The Value of Public Domain Works

Lead Research Organisation: University of Glasgow
Department Name: School of Law

Abstract

The creative process within media firms is often characterised as a binary choice between licensing existing intellectual property or creating new intellectual property owned by the business. However, a third possibility exists, which is that creators draw upon material in the public domain, such as stories and ideas that are not protected by copyright. In the 2011 Review of Intellectual Property for the UK government, Ian Hargreaves suggested that "unduly rigid application of copyright law" may "block innovation" and "hamper growth". The greater availability of creative material may indeed provide greater opportunities for the UK media sector and particularly SMEs.

While this claim is theoretically plausible, there have been no empirical studies of value creation from a public domain perspective. It is the aim of this knowledge exchange partnership to create a foundation for assessing the economic and social value that use of materials at the margins of copyright law brings to the UK economy.

Three interrelated activities are proposed, each developed iteratively with the Intellectual Property Office, and supported by short placements of researchers:

1. Mapping Public Domain Exploitation
The extent of exploitation of public domain works in commercial products is little understood. Researchers from Glasgow University and Bournemouth University will undertake an empirical study of the use of public domain content in digital interactive media (video games). Building upon previously published work to evaluate copyright exploitation in other domains, the researchers will apply an innovative content analysis methodology to UK video games published from 2003-2013. Credits and content will be analysed for the presence of licences, and public domain elements in story lines, settings, music, and other elements will be coded. This method will permit for the first time quantifying the role of the public domain in an important commercial market.

2. Business Models for the Exploitation of Public Domain Works
This project will exchange knowledge between UK SMEs and policymakers around emergent business models, to facilitate informed policy decisions to benefit UK firms. Prior academic research has already established that media SMEs face difficult decisions around IP, particularly when choosing whether to create original material, license from a third party, or engage in contract work-for-hire. Qualitative research with UK transmedia SMEs will enable the project partners to develop insight about the potential role for public domain works in the media value chain. A quota sampling method will be used to ensure the applicability of findings across a range of markets, including print, mobile, TV and interactive games.

3. Forward-looking data on works entering public domain
There is no central database of works currently in the public domain. Calls to make available information on the upcoming entry of works into the public domain has prompted a number of initiatives across the EU to create 'public domain calculators', however these projects remain limited in scope or incomplete. The project will create a publically available database of UK literary works that entered the public domain since 1992 and those due to enter the public domain until 2023. Researchers will additionally conduct quantitative time series analysis on a sample of works to enable benchmarking the economic performance of works before and after they enter PD. The database will be publically hosted on a Copyright User Portal, a joint web resource to be managed by faculty from Bournemouth University and CREATe at the University of Glasgow.

The knowledge exchange scheme will culminate in a major national conference bringing together policymakers, business managers, freelancers and academics. An associated 'hothouse' event will be hosted in which media SMEs will be invited to collaborate around a series of public domain business models.

Planned Impact

The primary beneficiaries of this project will be policymakers and staff at the Intellectual Property Office, and business in the UK media sector.

The IPO have called for empirical research and related activity to better understand the potential of the public domain and its role in the UK creative economy. To serve the public as effectively as possible, policy in this area must be based on sound empirical research and consultation with the business community. As primary beneficiaries of this knowledge exchange project, the IPO will gain actionable empirical findings to guide informed policy making, consisting of three key knowledge areas: the size and value of the public domain, the exploitation strategies available to media businesses, and the possible influence on the UK creative economy in the coming decade. Since Government IP policy directly concerns the UK creative industry and consumers, the impact of this activity will be considerable and wide reaching. In particular, the Government will be provided with the tools to be able to estimate the value of the public domain for the creative industries and establish how different policy approaches might heighten or reduce its productive use.

The knowledge produced and disseminated by this project is will assist media businesses in developing strategies to exploit public domain works. Impact will consist firstly of raised awareness, by informing media businesses about the existence and availability of public domain materials. This will be accomplished via published outputs in partnership with the Intellectual Property Office, direct engagement with the business community via planned events and via online dissemination on the Copyright Portal and other websites. Secondly, the project will have behavioural impact by providing business managers with actionable and strategically beneficial sources of knowledge (such as the forward-looking database of works entering the public domain). It is expected that media businesses will expand their repertoire of IP strategy to include PD works, potentially lowering costs and thus providing a viable alternative revenue model for risk-averse media firms. The project is expected to produce benefits for the wider economy in terms of increased UK creative industry revenues and an increase in creative output based on public domain material.

Publications

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Title Video: SMEs, Copyright and the Public Domain 
Description This video explores the use of public domain and licensed copyright materials as inputs to commercial innovation. Interviews with successful UK media firms reveal how the availability of certain expressions, such as open source software and out of copyright artistic works, can be combined with new artistic inputs to generate commercial products. The video was supported by funding from the ESRC project, 'Valuing the Public Domain', led by CREATe at the University of Glasgow. It was produced in cooperation with copyrightuser.org, a free online resource to support understanding of copyright in the UK. 
Type Of Art Film/Video/Animation 
Year Produced 2015 
Impact The video is part of a suite of learning tools by copyrightuser.org to inform entrepreneurs about opportunities related to the exploitation of copyright and out-of-copyright works. Copyrightuser.org is an online public outreach resource aimed at making UK copyright law accessible to creators, media professionals, entrepreneurs, students, and members of the public. Its stated objective is to 'inform creators about how to protect their work, how to license and exploit it, and how to legally re-use the work of others.' 
URL https://vimeo.com/129528245
 
Description The project, titled 'Valuing the Public Domain', had the following aims: 1) map the size of the public domain in creative works and the frequency of its use; 2) analyse the role of public domain works in value creation for UK firms; 3) assist UK media companies to identify business models that derive benefit from the public domain.

The non-rival, non-excludable nature of public domain materials would seem to limit their appeal to creators in a competitive market. Any observed commercial uptake of public domain material consequently raises important questions: What stimulates creators and firms to invest in transforming or re-publishing public domain works? How do firms gain and sustain competitive advantage when exploiting freely available public domain materials? What policy options are available to promote market uptake of public domain materials, and what are the likely impacts?

The researchers undertook three related empirical data collection exercises. First, an inductive study of entrepreneurial decision making inside of UK creative firms was based on interviews with 22 businesses that had successfully exploited public domain materials. Second, a computer-assisted content analysis of 1,993 projects on the Kickstarter crowdfunding platform enabled researchers to compare success rates of different kinds of IP in a live market, including public domain works. Third, a study of 1700 biographical web pages on Wikipedia permitted analysis of the value added to web pages where public domain photographs or those licensed under Creative Commons scheme were available.

Overall, findings show that new works inspired by the public domain do perform well in the marketplace and can be a source of competitive advantage for innovative firms. Public domain materials appear to attract a higher rate of funding and success on the Kickstarter platform, likely because because public domain works are familiar to potential backers and operate as a signal of quality in a market characterised by information asymmetry and high risk. UK firms that have used public domain materials successfully report benefits at different stages in the value chain. For example, they might build proprietary technologies as wrappers around placeholder PD material, which is later commercialised at little additional marginal cost alongside other licensed copyright works; some firms develop original content within a user community of other fans and consumers of a PD work, producing creative products which connect with other offerings in the transmedia ecosystem; finally, some creative firms working on public domain materials find ways of connecting with public stakeholders around issues of local and national significance, essentially enrolling public stakeholders into the value chain as co-producers. Some firms use a combination of approaches and it is likely that new approaches will be developed.

The theoretical proposition that overgrazing will diminish the value of public domain works does not appear to be a significant concern - firms are innovating with PD material despite the absence of exclusive rights in the source material.
Exploitation Route The three main areas where action is encouraged on the basis of this research are in (i) valorising UK cultural heritage by increasing accessibility, (ii) clarifying the legal status of public domain works, and (iii) improving access to information about the public domain among commercial users such as SMEs.

1) Valorising UK cultural heritage:
Research with individuals and firms revealed that creators struggle to locate public domain materials suitable for commercial exploitation. Where searchable archives of high-quality materials exist, innovators report significant benefits. A recent successful example is the British Library Mechanical Curator initiative and its various spin-out products. Unfortunately, digitisation efforts have until now taken place on an ad hoc, case-by-case basis and carry significant risk for archival institutions . Future efforts to digitise and make available works in the public domain should be particularly attuned to commercial and well as non-commercial uses. Members of the public are both consumers and stakeholders in relation to the public domain. As much as possible, members of the public and stakeholder communities should be involved in curating, preserving and disseminating public domain materials. Ideally, outputs should be of professional quality and should be presented in formats which are machine-readable, manipulable, and adaptable to different mediums.


2) Clarifying legal status of public domain works:
The creators involved in the study possessed varying degrees of knowledge about intellectual property. All expressed uncertainty when working with public domain materials. Specific gaps in knowledge included: when it is necessary to ask permission to use a work, and from whom; whether works by foreign creators may be used in the UK and under what conditions; what expressions are protected by copyright and what ideas or inspiration remain available for uptake; and what copyright rules pertain to digital or photographic reproductions of famous artwork. A number of academic initiatives in the USA and Europe in recent years have attempted to develop 'public domain calculators' capable of ascertaining the status of a given work, either automatically or with user input. However, these initiatives have failed to yield useful results, largely because of the complexity involved in determining the copyright status of a work, even within a single territorial jurisdiction. Government should provide guidance on those issues, in a format that is accessible to creators and businesses. Educational initiatives should be aimed at helping UK firms understand what is likely to be still in copyright and what is likely to be in the public domain. Increasing the strategic capabilities of the UK media sector with respect to intellectual property will likely increase licensing of copyright works alongside uptake of public domain materials - both types of usage require similar legal awareness and capacity.

3) Improving information systems:
This research demonstrates that entrepreneurs have developed business models that add value to underlying materials drawn from the public domain. Rather than express concern about the possibility of competition from later market entrants, creators were confident that they were able to retain competitive advantage on the basis of proprietary innovation. Respondents focused their concern on transaction costs: searching for and using public domain materials was often more costly than licensing a copyright work or developing original work, disinhibiting creation. Centralised databases of works with associated metadata, such as the Wikimedia Commons project, have sought to overcome the problem. Initiatives to increase the centralisation and searchability of public domain data will likely lower these barriers to entry and encourage innovation and new products. Government is encouraged to consider further research on markets where open innovation occurs, focused on enumerating the costs and benefits of open, searchable resources for creative entrepreneurship (as this is emerging as a key concern in debates about public open data).
Sectors Creative Economy,Digital/Communication/Information Technologies (including Software),Government, Democracy and Justice,Culture, Heritage, Museums and Collections

URL https://www.gov.uk/government/publications/copyright-and-the-value-of-the-public-domain
 
Description European Copyright Policy. Full details are documented here: https://www.create.ac.uk/policy-responses/eu-copyright-reform/
Sector Creative Economy,Digital/Communication/Information Technologies (including Software),Government, Democracy and Justice,Culture, Heritage, Museums and Collections
Impact Types Cultural,Societal,Economic,Policy & public services

 
Description Citation by MEP Julia Reda in support of copyright reform
Geographic Reach Europe 
Policy Influence Type Citation in other policy documents
Impact In a speech on 3rd March 2015, titled 'Towards a new legislation on Intellectual Property in the digital single market', European MEP Julia Reda cited our public domain research while arguing for political action to preserve and enlarge the digital public domain in Europe. Discussing our empirical results on the value of Wikipedia, she stated: 'What these authors found was that [...] having these kinds of works increases the understanding, increases the attractiveness of a site like Wikipedia. So what you can see is that if we don't have a public domain, projects like Wikipedia, which are in the public interest, would not even be possible to start, because the commercial investment that would be needed to clear the rights to images would be a huge obstacle to any commercial business going in this direction.' (MEP Julia Reda, 3 March, 2015).
URL https://www.youtube.com/watch?v=hwhieAogRtM
 
Description Citation by Wikimedia Foundation
Geographic Reach National 
Policy Influence Type Citation in other policy documents
Impact Wikimedia Foundation cited research by Heald, Erickson and Kretschmer on the valuation of public domain images for Wikipedia, which was funded by ESRC Grant ES/K008137/1. The research shows that reducing the public domain would incur welfare costs for society, and the authors calculate those costs in terms of access to free content on Wikipedia, amounting to between USD $200-230 million annually in consumer surplus. Wikimedia Foundation used this evidence as a basis to argue for halts to copyright term extension and other restrictions on the size of the public domain.
URL https://meta.wikimedia.org/wiki/Research:Newsletter/2015/April#Excessive_copyright_terms_proven_to_b...
 
Description ESRC Festival of Social Science Open Innovation Design Jam
Amount £800 (GBP)
Organisation Economic and Social Research Council 
Sector Public
Country United Kingdom
Start 11/2016 
End 11/2016
 
Title Text mining extractor tool for Kictstarter research 
Description In support of the research project 'Valuing the Public Domain', the research team developed a bespoke software tool to extract information from the online crowdfunding platform Kickstarter and analyse its contents. This tool enabled the research team to gather a dataset of 1,993 product pitches on the platform during Q1 2014, and analyse the corpus of text to generate quantitative data about market performance of items in the sample. 
Type Of Material Improvements to research infrastructure 
Provided To Others? No  
Impact The extractor and text mining tool has been improved and can now be used to update and replicate the previous study for comparison, or conduct novel studies with different research questions. The research team has been approached by a third sector organisation (EFF) to run a new study using the existing methodology to measure the market performance of open vs closed DRM in technology and design products. That follow-on study is currently under development in 2016. 
 
Description Association of Internet Researchers (AoIR) Conference, Berlin 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Postgraduate students
Results and Impact Abstract:

The authors analyse 1,993 product pitches on the crowdfunding platform Kickstarter for the first quarter (January - March) of 2014. The sample includes successful, unsuccessful, and cancelled or suspended projects in the categories of publishing, video games, comics, theatre and film. These categories were selected because they consist of expressions which can be protected by copyright, and thus have comparable licensing parameters. Other categories include products which can be protected with patent or design right, which have different licensing requirements.

The authors estimate an Ordinary Least Squares (OLS) regression model on the reported cost of production for media products in five categories. Controlling for popularity, status of pitch creator, previous experience and other factors which may influence perceived value, we find a moderately significant negative effect of in-licensing of copyright works on the price of a good set by creators, compared to 'pure' original works. The authors interpret this to indicate that in-licensing has a cost-savings effect for creators. The result is somewhat confounded by the lack of a corresponding significant effect for the re-use of works in the public domain (non-copyright inputs). We interpret this to indicate that in-licensing of third-party IP confers additional cost-savings benefits to creators beyond simple permission to use an expression (such as valuable tools or assets related to the license). To test for the presence of increased payoff for original creators, the authors use a logistic regression employing the outcome of success or failure for product pitches as dependent variable. Holding constant the amount of funding initially pitched for (which is shown to significantly impact the outcome), we find a strongly significant positive effect for transformative use in both in-licensing and public domain adaptation, on the likelihood of a project's success.
Year(s) Of Engagement Activity 2016
URL https://aoir.org/aoir2016/
 
Description European Law and Economics Association (EALE) Conference, Bologna 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Abstract:

This paper exploits the patronage-like features of an online crowdfunding market to study the effect of transaction and licensing costs on the ability of follow-on creators to successfully reuse existing works. We study the reported costs of production of 1,993 projects seeking funding on the Kickstarter platform from January to March 2014 to see if re-use of copyright material has a measurable effect on the cost of creation under four different conditions: (1) the creator has obtained a copyright license; (2) the creator vows to seek a license if funding is successful; (3) the creator borrows from a copyright work but does not discuss licensing; and (4) the creator borrows from a work in the public domain.
Year(s) Of Engagement Activity 2016
URL http://eale.org/conference/eale-2016-bologna/general-information-2
 
Description European Policy for Intellectual Property (EPIP) Conference, Oxford 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Abstract:

Kristofer Erickson (University of Glasgow, CREATe), Fabian Homberg & Martin Kretschmer, "Measuring the costs and benefits of copyright re-use for follow-on creators: evidence from a crowdfunding marketplace"

This paper exploits the patronage-like features of an online crowdfunding market to study the effect of transaction and licensing costs on the ability of follow-on creators to successfully re-use existing works. We study the reported costs of production of 1,993 projects seeking funding on the Kickstarter platform from January to March 2014 to investigate if re-use of copyright material has a measurable effect on the cost of creation under four different conditions: (1) the creator has obtained a copyright license; (2) the creator vows to seek a license if funding is successful; (3) the creator borrows from a copyright work but does not discuss licensing; and (4) the creator borrows from a work in the public domain.

Previous experimental research has explored the effect of copyright protection on the ability of follow-on creators to in-license and transform existing works. Crosetto (2010) conducted experiments on sequential creativity in which players were given the opportunity to exclude others from a solution to a word puzzle in exchange for a set royalty fee. When the royalty fee condition was higher, participants tended to protect their innovations, leading to anti-commons conditions and a failure to transact. In a low fee condition, players obtained higher payoffs by opening initial innovations and extending other players' open solutions. Bechtold et al (2016) employ a similar experimental approach to study creators' ability to judge whether borrowing or originating is the most beneficial strategy under different licensing cost conditions, on the assumption that copyright imposes costs on sequential innovators:

'According to rational choice theory, a would-be creator, faced with this borrow/innovate decision, should compare the costs and benefits of borrowing with the costs and benefits of innovating. Borrowing entails a variety of costs including, primarily, licensing fees and transaction costs. Innovating, on the other hand, may involve substantial investments in research and experimentation that borrowing does not.' (2016: 16).
Year(s) Of Engagement Activity 2016
URL http://www.epip2016.org/book-of-abstracts/erickson
 
Description European Policy for Intellectual Property Conference (EPIP 2015) 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Research findings were presented to an audience of 60 delegates at the EPIP 2015 conference. EPIP is a conference for academics, legal practitioners and policy makers to discuss issues relating to the regulation of Intellectual Property in Europe (including patent, trade mark and copyright). Following the presentation, the Chief Economist for the Office for Harmonization in the Internal Market (OHIM) European Observatory on Infringements of Intellectual Property Rights contacted the authors to request the full research results, which were supplied.
Year(s) Of Engagement Activity 2015
URL http://www.epip2015.org/make-buy-or-borrow-creative-industry-business-models-from-public-domain-inpu...
 
Description Invited WIPO Seminar on Economics of Intellectual Property 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Investigator Erickson was invited to present findings from the ESRC funded study 'Valuing the Public Domain' to the World Intellectual Property Organization (WIPO), a specialist agency of the United Nations in Geneva. The talk, which attracted 60 attendees, was focused on the theme of the economics of Intellectual Property, and in particular empirical evidence of the economic contribution of public domain materials. in the discussion which followed the presentation, several national representatives (Chile, Spain) expressed interest in the research methods and results for local national policy making. The findings were also features in WIPO Magazine, an industry journal produced by the organization's press office, and IP Watch, an independent press outlet in Geneva.
Year(s) Of Engagement Activity 2015
URL http://www.ip-watch.org/2015/07/10/study-documents-public-domains-importance-to-innovation-and-creat...
 
Description Participation in Strategy Conference, CASS Business School, London 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact The researchers were invited to take part and present findings at the Cass Strategy workshop in London. This two-day annual workshop attracts leading management studies scholars and researchers in related fields, including PhD students/
Year(s) Of Engagement Activity 2017
 
Description Stakeholder Event: Workshop for Creative Firms 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Industry/Business
Results and Impact The purpose of this event was to engage the stakeholder community of small and medium sized creative businesses with research results related to improving the exploitation of public domain materials. The day long event was held in London, at the offices of Digital Catapult and attracted 65 participants. Morning presentations by stakeholder representatives from the British Library, Auroch Digital, and 3Turn Productions were followed by a panel debate with representatives from the Intellectual Property Office, Wikimedia Foundation and the research team. The event explored practical applications of the research findings (new business models, product pitch simulation) and explored partnerships between public and private users of public domain materials.
Year(s) Of Engagement Activity 2014
URL http://www.create.ac.uk/blog/2014/09/25/valuing-the-public-domain-a-workshop-for-uk-creative-firms/
 
Description WIPO Magazine: Generating Value from the Public Domain 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact An article commissioned by WIPO Magazine and written by co-investigator Erickson appeared in both the print and online versions of the journal. WIPO Magazine reaches an international audience of policy makers, law practitioners, and businesses. It is translated in three languages: English, French and Spanish. Subsequent to publication, the researchers were contacted by academics and journalists from other outlets to discuss the research findings. A longer academic working paper containing more detail has emerged from the magazine article and is in development for submission to an academic journal in 2016.
Year(s) Of Engagement Activity 2015
URL http://www.wipo.int/wipo_magazine/en/2015/04/article_0008.html