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Snow, Arthur; Watt, Richard --- "Risk sharing and the distribution of copyright collective income" [2005] ELECD 88; in Takeyama, N. Lisa; Gordon, J. Wendy; Towse, Ruth (eds), "Developments in the Economics of Copyright" (Edward Elgar Publishing, 2005)

Book Title: Developments in the Economics of Copyright

Editor(s): Takeyama, N. Lisa; Gordon, J. Wendy; Towse, Ruth

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843769309

Section: Chapter 2

Section Title: Risk sharing and the distribution of copyright collective income

Author(s): Snow, Arthur; Watt, Richard

Number of pages: 14

Extract:

2. Risk sharing and the distribution of
copyright collective income
Arthur Snow and Richard Watt

2.1 INTRODUCTION

Hollander (1984, p. 200) sums up the basic functions of copyright collect-
ives as follows:

Copyright collectives are associations to whom authors transfer copyrights for
purposes of exploitation. In general, collectives are concerned with the follow-
ing functions: (1) they grant licenses for the use of works in their repertory,
(2) they negotiate and collect royalties, and distribute them to their members,
(3) they take legal action against those who infringe the copyrights to which they
hold title.

Each of these three aspects of collective administration of copyrights (as
well as the monopoly position that such collectives enjoy) has been subject
to the analysis of economic theory. In particular, the literature asserts that
the underlying reason for copyright collectives to form naturally is that by
joining together and marketing a blanket license to the entire repertory,
each individual member can achieve a better utility position than by acting
alone. In this chapter, we shall consider the possible ways in which collect-
ive administration improves the welfare of its members.
In the above quote from Hollander, it is clear that the principal idea is to
share certain transactions costs over collective members (costs of negotiat-
ing, receiving payment for, and protecting license agreements). Clearly,
then, the most obvious reason for collective administration is the welfare
gains that the members can enjoy as transactions costs are diminished.
The Coase theorem implies that final resource ...