The Value of Content

You'll be pleased to know that the world remains a safe place for Mickey Mouse, at least for another 20 years. That, in essence, is one consequence of the U.S. Supreme Court's decision on Jan. 15, 2003 in Eldred v. Ashcroft. The Supreme Court affirmed the right of the Congress to extend the term of copyright.

Congress has extended the terms of copyright 11 times over the past 40 years. The Eldred case, strongly supported by many in the campus community, was a challenge to the 1998 Sonny Bono Copyright Term Extension Act, which added an additional 20 years to the term of copyright.

Backed by Disney and other media companies, the Bono Act extends the term of copyright protection up to 95 years for the creative work of corporations (think Mickey and Minnie Mouse, as well as Yoda, the Jedi Warrior). The Bono Act also extends copyright for the creative work of individual authors and artists (for example, Anne Frank, Ralph Ellison, Joyce Carol Oates, and JRR Tolkein) for up to 75 years following the death of the creator.

The campus and publishing communities can and will argue the merits of the Eldred decision for years to come. In addition to protecting Disney characters, the decision also slows the movement of content into the public domain. So while you can access public domain texts by hundreds of 18th and 19th century authors, including Louisa May Alcott, Harriet Beecher Stowe, and Mark Twain at Project Gutenberg (www.gutenberg.org), the Bono Act, as affirmed by the Supreme Court in January, impedes the migration of 20th century content into the public domain (and, by extension, to the Web).

The Bono Act and Eldred decision have other consequences, both symbolic and substantive. The Eldred case marks the third time in the past dozen years that publishers have gone to the courts to affirm copyright protection. In 1991, a federal court ruled that Kinkos violated copyright by preparing coursepacks without securing permissions or paying royalties. And in February 2001, a federal appeals court upheld a lower court decision which found that Napster, the file swapping service, violated copyrights.

In each instance—Kinkos, Napster, and Eldred—the publishers won in the courts. But winning in the courts has not solved the problem of losing in the marketplace. Indeed, these court decisions have not resolved the challenges posed by market demands or by the new technologies that facilitate the distribution of content. Most importantly, the decisions have not addressed the value of content in the digital age.

Admittedly, campus conversations about the value of content can be contentious. Many students and faculty believe that content—books, articles, music, and media—should be free. (Correction: Many professors feel that all books and articles should be free—except, of course, their own publications!) Officials in the book publishing and recording industries argue that college students are not willing to pay for content.

And yet, every time I visit a school, college, or public library, I see ample evidence documenting the value that college students and college faculty place on content.

Across the United States, what economists call the "market clearing price” for content is about seven cents a page. That's what library users generally pay, per page, to copy content from books, magazines, and journal articles. That's what college students are willing to pay for the convenience of having materials from the stacks and reserve reading rooms in their dorm rooms and off-campus residences.

So the market experience indicates that, yes, content has value. Consumers—college students and faculty—will pay for content, when the content is "fairly” and thoughtfully priced. The problem, of course, is that providers and users have very different expectations about the value of content.

The library experience suggests that the market metric should be dimes, not dollars. Unfortunately, book, music, and media publishers still seem focused on dollars.

There is hope. While the content providers in the book, music, and media industries have sought protection from the courts, they are also learning lessons from the market. Film studios initially protested the arrival of VCRs 20 years ago, fearing this new technology would kill box office revenues. Yet the films studios have found home video to be a huge market. Today in the United States, home videos—the rental and the sale of VHS and DVD products—generate almost twice the revenue of movie tickets—roughly $10 billion for box office sales vs. approximately $19 billion for VHS and DVD rentals and sales. In the early days of VHS, studios would often price movies at $100; today, DVDs for many recent releases now sell for less than $20.

Recalling one key mantra of the Internet economy, yes, content may yet become king on the Internet. But not yet—and not until providers and users can come to reasonable agreements about fair value. The experience with video suggests it will take time before all participants learn the real lessons about the real value of content in real markets. Let's hope it d'esn't take another two decades.

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