The New York Times (5/31/16) presents musicians like Pharrell Williams as the face of calls for strengthened copyright protections–though only a small percentage of the costs of such protection will end up in musicians’ pockets. (photo: Christopher Polk/Getty)
All New York Times readers know that protectionism is stupid and self-defeating. It hurts everyone involved. So where were all the economic experts to give the usual lines on protectionism in response to efforts to change the Digital Millennium Copyright Act?
The Times reported on these efforts without ever once mentioning the economic costs that would be implied by making listeners pay more money for music and the cost that intermediaries like YouTube would have to incur to comply with stronger copyright protection. The failure to mention these costs is remarkable, given how much space the Times and other media outlets have devoted to denouncing proposals from Donald Trump to impose higher tariffs and plans by Bernie Sanders to chart a different course for trade policy.
Economics works the same, regardless of whether the item in question is a car, a ton of steel or a song. Barriers that raise the price impose costs on consumers and the economy. The biggest difference is that in proportionate terms, the barriers involved with copyright protection are likely to be far larger than any trade barriers that Trump or anyone else might impose on imported manufactured goods. While the latter are unlikely to exceed 50 percent of the sale price, and would almost certainly be far less, copyright protection can make music that would otherwise be available for free very costly.
To get an idea of how costly such protections can be, New Zealand’s government estimated that increasing the length of copyright protection from 50 to 75 years, as required by the Trans-Pacific Partnership, would cost it 0.24 percent of annual GDP, the equivalent of $4.3 billion in the US economy in 2016. It would have been helpful to include some estimates of the costs associated with the stronger protections being discussed in this piece.
It is also worth noting that only a very small portion of the costs associated with this protection is likely to end up in the pockets of the performers. Much of it is simply deadweight loss—the lost benefit that consumers would have had from being able to listen to music at its marginal cost, which they will forego now that it is selling at its higher, protected price. A large portion will go to costs associated with enforcement, including new locks that would be put in place. And much would go to intermediaries in the process, including the lawyers and lobbyists working on changing the law.
It is likely that performers will get less than 10 cents for every dollar of lost benefits to consumers, and their take may well end up being less than one cent per dollar. Unfortunately, the New York Times never mentioned these losses at all, ignoring the well-known benefits of free trade.
Yes, musicians and singers need to be paid for their work, but there are more modern and efficient mechanisms for this task.
Economist Dean Baker is co-director of the Center for Economic and Policy Research in Washington, DC. A version of this post originally appeared on CEPR’s blog Beat the Press (4/30/15).
You can send a message to the New York Times at letters@nytimes.com (Twitter:@NYTimes). Please remember that respectful communication is the most effective.
And how, Dean Baker, is a voucher system going to protect the rights of a musical composer, who at present is at least is legally entitled to be recompensed for sales of copies of their music and recompensed for a share of the gross made by musicians who perform their music?
Copyright laws on music are useless today, you can get everything on internet. Yet composer and musician manage to live well with live representation.
Internet give your music for free but also give you a gigantic network for advertisement and marketing, everyone can ear you. Look at the film industry, it is as easy to get free movies at home yet the box office is doing very well.
Sidney, that’s a pretty sweeping statement, (‘composer and musician manage to live well’), and in all too many cases, untrue. The world has a host of talented musicians who work day jobs so that they can pursue music in their spare time, many of them of much higher quality than those who become successful in the “music industry”. Most of the composers I have known either make their living doing something else than music, or they teach in a university, which is a great environment for killing talent. Capitalism is probably the worst way to organize economic institutions to promote excellence in music. [See, I can make sweeping statements of my own, too. But give me an advance to write a book about it, and I could make a good case.]
“musicians *and* singers”. Ooh, snap!
I guess Dean’s an instrumentalist!
Dear FAIR;
In regard to economist Dean Baker’s astonishing post in response to the NYT/Ben Sisario piece on music licensing – where to even begin?
Mr. Baker is worried that YouTube, valued at about $70 billion, might be forced to pay more money to music creators. Oh, the horror.
The intellectual property industry in the United States is incredibly valuable to our economy. Nearly 40 million American jobs are directly or indirectly attributable to “IP-intensive” industries. These industries drive approximately 60 percent of U.S. merchandise exports. (https://ustr.gov/trade-agreements/free-trade-agreements/trans-pacific-partnership/tpp-chapter-chapter-negotiating-9) YouTube would not exist without intellectual property, yet they, like every other user of music in the history of the world, thinks IP should be free.
Why are so many people obsessed with the desire to “make music free?” I don’t hear anyone, including economists, clamoring to make cars, or air travel, or refrigerators free. And where does lowering the cost of music to consumers and corporations rank compared to the problems of homelessness, hunger, deteriorating infrastructure, clean water and air, etc.?
Mr. Baker states that “Economics works the same, regardless of whether the item in question is a car, a ton of steel or a song.”
No, sir, it does not.
Mr. Baker apparently fails to grasp the essential difference between intellectual and tangible property. Cars and steel, unlike music, cannot be used by others 24/7, around the world, without the knowledge or permission of the owner. This is why PRO’s (Performing Rights Organizations, such as ASCAP, BMI and SESAC, and dozens of others worldwide) were created.
The idea that musicians need to work for free in exchange for “exposure” needs to be put to death. Try asking a plumber, caterer, or mechanic to work for free in exchange for “exposure.”
Baker states “Yes, musicians and singers need to be paid for their work, but there are more modern and efficient mechanisms for this task.” That’s mighty generous of Mr. Baker, but I can’t help notice he doesn’t mention composers and songwriters.
His answer is The Artistic Freedom Voucher, a document he himself created in 2003. It would be better titled The Devalued Artist Voucher. The “freedom” component applies only to the end users and the IP exploiters.
“The AFV would allow each individual to contribute a refundable tax credit of approximately $100 to a creative worker of their choice. The AFV would create a vast amount of un-copyrighted material. A $100 per adult voucher would be sufficient to pay 500,000 writers, musicians, singers, actors, or other creative workers $40,000 a year.”
In other words, we should all rely on tips from strangers. Like strippers.
Baker states “All of the material produced by these workers would be placed in the public domain where it could be freely reproduced.” There is already more than enough public domain music to last a thousand years. And what would the quality level of this new work created by these “workers” be? And how would these “workers” survive on $40k per year? And never mind that Mr. Baker has conflated actors and musicians, who typically earn union-negotiated residual payments for their work, with composers and song writers, who earn royalties based on licenses negotiated with music users by the PROs.
Mr. Baker is also under the impression that creators of music earn most of their money from performing at live concerts. This is true for a few. But ASCAP has 575,000 members, BMI has 700,000 and SESAC has 30,000. I doubt that you will find most of these people on world concert tours of massive stadiums this summer. And how about the dozens of foreign performing rights societies, representing many thousands of additional songwriters and composers, with which we have reciprocal arrangements?
Mr. Baker states “Creative workers are entitled to be compensated once for their work, not twice.” Really? So the composer of a Broadway show that runs for a year, or the composer of a score for a film that generates a billion dollars, or the pop artist who sells a million copies of a hit song, digital or otherwise, should receive zero dollars in royalties after the payment of their creative fee? And the incentive to create again is what, exactly? But Mr. Baker would allow us to put on live concerts, so that’s something, I suppose. And we could sell T-shirts.
Mr. Baker claims his Artistic Freedom Voucher is both “modern and efficient.” If he wants to claim his idea, which dates from 2003, is “modern,” so be it. But “efficient,” it is not.
Nearly 40 million American jobs are directly or indirectly attributable to “IP-intensive” industries. These industries drive approximately 60 percent of U.S. merchandise exports. (https://ustr.gov/trade-agreements/free-trade-agreements/trans-pacific-partnership/tpp-chapter-chapter-negotiating-9) Mr. Baker’s scheme, if approved, and if it works, would cover 500,000 people, who may or may have talent and would subsidize the creation of worthless property, and therefore impossible to export, at a cost to the taxpayers of $20 billion. Billion with a “B.”
The GOP members of congress have tried to zero out the NEA budget for decades. These same GOP members decry the influence of government in private business affairs and abhor the creation of new bureaucracies. And above all, they condemn the seizing of private property. Why does Mr. Baker believe that congress will embrace a new $20 billion line item for creative artists in any budget, ever?
A better way to support artists, if this is truly Mr. Baker’s goal, would be to double the current NEA budget to $300 million. The annual cost per person would rise from about 47 cents per person to about 94 cents per person and would benefit large numbers of artists, audience members, and affiliated and supporting businesses. And, compared to Mr. Baker’s plan, this would save the taxpayers $19.7 billion.
Thank you, Mr. Babcock, for you extensive and well-thought-out reply. You have brought some well needed sanity into this discussion.