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Who Owns the Copyright Industries, and Why It Matters

Last Updated on March 5, 2013, 5:00 pm ET

The US Department of Justice might have seen the light and decided not to side with foreign publishers against a US public university, but it appears that the US copyright system in general takes the side of foreign companies against the US public.

That’s the inference I draw from an important new report, Foreign Ownership of Firms in IP-Intensive Industries and handy infographic by Jonathan Band and Jonathan Gerafi, which shows that the US’s rightsholder-friendly copyright laws amount to a kind of reverse protectionism: we punish US taxpayers, domestic industries, and the public interest in order to protect foreign corporations.

The numbers are striking, especially in the publishing industry. Simply put, the vast majority of the publishing industry is foreign-owned – over 80% of the revenue flowing to the “big 6” publishers is flowing overseas. When you focus on STM publishers, the numbers get even worse – around 90% of the STM publishing industry is foreign owned by revenue.

The recording industry is nearly as bad, with around 75% of the revenue of the “big three” labels flowing overseas. Gaming console makers are similarly dominated 3-to-1 by foreign companies.

The motion picture industry looks like a star-spangled standout, with most of the industry owned by US companies, but Band and Gerafi dig deeper to show that there is still a good chunk of work and revenue flowing overseas for shooting locations, production work, foreign talent, and the like.

In short, the tangible benefits of the US copyright system with its extravagant term of protection, its punitive statutory damages, and all the other well-known and documented dysfunctions, seem to flow mostly to huge foreign corporations.

It wasn’t always thus. It’s a truism among copyright wonks that the US used to be a “pirate nation” – US law for many many years did not award copyright to foreign works. Indeed, Benjamin Franklin, who was one of the country’s first librarians, was also arguably one of our first pirates – he ran a press in Philadelphia that profited from the unlicensed printing and sale of the works of European authors.

What a difference a couple of centuries makes. In addition to the overwhelming foreign domination of the copyright industries, American copyright law on its face is definitively tilted in favor of foreign authors and foreign rightsholders. Their works were airlifted out of the public domain by the Uruguay Round Agreements Act, which was challenged and vindicated in the Supreme Court in the Golan case. Foreign rightsholders are not subject to the requirement of registration prior to bringing lawsuits. And the list goes on.

Together with the growing consensus that some of the worst problems in our copyright system owe to our accession to an international copyright treaty called the Berne Convention, this report should give momentum to the movement to recalibrate copyright so that it returns to its Constitutional purpose of “promoting Progress” for the benefit of the US public at large.