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The economic value of fair use in copyright law: counterfactual impact analysis of fair use policy on private copying technology and copyright markets in Singapore

  • Ghafele, Roya
  • Gibert, Benjamin

The counterfactual impact analysis of fair use amendments in Singapore undertaken here demonstrates that flexible fair use policy positively influences growth rates in private copying technology industries. In 2010, five years after the policy intervention, Singapore’s fair use amendments are correlated with a 3.33% increase in value-added (as % of GDP) for private copying technology industries. Prior to the amendment of fair use policies, private copying technology industries experienced - 1.97% average annual growth. After the changes were introduced, the same industries enjoyed a 10.18% average annual growth rate. This resulted in a total increase of € 2.27 billion in value-added for private copying technology industries in that period. The results show that, prior to fair use amendments, the private copying industries in Singapore were in recession. After fair use amendments, this group experienced a rapid increase in growth rates and continued to exhibit strong growth over the five year period. Crucially, the control group, a set of technology manufacturers/services, was not significantly affected by the fair use amendments in Singapore. The counterfactual impact of fair use policies on the control group, five years after the amendment, is shown to be correlated with a 0.01% increase in value-added (as % of GDP). Despite experiencing fluctuating growth rates, the control group exhibited steady, albeit small, recession relative to the entire economy both before and after the fair use amendments. Though the year-on-year growth rates of the control group fluctuated significantly, the period-averages were closer in magnitude than the other two groups (3.89% pre-amendment growth and -0.22% post-amendment growth). This suggests that the control group was not significantly affected by the fair use amendments. This is a positive finding that enables us to better isolate the impact of fair use on the two industrial groups of interest. The counterfactual impact analysis results in Singapore indicate that the growth of private copying technologies has had a negligible impact on copyright industry revenue. For 2010, fair use policy was correlated with a -0.23% reduction in value-added (as % of GDP) for copyright industries. The copyright group enjoyed an average growth rate of 14.16% before the amendments were introduced (a total increase of over € 274 million in value-added). This slowed to 6.68% for the period after the amendments were introduced and resulted in a total increase of over € 158 million in value-added. There was no significant change in growth rates for the copyright group before and after fair use amendments when measured in terms of real economic growth (value added as % of GDP). While growth certainly slowed down in absolute terms, the industry group nevertheless continued to grow after the intervention. Moreover, the magnitude of the change was minimal in comparison to the private copying group. The results indicate that the growth rate of copyright industries leveled out after the fair use policy intervention and consequently that the value-added (as % of GDP) of the copyright industry group remained relatively constant over the entire period. While copyright industry growth rates slowed to a limited extent, copyright markets did not experience a significant negative impact. Moreover, this impact was offset by substantially higher growth rates in private copying technology industries. We suggest fair use amendments in Singapore did not negatively affect the copyright industries significantly because private copying technologies, which experienced high growth as an industry group after the fair use amendments, increase the value of copyrighted works to consumers. While one might expect a rise in private copying technology industries to result in a significant recession for the copyright industries, this has not been the case in Singapore since the introduction of more flexible fair use policy in 2005. The counterfactual impact analysis results for the Singapore case study show that fair use policy is correlated with higher growth rates in private copying technology industries while having a very limited impact on copyright industries.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 41664.

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Date of creation: 01 Oct 2012
Handle: RePEc:pra:mprapa:41664
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  1. Depoorter, Ben & Parisi, Francesco, 2002. "Fair use and copyright protection: a price theory explanation," International Review of Law and Economics, Elsevier, vol. 21(4), pages 453-473, May.
  2. Joshua Lerner, 2002. "Boom and bust in the venture capital industry and the impact on innovation," Economic Review, Federal Reserve Bank of Atlanta, issue Q4, pages 25-39.
  3. Besen, Stanley M & Kirby, Sheila Nataraj, 1989. "Private Copying, Appropriability, and Optimal Copying Royalties," Journal of Law and Economics, University of Chicago Press, vol. 32(2), pages 255-80, October.
  4. Besen, Stanley M., 1986. "Private copying, reproduction costs, and the supply of intellectual property," Information Economics and Policy, Elsevier, vol. 2(1), pages 5-22.
  5. Hal R. Varian, 2005. "Copying and Copyright," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 121-138, Spring.
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