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fbtwitterlinkedinvimeoflicker grey 14rssslideshare1
Kretschmer, Martin (2005)
Publisher: Centre for Intellectual Property Policy & Management (CIPPM), Bournemouth University
Languages: English
Types: Unknown
Subjects: law

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Copyright Collecting Societies have proliferated, with more than 150\ud organisations now collecting and distributing licensing fees for rights in music,\ud literary, audio-visual and graphic works within the European Union. From the\ud perspective of Competition Law, collecting societies may be viewed as price-fixing\ud cartels under Art. 81 EC, and as vulnerable to challenges under Art. 82 EC (i.e.\ud abusing a dominant position as the sole provider of a management infrastructure to\ud right holders, and as the only supplier of licences to copyright users). Yet, collective\ud administration of copyright has important policy benefits: (i) From a user\ud perspective, collecting societies may offer a single point licence providing easy and\ud wide access to copyright protected contents. This can be a solution to innovation\ud issues in an information society where major right holders otherwise may dictate\ud problematic terms. (ii) Creators at the margins of commercial viability have access to\ud a mechanism of collective bargaining against major rights exploiters, such as\ud publishers, record labels and broadcasters. This may support a culturally diverse\ud society. This article develops principles for regulating the collective management of\ud copyrights from a critique of EC competition jurisprudence.
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    • 11 One strand of commentators has located the inefficiencies in collective administration in the nature of liability rules: R.P. Merges 'Contracting into Liability Rules: Intellectual Property Rights and Collective Rights Organizations' (1996), 84 California Law Review 1293. The argument derives from R.H. Coase's seminal paper 'The Problem of Social Cost' (1960), 3 Journal of Law and Economics 1- 44. For a critique of natural monopoly analysis, see A. Katz 'The Potential Demise of Another Natural Monopoly: Rethinking the Collective Administration of Performing Rights' (2005) 1(3) Journal of Competition Law and Economics 541, and 'The Potential Demise of Another Natural Monopoly: New Technologies and the Administration of Performing Rights' (2006) 2(2) Journal of Competition Law and Economics 245.
    • 12 To give some examples: PRS performing right income is roughly equally split between income from broadcasting and from general performance (i.e. music at pubs, clubs, shops, aircrafts, concerts). Unsurprisingly, the costs of collecting are much higher for the latter. For 1999, the PRS reported income of £75.54m from general licensing (of which 24.5% disappeared as administrative commission) and £79.58m from broadcasting (with 14.6% deducted for administrative expenses), leaving a net distribution of £57m and £68m respectively (PRS Yearbook 2000/01). The Design and Artists Copyright Society (DACS) administers reproduction rights for visual artists (painters, printmakers, sculptors, and photographers). Of the turnover of £3m in 2003, 25% are charged as administration costs (Annual Report 2004). Analytical tools for analysing the efficiency of collecting societies are discussed in F. Rochelandet 'Are Copyright Collecting Societies Efficient?' paper presented at the annual congress of the Society for Economic Research on Copyright Issues, Madrid 2002 [available at www.serci.org]. See also A. Charnes, W.W. Cooper, and E. Rhodes 'Measuring the efficiency of decision making units' (1978) 2 European Journal of Operational Research 429-444.
    • 23 Case C-92/92, Phil Collins v. IMTRAT Handels GmbH, [1993] 3 CMLR 773 (para. 22). Cf. W. Cornish and D. Llewelyn Intellectual Property (5th ed.) (London: Sweet & Maxwell 2003), section 18- 2.
    • 24 Case 127/73, Belgische Radio en Televisie v. SV SABAM and NV Fonior, [1974] ECR 313, [1974] 2 CMLR 238.
    • 25 Case 22/79, Greenwich Film Production, Paris v. SACEM, [1979] ECR 3275, [1980] 1 CMLR 629.
    • 26 Case 7/82, Gesellschaft zur Verwertung von Leistungsschutzrechten mbH (GVL) v. Commission, [1983] ECR 483; [1983] 3 CMLR 645.
    • 27 This point was made by J. Temple Lang, then a director in DG Competition ('Media, Multimedia and European Community Antitrust Law' (1998) 21 Fordham International Law Journal 1296): 'The assumption that no member or group of members of a society could negotiate licences is no longer true, if it ever was, of big sound reproduction companies which can do and do, enter into individual negotiations, in particular for reproduction rights, when the size and importance of the licensee makes it worthwhile to do so. It seems to follow that as far as such companies are concerned the main reason for ignoring Article [81(1)] is no longer convincing, and such companies need exemption under Article [81(3)] for their participation in these societies, at least in their relations with licensees which are important enough to make individual negotiations appropriate. It is surprising that this issue has not been raised before now.' 61 I have discussed this in more detail in my 2002 paper 'The Failure of Property Rules in Collective Administration', 24(3) European Intellectual Property Review 126-136, at 133. Compare also [Wallis, Baden-Fuller, Kretschmer, Klimis 1999 supra note]. The idea has been around for some time (Besen and Kirby 1989 [supra note__] attribute it to Paul Goldstein (at note 8). It is also the solution advocated by Katz [supra note__].
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