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for consumer welfare, the minimal effect of extension on private incentives cancelling out the similarly minimal effect on social costs.
The comparison of discounted private benefits and social costs becomes more complicated — and important — in the case of motion pictures. The great majority of motion pictures fail to repay their budgets and motion picture companies must rely on profits from blockbusters and even medium successes to balance these losses. By increasing the value of their libraries overall, term extension can give them revenues to produce new films during the extension period. Further, companies are more likely to invest resources in creating s.equels or remakes of existing works if they know that the expiration of the copyright in the original work is more than twenty years in the future. If a work is about to fall into the public domain there is much less incentive to make a derivative work since any rights in underlying works will soon become — in effect — non-exclusive.
2. Effect of Extension on Public Access. Some opponents have argued that copyright term extension will diminish the future dissemination of copyrighted works. The more alarmist of these opponents speculate that copyright owners will suppress their works in the extended term. Opponents with a better grounding in economics argue that copyright during the extension period will result in higher prices for copyrighted works than consumers would otherwise have to pay. The first argument is plainly wrong; the second, though not inherently wrong, is more complicated than its supporters acknowledge.
a. The Suppression Fallacy. Copyright owners are by and large in business to make money. This means that if they are not exploiting a copyrighted work themselves, and someone else has an interest in doing so, they will happily license that use at a price. To be sure, copyright owners "suppress" dissemination over a short period in order to obtain the rewards of price discrimination. This is why a motion picture company will, for example, first release a film to movie theatres where the admission price is highest; six months later it will sell videocassettes to video stores where viewers can rent them for less; pay-per-view will come later and, as much as three years later, the film may appear "free" on network television. But, once this brief period of staged exploitation ends, the copyright owner will have every incentive to license uses that it chooses not itself to exploit. The few instances that these alarmists cite as evidence of suppression are the exceptions that prove the profit-maximizing rule.
b. Price and Quality Effects in the Extended Term. In theory, at least, opponents of copyright extension are correct to observe that the price charged consumers for a work will be higher if copyright subsists in the work than if the work is in