Abstract

I first review the theoretical apparatus that has been largely used so far to analyze information goods industries. I argued then that although this apparatus was fairly appropriate in the analog era and in the early digital era, it now needs to be significantly updated. The advent of streaming challenges indeed the main assumptions that underlie the existing models. This observation leads me to propose two main directions for future research efforts. First, one needs to better understand, and model, how streaming modifies the way content is accessed and consumed. Second, more attention should be given to the roles and strategies of streaming platforms, which become inescapable intermediaries regarding the distribution and consumption of digital goods.

Abstract

I propose and implement a method to divide the collection of private copy remuneration between the authors of text and the authors of images. I propose that the division should be based on the economic value added by text and images in the original work. Using a unique dataset of books and magazines copied in Spain, I estimate the economic value of each item, text and image, according to different characteristics of the written creative work. My estimates indicate that the average economic value of the images is between 6.35% and 20.00% of the average economic value of the text. These numbers are close to estimates that simply use the proportion of space occupied by images to proxy their economic value.

Abstract

The law concerning the reproduction of works of art is unambiguous: the owner of the physical item does not own the right to copy and reproduce it. The copyright or right to reproduce a work of art either belongs to the artist and his/her heirs, or to everybody when the work is in the public domain. However, a large number of museums use their property rights to assume a copyright, i.e. a right to reproduce works of art. These illegal practices are the result of choosing a business model based on the desire to cross-subsidise the upstream market of the services provided to the public with the benefits obtained by monopolising the "downstream" market of the copies or reproductions of works of art. The objective of this paper is to show that this is not efficient. We argue that this strategy conflicts with the mission upheld by museums and prevents certain externalities from circulating in the society.

Abstract

The existing economic theory of copyright collectives, or copyright management organizations (CMOs) is strongly focused on the benefits of sharing of transaction costs. Here, we appeal to the contractual environment of CMOs to offer a different perspective. Copyright collectives form contracts at two principle points along the supply chain. First, there are the contracts between the collective's members themselves (the copyright holders) for distribution of the collective's income. And second there are the licensing contracts that the collective signs with users of the repertory. Using standard economic theory, the paper argues that there are significant efficiency benefits from having copyrights managed as an aggregate repertory, rather than individually, based on risk-pooling and risk-sharing through the contracts between the members themselves. Similarly, there are also aggregation benefits (at least in terms of the profit of the CMO) of licensing only the entire repertory, rather than smaller sub-sets. Both of these theses are defended by appealing to existing economic theory literature in related fields. Interestingly, there is a link between these two theories of the efficiency of aggregation which lies at the heart of the theory of syndicates, and the characteristics that imply that the group (or syndicate as a whole) can be considered as a valid "representative", sharing the same preferences as each individual syndicate member.

Abstract

In the regulatory setting of rates for statutory-licensed music services, the question of value-based versus cost-based rate setting for the component-rights of a musical performance arises. In this article, we have demonstrated this value-or-cost question is a distinction without a difference. Starting with the value-based concept of second-best (or Ramsey) prices, we end with a result prescribing that cost differences should be fully reflected in compensation across the inputs to the music recording. Each price is set so that the costs are covered, no more and no less.

Abstract

Judges who set copyright royalty rates through litigation, like all trial Judges, are constrained by the evidence and testimony. Thus, we can only determine rates that are supported by the record. For the record to be sufficient, testifying economists must be able to apply a sufficient body of work in the economics of copyrights. In my address to the 2015 SERCI Congress, I emphasized the judicial need for continued and comprehensive research in this field, so that testifying economists can provided a foundation for our determinations. In this article, I explore such issues in more detail.

Abstract

A comparison of existing online revenues collected from digital music licenses and the potential royalty market for online music, suggests an inadequate royalty market capture within the European Union. An estimate of the 2012 market for digital music royalties in ten different E.U. countries indicates this market could have been well over €18 billion. However, only €116 million were reported by corresponding Collective Rights Management Organizations in that same year. The three largest digital music royalty markets (U.K., Germany and France) comprise around €11 billion. Yet, the corresponding Collective Rights Management Organizations (PRS for Music, SACEM and GEMA) generate only €95 million in royalty revenue from all online media. The gap between existing and potential royalties is tremendous and suggests that E.U. Member States have not come to grips yet with the internet. Their existing business models, paired with a regulatory environment rooted in the 19th century rationale of the Berne Convention has not been supportive of grasping the opportunities provided by a disruptive technology. By consequence, artists do not receive the royalties they deserve, commercial users are exposed to prohibitive license fees and non-commercial users suffer from adequate legal alternatives to digital piracy.

Abstract

Digitisation and adoption of increasingly fast broadband Internet represent the two fundamental 'winds of change' that have transformed the UK music industry since the 1980s. This paper examines the impact of these changes on sales of music and, by extension, on the royalties of creators of music, in both nominal and real terms. It identifies weaknesses and threats in both, opportunities that might be developed as responses, and possible hypotheses for future economic research that are likely to be of interest to the sector in providing evidence in the debates around appropriate strategies and policies.

Abstract

In this paper we aim to contribute to the discussion on the role of royalties in copyright agreements by concentrating on the incentives that they provide to the creator and the intermediary when the success of the work depends on their involvement with the commercialization process. We also consider the effect of this moral hazard on the matching among creators and intermediaries and their gains.

Abstract

In recent years economic literature has deeply analyzed piracy and copyright violation. Nevertheless most of the contributions focus on the study of digital markets and monopoly. In this paper we concentrate on the effect the entry of a pirate may have in a vertically differentiated duopoly where originally two firms compete producing a high quality and a low quality good. We show that, under general conditions payoffs of firms might increase with piracy, since piracy may support collusion between the two firms producing the original goods and the collusive profits of the firms in presence of piracy may be bigger than the profits of Nash without piracy. This result may explain the reason why in some markets, like the fashion market, where the producers of the original brands basically control the supply chain of the sector, piracy and production of high quality fakes is huge.

Abstract

The Berne Convention was the first attempt to recognise the copyright of foreign authors and their translations. I create a unique dataset to analyse the long run effects of the Berne Convention in 1912 in the Netherlands. Using pre-post statistical analysis and regression discontinuity design I find a significant decrease in the number of books translated per capita and an increase in translations per author.

Abstract

Digitization has had a profound effect on the management of musical copyrights in terms of data requirements and has vastly increased the volume of transactions: both impacts have raised net costs of administration to collecting societies. This paper explores these points using information provided by PRS for Music, the UK's collecting society managing musical rights and considers them in the wider context of moves on the political front to increase competition in rights management as well as to promote multi-territorial licensing within the EU. An important question for economists is whether the natural monopoly argument for single national collective rights management using blanket licensing still holds up with digitization of music and management of musical rights. This paper suggests that collaborative concentration may be preferable to competition.

Abstract

Right-holders can create differences between their cultural goods to attract consumers with varying levels of willingness to pay. Some Internet intermediaries propose similar choices but do so without authorization. In this paper, we present a theoretical model of copyright piracy in which a rightholder competes in price with an Internet intermediary in a leader-follower game. The Internet intermediary provides two types of streaming goods (with and without restrictions). Copyright and intellectual property rights on the Internet are subject to ex-post adjudication. This means that enforcement can lead to uncertainty regarding Internet intermediaries' liability. We analyze how copyright enforcement and quality differences impact price competition. Our analysis suggests that law uncertainty plays a role in an intermediary's decision to enter the market, and thus that quality has an impact on law enforcement efficiency.

Abstract

The last few decades have seen enormous growth in piracy of copyrighted goods and, in particular, an enormous growth in piracy of creative works that employ a digital format. In this paper we discuss classic theory related to the piracy issue, provide a brief history of the growth of piracy over the last few decades, and then discuss issues concerning the present situation. We conclude with speculation concerning the future of piracy, where one of our main points is that, at least for the developed world, there are important reasons for believing that piracy is likely to continue to grow.

Abstract

Collective performing rights licensing agencies are private enterprises and their files are thus not public. Thus, the possibilities to carry out scientific research regarding the effects of performing right fees have been limited. This paper is based on new unique data provided by the Swedish Performing Rights Society (STIM) which has provided data for a large share of Swedish composers of art music with mandates from them for this study as legal requisites. The point of departure for the analysis is the basic monetary incentive theory which holds that the prospect of revenues will result in more output. Another question is whether royalty income plays a substantial role in the total incomes of composers or not. Furthermore, three factors, which are generally considered to be influential when it comes to the size of composer incomes in Sweden, are also analysed: gender, level of education and choice of domicile. Female composers are found to earn substantially less than males. Whereas in most professions higher levels of education increase income this seems to be less important for composers. Finally, the expectation is that a composer living in the national capital, Stockholm, will earn more than others is not substantiated.