Everything still applies now
Li et al. 18 (Xing Li is an Associate Professor of Marketing at Guanghua School of Management, Peking University. Megan MacGarvie is associate professor of markets, public policy, and law at the Boston University Questrom School of Business and a research associate of the NBER. Petra Moser is an economist and economic historian serving as a Professor of Economics at the New York University Stern School of Business. “Dead poets' property—how does copyright influence price?” The RAND Journal of EconomicsVolume 49, Issue 1, 2/9/2018. Accessed 5/23/2024 via University of Michigan online libraries) wtk
We find that longer copyright terms raised prices by improving publishers’ ability to practice intertemporal price discrimination. A straightforward extension of models of price discrimination (Stokey, 1989) to the case of temporary monopoly rights predicts that prices increase in response to longer copyrights. This result requires that consumers vary in their willingness to pay for books, which is consistent with the historical record. Commercial circulating libraries and wealthy individuals were the main buyers of romantic period books (Erickson, 1990). Circulating libraries had a higher willingness to pay than individual readers, because they could rent the same book to many readers. By the 1800s, more than 1,000 libraries operated in Britain (St. Clair, 2004). Publishers sold to wealthy libraries in London first, whereas smaller provincial libraries and individual buyers waited for lower priced editions. Personal letters reveal that even wealthy buyers, such as the Earl of Dudley, waited for prices to fall before they would buy a book. Analyses of book-level price data over time confirm that publishers reduced the price of new editions as books approached the end of copyrights.
The 19th-century publishing industry shares many traits of publishing today, but marginal costs of distribution are approaching zero for e-books and online movies today. A simple extension of our model to the case of zero marginal costs of distribution confirms that extensions in copyright terms increase price. Another distinct feature of the historical setting is that resale markets were thin. For example, circulating libraries such as Mudie’s “kept most of the books which had done their rounds in huge ‘catacombs’ for decades or longer” to prevent competition with used copies of their books (St. Clair, 2004). Today, textbooks and other types of books are traded in active resale markets, which can limit publishers’ ability to practice intertemporal price discrimination (Chevalier and Goolsbee, 2009).52 However, similar to 19th-century publishers, copyright owners take active steps to prevent resale, for example, by making it more difficult for students to use earlier editions of a textbook, or by distributing goods digitally through streaming or rentals (Shiller, 2013).53