Copyright term, film labeling, and film preservation legislation : hearings before the Subcommittee on Courts and Intellectual Property of the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, first session, on H.R. 989, H.R. 1248, and H.R. 1734 ... June 1 and July 13, 1995 (1996)

300 exploit a work under the extended term than would be paid under the current life + 50 period." The extension, therefore, holds little promise of fmancial benefit to individual authors. The absence of any additional incentive for corporate authors from the extension of the copyright period to 95 years is also easily seen. Consider an assured $1,000 per year stream of income. At a discount rate of 10%, the present value of such a stream for 75 years is $10,992, while the present value of a 95-year stream is $10,999, a difference of less than 0. 1 % . Even at a 5% discount rate, the present values are only $20,485 and $20,806, respectively, a difference of about 1.5%. And these minuscule present value differences are for guaranteed streams of income. When risk is factored into the analysis, the present value of a 75-year stream and that of a 95-year stream must be considered essentially identical. The chance that a given copyright will still have nontrivial economic value 75 years after the work is created is very small—only a tiny fraction of all works retain economic value for such a long time. No company will take the "extra" 20 years into consideration in making a present decision to invest in the creation of a new work. In fact, an ongoing successful company like Disney is more likely to be spurred to the creation of new works like The Lion King or The Little Mermaid because it realizes that some of its "old reliable" moneymakers, like Mickey Mouse, are about to enter the public domain. It is therefore extremely unlikely that an additional 20 years of protection tacked onto the end of a copyright protection period that is already very long will act as an incentive to any current author to work harder or longer to create works he or she (or it) would not have produced in any event. What is certain, however, is that such an extension of the copyright term would seriously hinder the creative activities of future as well as current authors. Consequently, the only reasonable conclusion is that the increased term would impose a heavy cost on the public-in the form of higher royalties and an impoverished public domain— without any countervailing public benefit in the form of increased authorship incentives. Indeed, if incentives to production were the basis for the proposed extension, there would be no point in applying it to copyrights in existing works. These works, by definition, have No human author can possibly receive anything more in exchange for terminable rights in his or her work under a life + 70 regime than under the current life + 50 regime. The reason, quite simply, is that no purchaser of copyright rights will pay anything for the "extra" 20 years of the term, because those supposed extra years can be freely terminated, along with whatever remains of the current period, before they ever begin. An exception is the right to continued exploitation of derivative works, which cannot be terminated. Even in this case, however, the maximum "extra" value to the transferring author is the present value difference between a 50-year and a 70-year protection period. Even for guaranteed income streams, this difference is around 5.4% (at an assumed 5% discount rate). That is, a guaranteed income stream of $1,000 per year for 50 years has a present value of $19,256 while the same stream for 70 years has a present value of $20,343. The purchaser of the derivative work right, however, will not be willing to pay anything close to this difference in present value, because of the overwhelmingly high risk thai the derivative work created pursuant to the purchased right will have an economic life, like most works, far less than even the 50 years now afforded. Written Testimony of Intellectual Property Professors Page 9