Book review: Creating Economy – Enterprise, Intellectual Property and the Valuation of Goods

We often read that the economic benefit of intellectual property, e.g., incentivising innovators to create, is unproven and tenuous at best. Why bother with these cumbersome, and seemingly ever-expanding, legal framework?

Well, perhaps, because there is more to intellectual property than providing an incentive for innovation. At least this is one of the key contentions developed by sociologists Barbara Townley, Philip Roscoe, and economist [+ former PermaKat] Nicola Searle, in “Creating Economy – Enterprises, Intellectual Property and the Valuation of Goods”.

The book demonstrates that intellectual property rights do more than provide creators with hope for a return on investment. The authors observe that intellectual property ‘structures’ transactions because it operates as a “market device”. Intellectual property enables complex goods, such as music, literary content or design, to navigate the market. Creative works are complex goods because they are difficult to appropriate, unlike tangible objects, being both non-rivalrous and non-excludable. As such, this type of goods would be more vulnerable to free-riding; hence the need for special protection.

In practice, intellectual property enables creative economic agents (creators and producers) to categorise and segment these creative goods via contractual agreements into different uses across different territories. This has the effect of ‘stabilizing’ creative content within the market. The authors conclude that intellectual property is, in fact, effective in its role as “market device”.

The authors support their analysis with an empirical study of the UK micro-creative industries. Their study is based on 122 interviews with small-medium enterprises (SMEs), micro-businesses, free-lancers and sole-traders across the following creative sectors: publishing, fashion and textiles, film, TV, dance, video-game design, music, and theatre. The authors describe the main aim of their fieldwork:

The primary interest lay in understanding the organizations’ comprehension and management of IP. Questions related to the nature of their business, its brief history, their main products, projects, audiences, markets, and challenges; and how they understood IP, what IP issues they faced, and how these were managed (p. 24).

The data generated by these interviews reveal that the impact of IP on the relevant markets is complex, and that IP is understood in very different ways, depending upon the creative producer and the milieu in which they operate. For example, the game sector is described as very interested in seeking protection, and it seems, is more aware of the various layers of IP rights than other sectors, such as dance, which, as a community, has traditionally been more reluctant to rely on copyright in negotiations or disputes over ownership (see p. 41-48).

The authors highlight the existence of gaps between the reality of the creative process, the expectations of ownership by creators and the actual existence of legal ownership. These gaps are explored in Chapter 2, which unpack how creators, in each field, negotiate these gaps, or tensions, according to the conventions of their own field.  

Another central finding of the study is that intellectual property does not seem to be experienced as a ‘title’ or a ‘thing’ that one may own or transact, but rather as something more fluid. Thus, the authors analyse the role of IP on the market as a ‘nexus’, tying the IP content (e.g. the book) and the IP right (IPR) applicable to that content (e.g. the copyright). This notion of ‘IP/IPR nexus’ underpins the book’s entire approach and offers an interesting lens through which to study the practical impact of intellectual property on the ground.

Conceptualizing IP as a ‘nexus’ enables us to recognize that a creator will relate differently to the IP content (let us say the book) and the IPR that may be subsist within it (here the rights granted by copyright for instance). In some cases, the creators will not affirmatively seek to enforce their IPR in the book; at the most the IP in the book will be negotiated between parties according to other conventions, specific to the milieu (e.g. publishing) or not at all.

For example, the author of a novel might let a colleague produce an adaptation of her book to be performed at a story-telling festival without asserting her intellectual property rights or demanding payments. At most, there is an expectation that the conventions relevant to her milieu will apply, such as being included in the credits of the performance or consulted prior to the adaption being commercialized anywhere.

In other cases, the same author may assert her IPR firmly using the law to formulate her transaction, say in selling the rights of her book for adaptation by a large film production company for sale in specific countries. In each one of these hypothetical circumstances, the IPR in the book does exist but it is not necessarily enforced by the author. This what the authors of the book, if this Kat understands correctly, is meant by “IP/IPR nexus”, at the most basic level.

In explaining the IP/IPR nexus the authors go on to write:

An analogy might be useful here, so we will take one from the world with which we are most familiar. The book you are holding, or reading on your screen is a ‘creative work’. In the spring of 2018 it existed as a clutch of texts, digitally processed documents that could be printed out and annotated. This was the author’s IP, to which certain legal rights immediately and automatically accrued: notably copyright, a right of exclusion, and a right not to be copied. This IP, embodied in our texts, has an overspill in a more colloquial conception of IP as the intellectual careers, experience, knowledge and projects of the authors … At some point however, the IP changes to more specific IPR, which through assigning copyright, renders it separable, detached and ready for sale. … rights proliferate: the right was passed to the publisher to turn our documents into a book that can then be sold to fellow scholars and libraries; the rights for the Hollywood blockbuster and Sunday Times serialization that will inevitably follow; rights of translation…

Alongside the concept of IP/IPR nexus, there is a range of timely topics worth mentioning, such as: the definition of the creative industries (see, Introduction); the profile of creators, caught between the myth of the author-genius and the figure of the resilient ‘entrepreneur’ (see, Chapter 3 onwards); the concept and impact of uncertainty on the relationships formed between creative agents in the creative industries (see, Chapter 4), and  the understanding, calculation and protection of value in the creative context (Chapter 5 to 7).

This book is a most welcome contribution to the scholarship, not least for its coining of the IP/IPR nexus. It will be interesting to see how the nexus ‘behaves’ in data samples larger than the one collected by the authors in their qualitative study. The present data spans across a wide range of creative industries (as listed above) but not all sectors are equally represented. For instance, the authors interviewed 26 persons working in design (ranging from interior product design to craft and jewellery), 18 in theater, 14 in fashion and textiles, 12 in computer games, film, publishing, TV, and music, but only 8 in dance. It would be interesting to see, for example, whether a larger sample of dance artists would confirm that the dance community is today as copyright averse as presented in the study (see p. 125) or as it has been in the past. Larger samples would certainly strengthen comparisons between creative sectors on their relationship to intellectual property.

This book will be relevant and useful for anyone interested in the economic and “real-world” impact that intellectual property rights have on (at least) the UK creative industries. There is no need to be well-versed in either IP law or economic theory to be able to follow the reasoning of the authors developed throughout the book, which makes this monograph suitable for lawyers, policy-makers and students alike. For all of the reasons stated above, this book comes in warmly recommended and this Kat looks forward to the “follow-on” research it will spark.  

Book reviewed: Creating Economy - Enterprise, Intellectual Property, and the Valuation of Goods, by Barbara Townley, Philip Roscoe, and Nicola Searle. Oxford University Press. 2019. Hardback: £55.00. 240 Pages. 234x153mm. ISBN: 9780198795285. Also available as e-Book. See here.