[Ecommerce] M.Geist re Copyright reform: why mess with Canadian success story?

[Manon Ress]

When numbers do not add up...see below Michael Geist on how the
"copyright industries" are really doing in Canada
Manon


Michael Geist wrote:

http://www.michaelgeist.ca/index.php?
option=com_content&task=view&id=1265


Sound Numbers

Appeared in the Ottawa Citizen on May 25, 2006 as Sound Numbers

Copyright reform advocates frequently point to the economic
importance of the so-called "copyright industries" to support their
view that the government should enact tougher copyright laws. While
few doubt that the industries merit attention, the economic angle has
been hampered by the relative dearth of Canadian studies on the issue.

Last year, the Department of Canadian Heritage's Copyright Policy
Branch set out to remedy that shortcoming by paying Connectus
Consulting, an Ottawa based public policy firm, over $37,000 to study
the Canadian economic impact of the copyright industries (the
department has also been asked to provide $50,000 to support a
Canadian Recording Industry Association backed study that focuses
exclusively on the recording industry).

The Connectus Consulting report, entitled The Economic Impact of
Canadian Copyright Industries - Sectoral Analysis, has yet to be
publicly released.  However, I recently obtained a copy of the final
report dated March 31, 2006, under an Access to Information Act request.

The 93-page report should be required reading for those involved in
the copyright reform debate since it confirms the importance of the
copyright industries (defined in the report as music, movies, radio,
television, publishing, theatre, software, and advertising services),
yet challenges long-held assumptions about both the performance of
the Canadian copyright industries in comparison to those in the
United States as well as the economic health of the Canadian sound
recording industry.

The report, which spans 1997 to 2004, finds that the copyright
industries comprise 4.5 percent of the Canadian economy and
contribute 5.5 percent of total Canadian employment.  While that is
expected to increase in the coming years (the copyright industries
are growing at a faster rate than the overall economy), it pales in
comparison to sectors such as finance, manufacturing, agriculture,
education, and health care.

Software is the prime driver of copyright industry growth, more than
doubling in size from $5.76 billion in 1997 to $12.2 billion in
2004.  That growth has tailed off slightly over the past two years,
however, a trend that the report attributes primarily to a disturbing
shortage of skilled workers.

Consistent with several Statistics Canada studies, the report
confirms that Canada maintains a significant copyright deficit, which
it pegs at nearly $2 billion.  Bucking the trend are software
royalties and advertising services, which together account for a $550
million trade surplus.

While this data is interesting, the more noteworthy findings are to
be found toward the end of the report in two case studies: a
comparison of the Canadian performance with the United States and
Singapore as well as a comprehensive focus on the sound recording
industry.

Given the success of Hollywood and Silicon Valley, it comes as little
surprise to find that the U.S. copyright industries are ahead of
their Canadian counterparts in contributing a higher percentage to
their overall national economy (Singapore trails both Canada and the
U.S.).  In recent years, however, the Canadian copyright industries
have outperformed the U.S. with respect to growth rates and
contribution to national employment.  These facts are worth noting
when critics of Canadian copyright law claim that Canada needs to
emulate U.S. policy in order to achieve economic success.

The sound recording case study is particularly compelling since the
data contradicts both the industry claims and the expectations of the
report' s authors.  It begins by stating that "there is little doubt
that the Canadian sound recording sector has undergone significant
change in the past several years, primarily as a result of illegal
music downloading (or peer to peer file sharing) and the consequent
impact on the sale of recorded music."

Incredibly, the report's authors marshal no economic evidence to
support this unequivocal assertion nor do they offer any legal
analysis to back up the claim that peer-to-peer downloading is
illegal in Canada.  In fact, the study undermines its own credibility
by ignoring evidence that the changes in retail distribution
channels, the decline of radio, and competition from other consumer
entertainment products such as DVDs and video games are primarily to
blame for dropping sales.

Regardless of the reason, the report's authors were clearly surprised
when the economic data contradicted their stated thesis.  Warning
that "these findings should be treated with caution", the study
reports that the Canadian sound recording industry grew steadily from
1999 to 2004, with the GDP contribution jumping from $243 million to
$387 million.

The report implausibly attributes the increase to reduced employment,
noting that there may be greater efficiencies due to a reduction in
the number of record labels and the consolidation of the major
multinationals.

Given that a ten percent reduction in employment is unlikely to
inject an extra $150 million into the Canadian economy, the report's
authors might instead have considered the fact that Canadian music
labels have enjoyed unprecedented success in recent years.  With the
major foreign multinationals reporting 20 percent employment
reductions, the data suggests that Canadian record companies, who are
responsible for 90 percent of new Canadian releases, are providing a
counterbalance to the multinationals' struggles.

With the economic success of copyright industries, the strong
Canadian performance in comparison to the U.S., and the exciting
economic growth of the sound recording sector, this Canadian Heritage-
commissioned study may leave Canadian Heritage Minister Bev Oda and
Industry Canada Minister Maxime Bernier wondering why there is any
reason to mess with a Canadian success story.

Michael Geist holds the Canada Research Chair in Internet and E-
commerce Law at the University of Ottawa, Faculty of Law.  He can
reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

************************************************
Manon Anne Ress
manon.ress@cptech.org,
www.cptech.org

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