In recent years, websites that violate copyright laws, such as Manga Mura, are becoming hot topics of discussion in Japan. Although these services are being recognized as problems that are causing major economic harm to existing businesses, the blocking measures employed as countermeasures are being criticized as being invasive of the secrecy of communications.
From the perspective of the manga industry, this matter describes the likelihood of a conventional ecosystem with a publisher in the center, and with paid subscriptions and advertisement as core pillars, becoming reconstructed around a new player, the free content sites, which are dependent on the advertising model. In other words, the path of re-intermediation is being demonstrated. Utilizing the personal information of users who visit the website, can not only increase the accuracy of ad distribution, but also contribute to the improvement of the quality of manga, leading to further business growth. The cost of the distribution system is largely fixed, and the digital reproduction of manga themselves barely costs anything (in other words, marginal costs are close to zero). As a result, as the business expands and ad revenues increase, the sustainable operation of the entire system that bears the proper copyright fees can be expected.
If readers who buy books and magazines are thought of as the paying users of freemium services, there is a potential to reach a 50-fold market increase through free distribution. Assuming the semilog inverse demand function and estimating parameters using a data set of the Japan Magazine Publishers Association
, consumer surplus increments generated by free distribution of comic magazines (16 male-targeted magazines and 12 female-targeted magazines) can be estimated at around 540 billion yen in 2017. This exceeds the trial calculation of the amount of damages (total of 413 billion yen) conducted by Content Overseas Distribution Association (CODA) by a large margin.
This shows that, by converting the free business model that is currently inconsistent with the copyright laws into a legitimate business model, we can expect the improvement of social welfare. If this opportunity is missed in Japan and overtaken by overseas firms, it will surely be a major blow to our economy. From the perspective of social welfare maximization, it can be said that this situation requires stakeholders to take business risks to bring about change to the conventional business model.