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Economists are frequently involved in quantitative research (ex ante and ex post) on policy changes and it should be possible to apply this competence to copyright reform. However, aspects of the EU Directive, such as technological protection measures and digital rights management, present severe challenges to empirical economic evaluation.
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... A number of commentators have argued that there is no economic justification for a further strengthening of copyrights, as there is only cursory evidence that stronger and longer copyright protection increases the provision of creative work. In addition, there is even less evidence available to assess possible welfare effects thereof (Towse, 2005). 2 f) Some industries are characterized by a specificity of technological development. ...
... While it is common knowledge that strong property rights for rival goods are conducive to economic growth, for non-rival goods such as ideas, the economic rationale is less clear. For non-rival goods, property rights involve the trade-off between incentives (appropriability) and monopoly distortions (Landes and Posner 1989, Romer 2002, Scotchmer 2004, Towse 2005. There is some controversy about the question whether intellectual property rights work primarily as incentive mechanism or whether they can also constitute barriers to entry and being counterproductive for innovation. ...
... In fact the evidence by Hui and Png (2002) suggests that the copyright reform seems to have "been a giveaway to owners of existing creative work, while having relatively little impact on new creative activity" (Hui and Png, 2002, p. 219). Towse (2005) provides a critical discussion of the extension of copyright protection for the creative industries and concludes that the unintended consequences of extending and strengthening copyright protection are not taken in consideration. One consequence is to increase the value of existing copyright assets which increases entry barriers into creative work, e.g. if creative work is cumulative or rights are held in monopolistic industries. ...
... The public will choose to abandon licensing negotiations or even ignore the issue of licensing and using the work (Ahluwalia et al., 2020). From the perspective of transaction cost economics, the issue of short video copyright infringement can essentially be seen as a market failure based on high transaction costs (Towse, 2005). ...
In recent years, copyright governance for short videos has become a hot issue of common concern in the academic community and the industry. Therefore, this study intends to explore the economic aspect of copyright governance in relation to the proliferation of infringing short videos. The short video industry of China has been taken as a case to demonstrate the copyright governance issue. Transaction cost theory has been applied to analyze the economic aspect of copyright governance in terms of four dimensions: bounded rationality, opportunism, environmental uncertainty, and asset specificity. From the perspective of transaction cost economics, the problem of short video infringement is observed to be essentially a market failure due to high transaction costs. In the short video market, substantial transaction costs are incurred in the legal transaction of copyright with these costs considered to be too high. This is especially the case when transaction costs exceed the net proceeds initially expected by short video users from the authorization, making it impossible to carry out the transaction and leading to infringement. To effectively control the copyright infringement of short videos, it is necessary to build a cross-platform information-sharing mechanism to reduce search costs, establish a unified copyright management platform to reduce coordination costs, and give full attention to the role of technical support to reduce regulatory costs.
... Changes to copyright law have not been helpful to performers (Taylor and Towse (1998)), though the recent changes made to deal with online activity were supposed to favour them. The so-called Internet Treaties established by the World Intellectual Property Organisation (WIPO) the WIPO Copyright Treaty (WCT) and the WIPO Performers and Phonograms Treaty (WPPT), which have been adopted throughout Europe and elsewhere, mandated the so-called 'making available' right for authors and performers respectively, which relates to any use for which the consumer can choose the time of access as with streamed music (Towse, 2005). Apart from the issue whether publishing and performers' contracts explicitly include this right, there is disquiet regarding its efficacy. ...
The intervention of digital service providers (DSPs) or platforms, such as Spotify Apple Music and Tidal, that supply streamed music has fundamentally altered the operation of copyright management organisations (CMOs) and the way song-writers and recording artists are paid. Platform economics has emerged from the economic analysis of two- and multi-sided markets, offering new insights into the way business is conducted in the digital sphere and is applied here to music streaming services. The business model for music streaming differs from previous arrangements by which the royalty paid to song-writers and performers was a percentage of sales. In the case of streamed music, payment is based on revenues from both subscriptions and ad-based free services. The DSP agrees a rate per stream with the various rights holders that varies according to the deal made with each of the major record labels, with CMOs, with representatives of independent labels and with unsigned artists and song-writers with consequences for artists’ earnings. The article discusses these various strands with a view to understanding royalty payments for streamed music in terms of platform economics, offering some data and information from the Norwegian music industry to give empirical support to the analysis.
... In the USA, companies have been granted a 95 year term, the 'Sonny Bono' extension to copyright law that kept Mickey Mouse from going into the public domain. 6 WIPO (2003),Towse (2005) 7 Space does not permit further discussion of these important topics. SeeFrey (2000),Towse (2001b) andTowse (2004) ...
The paper considers recent policy changes to the copyright law and its management, particularly digital rights management, and asks how they can be evaluated. Copyright law is perhaps the most important policy tool affecting the cultural industries and it provides the regulatory environment in which all enterprises in the music, film, book publishing, broadcasting and other media industries function. Digitalisation is now affecting all art forms and the management of rights is becoming an issue for arts managers as well. In Europe, the European Commission is seeking to increase competition into rights management but it is argued this may lead to restriction of cultural diversity and other cultural policy aims.
... • create a new exclusive right in favour of copyright owners, including sound recording producers and performers, to make their works available on-line to the public (known as the making available right); 7 WIPO (2003), Towse (2003b) • prohibit the circumvention of copyright protection (TPMs -technological protection measures); and, ...
The paper surveys the economic literature on copyright law, relating it to artists' labour markets and considers its intended and unintended effects in the cultural industries, where copyright has an important impact on the relation between creative and performing artists and the firms who produce and distribute cultural content. The paper considers by way of example recent changes to performers' rights and how to assess their effect on artists' labour markets. The conclusion is that cultural economics has an insight into these questions that other approaches do not fully address.
... A historical analysis of over 1,000 years land enclosure and commons property reveals that the right to be included in the benefit stream has recently moved to the background and hurts innovation (Ford Runge and Defrancesco 2006). An economic analysis reveals that EU legislation contains three assumptions which are not thta valid anymore (Towse 2005). These assumptions are that there is no clash between content publisher interest and author interest, that only publishers are capable of entrepreneurship, and that firms innovate instead of creators. ...
This study traces the evolution of commons-based peer production by a measurement-based analysis of case studies and discusses the impact of peer production on net neutrality and copyright law. The measurements include websites such as suprnova.org, youtube.com, and facebook.com, and the Peer-to-Peer (P2P) systems Kazaa, Bittorrent, and Tribler. The measurements show the two sides of peer production, the pirate side with free availability of Hollywood movies on these P2P systems and the Samaritan side exhibited by the quick joining of 400,000+ people in a community to organize protests against events in Burma. The telecommunications and content industry are disrupted by this way of peer production. As a consequence, revenues of both industries are likely to suffer in the coming years. On the other hand, innovative P2P systems could win the battle on merit over classical distribution technologies. As a result, a continuation is expected of both legal actions against P2P and possible blocking actions of P2P traffic, violating net neutrality. It is argued that this hinders innovation and causes a large discrepancy between legal and user perspectives. A reform of copyright laws is clearly needed, otherwise they will be unenforceable around 2010.
... lack of standards) but to other factors as well. For example, a social factor is that users are not satisfied with existing, strict usage rights policy of current DRM solutions [4,5]. The lack of relevant legislation, which is not matured in many countries, and usability are also drawbacks for DRM's wider adoption . ...
Digital Rights Management (DRM) systems’ interoperability is becoming one of the main obstacles for their wider adoption,
especially from medium and small size users. Interoperability issues affect, among others, the management of content usage
rules by third parties (authorities) and the automation of licensing procedures upon the purchase of digital content. The
fundamental question of who is handling content licenses in the national or global DRM value chain is complex, with business,
social and technological extensions. In this paper, we discuss current trends in DRM systems technology and business modelling
and briefly present a proposal for handling digital content licensing, Distributed License Catalogues (DLCs). The DLC concept,
borrowed from web engineering, makes available (“advertises”) content or services concerning DRM functionalities, enabling
multi-party DRM eco-systems.
The last decade has been characterised by a tightening of IPR regulations worldwide. The premise underlying this trend is that the stringent regulation of IPRs enhances innovativeness. IPRs have been identified as a central aspect of EU innovation policy. The harmonisation of IPRs provides a clear-cut mechanism for reducing trade barriers and simplifying existing national regulations. The question of whether IPRs should be further strengthened in conjunction with their harmonisation is subject to controversy. The main message of this paper is that changes in IP regimes should be used cautiously and assessed through careful evaluation.
Copyright protection is becoming an important issue for organizations that create, use, and distribute digital content through e-commerce channels. As online corruption increases, new technical and business requirements are posed for protecting Intellectual Property Rights, such as watermarking, use of metadata, self-protection, and self-authentication. This chapter gives a review of the most important of these methods and analyses of their potential use in Digital Rights Management systems. We focus especially on watermarking, and argue that it has a true potential in e-business because it is possible to embed and detect multiple watermarks to a single digital artifact without decreasing its quality. In conjunction with parallel linking of content to metadata there is true potential for real life copyright-protection systems. Furthermore we attack the problem of DRM systems’ interoperability with Distributed License Catalogues (DLCs). The DLC concept, borrowed from Web engineering, makes available (‘advertises’) content or services concerning DRM functionalities, enabling multiparty DRM eco-systems.
This article examines the scholarly literature pertaining to music, film and software piracy around the world, with special attention to data sources, research scope and general findings. The article finds that the conspicuous absence of methodologies utilizing critical theory in this broad literature has constricted the world view of piracy, resulting in monolithic explanations of the causes and correlates of piracy. It further identifies systematic biases relating to the unjustified use of data published by the industry watchdog Business Software Alliance (BSA).
Nobody likes today’s copyright law. Widespread unauthorized use of copyright material proliferates with impunity, while citizens and users protest that intrusive copyright and related rights law stifle cultural expression. Equipment manufacturers and intermediaries complain about yet more ’security’ features that complicate their products and services and encumber marketing, while content owners desperately want enforcement to work. And of course it is crucial that whatever regulatory instruments come into play must not age prematurely in Internet time.The European Union faces the daunting challenge of articulating coherent copyright policies that satisfy these contradictory multiple demands. Yet the legal framework must conform to the European Union’s remit of fostering economic growth in a common market, while respecting the national traditions of its still growing family of Member States. Clearly, an extraordinary balancing act is called for if justice is to be done to all of the private and public interests affected.So how has the European acquis communautaire scored on these issues so far? In this groundbreaking study the Institute for Information Law of the University of Amsterdam brings its extensive academic expertise to bear on this question. The authors scrutinize the present law as laid down in the seven copyright and related rights directives, against the background of the relevant international standards of the Berne Convention, the TRIPs agreement, and the WIPO Internet Treaties. They map out in detail the degree to which certain areas of copyright have been harmonized as they expose the gaps and inconsistencies in the acquis and the urgent unresolved issues that persist. They identify the EU’s ambitions in relation to its present and future competences (following the Lisbon Reform) to regulate copyright, and to its Better Regulation agenda. Following a comprehensive analysis of almost two decades of regulatory intervention, they move on to the salient current trends that point toward a more coherent and balanced European copyright law.
The protection of the investment made in collecting, verifying or presenting database contents is still not harmonised internationally. Some laws over-protect database contents, whilst others under-protect them. This book examines and compares several methods available for the protection of investment in database creation - namely, intellectual property, unfair competition, contract and technological protection measures - in order to find an adequate type and level of protection. To this effect, the author uses criteria based on a combination of the economics of information goods, the human rights to intellectual property and to information, and the public interest, and proposes a model that can be adopted at international and national level.The Legal Protection of Databases will be of interest to intellectual property lawyers, competition lawyers, as well as general commercial lawyers because of the breadth of laws reviewed. It will also appeal to practitioners, policy-makers, economists and students.
The notion of copyright is deeply entrenched in the psyche of librarians, who remain one of the few groups who consistently support or uphold it. Given the growth of digital information and consequential change in the behaviour of information creators and users the paper posits that copyright administration in libraries has become a cumbersome burden whose “time has come”. Changes in information provision by libraries towards delivering more digital information have ironically highlighted the paradox libraries face between providing the best possible service and upholding copyright. The notion that there exists in the digital environment a “right to copy” is put forward. Copyright is legally complicated, controversial, subject to a number of misunderstandings and generally not fully understood even by the librarians whose daily tasks include administering it. To better understand the current status of copyright and its impact on libraries the notion of copyright is briefly outlined, along with what exactly copyright is, its historical roots and its suitability in the current environment. In examining the legislation the paper critiques its aims and how it fails in these; compares arguments in favour and against its retention, investigates how it serves to restrict creativity rather than encourage it and in closing suggests why libraries should abandon the struggle to uphold copyright. Examples from New Zealand, Australia, the US and the UK are used to highlight inconsistencies that support the argument that copyright in the digital environment is a nonsense that no longer works.
As intellectual property rights have gained in prominence, businesspeople and scholars alike have complained of the increasing burden of obtaining intellectual property licenses and, failing this, litigating intellectual property disputes. Intellectual property experts, especially scholars, have responded to this burgeoning thicket of rights with a series of initiatives to expedite deal making by means of statutory compulsory licensing. These licenses are classic examples of "liability rulesh" in the foundational legal entitlements framework of Guido Calabresi and A. Douglas Melamed. They appear to be a compromise: they address the mushrooming transactional hurdle created by new and stronger intellectual property rights, while preserving most of the economic advantages that accompany strengthened rights. In this Article, Professor Merges argues that proposals to create more compulsory licenses are rooted in a faulty theoretical framework. Based on a survey of the diverse institutions various industries have cultivated to handle intellectual property transactions, Merges contends that "repeat players" (individuals and firms that frequently need to exchange rights) can and often do take steps to overcome transactional bottlenecks. Whether through copyright collectives, such as ASCAP and BMI in the music industry, or undertakings such as patent pools in automobile and aircraft manufacturing, those with a recurring need to transact in intellectual property rights invest in administrative structures that lower the costs of exchanging rights. Among other functions, these collective rights organizations promulgate rules and procedures for placing a monetary value on members' property rights. They thus conserve on transaction costs either by making it easier to identify and locate rightholders, or by creating the occasion for repeat-play, reciprocal bargaining, versus more costly one-shot exchanges. Drawing on a body of academic literature known as the new institutional economics, Professor Merges explains and analyzes the origins and operation of these organizations. He also argues that entitlement theory must be adjusted to recognize the possibility that such institutions will evolve out of a background of strong property rights. More generally, he points out that entitlement theory ought to incorporate a more dynamic understanding of the importance of contracting after entitlements are granted. Professor Merges applies his observations and theoretical insights to an important contemporary controversy: whether Congress ought to legislate a compulsory license for digital content needed by the multimedia industry. He argues that it should not. Given the underlying economics, and consistent with experience in other industries, existing intellectual property rights will force industry participants to invest in institutions to conduct transactions. Indeed, consistent with the analysis in this Article, evidence indicates this is already occurring.
This paper examines whether commercial success in the popular recorded-music industry, as measured by gold-record output, conforms to an empirical concentration. We find that Lotka's Law overestimates the number of artists with one gold record and underestimates the number of multiplegold-record performing artists. However, for all measures of “successful” records, theGeneralized Lotka's Law provides an excellent fit, which suggests that the number of performers producingn gold records in about 1/n
c of those producing one gold record.
The paper is concerned with the issue of whether international copyright legislation is effective in curbing audio software counterfeiting. The paper finds that copyright conventions have not been effective in reducing audio counterfeiting to comparatively low levels. This result holds even when allowances are made for the duration of copyright convention membership and the specificity of the articles of the convention. Economic development is found to be the main determinant of low counterfeit levels. This would tend to support anecdotal evidence which indicates that economic development is a necessary condition for the active recognition of audio property rights by the general public, judiciary and police. It is also consistent with a view that pirate audio software, being an inferior good, has a more buoyant market in less developed economies. From a policy perspective the research would seem to suggest that the extensive efforts and copious attention to detail by legal experts has made little impact on counterfeit activity and is secondary in importance to the socio-economic environment in which these laws are being applied.
This paper examines from the standpoint of economics the relationship between copyright law, borrowed images and the post-modern art form known as appropriation art. Artists and judges have very different views regarding how the law should treat appropriation art. The artist perceives legal restraints on borrowing copyrighted images as a threat to artistic freedom. The law gives artists no special privileges to borrow copyrighted material. Although there are no market impediments to licensing most copyrighted images, fair use would lower transaction and access costs. These cost savings should more than offset the reduced incentives to create new images in cases where the appropriation artist has already paid for the image or is making only a few copies. In contrast, when the appropriation artist makes many copies, he should be treated no differently from a firm that incorporates licensed images in products such as calendars, coffee mugs and beach towels.
In continental Europe, copyright law is traditionally viewed as a so-called 'natural' right - briefly put: it is simply right for the author to enjoy the fruits of his labor. However, socio-economic considerations are becoming more in important in European copyright doctrine. One reason for this tendency is that more and more copyright matters are regulated at the EU level and that the European regulator explicitly adheres to the economic rationale for copyright law. In this contribution, it is investigated what the apparent economic policy goals are of the EU Copyright Directive of 2001 - which is by far the most ambitious piece of EU legislation in the area of copyright to date. The purpose of this article is not to set-out new, cutting-edge economic theories on copyright law, but merely to analyze what the explicit and implicit aim of the Directive is and to explore what, according to standard, mainstream and widely known economic theory, will be the likely result of the new regulations on copyright law. Will the Copyright Directive succeed in achieving its apparent goals? What does economic theory predict about its impact? The emphasis is on the most important and controversial changes that the Copyright Directive brings about. These are the introduction of a right of temporary reproduction, the limiting of the exhaustion of copyright, the abolishing of remuneration rights and, last but certainly not least, the broad protection of technological measures - i.e. DRM systems. The article concludes that the Directive appears to be based on a great belief in the beneficial effects of granting property rights in information products and in the ability of the market mechanism to achieve an optimal result. However, it may well be argued that apparent faith in the 'invisible hand' of the market is unjustified. Particularly, the public good character of information products is not taken into account. Moreover, the provisions of the Directive may hinder competition to a further extent than copyright traditionally did, which could have an undesirable result as well. Additionally, the apparent reliance on market forces to match the demand for uses with the offered technological usage restrictions may be unsubstantiated. There may be valid arguments for limiting the freedom of contract and the freedom to block any information usage technologically.
A combination of powerful new technologies and existing legal doctrines threatens to reduce the scope of copyright's fair use defense in digital intermedia. In place of fair use, these influences will give rise to a system of fared use. Fared use seems certain to improve the efficiency of copyright law. It raises questions of equity, however, by offering copyright owners increased compensation without guaranteeing the public increased access to copyrighted works. This paper addresses those concerns. Fared use would make copyrighted materials in digital intermedia available to the public under a reciprocal quasi-compulsory license. Somewhat paradoxically, this license offers consumers cheaper and better access to such copyrighted works precisely because it would require them to pay for uses that, in other media, the fair use defense would cover. Fared use would give copyright owners more licensing opportunities, but increase the risk of objectionable reuses. This projected public bargain, the default rule under fared use, largely flows from combining automated rights management with current law. But this same technology will make it much easier for providers and consumers of copyrighted information to reach and enforce alternative, private agreements. To the extent that it threatens to preempt this new-found freedom, copyright law should step aside. Only widespread experimentation will determine which information rights best suit the digital intermedia.
The paper estimates the demand for vinyl L.P.s in the U.K. In so doing, it outlines a technique to account for the impact of product differentiation innovation when estimating the demand for a product group. This may be particularly important for cultural goods where consumers are attracted to buy a product because of its unique characteristics and where these characteristics differ across time. Thus, the methodology may be used to estimate the demand for other product groups, such as movies and literature. Over the sample period L.P.s are found to be normal goods which are close to being unit price elastic. The diffusion of the Compact Disc appears to reduce the price elasticity of vinyl L.P.s. Consumers also appear to treat L.P.s as perishable goods and the demand for vinyl albums is positively stimulated both by the range of albums available on the L.P. format and product differentiation innovation.
I. Introduction Since the turn of the century, legislation in Western countries has expanded rapidly to reverse the brief dominance of laissez faire during the nineteenth century. The state no longer merely protects against violations of person and property through murder, rape, or burglary but also restricts "dis crimination" against certain minorities, collusive business arrangements, "jaywalking," travel, the materials used in construction, and thousands of other activities. The activities restricted not only are numerous but also range widely, affecting persons in very different pursuits and of diverse social backgrounds, education levels, ages, races, etc. Moreover, the likeli hood that an offender will be discovered and convicted and the nature and extent of punishments differ greatly from person to person and activity to activity. Yet, in spite of such diversity, some common properties are shared by practically all legislation, and these properties form the subject matter of this essay. In the first place, obedience to law is not taken for granted, and public and private resources are generally spent in order both to prevent offenses and to apprehend offenders. In the second place, conviction is not generally considered sufficient punishment in itself; additional and sometimes severe punishments are meted out to those convicted. What determines the amount and type of resources and punishments used to enforce a piece of legislation? In particular, why does enforcement differ so greatly among different kinds of legislation?
The American copyright system separately protects the sounds in music recordings and the words and music of the underlying musical composition upon which they are based; separate rights are further defined for the reproduction and public performance of both the recording and the composition. The consequences of copyright fragmentation are now quite disturbing, as digital technology produces a breakdown and conflation of legal categories that were meaningful in the analog era; the same act of digital transmission can be viewed under U.S. law as reproduction and distribution of copies on the one hand and public performance or display of the work on the other. Since these rights are controlled by different parties and agents, the complexity of the system leads to a "copyright thicket". This article attempts to break the gridlock with an economic analysis based on the need for allocative efficiency, transaction minimization, administrative streamlining, and technological innovation.
In this paper we investigate the dynamics of chartsuccess in the U.K. pre-recorded popular music industryover the period 1980 to 1993 using the British albumchart listings. We find that the incidence of chartsuccess is substantially skewed to the right, whethermeasured by total weeks spent per artist, averageweeks spent per album, or the total number of albumslisted per artist. We subsequently investigatepossible determinants of the length of chart survivalof albums in order to determine what may be drivingthe observed skewness. Our results indicate that thetype of album, seasonal demand, and initial popularityplay an important role in ensuring continued chartlisting of an album. Copyright Kluwer Academic Publishers 2000
In this paper we investigate the dynamics of chart success in the UK pre-recorded popular music industry over the period 1980 to 1993 using British album chart listings. We find that the incidence of chart succedd is substantially skewed to the right, whether measured by total weeks spent per artist, average weeks spent per album, or the total number of albums listed per artist. We subsequently investigate possible determinants of the length of chart survival of albums in order to determine what may be driving the observed skewness. Our results indicate that the type of album, seasonal demand, and initial popularity play an important role in ensuring continued chart listing of an album.
The recent success of file-sharing technologies such as Napster has highlighted the economic question of whether copying increases or decreases the market value of copyrighted works. Contrary to Michele Boldrin and David K. Levine (2002), we show that Napster-type services are likely to reduce copyright value. This economic question of the effect of copying on copyright value largely coincides with the legal question of whether copying is “fair use.” The primary legal determinant of “fair use” (or use that does not require authorization by the copyright-holder) is whether the use adversely affects the present or future economic value of the copyrighted work. However, given this legal standard, it is unclear why copyright holders ever disagree with the court regarding “fair use.” Our analysis shows that there is no inherent conflict between the court and copyright holders with regard to particular uses, but why there may be a conflict with regard to a technology that has both “fair” and infringing uses.
Determinants of multimedia, entertainment and business software piracy. Paper Presented at 5th World Media Economics Conference WIPO Guide to Surveying the Economic Contribution of the Copyright-Based Industries
H Van Kranenburg
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Economic Importance of Copyright Industries in Norway
Toivonen, T., Picard, R., 2002. Economic Importance of Copyright Industries in Norway. Finnish Copyright Institute, Helsinki. R. Towse / Telematics and Informatics 22 (2005) 11–24
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Allen Consultancy Group, 2001. The Economic Contribution of AustraliaÕs Copyright Industries, Melbourne. Arrow, K., 1962. Economic welfare and the allocation of resources for invention. In: NBER The Rate and Direction of Inventive Activity. Princeton University Press, Princeton, NJ. 22 R. Towse / Telematics and Informatics 22 (2005) 11–24 Becker, G., 1969. Crime and punishment: an economic approach. Journal of Political Economy 81 (4), 813–846.
The Economic Contribution of Australia’s Copyright Industries
Allen Consultancy Group
Record sales' woes go beyond file swapping'. International Herald Tribune
Compensating Creators of Intellectual Property
Available from 〈http
The demand for vinyl LPs 19975–1988. Time series estimation of a product group in the presence of product differentiation innovation
Digital rights’ management systems; regulatory problems and market developments. Paper Given at the COST A20 Conference ‘Towards New Paradigms
The Economic Importance of Copyright in the Netherlands
Determinants of multimedia, entertainment and business software piracy