Monday, June 20, 2011

No Copyright - No music? (article excerpt)


To what extent does copyright law encourage the production of music? On the one hand, the Internet features a vast amount of new music, while on the other hand copyright law is practically weakened by piracy. This is a paradoxical situation. Following the rationale of copyrights, a mitigation of the law (due to problems of enforceability) should lead to a decrease in musical output due to lack of incentives and vice versa. This paper analyzes the motivational incentive of copyrights to artists and labels to produce and publish music.


A sagging copyright (due to piracy) should lead to a decreasing number in music recordings. However, in light of the flourishing supply of new music on the Internet, something in this equation appears to be wrong.

Firstly, artists appear not to be influenced significantly by copyrights. The majority of artists would not adjust their musical productivity to copyright alterations. In addition, there is evidence of a cost-of-creation effect shown by a contrary reaction of some artists to copyright modifications—meaning, the weaker copyrights are, the more music some artists would produce.

Secondly, even though the overall number of record labels which would react in line with copyright modifications is relatively small, they seem to be more sensitive to copyright alterations than artists. While around 7% of the artists indicated to adapt their output in line with copyright modifications, around 17% of the labels would react in such way. In addition, similar to the case of artists, there is evidence of a cost-of-creation effect in the case of the labels as well.

Thirdly, these results experience support by the analysis of the artist’s and record label’s opinions toward copyright infringements. While around 80% of the artists do not support severe penalties for copyright infringements, only 50% of the record labels indicated such behavior.

These findings are consistent with previous research which found only little evidence for the incentive effects of copyrights to produce art. The overall results show that even without a copyright there will be plenty of artists and a hand full of record labels which produce and market music. However, this present study emphasizes that there is a significant gap between the artist’s and label’s opinion toward copyrights. It appears that a strong copyright fosters the industry side of the value-creation chain in the music industry more than the creation side represented by the artists. Following this logic, it seems understandable that parallel to the multiple extensions of international copyright laws a strong and professionalized-shaped music industry has evolved.

On the contrary, a weak copyright should lead to a trend to amateurism. Exactly this is what can be observed over the last approximately ten years. The mitigation of copyright law in the wake of piracy (in particular its enforcement) led to a, in the words of Schumpeter, “creative destruction.” According to the results of this study, artists continue to produce music even without significant copyright earnings. We see an increase of self-marketing artist-entrepreneurs and a decrease in revenues in the professional industry. Due to the fact that these days artists can enter the market and distribute their work over the Internet easily and single-handedly, a different business environment in market for music recordings arises. We see a shift from professionalism to amateurism, from maximizing profits to maximizing creative expression, from full-time label-signed artists to part-time self-marketing artists-entrepreneurs. Accordingly, the initially stated paradoxical situation about a weak copyright but a flourishing music supply is explainable.

Nevertheless this should not be understood as a recommendation to weaken or abolish copyrights in the music industry. This paper just shows that the regulating mechanism of copyrights has different effects on different market participants. In the controversial debate about the bargaining function of copyrights, this information is crucial to evaluate each side—access to culture versus incentives to produce creative goods. Furthermore an interesting issue arises in the question whether an environment of amateurs and semi-professionals will produce music of inferior quality than a professionalized industry. Future research will assist in completing this picture.

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