- In an economic sense, copyright protection offers writers, filmmakers, songwriters and other producers of copyrighted works the incentive to create the product under protection and to produce additional works.
The Concise Encyclopedia of Economics states that economic efficiency requires that copyright protection last long enough to provide this incentive. Copyright lasts for the creator's life plus 70 years. It lasts 95 years after publication in the case of a work-for-hire product. - In 1989, economist William Landes and Judge Richard Posner released a paper titled "An Economic Analysis of Copyright Law." They wrote that copyright protection involves an economic trade-off between the costs of limiting access to creative works and the benefits of providing incentives for people to produce these works. To promote economic efficiency, the authors reason, copyright law must maximize the benefits that authors of creative works derive from making additional material while minimizing the costs associated with limiting access and administering a legal system of copyright protection.
- Economic analysis of copyright protection begins by considering the costs of producing creative works. Landes and Posner write that the costs consist of the author's time and effort, as well as the publisher's cost of purchasing, producing and distributing the work. To create additional works, the authors' and publishers' returns should exceed their costs. Unauthorized copying, for which authors and publishers receive no compensation, limits their returns, dampening the likelihood they will create additional works. Copyright law limits unauthorized copying, enabling authors and publishers to recover their costs and realize the benefits of creative endeavors.
- The most difficult economic issue surrounding copyright law involves the scope of protection the legal system offers. This question encompasses such issues as the protection of expression rather than ideas and the creation of new works derived from or based on earlier material. Posner and Landes write that copyright protects the expression of an idea, not the idea itself, but concede the distinction between the two is not always clear.
- The U.S. Constitution establishes the basis for copyright law in Article I, Section 8, which authorizes Congress to create a system of copyright to promote the growth of the arts and sciences. Lewis and Clark College law professor Lydia Pallas Loren, writing in "Open Spaces," cites this section of the Constitution and states that the central purpose of copyright law is to advance the progress of learning. The Supreme Court noted the economic incentive provided by copyright law in Twentieth Century Music Corp. v. Aiken in 1975. The court stated that copyright's first effect is to ensure authors receive a return for their labors. The larger purpose, the court continued, advances creative activity for the public good.
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