The concept of the digital economy

3.2 The Terms of Reference for this Inquiry refer to the ‘importance of the digital economy and the opportunities for innovation leading to national economic and cultural development created by the emergence of new digital technologies’.

3.3 The digital economy has been defined as ‘the global network of economic and social activities that are enabled by information and communications technologies, such as the internet, mobile and sensor networks’.^[1] It is not separate from the general economy, and is intrinsic not only to commercial transactions but also to education, health services, social services, paid and unpaid work.^[2]

3.4 Australia has made a commitment to becoming a leading digital economy.^[3] Digital technology, including search functions, cloud-based solutions and other digital platforms, provides savings and efficiencies for individuals, businesses and governments, increasing wealth in real terms and driving further economic growth.^[4] Stakeholders generally agreed that ‘participation in the digital economy is likely to be a critical source of innovation for Australian firms and consumers’.^[5]

3.5 A Department of Innovation, Industry, Science and Research Report has called for Australia to remove barriers to digital content and service uptake, or ‘risk falling behind the rest of the world’.^[6]

3.6 It is not possible to anticipate what new technologies will emerge over coming years and decades. What is clear is that copyright will have a direct and indirect impact. Copyright law is an important part of Australia’s digital infrastructure, and has a profound influence in ‘regulating access to education, culture, social interaction, commercial innovation and the provision of essential government services’.^[7]

3.7 Copyright law requires reform in order to facilitate the commercial and cultural opportunities of the digital economy. Universities Australia submitted:

It is therefore imperative that Australia puts in place an intellectual property framework that supports rather than hinders investment in the digital economy and that is sufficiently flexible to provide breathing space for the research and development that is essential to innovation without the need for constant readjustment.^[8]

3.8 Economists have warned of the

moral hazard effect on incumbent firms; that copyright in itself can create an incentive for existing industries to rely on law enforcement to protect their business model, rather than to adopt new technologies.^[9]

3.9 The recommendations in the Report are aimed at equipping Australian copyright law to serve more effectively the needs of Australia and Australians in the digital environment.