History of Copyright Copyright and Its Consequences Some Economic Problems

The Long History of Copyright and Its Consequences
Comparison between a System with and without Copyright
Eckhard Höffner Pictures: Wikipedia, Geschichte und Wesen des Urheberrechts

London, British Academy, 27th October 2010

Comparison between a System with and without Copyright

The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

Table of Contents

1

History of Copyright

2

Copyright and Its Consequences

3

Some Economic Problems

Comparison between a System with and without Copyright

The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

Great Britain was the leading economic power

Comparison between a System with and without Copyright

The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

Population
Great Britain (wealthy country) 1770 – 8.4 millions 1800 – 12 millions (50 % living in towns) 1830 – 22 millions (incl. Ireland) Germany (poor country) 1770 – 21 millions 1800 – 24 millions (20 % living in towns) 1830 – 30 millions Ability to buy and read books. Despite a larger population it is not obvious, that in Germany more people (in numbers) could afford books than in Great Britain.
Comparison between a System with and without Copyright The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

Population
Great Britain (wealthy country) 1770 – 8.4 millions 1800 – 12 millions (50 % living in towns) 1830 – 22 millions (incl. Ireland) Germany (poor country) 1770 – 21 millions 1800 – 24 millions (20 % living in towns) 1830 – 30 millions Ability to buy and read books. Despite a larger population it is not obvious, that in Germany more people (in numbers) could afford books than in Great Britain.
Comparison between a System with and without Copyright The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

Population
Great Britain (wealthy country) 1770 – 8.4 millions 1800 – 12 millions (50 % living in towns) 1830 – 22 millions (incl. Ireland) Germany (poor country) 1770 – 21 millions 1800 – 24 millions (20 % living in towns) 1830 – 30 millions Ability to buy and read books. Despite a larger population it is not obvious, that in Germany more people (in numbers) could afford books than in Great Britain.
Comparison between a System with and without Copyright The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

Great Britain 1710 – Statute of Anne: 14/28 years copyright from the time of the first publication. 1801 – The effect of Statute of Anne was extended to Ireland. 1814 – Prolongation of copyright duration to 28 years or lifetime of the author. Germany The Holy Roman Empire of the German Nation was divided in over 300 states (having legislative power). 1805 – Napoleonic Wars. 1815 – German Confederation consisting of 35 states, 4 towns. No wars for half a century. Pirate publishing was virtually allowed until about 1835/40.
Comparison between a System with and without Copyright The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

Great Britain 1710 – Statute of Anne: 14/28 years copyright from the time of the first publication. 1801 – The effect of Statute of Anne was extended to Ireland. 1814 – Prolongation of copyright duration to 28 years or lifetime of the author. Germany The Holy Roman Empire of the German Nation was divided in over 300 states (having legislative power). 1805 – Napoleonic Wars. 1815 – German Confederation consisting of 35 states, 4 towns. No wars for half a century. Pirate publishing was virtually allowed until about 1835/40.
Comparison between a System with and without Copyright The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

English Short Title Catalogue (ESTC)

Comparison between a System with and without Copyright

The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

Ficton in the ESTC (UK)

Comparison between a System with and without Copyright

The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

What can we learn from the ESTC
The ESTC is a database holding every surviving copy of letterpress produced in Great Britain or any of its dependencies in any language, worldwide, from 1473-1800. Not only books are included, but also form sheets, invitations to events of any kind, or advertisments. The ESTC comprises e.g. 619 prints of Mr. James Christie. He was not an active author, but the founder of the auction house Christie’s. The printing press was used more and more, however, the number of newly written and published books did not increase. One of the goals of the Copyright Law (»Statute of Anne«) was the »Encouragement of Learned Men to Compose and Write useful Books«. This target was missed.

Comparison between a System with and without Copyright

The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

New books published per year
Zahl 13000 12000 11000 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000
90 70 80 00

Copyright in Germany

Germany

Great Britain
20 30 10 40 50 60 18 70 18

17

17

17

18

18

18

Comparison between a System with and without Copyright

The Long History of Copyright and Its Consequences

18

18

18

History of Copyright Copyright and Its Consequences Some Economic Problems

Significant dates
Copyright Law shows no positive impact

1642: Civil War 1648: Second Civil War 1688/89: Glorious Revolution 1695: Lapse of Guild Monopoly – no significant effect (periodicals are not included in the ESTC) 1710: Statute of Queen Anne – no significant effect 1774: Donaldson v. Beckett – maybe a small effect 1814: Prolongation of copyright duration, end of the war with France – no significant effect

Comparison between a System with and without Copyright

The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

High prices with Copyright
The monopolists, by keeping the market constantly understocked, by never fully supplying the effectual demand, sell their commodities much above the natural price, and raise their emoluments, whether they consist in wages or profit, greatly above their natural rate. The price of monopoly is upon every occasion the highest which can be got. The natural price, or the price of free competition, on the contrary, is the lowest which can be taken, not upon every occasion, indeed, but for any considerable time together. The one is upon every occasion the highest which can be squeezed out of the buyers, or which, it is supposed, they will consent to give: the other is the lowest which the sellers can commonly afford to take, and at the same time continue their business. (Adam Smith, 1776)
Comparison between a System with and without Copyright The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

The Reason for the poor development
Like all other monopolies, it will unavoidably raise the price of good books beyond the reach of ordinary readers. They will be sold like so many valuable pictures. The sale will be confined to a few learned men who have money to spare, and to a few rich men who buy out of vanity as they buy a diamond or a fine coat. [. . .] The commerce of books would of course be at an end; for even with respect to men of taste, their number is so small, as of themselves not to afford encouragement for the most frugal edition. Thus booksellers, by grasping too much, would lose their trade altogether; and men of genius would be quite discouraged from writing, as no price can be afforded for an unfashionable commodity. (Lord Kames, 1773)
Comparison between a System with and without Copyright The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

High prices
Keeping the market constantly understocked . . . Higher prices result in fewer buyers and fewer readers. Books were bought by the upper class and libraries. The classical canon (known since the humanism) and novels were published. Luxury properties: »those who would be disposed to purchase books, have not the means of so doing, and are obliged to be frugal« – George Woodfall (1818). Reading skills require practice. Development of literacy was hampered. The benefits of the books as vehicles of knowledge, as a means of education, was not recognized in many social circles.
Comparison between a System with and without Copyright The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

Ordinary readers do not read average books
. . . beyond the reach of ordinary readers . . . Ordinary reader means: average income, but not average taste and average interests. Every profession has a particular set of training and knowledge, that must be renewed regularly. Special literature was missing: best practice books, know how for small business, educational books for the masses and so on. People start writing, because they read. A writer becomes an author, because he is read by the consumers. No lively scientific disputes in written form. Books are a memory of the results of intellectual work. If one cannot use the results, people were forced to start from the basics again and again . . .
Comparison between a System with and without Copyright The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

Pin Makers

Adam Smith’s example of the pin makers: If the pin makers had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day. On the other hand, with education and division of work it was possible to produce four thousand eight hundred pins in a day.

Comparison between a System with and without Copyright

The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

The Costumers

It is of importance that we do not look only at the increase in productivity, but also on the other side, the costumer or the price, a costumer has to pay. If someone produces twenty pins in a day, he might receive twenty pounds on the market. However, if it is possible to produce 4800 pins in a day, there is no need to pay him 4800 pounds a day. If there is no monopoly, the competition reduces the payment for the pins and the increase of productivity will benefit the society. The competition forces the pin maker to pass over most of the advantages to the costumers. On the other hand, the pin makers still receive the natural price for their work.

Comparison between a System with and without Copyright

The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

Copyright fulfilled any of the objectives

The market was understocked. The development of the society has been hampered. The average payment for authors was below the average for educated men (paid like beggars). Some raised their profits, whether they consist in wages (authors) or profit (publishers), greatly above the average. Complete absence of the pin makers ideal.

Comparison between a System with and without Copyright

The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

Germany
Keeping the market constantly understocked . . . It was impossible to keep the market understocked. Publishers were forced to sell books to everyone, who paid a price above the production costs. An efficient book industry (authors, production, and distributon) was established with increasing author fees, a variety of novelties, efficient sales and low priced current books. Comparision to the internet: Because the internet is cheap,
one can find so much information; millions of people earn their living with the net; it is a seismograph for the interests of the masses.

Comparison between a System with and without Copyright

The Long History of Copyright and Its Consequences

History of Copyright Copyright and Its Consequences Some Economic Problems

Economic Problems
Economics deal with money, distribution of income . . . In the long term, copyright (as we have it now) does not help the authors or readers. It is a distribution rule resulting in high incomes of the leading publishers and some best selling artists or writers. It harms the average intellectual producer and the consumers. What is the »natural price« of a book or the performance of an author? Economists don’t like Adam Smith’s term natural price, because it includes also a fair value idea. When we talk about a fair system, this question must be answered. Today, authors are not the real reason for copyright, since most have to be modest in financial terms. They are satisfied with an apple and an egg (peanuts) and often lucky if they do not have to pay for the publication.
Comparison between a System with and without Copyright The Long History of Copyright and Its Consequences