Emerging trends in the creative economy have major IP implications

The WEF identified six “megatrends” that are expected to have significant impact on the creative economy of the future

In the 21st century creative economy, rapidly advancing technologies and increasingly global commercial markets are presenting a mounting array of challenges to traditional notions of intellectual property. Organizations that are operating in industries directly or peripherally impacted by creative markets are well advised to stay current on emerging trends in the creation, distribution and consumption of digital content.

Considering the unprecedented pace at which evolving consumer tastes are fueling innovation and innovation is in turn driving consumer behavior, staying current is no easy task. Helpful in this regard is a recently released report commissioned by the World Economic Forum (WEF), an independent international organization that in the last year analyzed how technology trends and a globalized economy are reshaping the way the world creates, distributes, and accesses content.

Key among the findings reported by the WEF’s Global Agenda Council on the Intellectual Property System is the identification of six overarching “megatrends” — areas where a number of important patterns of activity are converging — that are expected to have significant impact on the creative economy of the future. In addition to identifying and detailing these megatrends, the report takes a closer look at specific industries under the creative economy umbrella and extrapolates generally applicable lessons for how IP might best be managed in order to capture the value of innovations in the creative economy.

The first of the megatrends that will continue to shape IP generation is found in the changing means of access and consumption. Location and access are becoming increasingly decoupled — a particular song, for example, once downloaded to a single consumer’s home server can be streamed to her office, to her car or to her mobile device while thousands of miles away on vacation — and intermediaries that were once part of the physical distribution chain from creator to consumer are playing a less obtrusive but invaluable (and more complex) role in the process. The shift in distribution models toward instantaneous and ubiquitous access are probable sources of friction with delivery frameworks that cannot or do not embrace the full extent of capabilities offered by modern networks and mobile devices.

The second megatrend is a predictable one: new technologies. Big data, increasingly complex virtual content, 3D printing and technology convergence will be key drivers in how content is created and disseminated. Not only will these technological advances lead to increases in efficiency, but they will also enhance the creative process itself.

The third megatrend is seen in increased user involvement. The creative process is more than ever a shared endeavor, a reality perhaps best exemplified by the 100,000 active contributors to the popular online resource Wikipedia. A range of new licensing choices provides a wealth of options from which user-contributors can tailor protections of their IP. The potential blurring of traditional lines between content creators and users raises serious challenges with respect to ownership and rights to the resulting content.

The fourth megatrend lies at the convergence of shifting business models. Traditional business models will see increased pressure from new business models that rely on content distributors’ lower marginal costs of production and consumers’ shift in preference away from ownership of content in favor of obtaining licenses to access that content. A salient example of the impact of shifting business models is offered by the music industry. A combination of piracy and business model disruption reduced annual global music industry revenues from $30 billion in 1999 to $16.5 billion in 2012. And yet, as subscription services have rapidly expanded, 2012 brought the first year-over-year growth in the music industry since 1999, providing an indication that new models of distribution can meet consumer expectations while at the same time protecting the interests of content owners.

The fifth megatrend focuses on the increasingly global market for content. Globalized commerce, when properly leveraged, is a win-win for consumers and content owners. Consumers will continue to see a wider range of choices while content providers will have access to larger and larger audiences — especially considering the growth of the middle class in emerging economies. Yet globalization also will test the limits of IP legal frameworks which are nationally oriented and were developed before the spread of high-speed global networks. Present international agreements serve an important role but are unlikely to suffice as the creative economy increasingly comes to depend on cross-border licensing.

The sixth and final megatrend that has a critical bearing on IP development is the increased fragmentation of copyright ownership. More than ever, thanks to the Internet, derivative works are playing a central role in content creation, as existing works are increasingly excerpted, repurposed and incorporated into new works. Ensuring that the rights of original copyright holders are respected will be essential in the context of this expanding “remix” culture. The longstanding problem posed by orphan works — works for which the copyright owner is unknown or unreachable — will become even more challenging in this context, and copyright authorities worldwide can be expected to develop new solutions to address this exigency.

Maintaining an awareness of where the creative market is and where it is likely to go is vital if an organization is to calibrate its IP measures to best capture the value offered by market innovations. A more in-depth treatment of the WEF’s forecasted megatrends, as well as scrutiny of specific creative industries, IP recommendations, and digital copyright principles can be found in the full report, Intellectual Property Rights in the Global Creative Economy, on the World Economic Forum’s website.

Contributing Author

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David J. Kappos

David J. Kappos is a partner at Cravath, Swaine & Moore LLP. He is widely recognized as one of the world's foremost leaders in the...

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