Copying and Indirect Appropriability

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Copying and Indirect Appropriability:
Photocopying of Journals
S. J. Liebowitz
University of Rochester and University of Chicago
Creators and owners of intellectual properties are alarmed by the growth of technologies that ease the task of copying these properties. This paper, however, shows that the unauthorized copying of intellectual properties need not be harmful and actually may be beneficial. The empirical impact of photocopying on publishers of journals is examined in an attempt to discover if publishers can indirectly appropriate revenues from users who are not original purchasers. The evidence indicates that publishers can indirectly appropriate revenues from users who do not directly purchase journals and that photocopying has not harmed journal publishers.  

I would like to thank Gerald Dwyer, Jack Hirshleifer, Steve Margolis, George Stigler, Susan Woodward, and an anonymous referee for their suggestions. Support from the Center for Research in Government Policy and Business at the University of Rochester is gratefully acknowledged. [Journal of Political Economy 1985. vol. 93, no. 5]

1983 by The University of Chicago. All rights reserved. 0022.3808/85/9305.00045$0 1.50  
It has become dramatically easier to make copies of printed materials since the introduction of the Xerox 914 copier in 1959. Since that time, users of printed materials have been busily making copies of these materials with this and subsequently introduced copying machines, conveniently and at low cost. The copies are generally not of’ as high a quality as the printed originals, but they are often much more convenient. The producers of copyrighted printed materials see this use of their product as an infringement of their property rights and, more important, as a drain on demand and revenues. But the feasibility of photocopying has two other important effects not generally acknowledged: (1) because the materials can be inexpensively copied, there is an increased demand for them as copyable originals 945

(i.e., the demand of copiers can be indirectly appropriated by copyright owners), and (2) the total value of the copyrighted good may be dramatically altered. Because of these two effects, photocopying need not have a detrimental impact on the revenues of copyright holders. In this paper I examine photocopying’s influence on journal publishers, with the conclusions being that both of these effects are operative and that photocopying has had a salutary effect on the profitability of publishers of photocopied materials. The debate and litigation between owners and users of copyrighted materials, therefore, may be misplaced.1  

I. Copyright Law and Appropriability
Copyright gives authors certain property rights over their intellectual creations, the most important being the sole right to reproduce or publish the work. It is often suggested that without such a right authors and publishers would not receive remuneration sufficient to create their intellectual works. Copyright, however, is rather narrow in scope, protecting merely the expression of intellectual ideas and allowing several authors to copyright similar or identical works independently if they were created independently. The usual term of copyright is the life of the author plus 50 years. There are various exceptions to copyright protection such as performance for charitable causes or copying short passages for use in schools. An important exception, which is most germane to academic and other researchers making photocopies, is known as fair use. Fair use is a defense to a claim of infringement currently provided in Anglo-American copyright law when the copying is done for purposes such as research, teaching, news reporting, or commentary.2 The courts determine whether a particular action constitutes fair use, and no hard and fast demarcation exists. Although it is often suggested that copyright is required if creators of intellectual products are to be...
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