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Innovation and CreativityWhat Does Broadway's Hamilton Tell Us About Today;s Global Economy?

This blog first appeared on Progressive-economy.org,
June 8, 2016


 
Innovation and Creativity
 
What Does Broadway’s “Hamilton” Tell Us About Today’s Global Economy?
 
By Kathryn Hauser
 
Even if you can’t score tickets to the hit Broadway show, Hamilton, which was recently nominated for a record-setting 16 Tony Awards, you can still download the cast album onto your computer, iPhone, iPad or other device.  As you listen to the highest selling Broadway cast album of 2015, the hottest selling cast album since 1963 and the #1 Rap Album, you may not appreciate that all of this is made possible by copyright protections provided in the United States and countries around the world.  
 
Modern copyright law stems from the goal enumerated in the Constitution of “promot[ing] the Progress of Science and useful Arts” by providing exclusive rights to creators.  This matters today because copyrights and other intellectual property (IP) protections are one key to generating good jobs for Americans in an ever more globalized economy and because IP benefits the rest of the world, including developing countries.

Ron Chernow, who wrote the biography of Alexander Hamilton in 2004, received copyright protection for his written work.  Chernow’s book inspired Lin-Manuel Miranda to create an interpretation of Hamilton’s life through music, lyrics and the play, Hamilton, which is also copyrighted.  U.S. copyright laws ensure that they both will benefit from their creativity by exclusive rights to reproduce their work for a limited period of time. 

Protection by copyright law gives creators incentives to produce new works and distribute them to the public, whether cultural products like music or computer software.  Copyright holders are given a set of exclusive rights as an incentive to create works that enrich society. 
 
Copyrighted works move into the “public domain” and are available for unlimited public use when the copyright term expires.  In the meantime, the public is free to make “fair use” of copyright works. Copyright laws strike important balances in defining what can and cannot be protected, determining what uses are permitted without a license, and establishing appropriate enforcement mechanisms to combat piracy, so that all stakeholders – including us as consumers -- benefit from the protections afforded by copyright.

Copyright protection is not just an American phenomenon.  Nearly all countries are parties to international copyright treaties and conventions that offer protection to foreign works, and the United States is a member of many of these, including those administered by the World Intellectual Property Organization. In addition, the United States and its trading partners are subject to the provisions related to intellectual property rights, including copyright and enforcement measures, in the context of the multilateral trade agreement administered by the World Trade Organization, known as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).   
The United States has negotiated free trade agreements with a range of countries that require them to have robust copyright laws and enforcement measures in place.  Taken together, these treaties, conventions and trade agreements underscore the international consensus that copyright protection provides necessary rewards and incentives to creators and innovators, and enriches societies as whole.

Whether through music, films and TV, software, video games and text publishing, American core copyright industries are an important segment of the U.S. economy, punching far above its weight.  This segment provides significant value-added to GDP, an increasing number of high-paying jobs, real growth which outpaces the rest of the economy, and substantial foreign sales and exports, surpassing many industry sectors.
 
  • In 2013, the value added by the core copyright industries to U.S. GDP reached more than $1.1 trillion dollars, accounting for 6.7% of the U.S. economy.
  • Firms that create, produce, distribute or exhibit copyright materials employed nearly 5.5 million workers in 2013, accounting for 4% of the entire U.S. workforce, and nearly 5% of total private employment in the United States.  Moreover, the average annual 2013 compensation paid to these workers was $88,000 – 34% higher than the average annual compensation paid to all U.S. workers.
  •  Significantly, growth rates of this segment outpaced the growth of the economy as a whole. During the period 2009-2013, the core copyright industries grew at an aggregate annual rate of 3.9%, compared with 2.2% for the remainder of the economy.
 
ProgressiveEconomy previously addressed the importance of IP trade to the US economy in a piece written by Ed Gresser. The following data from that piece illustrates the importance of IP to US exports:
 
In U.S. trade: For the U.S., last year’s $128 billion in royalty and licensing income would be 6 percent of a $2.28 trillion export total. In comparison to other top-tier American exports, income from ideas and inventions would rank a bit below food and agriculture, a bit above financial services, and about equal to automotive-industry exports. A table:

2013 Total
$2,280 billion
Food and Agriculture
162 billion
IP Revenues
129 billion
   Patents
45  billion
   Software
43 billion
   Film/TV/Music/Books
17 billion
   Trademarks
17 billion
   Other*
  6 billion
 Automotive
 125 billion
 Finance and Insurance
 110 billion
 IT goods
 108 billion
 Aerospace
 105 billion

 
Since the days of Alexander Hamilton, much has changed in the way in which copyrighted works are disseminated to the public.  Digital technology and networks have changed the nature of what creators are able to produce and how they share their works with the public, as well as the ways the public can access that content and interact with it. 
“Fair use” makes it possible for individuals to access creative works through an increasing variety of legitimate online platforms.
 
  • According to the Motion Picture Association of America, American audiences now have access to more than 110 legal online video services in addition to more traditional outlets, like movie theaters, broadcast, cable and satellite TV.
  • In 2014 alone, viewers used these lawful online services to access more than 66 billion television episodes and 7 billion movies.  As consumers demand more and more online content, these TV and film numbers are expected to balloon to 102 billion and 12 billion by 2019.
 
Also very important are initiatives to assist developing countries in capturing the value of their IP.  Lightyears IP is a highly effective and innovative organization that has implemented an IP value capture strategy, enabling African communities to profit from their intellectual property.  This strategy has enabled Ethiopian coffee farmers to increase export income by $100 million by capturing the value of their IP.  Such initiatives should be expanded.

As in other aspects of the global economy, a rules- based system, including through the Rule of Law at the national level, international agreements (such as the Trans-Pacific Partnership and the WTO’s TRIPS agreement), international institutions (such as the UN’s World Intellectual Property Organization), and civil society initiatives (such as LightYears IP) are essential to protecting American interests and the interests of our trading partners.

The innovation and creativity of Ron Chernow and Lin Manuel Miranda, supported by America’s robust copyright protection and “fair use” exceptions, enable people across the country -- and, indeed, the world -- to learn about the extraordinary life of Alexander Hamilton and listen to the soundtrack – all without scoring tickets to the show playing on Broadway.  Copyright matters.

END NOTES:
To learn more, please go to the resources below:
1.  World Intellectual Property Organization
The Economic Performance of Copyright-Based Industries - WIPO
http://www.wipo.int/copyright/en/performance/
2.  Report from the McKinsey Global Institute, October 2011,
The great transformer: The impact of the Internet on economic growth and prosperity
3.  United Nations Conference on Trade and Development, “Information Economy Report 2012: The Software Industry and Developing Countries,” November 2012, http://unctad.org/en/PublicationsLibrary/ier2012_en.pdf
4.  BSA and INSEAD, “Competitive Advantage: The Economic Impact of Properly Licensed Software,” May 2013, http://www.bsa.org/softwarevalue.
5.  Thomas Rogers & Andrew Szamosszegi, “Fair Use in the U.S. Economy: The Economic Contribution of Industries Relying Upon Fair Use (CCIA 2011)”,
http://www.ccianet.org/wp-content/uploads/library/CCIA-FairUseintheUSEconomy-2011.pdf
6.  According to the analysis of two experts, Roya Ghafele & Benjamin Gibert, the introduction of fair use amendments in Singapore substantially increased the growth of industries relating to private copying technology, while having a negligible impact on copyright industries. See “The Economic Value of Fair Use in Copyright Law: Counterfactual Impact Analysis of Fair Use Policy On Private Copying Technology and Copyright Markets in Singapore (Oxfirst Ltd. 2012)”,  http://bit.ly/1bVpKYZ
7. Research in Europe also indicates a substantial reliance on copyright “flexibilities” See P. Bernt Hugenholtz & Martin R.F. Senftleben, “Fair Use in Europe: In Search of Flexibilities (Universiteit van Amsterdam 2011)”, http://www.ivir.nl/publicaties/download/912
8. In 2012-2013, the World Economic Forum initiated a project to examine the overlapping interests among different stakeholders involved in the digital media. The first report, Norms and Values in Digital Media: Rethinking Intellectual Property in the Digital Age, is available here: WEF_RethinkingIntellectualProperty_DigitalAge_Report_2014.pdf.
9. Subsequently, McKinsey & Company prepared a summary report for the WEF in 2015 that examines the digital ecosystem and contains excellent data and analysis. See WEF The Business of Creativity 20152015-1.pdf
 
 
 
 
 
 

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