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New Study Affirms Fewer Copyright Restrictions Benefit the Economy, Amid Renewed Calls for SOPA 2.0

September 21, 2012

A new study from Australia presents the latest evidence that loosening copyright restrictions not only enables free speech, but can improve an economy as well. The study, published by the Australian Digital Alliance, indicated that if Australia expanded copyright exceptions like fair use, along with strengthening safe harbor provisions, the country could potentially add an extra $600 million to their economy.

In addition, the report details how vital copyright exceptions are to the Australian economy as a whole. As ADA’s executive officer and copyright advisor Ellen Broad told EFF, "Australia's sectors relying on copyright exceptions currently contribute 14% of our GDP, around $182 billion and they're growing rapidly. It's essential that Australia's copyright policy framework adequately support innovation and growth of these sectors in the digital environment.”

Given how much Australia’s burdensome and confusing copyright law has held up innovation, EFF is encouraged by the fact that copyright reform is being considered and debated in the public sphere.

But more broadly, this is just the latest evidence disproving a major talking point used by the MPAA and RIAA anytime copyright laws come up for a vote: that tough copyright laws are good for the economy. During the SOPA debate, organizations such as the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA) claimed over and over again that the restrictive law are needed to save and create jobs. Yet the Australian study confirms similar research done by CIAA in the US, showing how important fair use exceptions are to the economy. In fact, fair use accounted “for more than $4.5 trillion in annual revenue” in the US and exceeding the economic benefits of copyright laws themselves. 

Unfortunately, this new evidence probably won’t stop the MPAA and RIAA from continuing to peddle misinformation about the economics of copyright law in Australia, the US, or elsewhere. Currently, the MPAA is distributing materials to members of the US Congress—perhaps in another attempt to gin up support for SOPA 2.0—extolling how important new, restrictive laws will allegedly to help them create jobs.

But these new talking points are short on statistics—perhaps for a reason. MPAA and RIAA have used drastically exaggerated numbers and discredited studies for years to claim that laws like SOPA and PIPA—or agreements like the Trans-Pacific Partnership—are vital for the economy. In reality, SOPA would’ve cost many more jobs than it saved, given it would have weakened or eliminated the Digital Millennium Copyright Act (DMCA) safe harbors that have allowed Internet companies like Google and Facebook to thrive for the last decade. That’s why when a survey was taken of venture capitalists, they “overwhelmingly” indicated they would stop investing in tech companies—the one of the economy’s fastest growing sectors—if SOPA were to pass.

Since the economic numbers don’t add up, advocates for draconian copyright laws have resorted to other misleading arguments. For example, this week, a Fox News editorial erroneously argued that intellectual property protection is a “forgotten” constitutional right and “it is the obligation” of Congress to pass laws like SOPA to protect rightsholders. Of course, the problem with SOPA was that it was written so broadly it would’ve ended up censoring millions of Americans who never even thought about copyright, but that’s beside the point. The US Constitution does mention intellectual property but not in the context of an individual right or mandate to Congress. Specifically, it says: 

Congress shall have power . . . To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.

A plain reading of the clause indicates Congress has the authority to use copyright law to promote creativity—if they so choose. There’s no mandate for Congress to pass any copyright law that comes their way, and there’s no clause guaranteeing the rights of movie studios and record labels to maximize their profits. Meanwhile, creativity—far from being stifled without more copyright laws on the books—is currently thriving. There’s been a market increase in the amount of movies, music, and books produced over the last decade, as this comprehensive study done by CCIA and Techdirt’s Mike Masnick shows

So while huge legacy corporations may find it harder to keep a grip on their market share, it’s not because people have stopped creating and selling art. It’s quite the opposite: they’re creating more by incorporating fair use, cutting out the middlemen, and bringing their art directly to their fans through the Internet.

Unfortunately, all too often copyright maximalists, like the author in the Fox News editorials, put forth the idea that “lawlessness” prevails on the Internet, even though in the US and abroad there are many copyright laws already on the books. In the US alone, Congress has passed fifteen separate laws in the last thirty years alone strengthening the powers of rightsholders.

Most notably, the US DMCA gives power to copyright holders to force websites to take down any of their protected material. In fact, the DMCA gives disproportionate power to the rightsholders, often leading to abuse, and in turn, censoring material that is clearly protected free speech. As Techdirt noted, in Australia, their outdated and burdensome copyright system “is ill-equipped to cope with key Internet activities like search and indexing, caching and hosting, since they all involve incidental copying.”

Both countries would be better served by evidence-based policy that promoted the intended balance of copyright. After decades of unbalanced legislation, the evidence is clear, and points to relaxing copyright restrictions, not strengthening them.

For more on the debate over the economics of copyright see here and here.

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