The real cost of copyright term extension in New Zealand

Article  \  9 Mar 2016

How many new books, first published between 1905 and 1925, did you buy last year Chances are, not many.

What about the number of films, TV shows, or sound recordings, first released between 1945 and 1965 that you bought or paid to see?

If your answer to both these questions was none, then the copyright term extension from 50 to 70 years under the Trans-Pacific Partnership Agreement (TPPA) would have cost you nothing. Unless you buy new publications of old stuff, it won’t affect you at all.

Government analysis has put the expected long-term cost of extending New Zealand’s copyright term by 20 years, at $55 million per year.[1]

Frankly, we struggle to see how the copyright term extension will cost New Zealand this much. The additional 20 years does not affect new productions, rather on average, it will add a few dollars (or probably cents) to each book, recording, film, TV show, or other artistic work that was first published 50 or 90 years ago (depending on the type of work).

And remember, the additional cost would only be on newly-purchased items. Second-hand sales don’t have royalties.

In 2009, the Ministry of Economic Development commissioned Concept Economics to undertake a study to determine the projected cost of a 20 year extension of the copyright term. The study modelled the economic costs and benefits to books separately from recorded music. It took into account sales, exports, imports and royalties based on estimated future sales. Films and television copyright were not modelled, but assumed to be the same as for recorded music.

In relation to books, for example, the extension is from ‘the life of the author plus 50 years’ to ‘the life of the author plus 70 years’.

We have reviewed the summary of this study, released by the Government for public consumption. The summary does not include the calculations Concept Economics undertook to arrive at the final $55 million, and there is not enough information included for any analysis of the methodology or numbers to be undertaken.

The study does explain that Concept Economics used a number of assumptions to arrive at a workable data set. In relation to books, these were:

  1. the average life expectancy of authors over the last 90 years is 70 years
  2. the average age of an author when they create a new work is 30 years.

Together, these first two assumptions imply that the effective copyright term under the current regime would be 90 years (ie, 70-30+50) whereas under term extension it would be 110 years (ie, 70-30+70).

They assume 15% of sales each year relate to works published a year or more before they were sold.

The third assumption made was that ‘the vintage pattern of the population of books is identical to the vintage pattern of the National Library of New Zealand (NZNL) book stock, and this vintage pattern is constant through time.’

Assumptions one and two provide a reasonable timeframe for assessing the period of interest. Assumption three, however, seems arbitrary—the question is not whether a book is in the library, but how many books sold each year were written between 90 and 110 years ago. While the NZNL stores copies of each book published in New Zealand, this does not necessarily equate to the likelihood any given book will be in demand 90 years after it is first published.

Put another way, it is irrelevant how many books were published between 1905 and 1925. What is relevant is how many copies of books published in those years were sold in New Zealand in 2015. For example, F. Scott Fitzgerald’s The Great Gatsby was published in 1925, as was Elinor Wylie’s The Venetian Glass Nephew. The copyright revenue from The Venetian Glass Nephew is unlikely to have been the same as that from The Great Gatsby. And neither would have been significant.

The next thing to keep in mind, of course, is that we’re not talking about the whole price of those books or films, only the part of the price due to a copyright royalty. In fact 50-year-old books (still in copyright, but in low demand) tend to cost almost the same as say, a Charles Dickens novel (where copyright has expired).

From their assumptions, Concept Economics calculated book sales to GDP, proportion of sales being imports versus exports, royalties as a proportion of sales price, and projection of total book sales.

Determining the veracity of these subsequent calculations requires more information than is provided in their paper released by the government, but even assuming it is all correct, it remains difficult to see how the term extension could cost New Zealand $55 million per year.

We have looked to similar studies done in Australia and the United Kingdom when those jurisdictions introduced the longer copyright term. In both instances, the projected cost was significantly lower per head of population than the New Zealand government calculated.

We don’t have details of how those analyses were undertaken, but we would like to know how the expected cost to each New Zealander is three times that of Australia for the same length of copyright extension.

The moral of this story? Buy second hand, not new. It’s better for the planet and better for your wallet. But even if you don’t, the copyright term extension is unlikely to cost you very much at all.

[1] Economic Modelling on Estimated Effect of Copyright Term Extension on New Zealand Economy (Ministry of Foreign Affairs and Trade, November 2015).