Analysis of Advertisement based Business Model under Technological Advancements in Fair Use Personal Recording Services: A Law and Economics Approach

Recent technological advancements such as cloud based digital video recording services and advertisement-skipping services are threatening copyright holders’ business models more than ever. This paper introduces an economic model to analyze court rulings on the personal fair use of video recording technologies. Although personal video recorders might have been beneficial for copyright holders in the past, newer and more innovative information technologies have the potential to restrict copyright holders’ usual distribution channels, namely live airing and video on demand. By linking a law and economics approach with the characteristics of information technology, this paper provides a new perspective to explain the effects of copyright law on the business strategies of copyright holders under the threat of new kinds of information technologies. The court may have to consider adjusting the boundaries of fair use according to match such rapid technological development. Business managers should also be aware that this combination of legal rulings and information technology may create either benefits or disruptions.