Do copyright extensions drive innovation? -- Hollywood blockbuster edition

After all this time on patents, I thought we'd give copyrights a turn.

One of the standard arguments for stronger intellectual property laws is that they encourage innovation. Now let's think about how this is supposed to work. Stronger protection for intellectual property makes those properties more valuable. Greater value causes the market to generate more and better properties, particularly those specific properties that best capitalize on the new profit potential.

In the case of copyright protection, the properties that make the best use of these extensions are franchisable stories and characters. I'm specifically using franchise in the sense of selling the right to use a business model. Just as McDonald's can sell one person the right to run a restaurant in one neighborhood and then sell a different person the right to run one in a different neighborhood, the company that owns the rights to, say, Batman can allow one creative team to produce a series of properties based on the character, then turn around a few years later and allow another team a shot.

This interchangeability of talent is essential given the lengths of time we're talking about here. For most of the Twentieth Century, copyright protection was effectively capped at fifty-six years, but major extensions were passed in 1976 and 1998 which extended protection of corporate works up to ninety-five years and left the possibility open of essentially unlimited future extensions.

In order to reach their full potential, franchises have to repeatedly replace all of their creative personnel. Bond and Batman are arguably the good examples, both having gone through numerous incarnations with completely different creative teams, but there's an important difference in the business model. Bond was an ongoing series with considerable continuity both in front of and behind the camera; Batman pattern since the Sixties has been successful run, fallow period, relaunch with new team. The second model, with its long cycles, takes better advantage of the long copyrights.

We would expect 1976 and 1998 to produce major upticks in the creation of properties that could support Batman style franchises because at those points the profit potential of that type of property greatly increased. We would also expect newer properties generally to be more valuable than older properties both because of freshness and because of changing tastes.

That means by now if we look at films that are either part of a franchise or an attempt to launch or relaunch one, we should expect to see a very large share from the past decade (both because of the 1998 Act and because of recency) then a decent showing from the the Eighties and Nineties and little if anything from before the mid-seventies. With that in mind, let's look at the medium to large budget franchisable movies from 2011 and their creation decade:



The Adventures of Tintin -- Twenties


Alvin and the Chipmunks: Chipwrecked -- Fifties


The Twilight Saga: Breaking Dawn - Part 1 -- 00s


Captain America: The First Avenger -- Forties


Conan the Barbarian -- Thirties


Cowboys & Aliens -- 00s


Diary of a Wimpy Kid: Rodrick Rules -- 00s


The Green Hornet -- Thirties


Green Lantern -- Sixties*


Harry Potter and the Deathly Hallows: Part 2 -- Nineties


I Am Number Four -- 00s


Mission Impossible -- Sixties


The Muppets -- Fifties


Pirates of the Caribbean: On Stranger Tides -- Sixties (part of Disney's movies based on rides series)


Rise of the Planet of the Apes -- Sixties


Sherlock Holmes -- Nineteenth Century


The Smurfs -- Fifties


Spy Kids: All the Time in the World -- 00s


Thor -- Sixties


Transformers: Revenge of the Fallen -- Eighties


X-Men: First Class -- Sixties


You can quibble with some of my calls here. I quibbled with myself quite a bit, going back and forth on the Adjustment Bureau (old), Cars (new), Puss-in-boots (old) and Diary of a Wimpy Kid among others, but no matter what standards you use, it's almost impossible to see anything in the data that supports the idea that these extremely long copyrights have increased the production of highly marketable properties.

At best you could argue that the extensions might have had a positive effect but it was small enough to be swamped by other technological, economic and demographic factors. At worst, you could make the case that copyright laws were approximately optimal in the middle of the Twentieth Century and that the extensions have actually inhibited innovation.

Like patents, copyrights are necessary, but highly intrusive regulations. Taken to an extreme, they distort markets, divert resources from creators to legal departments, encourage consolidation and set up onerous barriers to entry for small companies and start-ups.

For another layer of irony here, take a look at how Disney approached intellectual property in its early days.

* Technically very late Fifties (or even Forties if you count earlier character with the same name)

Also posted at MippyvilleTV.