Copyright-Based Industries: Assessing their Weight

Evaluating the link between copyright and economic development has been a challenge for intellectual property (IP) professionals for years. Much has been written in academic literature about the economics of patents, while copyright has been somewhat neglected. But as copyright-based industries expanded in the 1970s, so did the interest in determining how copyright’s contribution to development could be described in economic terms. Studies in a number of countries and regions began to gather evidence. But there was still little research in developing or transition countries; and differences in methodologies, practices and objectives made it difficult to compare results from existing surveys.

WIPO’s Guide on Surveying the Economic Contribution of the Copyright-Based Industries (published in 2003) set out to fill some of these gaps. This article explains what the Guide offers, and reports on the latest findings from surveys using the WIPO-recommended methodology.

Background and purpose

Triggered by interest from WIPO Member States, the Guide on Surveying the Economic Contribution of the Copyright-Based Industries provides a practical tool for evaluating the contribution of copyright-based industries. The Guide aims (a) to summarize existing experience in surveying the copyright-based industries, (b) to develop a practical set of recommendations and research methods, and (c) to establish a basis for meaningful comparisons to be made between different studies.

Why survey the copyright-based industries? At a time when fundamentals of IP are being questioned, policy makers need hard evidence of the positive effects of copyright on the economy. Statistical proof is required to demonstrate convincingly the competitive advantages that arise from a nation’s creative and information sector, particularly if this feeds into government policy and legislative practices.

Caption: The Working Group of Experts, who contributed to developing the Guide.

Scope

In order to measure the size of the copyright-based industries, the Guide recommends that survey teams consider three main indicators: the percentage of Gross Domestic Product (GDP) which is attributable to those industries (value added); employment in the industries; and international trade (share in exports and imports) generated. All three are industry-focused, statistical in character, and produced on a regular basis. The Guide sets out research methods to assist survey teams in compiling, extracting or calculating information on these indicators. It recommends a multidisciplinary approach, involving copyright professionals as well as economists and industry experts.

The Guide identifies which industries to include in surveys, and it categorizes these according to the extent to which their activities are dependent on copyright. It provides guidance as to how to estimate for each category and what percentage of these industries’ economic contribution should be counted as attributable to the copyright element. The categories are:

• Core copyright industries, defined as wholly engaged in the creation, production, performance, exhibition, communication or distribution and sales of copyright protected subject matter. These include literature, music, theatre, film, the media, photography, software, visual arts, advertising services and collective management societies.
• Inter-dependent copyright industries, which deal with products jointly consumed with the core industries, or with facilitation equipment. They include the manufacture and sale of equipment such as television sets, CD recorders and computers; of musical and photographic instruments; of photocopying and recording material, etc. They provide the means for the production, dissemination and consumption of copyright goods and services.
• Partial copyright industries, in which only part of the production is linked to copyright protected material, such as design, architecture, jewelry, furniture and other crafts., etc. (The element attributable to copyright varies according to the extent to which they are protected by copyright legislation).
• Non-dedicated support industries, which only remotely rely on copyright material, and where copyright generates a very small portion of their business, such as telephony, transportation and general wholesale. The copyright-related contribution of these industries is calculated on the basis of an appropriately weighted copyright factor.

Latest findings

Results have now been published from the first surveys using the WIPO guidelines, which were carried out in Singapore, the U.S., Canada and Latvia. These have already highlighted some noteworthy trends, as well as providing a wealth of statistics to inform policy makers.

Trends running through the survey results include the following:

• The contribution of the copyright-based industries was shown to be considerable, and indeed higher than suggested by previous research in those countries. This reflects the development of the copyright industries, but also the more detailed scope of the surveys.
• These industries showed a higher overall growth rate than the rest of the economy. By the same token, compared to traditional sectors of the economy, they both contract and expand more rapidly in response to fluctuations in the economy.
• Unsurprisingly, those copyright industries linked to the digital revolution grew faster than in previous periods.

Letting the statistics speak

Singapore

The study was commissioned by the Intellectual Property Academy of Singapore and carried out by the National University of Singapore.¹ Completed in October 2004, the survey took 2001 data and showed that value generated by the total copyright-based industries accounted for 5.7 percent of the total GDP. The copyright-based industries employed 118,600 workers or 5.8 percent of the total workforce. Exports of copyright goods and services generated foreign trade worth 3.5 billion Singapore dollars.

From 1986 to 2001 these industries grew at an average of 8.9 percent per annum - compared to the economy’s average annual rate of 7.6 percent. But they also proved more vulnerable to the fluctuations in the economic cycle: while GDP declined by 1.9 percent between 2000 and 2001, the decline in the value of the copyright industries was a striking 9.5 percent.

The Singapore study also documented a significant economic multiplier effect. Every 1 million dollars of output by the core copyright industries generated employment directly for 6 persons, and indirectly for a further 5, giving an employment multiplier of 11. This demonstrates that the core copyright industries have a greater impact on the economy in terms of generation of output, GDP and jobs, than the average for the industry.

United States of America

The U.S. survey was prepared by Economists Incorporated for the International Intellectual Property Alliance.² It showed that the value added by the core copyright industries accounted for 6 percent of the U.S. economy in 2002, while total copyright industries accounted for an estimated 12 percent ($1,25 trillion). Over 4 percent of the U.S. workforce were employed in the core copyright industries, with the total copyright-based industries employing twice that figure, i.e. 11.47 million workers. Foreign sales generated by the copyright industries at over US$89 billion were higher than the equivalent figures for major sectors such as the chemical industry.

Between 1997-2001 employment in the core copyright industries grew at more than double the annual employment rate for the U.S. economy in general.

Canada

The study on Canada, published in March 2004, was prepared for Canadian Heritage by Wall Communications Inc.³ It showed that the total copyright industries contributed 5.38 percent to the Canadian economy in 2002, compared to 3.87 percent in 1991. This was greater than the contribution of agriculture or mining. The overall growth rate in the copyright-based industries was twice the rate of the overall economy. They provided jobs to 6.9 percent of the employment total. The exports of copyright goods doubled within 5 years to reach almost 2.3 billion dollars in 2002.

The largest copyright contributors to the Canadian economy are the software and database industries, followed by press and literature publishing, photography, visual and graphic arts.

Latvia

Published in February 2005, this was the first survey of its kind, not only in Latvia, but in Central Europe as a whole. It was commissioned by the Ministry of Culture and carried out by an international team⁴ using statistics from the year 2000. While noting some gaps in the available statistics, the survey showed that core and interdependent copyright industries contributed 4 percent of GDP (Euro 315 million in value added). This was two and half times more than the textile manufacturing industry, and accounted for 4.4 percent of the overall employment in Latvia. Copyright related exports from Latvia generated over Euro 35 million – or Euro 16.7 million more than copyright related imports.

Print media, advertising, software and databases made the most important contributions. Comparisons with other EU member states showed that the economic contribution of Latvia’s copyright industries was broadly in line with the average contribution in EU countries.

Looking ahead

These surveys demonstrate that the WIPO guidelines can be applied effectively in developed, developing and transition countries. Studies are currently ongoing in Hungary, Brazil, the Philippines, Russia and Benin. WIPO will continue to provide expert advice and assistance to research in the field of the economics of copyright, which is now firmly on the copyright agenda.

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1. Economic Contribution of Copyright Industries in Singapore, Leo Kah Mun, Chow Kit Boe,Ong Chin Huat, NUS Consulting, 2004. 2. Copyright-based industries in the US Economy, The 2004 Report, Stephen E. Siwek, Economists Incorporated 3. The Economic Contribution of Copyright Industries to the Canadian Economy
4. The Economic Contributions of Copyright-Based Industries in Latvia 2000, Robert Picard, Jonkoping University, Sweden and Timo Toivonen, Turku School of Economic and Business Administration, Finland, 2005.