Study Shows How Notice-And-Takedown Reduces Transaction Costs In Making Works Legally Available

from the so-of-course-the-entertainment-industry-wants-to-kill-it dept

We've written a few times in the past about research done by Paul Heald on copyright and its impact on the availability of certain content. He's recently published an interesting new study on how the DMCA's notice-and-takedown regime facilitates making content available by decreasing transaction costs among parties. As we've discussed at length, the entertainment industry's main focus in the next round of copyright reform is to wipe out the notice-and-takedown provisions of the DMCA. The legacy recording and movie industries want everyone else to act as copyright cops, and hate the idea that notice-and-takedown puts the initial burden on themselves as copyright holders.

However, Heald's research looks at music on YouTube and concludes that the notice-and-takedown system has actually enabled much greater authorized availability of music, by reducing transaction costs. The idea is pretty straightforward. Without a notice-and-takedown provision, someone who wants to post music to YouTube needs to go out and seek a license. Of course, getting permission from all the various rightsholders is frequently impossible. The transaction costs of getting permission make it such that it's way too high. Yet, with notice-and-takedown, the person can upload the content without permission, and then the copyright holder is given the option of what to do with it. On YouTube, that includes the option of monetizing it, thus "authorizing" the use. That creates a natural experiment for Heald to explore, in which he can see how much content is "authorized" thanks to such a setup. And the result, not surprisingly, is that this system has enabled much greater authorized (and monetized) access to music than an alternative, high transaction cost system, under which uploaders must first seek out permission to upload everything.

In fact, the analysis shows a tremendous number of popular music hits from the US from 1930 to 1960 are available in what's likely an authorized (i.e., monetized) fashion, even thought nearly all of it was almost certainly uploaded by those without permission. Under the system that the RIAA and MPAA would like, this would be next to impossible. Instead, they'd want to negotiate deals first, making it nearly impossible for such works to be available, and meaning that both the availability and monetization of those works wouldn't be happening. As Heald concludes:

Congress should resist calls to dismantle platforms like YouTube which take advantage of current limits on secondary liability to create a marketplace that radically reduces the high cost of negotiating over rights to music and visual content. The access YouTube provides to valuable cultural products is far from perfect, but it provides a partial solution to the problem of disappearing works, at least in the music context. In any event, no new legislative initiative should proceed in the absence of concrete data testing the claim of copyright owners that their proposals make works more, rather than less, available to the public.

Filed Under: content id, copyright, dmca, efficiency, markets, notice and takedown, paul heald, transaction costs