Compensating Creators of Intellectual Property

Intellectual property is used in many ways that make it difficult or impossible for copyright owners individually to enforce their rights. Where each use has small value relative to the cost of enforcement, owners will not find it worthwhile to collect fees and enjoin infringers unless they can cooperate with other rightsholders to economize on transaction costs. The result is the formation of collecting societies or copyright collectives. This report is a study of the collective administration of copyrights. It analyzes the determination of license fees using economic models of alternative ways in which copyright collectives might operate. The report also provides detailed descriptions of the operations of performing rights and reproduction rights organizations, and it explores the legal regimes under which copyright collectives operate, including special legislation governing their behavior and antitrust laws that constrain their operations. The report reaches four tentative conclusions: (1) cooperative pricing may be inevitable when collective administration is employed; (2) collective administration should be limited to cases in which infringements cannot be handled individually; (3) there will be many license fees and revenue distributions for which collective pricing is better for everyone than is individual pricing; and (4) the nature and form of the collective administration of any given set of rights will be similar in all countries.