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

Broadcasting and Issues of Demand

165 An important element in effects of unauthorized uses relates to elasticity of demand for reception of broadcast channels. The fundamental law of demand indicates that as price increases, the quantity of consumption by consumers decreases and vice versa. Elasticity of demand is a measure of the amount of change that occurs.⁵³ Clearly, this has implications for paid broadcasting and the ability and willingness of consumers to pay for services or to substitute similar services (satellite for cable, for example) that are available at a different price. The concept does not apply to audiences of free-to-air broadcasting where there is no direct monetary price for consumption.

166 Audiences are not the only consumers in the broadcasting environment, however. Advertisers are also consumers and the concept applies to them in both pay and free to air settings. Their demand involves decisions as to whether to pay prices offered, what amount of advertising to purchase, and their willingness to substitute one broadcaster over another. Demand also applies when broadcasters sell rights to carry their signals to cable and satellite operators and to the sales of rights to broadcasters. The effects of these demand and elasticity issues are integrated in the analysis in Table 1.

167 If unauthorized use is made, it may or may not affect company revenue depending on consumer demand issues. If unauthorized use of free-to-air signals is made, or if unauthorized use of pay signals is made by persons or entities unable or unwilling to

pay the price for authorized services, no actual loss occurs to company revenue, but it may affect the broadcaster’s ability to sell its broadcast signals to other parties willing to pay.⁵⁴

168 However, if unauthorized use is made by consumers and retransmitting organizations who would otherwise be able and willing to pay for authorized use, the broadcaster is denied revenue that it would otherwise receive from these consumers and organizations. These unauthorized uses may also interfere with the broadcaster’s ability to sell its broadcast signals to other parties that are willing to pay. The same applies to cablecasters.

169 Four fundamental conditions must then be considered in determining the economic effects of unauthorized use: is the use within or external to the intended market of the signal, and does the use involve free-to-air or paid broadcast signals? Table 1 shows the economic effects of unauthorized uses under these four conditions. These provide the fundamental elements that help focus attention to harm done shown in the analysis tree in Figure 3.

170 These economic effects are similar whether the unauthorized use is made in pre- or post signal environments.