibert

A new paper by Roya Ghafele and Benjamin Gibert provides empirical evidence that Singapore’s adoption of fair use into its copyright law had a positive effect on it economy.   The authors examine data from the private copying industries – defined as “those industries that manufacture and sell technologies and related electronic components, infrastructure and services, that enable consumers to record, store and transmit copyrighted materials for their own personal use” – before and after Singapore’s change in copyright law.  They find that “fair use policy is correlated with higher growth rates” relative to a control group of other industries. (Growth rates in these industries increased from -1.97% to +10.18% after the introduction of fair use.)

The authors also examined the data from the copyright industries – defined as “those industries whose primary source of revenue are the reproduction, distribution, publication and sale of copyright materials, including film, audio and text” – before and after the change.  They found a “very limited” decline in value-added, which was more than offset by the increase experienced by the private copying industries.

The full paper is here: http://works.bepress.com/roya_ghafele/12

Abstract

The counterfactual impact analysis of fair use amendments in Singapore undertaken here demonstrates that flexible fair use policy positively influences growth rates in private copying technology industries. In 2010, five years after the policy intervention, Singapore’s fair use amendments are correlated with a 3.33% increase in value-added (as % of GDP) for private copying technology industries. Prior to the amendment of fair use policies, private copying technology industries experienced – 1.97% average annual growth. After the changes were introduced, the same industries enjoyed a 10.18% average annual growth rate. This resulted in a total increase of € 2.27 billion in value-added for private copying technology industries in that period. The results show that, prior to fair use amendments, the private copying industries in Singapore were in recession. After fair use amendments, this group experienced a rapid increase in growth rates and continued to exhibit strong growth over the five year period.

Crucially, the control group, a set of technology manufacturers/services, was not significantly affected by the fair use amendments in Singapore. The counterfactual impact of fair use policies on the control group, five years after the amendment, is shown to be correlated with a 0.01% increase in value-added (as % of GDP). Despite experiencing fluctuating growth rates, the control group exhibited steady, albeit small, recession relative to the entire economy both before and after the fair use amendments. Though the year-on-year growth rates of the control group fluctuated significantly, the period-averages were closer in magnitude than the other two groups (3.89% pre-amendment growth and -0.22% post-amendment growth). This suggests that the control group was not significantly affected by the fair use amendments. This is a positive finding that enables us to better isolate the impact of fair use on the two industrial groups of interest.

The counterfactual impact analysis results in Singapore indicate that the growth of private copying technologies has had a negligible impact on copyright industry revenue. For 2010, fair use policy was correlated with a -0.23% reduction in value-added (as % of GDP) for copyright industries. The copyright group enjoyed an average growth rate of 14.16% before the amendments were introduced (a total increase of over € 274 million in value-added). This slowed to 6.68% for the period after the amendments were introduced and resulted in a total increase of over € 158 million in value-added. There was no significant change in growth rates for the copyright group before and after fair use amendments when measured in terms of real economic growth (value added as % of GDP). While growth certainly slowed down in absolute terms, the industry group nevertheless continued to grow after the intervention. Moreover, the magnitude of the change was minimal in comparison to the private copying group.

The results indicate that the growth rate of copyright industries leveled out after the fair use policy intervention and consequently that the value-added (as % of GDP) of the copyright industry group remained relatively constant over the entire period. While copyright industry growth rates slowed to a limited extent, copyright markets did not experience a significant negative impact. Moreover, this impact was offset by substantially higher growth rates in private copying technology industries. We suggest fair use amendments in Singapore did not negatively affect the copyright industries significantly because private copying technologies, which experienced high growth as an industry group after the fair use amendments, increase the value of copyrighted works to consumers. While one might expect a rise in private copying technology industries to result in a significant recession for the copyright industries, this has not been the case in Singapore since the introduction of more flexible fair use policy in 2005.

The counterfactual impact analysis results for the Singapore case study show that fair use policy is correlated with higher growth rates in private copying technology industries while having a very limited impact on copyright industries.

 

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