Abstract
Private copying exceptions in copyright law allow individuals to make personal copies without infringing on rights. Copyright levies aim to compensate rightsholders for resulting harm by making devices that enable copying subject to a surcharge. Notwithstanding that the welfare effects of levy schemes remain poorly understood, adaptations are frequently debated. This paper provides an ex-ante evaluation of a policy that would include cloud storage services in the copyright levy system. I study whether the benefits for rightsholders of a levy in the cloud can outweigh its costs for consumers and cloud providers in a static setting. Using a large-scale experiment, I estimate the demand function for cloud storage and quantify welfare changes of various counterfactual policies. I develop a method to determine the level of economic harm caused by private copies in cloud storage, which can be informative for practice. The results show that any realistic copyright levy on cloud storage would be welfare-decreasing. I discuss potential dynamic effects and considerations of efficiency versus equity.
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