Decreasing Copyright Enforcement Costs: The Scope of a Gradual Response

The digitization of copyrighted goods and the dematerialization of their distribution over the Internet have weakened copyright, a key institution of the creative industries. One factor affecting the value of copyright stems from the broadband roll-out, wherein copyright enforcement costs have become higher than the estimated benefits of copyright. This paper analyzes the causes of this situation and suggests how a graduated response to infringers may durably decrease copyright enforcement costs. Beginning with a review of the economic literature on copyright focusing on its industrial aspects, the study then analyzes how the consumers' impunity provides incentives to “free ride” on copyright all along the vertical distribution chain. This rapidly increases copyright enforcement costs. Next, the paper describes both the graduated response mechanism and the voluntary agreement which initiated this system in France. In conclusion, this study argues that increasing the cost of free-riding for the final consumer should lead to a decrease of copyright enforcement costs and, therefore, higher returns in the creative industries.