The economics of copyright levies

Scales of Justice Copyright Balance

IPO / ESRC Seminar: The economics of copyright levies

14 October 2010, 21 Bloomsbury Street, 10:30 – 12:30

As part of his ESRC Fellowship at the UK Intellectual Property Office, Professor Martin Kretschmer organised a seminar on the economics of copyright levies. See more details on Professor Kretschmer’s project on Private Copying and Fair Compensation. Programme and notes from the discussions are below.


  • Tony Clayton (chief economist, IPO)
  • Dr Christian Handke (Erasmus University)
  • David Humphries (senior policy advisor, IPO)
  • Ben Mitra-Kahn (economic advisor, IPO)
  • Prof. John Kay (economist, FT columnist)
  • Prof. Martin Kretschmer (Bournemouth University, ESRC Fellow at IPO)
  • Nick Munn (deputy director copyright, IPO)
  • Ed Quilty (director of copyright, IPO)
  • Joost Poort (SEO economic research, Amsterdam)
  • Dr Fabrice Rochelandet (Université Paris XI Sud)
  • Dr Nicola Searle (Abertay University, AHRC/ESRC Fellow at IPO)
  • Prof. Ruth Towse (Erasmus/Bournemouth University).


10:30 – 10:45
Welcome & Introductions
The IPO Economic research programme
Tony Clayton

10:45 – 11:00
What do we know about the operation of European levy systems?
Martin Kretschmer

11:00 – 11:30
Discussion I (chair: Tony Clayton)
What is private copying?
Should there be a private copying exception? If so, why?

Introductory summary of arguments from Gordon (1982/2002)
Christian Handke

11:30 – 12:00
Discussion II (chair: Ruth Towse)
If there is an exception for private copying, should there be compensation?

Introductory summary of arguments from Besen & Kirby (1989)
Ben Mitra–Kahn

12:00 – 12:30
Discussion III (chair: Martin Kretschmer)
What do we need to know about the operation of levy systems?

Circulated Papers

In preparation for the seminar, three papers were circulated:

1. Stanley M. Besen and Sheila Nataraj Kirby (1989), “Private Copying, Appropriability, and Optimal Copying Royalties”, Journal of Law and Economics Vol. 32, No. 2, pp. 255–280 – Distinguishes the rationale for private copying exceptions (and compensation) under models of indirect and direct appropriability.

2. Wendy J. Gordon (2002), “The ‘Market Failure’ and Intellectual Property: A Response to Professor Lunney””, 82 Boston University Law Review (B.U.L. Rev.) 1031 – A discussion of fair use exceptions as a response to market failure (an argument often used in support of removing private copying exceptions in the digital context).

3. José Luis Ferreira (2010), “Compensation for Private Copying: An Economic Analysis of Alternative Models”, ENTER–IE Business School (commissioned by Hewlett–Packard Europe) – A recent, and rather bold, Spanish study finding that current European levy systems waste 51.2% of each Euro collected and do not offer any incentives. Ferreira discusses eight possible improvements: Europe–wide harmonisation administered at national level, payment at retail level (rather than manufacturer), Europe–wide harmonisation at EU level, free choice of collecting society, levy on copyright works, indirect tax (á la VAT), national fund (á la Norway), and clause in labour contract.