The Society for Economic Research on Copyright Issues

Review of Economic Research on Copyright Issues (RERCI)

RERCI Articles

Licensing and Royalty Contracts for Copyright

Review of Economic Research on Copyright Issues, Vol. 3, No.1, 1-17, 2006

Richard Watt

Downloads:  899


Abstract

This paper reviews briefly how the owner of the copyright to a creation can best market access to that right to licensees under a variety of assumptions concerning the market. After an introductory section, the paper considers a situation of full certainty, in which the value of the final product that is sold by licensees is fully deterministic. In that setting, we consider a very simple model in which the copyright holder himself may or may not compete with the licensee in the final product market. Above all, it is shown that a linear form for the royalty contract always suffices in equilibrium. After that, a model with certainty as to the market value of the final product is developed. In this model, we consider Pareto efficient sharing contracts, and it is shown that now a linear form is unlikely to suffice. Throughout (i.e. in both sections), we shall be interested in exactly when a linear royalty contract is efficient, since these types of contract are so prevalent in the real world.Finally, as an introduction to the papers contained in the symposium, I devote a few words to each of them in turn.

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RERCI

Review of Economic Research on Copyright Issues, Vol. 6, No. 2, 1-4, 2009

Richard Watt

Downloads:  888


Abstract

The year 2009 has come to an end, and with it this second issue of the sixth volume of the Review of Economic Research on Copyright Issues, or RERCI. It has, at least in the opinion of the Managing Editor, been an extremely productive six first years of the life of this journal, and it has moved from its inception in 2004 as a start-up hoping to find a foothold in the competitive world of academic economics journals, to what I believe is now a widely recognised source of rigorous academic work on the very particular topic of the economics of copyright.

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Revenue Sharing as Compensation for Copyright Holders

Review of Economic Research on Copyright Issues, Vol. 8, No. 1, 51-97, 2011

Richard Watt

Downloads:  885


Abstract

Essential inputs are an important topic of debate for economics. One common essential input is intellectual property, in the form of either patents or copyrights, which the producers of goods and services for final consumption must necessarily purchase from the input supplier. The ensuing monopoly power of the input supplier leads in many cases to controversial outcomes, in which social inefficiencies can occur. In much of the literature on the economics of intellectual property, it is assumed that the right holder is remunerated either by a fixed payment or by a payment that amounts to an additional marginal cost to the user, or both. However, in some significant instances in the real-world, right holders are constrained to use (or may choose to use) a compensation scheme that involves revenue sharing. That is, the right holder takes as remuneration a part of the user's revenue. In essence, the remuneration is set as a tax on the user's revenue. This paper analysis such remuneration mechanisms, establishing and analysing the optimal tax rate, and also the Nash equilibrium tax rate that would emerge from a fair and unconstrained bargaining problem. The second option provides a rate that may be useful for regulatory authorities. The model is calibrated against a (hypothetical) scenario in which the copyright holders in music are paid a regulated share of the revenue of music radio stations, a topic that is presently at the fore-front of the economics of copyright pricing.

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The Efficiencies of Aggregation: An Economic Theory Perspective on Collective Management of Copyright

Review of Economic Research on Copyright Issues, 12(1/2), 26-45, 2015

Richard Watt

Downloads:  883


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.

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Private-Collective Software Business Models: Coordination and Commercialization Via Licensing

Review of Economic Research on Copyright Issues, Vol. 4, No. 1, 47-61, 2007

Heli A. Koski

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Abstract

Private-collective business models that involve both private investment incentives and the production of public goods are not well understood. This empirically oriented research uses a unique data from the software industries of five European countries (Finland, Germany, Italy, Portugal and Spain) to illuminate the patterns of private, entrepreneurial provision of software placed in the public domain. The estimation results strongly suggest that the highly restrictive GPL works as an efficient coordination mechanism for the (leading) developers of the OSS community and spreads particularly via the firms that have participated in the OSS development projects. The software companies supplying the OSS, instead, tend not to aim at using the GPL to coordinate the further development of their own OSS. Rather the firms are the origin of more flexibly licensed OSS products though generally the software firms' OSS business strategies relate to the restrictive licensing strategy choices.

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Digital File Sharing and Royalty Contracts in the Music Industry: A Theoretical Analysis

Review of Economic Research on Copyright Issues, Vol. 3, No.1, 29-42, 2006

Norbert J. Michel

Downloads:  879


Abstract

Although several researchers have examined the impact of copying in other contexts, relatively little theoretical work exists that allows for the presence of a profit maximizing music industry as an intermediary between the creators of intellectual property and consumers. This paper develops a simple theoretical model of interactions between artists who create original musical compositions, record labels that distribute them, and consumers who have the option of copying rather than buying music. The model provides testable price and demand equations and suggests that file sharing may have been undertaken by consumers who were previously not in the market for music.

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Intellectual Property Rights and Cultural Heritage: The Case of Non-Cumulative and Non-Degenerative Creation

Review of Economic Research on Copyright Issues, Vol. 1, No. 2, 97-117, 2004

Veronique Chossat and Christian Barrere

Downloads:  874


Abstract

This paper studies the case of cultural and creative goods that onstitute both private and common heritage assets and analyses the difficulties involved in protecting them by the means of IPRs. The specificities of non-cumulative and non-degenerative creative heritage assets prevent any universal model of protection and thus the building of a market of IPRs. The standard model of property rights is partially irrelevant depending on the specificities of cultural heritage assets. So strategic behaviours concerning the uses of cultural heritage assets can arise. Two creative industries are studied: Haute Couture and French Grande Cuisine.

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Introduction

Review of Economic Research on Copyright Issues, Vol. 2, No. 2, 3-15, 2005

Marcel Boyer and Gilles McDougall

Downloads:  874


Abstract

The Society for Economic Research on Copyright Issues held its 2005 Congress in Montrýal, Canada. Some of the papers presented at that congress are contained in this issue of RERCI. This introduction also includes a report on the round table session which was held on the pricing of copyright. For the sake of this introduction, the presentations could be informally regrouped under three headings: the proper compensation principles for copyrights; the phenomenon of copying and sharing, including the piracy activity; the development of the open/free source software movement.

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The Use of Vertical Market Prices in Setting Copyright Tariffs and Rates

Review of Economic Research on Copyright Issues, 13(2), 66-82, 2016

Gerry Wall and Bernie Lefebvre

Downloads:  871


Abstract

With the lack of direct markets to examine, copyright setting agencies often adopt a total proxy approach whereby other markets are used to formulate benchmark prices. In this paper, we utilize a "downstream" market to estimate the value to a commercial "rights user" of distant television signals. This "partial proxy" approach has two advantages: it uses data drawn from the distant signal market (i.e. vertical market information) and it uses actual market pricing data from buyers and sellers of programming content.
Using this data, we derive estimates of the wholesale market value of distant TV signals. Based on our analysis we find that the current per signal payment to distant signal rights-holders (as certified by the Copyright Board of Canada) is less than the actual market value of those signals.

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Digital Technology, Price Discrimination, and Copyright Duration Extension

Review of Economic Research on Copyright Issues, Vol. 7, No. 2, 39-55, 2010

Michael Y. Yuan

Downloads:  870


Abstract

Many countries have yet to decide whether extend copyright duration. Technological changes were cited by a U.S. Senate report to support duration extension. This study adds to the assessment of the validity of the technological argument by simulating the effect on optimal copyright duration of increased price discrimination caused by digital technology. Simulation of a model of information product market indicates that increase of price discrimination on high-end market calls for shorter copyright duration; that on low-end market may support extension, if the discrimination benefits consumers, and otherwise work against it. It further suggests price discrimination on low-end market increases welfare and supply of original information products but that on the high-end market may either increase or decrease them.

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Creative Pricing in Markets for Intellectual Property

Review of Economic Research on Copyright Issues, Vol. 2, No. 1, 39-44, 2005

William R Johnson

Downloads:  856


Abstract

Technological changes over the past two decades have made it easier to distribute and to copy intellectual property. Creators and owners of intellectual property have responded to these changes with a variety of creative pricing strategies. The paper reviews some of these pricing innovations. Two broad categories of innovations are explored: those that facilitate price discrimination and those that exploit complementarities between different types of creative works.

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The Socially Desirable Size of Copyright Fees

Review of Economic Research on Copyright Issues, Vol. 1, No. 1, 83-92, 2004

William J. Baumol

Downloads:  855


Abstract

Licensing of copyrighted material can contribute to welfare. But what fee is socially desirable fee? The owner's marginal cost of licensing is often near zero, but P = MC = 0 is arguably neither equitable nor an efficient incentive for further creative activity. Here two fee-setting approaches are described, assuming copyright rules are pre-established and determine the holder's earnings, absent licensing. One approach is Ramsey pricing, theoretically second best and able to preserve the copyholder's earnings. The second is 'parity pricing', as derived in the price-regulation literature, which can ensure effective free entry into commercial use of the licensed material.

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Intellectual Property: How the Right to Keep it to Yourself Can Facilitate Dissemination

Review of Economic Research on Copyright Issues, Vol. 2, No. 2, 17-23, 2005

William J. Baumol

Downloads:  849


Abstract

The fundamental conflict in the goals of intellectual property (IP) policy is the apparent incompatibility of protection of the creator and ease of dissemination. Copyrights and patents seem to favor the first goal and conflict with the second, but patents have actually helped to resolve the conflict by transforming the IP into a tradable commodity. As a result, many patent proprietors actively promote use of their IP by others, even direct competitors. Patent licensing is a major revenue source for many firms. Patent pools institutionalize remunerative sharing of IP. Even from their medieval beginnings, patents were used to encourage dissemination and they continue to serve that purpose directly via disclosure requirements. So, perhaps with some redesign and innovative usage, copyrights can help to reconcile the two apparently conflicting goals - provision of incentives for both creative activity and widespread use of its products.

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A Comment: The 'Copyright Factors'

Review of Economic Research on Copyright Issues, Vol. 1, No. 1, 71-78, 2004

Richard Watt

Downloads:  848


Abstract

In this paper, I have suggested the possibility of a simple calculation that returns a lower bound on the total contribution of copyright to GDP, once the groupings between the core, and unrelated activities has been made, but independently of the exact weights that should be assigned to the activities that are not in either of these two groups (i.e. those that remain in the related group). On the other hand, in order to do this it was necessary to take a particular definition of exactly what particular activities should be included in the related group (activities that, without having a copyright factor of 1, are on average at least as dependent upon copyright as is the economy as a whole). Thus, with a relatively low level of effort, one can get what appears to be quite an accurate, but still only intended as a rough estimate, answer to the question of exactly what is the total contribution of copyright to GDP.

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Copyright in the Digital Age; Benefiting Users and Creators?

Review of Economic Research on Copyright Issues, Vol. 8, No. 2, 55-64, 2011

Peter Jenner

Downloads:  842


Abstract

Copyright is supposed to establish a mechanism under which content users contribute to creators' income, thereby providing incentives for creators to create new and original content for end-users to consume. However, in the current digital environment one can suggest that this arrangement is breaking down. The necessary flow of content is not being achieved in such a manner as to provide a satisfactory flow of revenue back to the creators, or is it vice versa? It can also be argued that the copyright system is not providing enough revenue for distributors to provide the sort of services that users would like with the current pricing structures, use restrictions and rights complexity demanded by the major controllers of music copyrights. In this essay I consider the current state of affairs regarding the copyright system, and its effects for all participants along the value chain for protected content.

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