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The Potential Demise of Another Natural Monopoly: Rethinking the Collective Administration of Performing Rights
Abstract
In most countries the right to publicly perform music is not administered individually by the copyright holders but rather collectively by Performing Rights Organizations (PROs). The common explanation behind the proliferation of collective administration is that some aspects of copyright administrations are natural monopolies. It is often argued that individual administration is impracticable or at least non-economical. Collective administration is therefore promoted as the most efficient method for licensing, monitoring and enforcing those rights. In addition, since the market is a natural monopoly, regulation, rather than an attempt to foster competition, is thought to be the optimal regulatory response.This is a first in a series of two articles that critically analyzes this natural monopoly argument. In this article I argue that the case for PROs is not as straightforward as it is assumed to be. I show that many of the underlying cost efficiencies that are attributed to PROs are usually simply assumed, and in many cases could be equally achieved under less restrictive arrangements. The next article will show that technological changes that can facilitate the online licensing of music undermine the natural monopoly framework even further. This is a pre-copy-editing, author-produced PDF of an article accepted for publication in the Journal of Competition Law and Economics following peer review.
... This 'natural monopoly argument' is often cited in the discussion about regulation or fostering competition between performing rights organizations (see e.g. Katz (2005)). Following this argument, it is not surprising that the situation in Europe is characterized by national, factual and legal monopolistic organizations like the German GEMA. ...
... In the beginning popularity of radio broadcasting, ASCAP used its monopolistic market power to rise the rate for their blanket licenses from 2 percent up to 7.5 percent of the broadcasters' gross revenues (see e.g. as well as Conolly and Krueger (2005) Following the inspiring ideas presented by and Katz (2005), we investigate a Bertrand type stylized model under implementation of two Salop-circles of fixed size, in which institutions like PROs or music publishers acting as intermediaries between the owners of copyrights (composers or artists) and the users (radio or TV stations). We introduce the idea that these intermediaries specialize in particular type of music 7. Intermediaries compete in the acquisition and in the supply of a differentiated product for the 5 Kleit (2001) describes the investments in BMI as a 'pure public good' because it was prohibited to BMI to exclude or discriminate any non-members as well as to implement exclusionary contractual strategies. ...
... 6 Due to Katz (2005) the existence of SESAC could be seen as an interesting fact against the natural monopoly argument. The small market share of SESAC indicates a monopolistic market structure is not needed to license efficiently. ...
This paper presents a theory of vertically interrelated markets of identical fixed size under implementation of positive indirect network effects. By introducing two Salop circles, a two-sided market model is provided, where intermediaries of differentiated copyrights for intellectual property, like performing rights organizations or publishers, compete as oligopsonists for owners of the intellectual property and as oligopolists for the users of their blanket licenses. We demonstrate, that an increase in competition benefits either license users or copyright owners or harms both groups. Moreover, if license users gain from an increased market entry, the owners of the intellectual property have to incur losses and vice versa.
... The risk of liability: infringement. This is a risk described by Katz (2005), when he treats blanket licenses as a risk management tool. Katz (2005) studies the right of reproduction and focuses on the problem of on-line music distribution. ...
... This is a risk described by Katz (2005), when he treats blanket licenses as a risk management tool. Katz (2005) studies the right of reproduction and focuses on the problem of on-line music distribution. He argues that " Copyrighted music has traditionally been distributed without any protecting technology. ...
In the law and economics literature of copyright, the economic function of collecting societies has been principally treated as a way to diminish transaction costs. However, another possible function, the transfer of risk as a function of collective administration has been, relatively, ignored. Through risk analysis, an author will be able to determine which method of administration of protected rights is most beneficial to him. Due to information asymmetries, authors and users bear a number of risks. These risks can be transferred to a collecting society which is in a better position to bear them more efficiently and to better administer the protected rights.
... Blanket licences also benefit rightholders in facilitating proof of infringement. It sufficed to show the unauthorised use of a single work to presume infringement of all the others contained in the same repertoire and simultaneously licensed by a <25> <26> CMO [103]. Currently, rightholders have to demonstrate infringement analytically, i.e. by giving evidence oneby-one, of which works within the repertoire have been used without authorisation [104]. ...
Online exploitation of musical works allows consumers in the European Union (EU) to enjoy tens of millions of musical works from a place and at a time of their choice. While the Title III of the EU Collective Rights Management (CRM) Directive contributed to reshaping the EU multi-territorial online music licensing market, it did not adequately facilitate licensing for online use of musical works on a multi-territorial level in the EU. This article seeks to answer the question as to which legislative measures should be introduced to facilitate licensing practices and to lower transaction costs in order to enable market entry of new online music services in Europe. In order to answer this question, this article analyses relevant provisions of the Title III of the CRM Directive and problematic aspects of their application to different licensors. Furthermore, legislative and soft law documents on the EU level as well as cooperation initiatives among CMOs are evaluated in order to assess whether past initiatives can be considered by the EU legislator. Finding answers to these questions seems relevant in the light of possible re-evaluation of multi-territorial licensing practices on the legislative level in April 2021, as foreseen by the CRM Directive.
... Албинсон у предоченим судским одлукама управо зато види признање "малих права" ауторима у Француској, то јест овлашћења на несценско извођење/јавно саопштавање (музичких) ауторских дела. 97 Полазећи од тог значаја исхода судског спора те од навода из судског поступка из 1848. године да је већина других сличних институција (као што су позоришта, салони, укључујући и оне на отвореном) плаћала накнаде Буржеу за извођење његових дела, Албинсон поставља питање: да ли је описани "инцидент" у Café Morel ствар случајности? ...
Колективно остваривање ауторског права је витални део корпуса модерних ауторскоправних система. Без њега се остваривање, па и постојање ауторског права тешко може замислити. Упркос томе, у последње две деценије све се више поставља питање његове сврсисходности у данашњем добу информационог друштва. Предмет истраживања је управо подробнија анализа одређених аспеката интеракције система колективног остваривања ауторског права и нових прилика у информационом друштву. Анализом се жели постићи двоструки циљ: теоријски и практични. Теоријски циљ је да се одговори на следећа два питања:
I Да ли је и под којим условима систем колективног остваривања ауторског права сврсисходан у савременом добу информационог друштва?
II Који су могући сврсисходни правци даљег развоја система колективног остваривања ауторског права у информационом друштву?
Практични циљ је да се покаже како добијени теоријски налази могу да се искористе у креирању и планирању националне политике развоја система колективног остваривања ауторског права у информационом друштву, и то на примеру Србије.
Одговори на два теоријска питања и решење за практични задатак се, при томе, траже кроз призму конструкције друштвеног контекста, која је посебно детерминисана за потребе истраживања, тако да је чине спољашњи слој – четири групе друштвених фактора (технолошки, економски, културолошко-вредносни и политички) и унутрашњи слој – ауторско право.
Спроведено истраживање је дало наредне одговоре. Колективно остваривање ауторског права је и даље сврсисходно у информационом друштву, будући да још увек постоји довољна друштвена потреба за његовим традиционалним улогама и оно те своје улоге може делотворно да извршава. Ипак, како би остало сврсисходно на дужи рок, колективно остваривање ауторског права мора да се развија, да се реформише. Могући сврсисходни правци даљег развоја система колективног остваривања ауторског права разликују се међу државама због разлика које постоје у њиховим локалним друштвеним контекстима. Они се крећу од привременог инсистирања на традиционалном устројству, преко умерене реформе (као најуниверзалније опције), до фундаменталне реформе колективног система. На основу тих теоријских налаза, напослетку су пружене и смернице за планирање политике даљег развојa система колективног остваривања ауторског права у Србији.
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Collective management of copyright represents a vital segment of modern copyright systems. Without it, the management and even existence of copyright would be hard to imagine. Despite that, in the course of the last two decades, in the new surroundings of the information society, the question of the purpose/relevance of collective management of copyright has become prevalent.
This research aims to provide detailed analysis of particular aspects of the interaction of the existing copyright collective management system and new circumstances in the information society. The analysis is twofold: theoretical and practical. The theoretical aim is meant to answer the following two questions:
I Does the system of collective management of copyright have a purpose in the present-day information society and under what conditions?
II What are the directions for the appropriate development of collective management of copyright in the information society?
The practical aim refers to how the obtained theoretical findings could serve the goal of creating and planning of national policies for the further development of the copyright collective management system, having Serbia as an example.
The answers to the two theoretical questions and the practical task are sought by relying on the construction of the social context, specifically made within this research, so that it consists of the outer layer – four groups of social factors (technological, economic, cultural and political) and the inner layer – the copyright law.
The conducted research has provided the following answers. Collective management of copyright still has its purpose in the information society. The sufficient social need for the traditional functions of the copyright collective management system still exists. And those functions could be performed effectively by the system. Nevertheless, the copyright collective management system needs to be changed/reformed to remain relevant in the long term. Directions for the appropriate development/changes of the copyright collective management system differ among countries due to differences in their local social contexts. They range from insisting on the traditional system (at least in the short term), and moderate reform (as the most universal option) to fundamental reform. Finally, based on the acquired theoretical findings, guidelines for the planning of the copyright collective management policy in Serbia are provided.
... Land rights are private rights, providing authority to right holders that can be an individual, a group or a legal entity. In practice, even after obtaining a certificate, the right to control, to use, or to take benefit from their land can still be void if the land was lost to abrasion [10]. ...
... Transactions need some governance structure, and this is costly to set up. Legal costs and other costs to resolve disputes are textbook examples of such transaction costs (Klein 1980, Ayres and Gertner 1992, Schwartz 1992, Hadfield 1994, Katz 2005, Scott and Triantis 2006, Kostritsky 2005, Famulski 2017). Legal costs understood as the transaction costs mean the direct economic costs incurred by the parties, primarily costs associated with inspection, bargaining, enforcement, and litigation. ...
The aim of the article is to identify factors influencing the transaction costs of the enforce- ment of contracts concluded between entrepreneurs in business matters. For the purpose of the article, a pilot study was conducted involving 210 court cases pending before the District Court in Gdańsk in the first instance after 2009, in which the judgment was issued in 2012 (the last 210 cases) and for which the appeal was lodged to the Appeals Court in Gdańsk and the proceedings were concluded before 2013. The conducted case study was to identify factors influencing the transaction costs of contractual rights on the supply side, i.e. as part of court activity. Transaction costs of contract enforcement include not only the costs of court fees and legal representation, which are defined normatively, but also – and what is obvious – the time necessary to exercise rights under the contract. The study attempted to answer two research questions. First, which factors influence the time of consideration of the case, from the moment it reaches the court of first instance up to the second-instance judgment, and second – to what extent the level of complexity of the case is correlated with the time of its examination. The results enabled preselecting the basic factors that identify the level of complexity of the case. It was assumed in this article that they include: the number of volumes accumulated throughout the examination of the case, the number of hearings, and the number of pages of justification of the first- and second-instance judgment.
... This requires the ability to easily license rights across borders in the European Union. There is a lack of competitive pressure on CRMOs as a result of their control of copyright at the national level (Day 2010;Balogh;Conley 2008;Katz 2005). However, increased competition amongst CRMOs regarding the EU-wide clearance of rights also risks fragmenting musical repertoires (Gervais and Maurushat 2003). ...
The identification and clearance of music copyright is a complex process that suffers from high transaction costs when managed by individual rightsholders. The pooling of music copyright in collective rights management organizations has historically reduced these costs, while providing a larger, and thus more attractive, repertoire to commercial users via the issuance of blanket licenses.However, the development of digital distribution channels and automated clearance technologies for music copyright across multiple borders presents a number of challenges to the current system. As music consumption increasingly takes digital forms, Europe must modernize its collective rights management system in response. The results of this study show there is a very large market for digital music in Europe. As broadband penetration increases and competition amongst Internet Service Providers (ISPs) in Europe enhances access to the Internet, this market will grow rapidly. The market is valued at over 2.6 billion Euro in France, Germany and the UK alone. This constitutes a potential royalty market of 212 million Euro. Yet, only 49 million Euro in royalty revenue from online sources was collected by SACEM, GEMA and PRS for Music. Moreover, the majority of this revenue was collected by PRS for Music in the UK, which is the smallest of the three markets but by far the most efficient CRMO for the collection of royalties from online sources. Other nations in Europe, though significantly smaller, still represent a valuable market opportunity. The disparity between potential and actual revenue for all of the European markets suggests there are problems with the current collective rights management system. The percentage of the royalty market captured in the USA was over 4% more than the European average. New solutions should be sought to capitalize on the market opportunity of digital music services in light of increasing broadband penetration and changing consumer patterns in Europe. This should help unlock the potential of digital music markets, consolidate the single European market, increase competition in the administration of collective rights, and provide better services to European consumers.
... As ana- lyzed above, in their dealings with users, collecting societies will usually issue blanket licenses that authorize unrestricted access to the repertoire they adminis- ter. 117 This arrangement makes singling out a particular track from a member's repertoire impossible, meaning that the attachment of a Creative Commons li- creative commons and related rights in sound recordings cense by that member to that particular track will not be reflected in the tariff charged to users. If the rights holder is not a member of a collecting society, the following scenario will come into play: the collecting society is likely to operate in a de facto monopolistic manner within national borders, administering, through cross-licensing agreements with other foreign societies, rights over more or less the entirety of the global repertoire. ...
Can the will of the author cancel her copyright? The Creative Commons licensing system depends on a positive answer to this question, and indeed, in the area of copyright proper, for the most part this is the case. But the related rights of performers and phonogram producers are a different matter: in addition to their exclusive rights, performers and phonogram producers are also granted a right to equitable remuneration for the use of their phonograms in communications to the public or broadcasting by wireless means. Given that, in many EU Member States the right to equitable remuneration has been implemented in the form of a (waivable or non-waivable) compulsory licensing scheme, while, even where a voluntary license scheme is in place, the functional reality of collecting societies will limit the flexibility that this will allow right-owners, the following question arises: is the legal framework of related rights and the collective management systems in place for the exploitation of these rights compatible with the use of Creative Commons licenses?This book chapter attempts to answer this complicated question with regard to the law of the two EU Member States of the UK and the Netherlands. The issue is examined against the backdrop of the innovative flexible collective management pilot project was initiated for musical works between Buma/Stemra, the Dutch collecting society for music authors and publishers, and Creative Commons Netherlands, the Dutch branch of Creative Commons. The chapter concludes that, when contemplating the application of Creative Commons licenses to musical works in the context of the user’s obligation to pay equitable remuneration to the performer and phonogram producer for use of a phonogram in a communication to the public or broadcast, three main circumstances must be kept in mind: (a) Whether the work has been published for commercial purposes; (b) Whether the work is offered by the user on an interactive, on-demand basis; and (c) What type of licensing scheme is established in the country in question for the management of the right.
This article presents the preliminary work carried out for a study designed to assess and explain the extent and form of the competition between performing rights royalty collection organisations (RCOs) in the music industry. Performing rights function as a key aspect of copyright law allowing creators and publishers to be compensated when their works are broadcast or performed. Such rights generate approximately $10bn annual in revenue for the music industry. RCOs effectively operate as enforcement agents sanctioned by law to requisition and gather payment on behalf of their members.
VGen handeln in einzelnen Kulturmärkten als natürliche Monopole. Doch die technologische Entwicklung der Digitalisierung und Veränderungen der regulato-rischen Umwelt durch die EU-Richtlinie von fordern die etablierten VGen und ihre Marktposition heraus. Diese Situation betrachte ich im Musikgeschäft und befrage VG-Alternativen danach, wie sie ihr Angebot gestalten, um sich von etablierten VGen zu unterscheiden. Durch einen multiplen Fallvergleich zeigt dieser Überblick, dass sich VG-Alternativen regelmäßig als global vernetzt und technologisch versiert präsentieren oder um die Entwicklung spezi scher, lokaler Märkte bemüht sind. Weniger sichtbar beziehungsweise geplant sind Alternati-ven, die sich bisher marginalisiertem Repertoire wie Creative-Commons-lizen-zierter Musik annehmen. Schlagwörter: Alternativen, Monopole, Digitalisierung, Musikwirtschaft.
This paper scrutinizes the effects of the European Directive on Copyright in the Digital Single Market on platform competition. Platforms that are online content-sharing service providers must have a license agreement with collective management organizations that control the content platform that users may – or must not – upload to the platform. The paper shows that the new directive may imply market concentration and an aggregate welfare loss. The reason is that only users of the large platform (in a dual platform setting) will be allowed to upload content if the content assets are sufficiently valuable and if network effects are strong.
This article clarifies the concept of remuneration rights and examines remuneration rights in EU copyright law. Specifically, the article examines the criteria for the calculation of remuneration under the different remuneration rights in copyright law and evaluates how they conform to the normative methodology based on Calabresi and Melamed’s distinction between property rules and liability rules. In the EU copyright acquis, in some cases remuneration reflects the market value of the use of the work, whereas in others it reflects the harm inflicted on the rightholder through use of the work. In spite of overlaps between harm and market value when used as the basis for the calculation of remuneration, the two criteria are fundamentally different. In yet other cases, remuneration is not closely tied to either market value or harm but is a means for the redistribution of surplus. The article concludes that a harm-based remuneration right is a young cuckoo bird in the nest of copyright law and that the calculation of remuneration ought always to be based on market value, unless the purpose of the right is to pursue specific policy objectives by redistribution of surplus. The article recommends that courts, de sententia ferenda, exploit the overlap between harm and market value and shift the focus of interpretation towards the latter.
There are basically two different mechanisms to control collective management organizations (CMOs), namely the general competition-law approach and the sector-specific regulation approach. This chapter explains the features of copyright management (CRM) systems in general and discusses up- and downsides of both approaches. In conclusion it suggests a primary focus on sector-specific regulation. This approach not only takes into account the particularities of two-sided markets in which CMOs act as intermediaries, but also allows the balancing of non-economic values and interests which are among the objectives of CMOs. Sector-specific regulation is further capable of addressing governance issues of CMOs; above all, it promotes transparency for both right holders and users by providing ex ante guidance. General competition law, in contrast, applies ex post and is particularly likely to become a last resort to control CMOs.
In the market for information goods, externalities occur when the production or consumption of literary and artistic works is not directly reflected in the market. Economic theories regarding the creation of market externalities, the causes for market failures, and the correction of market inefficiencies provide evidence in support of retaining the copyright system as the means of correcting these market failures and inefficiencies and to encourage authorship. This approach can also be adopted to analyze the system of collective management. This article aims at analyzing the rationale of collective management system through an economic approach. The author maintains that collecting societies are effective in dealing with the complicated process of rights management, license granting and remuneration distribution.
The mantra of “sex, drugs, and rock and roll” and the high profile deaths of a number of rock stars leads to the question of whether, in fact, rock stars are more likely to die young. A group of researchers in the U.K. found that indeed between 2 and 25 years from their initial rise to fame, rock stars tend to experience two to three times the risk of mortality expected in a similar group of non-rock stars matched by sex, age, and ethnicity. They note that a disproportionate number of the deaths are drug- or alcohol-related [13]. Though not covered in the study, when you add suicides and accidents, especially in planes and helicopters, it appears as though being a rock star is a risky business.
Is digital technology coupled with the Internet destroying the music industry as we have known it since the turn of the twentieth century? Yes. Is that necessarily a bad thing? No. So how will the record companies stay in business? They won’t, if they try to maintain the same business model into the future. That model was to earn revenue from the intellectual property rights attached to recorded music. The record company’s response to declining sales was to go after those who were illegally downloading copyrighted digital recordings. The record companies instead got lots of bad publicity. In 2004, Apple launched a campaign with Pepsi to give away 100 million free downloads and used people who were sued by The Recording Industry Association of America (RIAA) in the commercial promoting iTunes. Who will consumers have a more favorable view of? [27]. Even as the record companies realized that going after illegal downloading was a road with many pitfalls, technology has made downloading illegally passè. Who really wants 80 gigs of music stored on their computer? What music lovers want is to be able to listen to all of your music whenever and wherever you want. Mobile devices such as the iPhone, Blackberrys, and the iPad make this possible. It should be no surprise that just as the music industry is beginning to come to terms with the problem of illegal downloading, a new technology is making it increasingly irrelevant. Record cylinders took up space, 78s took up storage space as did 33 rpm and 45 rpm records. MP3s also take up storage space. Streaming music services allow you access to your songs on any computer or mobile device.
Making a living from composing music has never been easy. F. M. Scherer [125] has painstakingly made estimates of the income of the classical composers in the eighteenth and nineteenth centuries. Mozart was not wealthy and wrote a voluminous amount of music. Scherer found, for the evidence available for 23 composers, that the top two accounted for 44 % of the wealth of all of the composers in the group. Franz Schubert and Mozart died in debt. In fact, when compared with other art forms like painting or sculpture, composers earned far less. In the early 1700s, under the influence of the Lutheran religion, musicians attained a higher status and influence in Germany than elsewhere in the world at the time ([40], p. 133). By the late eighteenth century, they were able to attain a steady income from compositions and performances ([40], p. 138). Most well-known composers of the period distributed their work through sheet music which provided a considerable portion of their total income ([40], p. 140).
As we have seen, musicians are creative in putting a band together and in songwriting; however, to be successful, they must create a sound that is distinctive. Musical styles are differentiated on the basis of elements of sound such as rhythm, melody, harmony, and tone. Though musicians must have their own style, most compose within a particular genre of musical style such as jazz, country and western, rock, hip-hop, and so on. We can also compare the musical styles in different eras. The Tin Pan Alley songs, mostly written for Broadway, were quite different from the rock and roll songs of the 1950s which were simpler in both musical structure and lyrics. Fewer humans and a greater reliance on electrical amplification or electronic reproduction of sound characterized the Rock and Roll Era and rap music continued this trend.
The paper will discuss the reform of the legal framework in the light of the EU proposal directive on collecting societies. The focus will be specifically devoted to the Italian situation, where, like in Austria, there is a legal monopoly. The basis of this monopoly has been recently discussed and the Italian legislator has liberalized neighboring rights. According to some scholars this would lead to a re-thinking of the legal system and to the liberalization of copyrights too. On the other hand, we will take into account the relations between the CISAC decision and the EU Services Directive. The re-thinking of the de facto or legal monopoly positions will be analyzed by the paper also from an economic perspective, discussing economies of scale in the peculiar perspective of the division of the relevant markets. In fact, the final view is that the overcoming the legal monopoly is likely to lead to partitioning of the markets which will have the result of, on the one hand, promoting the creation of small collecting societies, which will be dedicated to specific sectors, but, on the other hand, it should facilitate the growth of the power of collecting societies already dominant in Europe (e.g. GEMA, PRS).
This book examines alternative ways of protecting patent rights using the law and economics framework of property and liability rules. Traditional compulsory licenses are compared with the most recent discussions on the choice between granting or denying injunctive relief for patents (ex post liability rules). The debate about strategic behaviour triggered by the patent system, especially in the aftermath of the U.S. Supreme Court decision in eBay v. MercExchange is discussed along with policy perspectives on both sides of the Atlantic. The problem of calculating the level of compensation, which is one of the most important critiques against the use of liability rules in patent law, is also examined in depth. The book concludes by suggesting that a coherent patent system could opt for property rules in general cases while leaving enough space for exceptions and limited liability rules. Curtailing exceptions and limitations to patent rights, including the use of patent liability rules, could otherwise risk stifling innovation and even contradicting the goals of patent law.
This book examines alternative ways of protecting patent
rights using the law and economics framework of property
and liability rules. Traditional compulsory licenses
are compared with the most recent discussions on the
choice between granting or denying injunctive relief for
patents (ex post liability rules). The debate about strategic
behaviour triggered by the patent system, especially in
the aftermath of the U.S. Supreme Court decision in eBay
v. MercExchange is discussed along with policy perspectives
on both sides of the Atlantic. The problem of calculating
the level of compensation, which is one of the most
important critiques against the use of liability rules in patent
law, is also examined in depth. The book concludes
by suggesting that a coherent patent system could opt
for property rules in general cases while leaving enough
space for exceptions and limited liability rules. Curtailing
exceptions and limitations to patent rights, including the
use of patent liability rules, could otherwise risk stifling innovation
and even contradicting the goals of patent law.
This Article focuses on an unappreciated and significant aspect of the debate over property rules in the technology law context. In particular, it argues that the classic justification for legal entitlements protected by a property rule - i.e., a right to injunctive relief - depends on the ability to define and enforce property rights effectively. In the case of many technology markets, the inability to tailor injunctive relief so that it protects only the underlying right rather than also enjoining noninfringing conduct provides a powerful basis for using a liability rule (i.e., awarding the relevant damages to the plaintiff) instead of a property rule. Notably, where injunctive relief cannot be confined to protecting the underlying right, the availability of such relief can give rise to a "holdup strategy," whereby a firm threatens or uses litigation to obtain a settlement significantly in excess of any harm it suffers. Such strategies, as the Article explains, arise in a variety of technology law contexts, including patent law, digital copyright cases, and spectrum regulation. Depending on the particulars of the context, either courts or agencies should superintend the relevant liability regime and, in some cases, the administrative challenges may undermine the case for a liability rule at all. Unfortunately, legal scholars have generally focused on the substantive debate as to the proper scope of property rights - often arguing for an all or nothing solution - at the expense of evaluating the institutional considerations as to whether and when courts or agencies can superintend a liability regime in lieu of a property right.
This Article advocates the approval of the pending Google Book Search settlement by responding to the antitrust concerns arising from the Amended Settlement Agreement. It contributes to commentary on the settlement by pointing out that the proper antitrust analysis must take into account Google’s role as a two-sided platform, which serves two interdependent sets of customers. The settlement, if approved, will not grant exclusive orphan book access to Google or anticompetitive pricing power to the Rightsholders. Post-settlement regulatory alternatives are explored, and the compulsory licensing of orphan books is rejected. Instead, this Article advocates the explicit grant of licensing power to the Unclaimed Works Fiduciary and the Registry if the settlement’s legal ability to do that is in dispute. Given GBS’s natural monopoly characteristics, another regulatory option is the imposition of a consent decree similar to those under which ASCAP and BMI operate.
Nobody likes today’s copyright law. Widespread unauthorized use of copyright material proliferates with impunity, while citizens and users protest that intrusive copyright and related rights law stifle cultural expression. Equipment manufacturers and intermediaries complain about yet more ’security’ features that complicate their products and services and encumber marketing, while content owners desperately want enforcement to work. And of course it is crucial that whatever regulatory instruments come into play must not age prematurely in Internet time.The European Union faces the daunting challenge of articulating coherent copyright policies that satisfy these contradictory multiple demands. Yet the legal framework must conform to the European Union’s remit of fostering economic growth in a common market, while respecting the national traditions of its still growing family of Member States. Clearly, an extraordinary balancing act is called for if justice is to be done to all of the private and public interests affected.So how has the European acquis communautaire scored on these issues so far? In this groundbreaking study the Institute for Information Law of the University of Amsterdam brings its extensive academic expertise to bear on this question. The authors scrutinize the present law as laid down in the seven copyright and related rights directives, against the background of the relevant international standards of the Berne Convention, the TRIPs agreement, and the WIPO Internet Treaties. They map out in detail the degree to which certain areas of copyright have been harmonized as they expose the gaps and inconsistencies in the acquis and the urgent unresolved issues that persist. They identify the EU’s ambitions in relation to its present and future competences (following the Lisbon Reform) to regulate copyright, and to its Better Regulation agenda. Following a comprehensive analysis of almost two decades of regulatory intervention, they move on to the salient current trends that point toward a more coherent and balanced European copyright law.
Collective administration of copyright has been touted as a solution to many of the ills of the copyright system and to many of the legal challenges brought about by the encounter between copyrights and the digital realm. It has been viewed as the magic bullet that bridges the unfortunate trade-off between incentive and access; a mechanism that allows both rewarding creators and unfettered access to works. While not at all a new phenomenon - music performing rights have been administered collectively in many countries for most of the 20th century - collective administration has recently proliferated across many other areas of copyright, often with enthusiasm. This paper offers a less enthusiastic account. It examines several types of collective administration and argues that with rare exceptions, the various justifications for collective administration are too weak to justify departure from the competitive paradigm that underlies market economies. It suggests that in most cases collusion and rent-seeking mainly drive the formation of copyright collectives, and suspects that only rarely such rent-seeking may be justified as a matter of policy, either as a way to improve the incentives to create socially valuable works or on distributional grounds.
New proposals on compensatory mechanisms and viability of traditional practices for online environment is currently being considered by the European Union and are subject of heated academic debate. Simultaneously new business models for distribution of intellectual property online are emerging rapidly. The paper focuses on the failures of the current compensatory mechanisms, as well as new proposals to compensate the creative in the online environment, including current online distribution practices, universal levy proposals -- Internet access and traffic levies, blank media levies, voluntary compensation systems, as well as traditional practices of the collecting societies, effects of the content protection technologies (DRM) on the accessibility and fair use of information online. The paper suggests the set of features for the new compensatory system, including socio-economic aspects of the different societies, and the need of uniform and worldwide compensatory system. Conclusions support the necessity to revise current compensatory mechanisms, centering on the proposed features, rather than just technological mechanisms, which dominate the current political agenda.
Why are many storefronts in Moscow empty while street kiosks in front are full of goods? This article develops a theory of anticommons property to help explain the puzzle of empty storefronts and full kiosks. Anticommons property can be understood as the mirror image of commons property. By definition, in a commons, multiple owners are each endowed with the privilege to use a given resource, and no one has the right to exclude another. When too many owners hold such privileges of use, the resource is prone to overuse ? a tragedy of the commons. Depleted fisheries and overgrazed fields are canonical examples of this familiar tragedy. In an anticommons, multiple owners are each endowed with the right to exclude others from a scarce resource, and no one has an effective privilege of use. When too many owners hold such rights of exclusion, the resource is prone to underuse ? a tragedy of the anticommons. Empty Moscow storefronts are a canonical example of the tragedy of underuse. Anticommons property may appear whenever governments define new property rights in both post-socialist and developed market economies. Once an anticommons emerges, collecting rights into usable private property bundles can be brutal and slow. The difficulties of overcoming a tragedy of the anticommons suggest that policymakers should pay more attention to the content of property bundles, rather than focusing just on the clarity of rights.
This paper applies a model of complementary oligopoly and anticommons pricing to the market for intellectual property rights. Our model demonstrates a surprising and interesting overlooked result: In the market for complementary goods, price coordination and monopolistic pricing do not necessarily represent inefficient equilibria, when compared to the alternative Nash equilibrium. Due to the peculiar cross-price effects in the supply of complementary goods, price coordination and monopolistic supply often constitute an improvement over the alternative equilibrium outcomes. To be precise, the welfare effects of competition and price coordination depend on the nature of the intellectual product concerned. This has significant and obvious implications for the economic analysis of copyright collectivization, as well as for antitrust regulation in this area.
I show that copyright law is intimately connected to price discrimination. First, price discrimination is common in markets for copyrighted works. Second, many features of copyright law affect resale or personal arbitrage and so influence the profitability of price discrimination. For example, the first sale doctrine and the fair use doctrine often facilitate arbitrage and discourage discrimination, while the derivative and public performance rights impede arbitrage and promote discrimination. Third, optimal copyright policy requires attention to the social costs and benefits from price discrimination. I use models of price discrimination to unify the analysis of a wide range of copyright policy issues. I argue that public performance rights are desirable because they support fine-grained price discrimination and displace other forms of price discrimination that have greater social cost. I argue against a broad definition of the derivative right that includes movie merchandise. Movie merchandising usually imposes allocative and implementation costs with little offsetting benefit in terms of creative incentive. I show that personal copying and other activities possibly covered by fair use have mixed effects on price discrimination and social welfare. Finally, I argue that the importation right should not cover gray market goods and should not be used to facilitate geographic price discrimination.
An anticommons problem arises when there exist multiple rights to exclude. In a lengthy law review paper, Michael A. Heller has examined "The Tragedy of the Anticommons," especially in regard to disappointing experiences with efforts to shift from socialist to market institutions in Russia. In an early footnote, Heller suggests that a formal economic model of the anticommons has not been developed. This paper responds to Heller's challenge. We analyze the anticommons problem in which resources are inefficiently underutilized rather than overutilized, as in the familiar commons setting. The two problems are shown to be symmetrical in several respects. We present an algebraic and geometric illustration and extend the discussion to several applications. Of greater importance, we suggest that the construction is helpful in understanding the sources of major value wastage in modern regulatory bureaucracy. Copyright 2000 by the University of Chicago.
Evidence shows that real-effort investments can affect bilateral bargaining outcomes. This paper investigates whether similar investments can inhibit equilibrium convergence of experimental markets. In one treatment, sellers’ relative effort affects the allocation of production costs, but a random productivity shock ensures that the allocation is not necessarily equitable. In another treatment, sellers’ effort increases the buyers’ valuation of a good. We find that effort investments have a short-lived impact on trading behavior when sellers’ effort benefits buyers, but no effect when effort determines cost allocation. Efficiency rates are high and do not differ across treatments.
- Eric Boehlert
- Fighting Pay-For-Play
- Salon
- Com
Eric Boehlert, Fighting pay-for-play, SALON. COM (2001) at
http://dir.salon.com/ent/music/feature/2001/04/03/payola2/index.html
159 Eric Boehlert, Record companies: Save us from ourselves!, SALON. COM (2002) at
http://www.salon.com/ent/feature/2002/03/13/indie_promotion/index.html.
An Economic Analysis of Copyright Collectives, 78 VA 43 See generally CHURCH & WARE, supra note 32
- M Stanley
- Besen
Stanley M. Besen et al., An Economic Analysis of Copyright Collectives, 78 VA. L. REV. 383, 407 (1992).
43 See generally CHURCH & WARE, supra note 32, at 258-62.
ASCAP Experimental License Agreement for Interactive Sites & Services -Release 1.0 available at http://www.ascap.com/weblicense/ascapinteractive.pdf ; See also ASCAP Concerts and Recitals Blanket License Agreement and ASCAP Colleges and Universities License Agreement in M
See e.g., ASCAP Experimental License Agreement for Interactive Sites & Services -Release 1.0 available at
http://www.ascap.com/weblicense/ascapinteractive.pdf ; See also ASCAP Concerts and Recitals Blanket
License Agreement and ASCAP Colleges and Universities License Agreement in M. W. KRASILOWSKY &
SIDNEY SHEMEL, MORE ABOUT THIS BUSINESS OF MUSIC 228 (5th ed. 1994).
- Baron-Franklin Park
Baron-Franklin Park, Inc. v. Taito Corp., 883 F.2d 275 (4th Cir. 1989).
000 songs) Warner's significant market share dates back to the 1930s when its publishing subsidiaries' music catalogues were estimated at 15%- 40% of the ASCAP material that was broadcast then
- Kerry Kohn
- Payola Segrave
- In
123 KOHN, at 68 (estimating that each of the two has a catalog in excess of 500,000 songs). Warner's significant
market share dates back to the 1930s when its publishing subsidiaries' music catalogues were estimated at 15%-
40% of the ASCAP material that was broadcast then, see KERRY SEGRAVE, PAYOLA IN THE MUSIC INDUSTRY:
A HISTORY, 1880-1991, 52 (1993).