Tuesday, November 17, 2015

The Cost of Canadian Copyright Term Extension Capitulation in the TPP - Estimates Based Upon New Zealand Study


Here’s the important study from New Zealand (recently mentioned by Michael Geist in his “must view” CIGIOnline talk) entitled Economic Modelling on Estimated Effect of Copyright Term Extension on New Zealand Economy.  The study was commissioned in 2009.

Here’s the bottom line from the first page of the NZ summary:
Based on this research, the Government estimated that the average cost to New Zealand from the obligation under TPP to extend New Zealand’s copyright period from 50 to 70 years would average around $55 million per year.
The study estimated the total cost for New Zealand of copyright term extension for
books and recorded music in terms net present value (i.e. the equivalent amount of
money that, if invested today, would cover all future costs for every year). The study
considered a time period of 70 years for recorded music (the extended copyright term,
which is generally calculated from time of production) and 110 years for books. The
study estimated a net present value of $208-239 million for recorded music and $263-
300 million for books.
(footnote omitted)

Here are key comparative statistics:

NZ $1.00 = CDN $0.86
NZ GDP = ~ 10.4% of CDN GDP based upon World Bank figures for 2014.

Assuming that the New Zealand study methodology for calculation of the cost of a 20 year copyright term extension were to be more or less applicable to Canada and that the results would be more or less proportional to the difference in GDP, here are some admittedly “back of the envelope” calculations:

The average present value of the cost of 20 year copyright for recorded music and books term extension (which included an estimate for film and television) was estimated by NZ is NZ $505 million, which is CDN $434 million, which adjusted by GDP ratio, would work out to about CDN $4.176 billion.

The average annual cost for NZ is NZ $55 million, which is $CDN 47.3, which adjusted by GDP ratio, would work out to about CDN $454 million.

I look forward to reading the whole study in detail. If Canada has anything comparable and credible by way of independent analysis, it would be useful to know. If not, it would useful to know why not. It has been too long since Canada based its copyright policy on actual evidence, such as we saw in the Consumer and Corporate Affairs studies in the early 1980’s, or the Economic Council, Ilsley, and Parker Commissions during the decades before.

Canada needs to look at the costs of copyright term extension very carefully before we decide to sign on to the TPP - or to insist that certain aspects of it be renegotiated. Given that Canada has a new Government, that the current TPP deal was agreed to by a "caretaker" government during an election, and that acceptance of the TPP is anything but assured in the USA, anything is possible. 


1 comment:

  1. Thanks, Howard, for suggesting some Canadian estimates of the copyright term-extension costs that the TPP will incur.
    One of the core arguments of the New Zealand study is that copyright term extension poses a net economic cost, not a net benefit, to New Zealand because New Zealand is a "significant net importer of copyright-protected works" (7). The economic benefits of the TPP's copyright term extension would mainly go to IP rights-holders, and since NZ consumes more IP than it produces (i.e. is a net importer), term extension would not economically benefit that nation.
    That argument therefore extends to other signing nations that are net importers of IP - including Canada. Here are a couple of sources of evidence that show Canada is a net importer of IP.
    Worldmapper.org's map visualization of royalty and license imports uses older data (2006) but helpfully highlights nations that are major importers of IP:
    Canada ranks 6th - right below New Zealand - as an IP importer.
    Contrast that image with Worldmapper's corresponding visualization of the world's major IP exporters:
    On this map, the world's biggest IP exporter is far and away the USA - which of course is also the nation that's pushing this TPP deal on its trade partners like Canada.
    So Canada is a major IP importer, but is it a *net* importer? The IP export map doesn't show Canada at all, from which we might infer Canada is indeed a net importer.
    But we get more specific evidence that Canada is a net importer of IP from Statistics Canada. See Stats Can's table of International transactions in services, commercial services by category:
    This table's data for "Charges for the use of intellectual property" show a consistently negative balance from 2010 to 2014. Therefore, Canada is a net importer of IP (which we might have already assumed from the nation's elaborate cultural policy toolkit).
    And since Canada is a net importer of IP, then the TPP will be as significant a net cost to the Canadian economy as it stands to be for New Zealand.