TILEC Seminar: Bertin Martens | Is the EU Copyright Directive still fit for purpose in the age of Generative AI? An economic perspective

Abstract

The arrival of Genera􏱖ve AI (GenAI) models has s􏱖rred considerable legal controversy about copyright (CR) issues. This paper complements the legal debate with economic considera􏱖ons. CR is an economic policy tool to overcome private market failures in media products. It reflects a balance between the nega􏱖ve economic effects of monopolis􏱖c private CR for authors of crea􏱖ve artwork, and the posi􏱖ve effects of incen􏱖vizing a con􏱖nuous stream of crea􏱖ve output. This paper explores how GenAI changes that balance.

There is no economic need for CR protec􏱖on to incen􏱖vize the produc􏱖on of GenAI media outputs because the marginal cost of GenAI output produc􏱖on is close to zero, much lower than human media produc􏱖on costs. This rela􏱖ve price effect will boost GenAI outputs and accelerate subs􏱖tu􏱖on between human- and machine-produced outputs. Human authors can always claim CR over hybrid human-machine outputs, provided they meet a legal de minimis thresholds for human inputs. Legal CR a􏱘ribu􏱖on problems with GenAI may lose relevance in this context.

EU CR law grants a condi􏱖onal Text and Data Mining (TDM) excep􏱖on to CR protec􏱖on for the use of media products as training inputs for GenAI models, provided the CR holder does not opt-out of this excep􏱖on. This narrow excep􏱖on cons􏱖tutes an over-protec􏱖on market failure. Personal interest of CR holders ignore spill-over effects to other industries, innova􏱖on and growth. There is no need for CR protec􏱖on because TDM will not have a nega􏱖ve supply effect on the produc􏱖on of media output, quite to the contrary. Imposing licensing requirements on GenAI training inputs will fragment the knowledge base on which GenAI model are trained, generate windfall monopoly profits for CR holders, increase transac􏱖on costs for training inputs and result in inefficient licensing terms, reduce compe􏱖􏱖on in favor of very large GenAI developers, and cons􏱖tute a major compara􏱖ve disadvantage for GenAI developers in the EU. An uncondi􏱖onal TDM excep􏱖on would overcome all these sources of private market failure.

Speaker: Bertin Martens

Time: 10:45-11:45 hrs

Host: Antonia Stanojević
Moderator: Konrad Borowicz