E sccr/21/2 Original: English date: August , 2010 Standing Committee on Copyright and Related Rights Twenty First Session Geneva, November to 12, 2010

VI. ECONOMIC LOSSES IN UNAUTHORIZED USES OF SIGNALS

159 Broadcasters differ in terms of their revenue models. Some receive income from public sources, some from advertisers, some from consumer payments, and some from a mix of sources. Consequently, the economic effects of unauthorized uses differ among broadcasters and cablecasters.

160 In terms of current business operations, the effects on broadcasters and cablecasters depend upon whether unauthorized uses involve personal purposes of consumption, consumption based on skirting pay systems, or commercial exploitation of signals by other parties. The exact economic impact of unauthorized uses of protected works depends upon the nature and costs of production and distribution on the supply side and the extent of rivalry among consumers and ability and willingness to pay on the demand side.⁴⁹

161 Unauthorized uses of copyrightable products affect recovery of marginal costs,⁵⁰ average costs of authorized products available for sale,⁵¹ consumer demand, and company revenue.

162 Marginal costs and average costs are particularly relevant to the theft or piracy of physical products. Because broadcasting and cablecasting does not involve the production and distribution of a good for physical distribution, there is no physical inventory of the product and there are only marginal costs of production and distribution, except those relative to amplification and signal encryption. Consequently, the average cost per unit of products available for sale is not relevant, and the unauthorized uses do not create uncompensated production and distribution costs that become economic losses for broadcasters. If the scale of uses is large, cablecasters may have to bear added costs for additional bandwidth that is not being recouped.

163 Because broadcast media do not require physical manufacturing and production for distributive purposes, they are spared manufacturing and transportation costs incurred by producers of physical products such as DVDs, books, and newspapers.⁵² This is particularly important in terms of costs, because no uncompensated manufacturing and distribution costs are caused by unauthorized uses when broadcasting is involved.

164 Protections against harmful effects on marginal and average costs are important to the rationale for the related rights protection provided for phonograms, but they are not relevant to the protection of broadcast signals and only partly relevant to cablecasting. The issues of demand and revenue remain salient, however. Consequently, the argument that signal protection is parallel to phonogram protection is imperfect.