ATRIP May 25 Dias 1 Centre for Information and Innovation Law ATRIP Conference May 2010 The Necessity to collectivize copyright - and dangers thereof Professor dr.jur. Jens Schovsbo, PhD Centre for Information and Innovation Law

ATRIP May 25 Dias 2 Centre for Information and Innovation Law “Collective Copyright” Collective rights administration of (individual) copyright Legal drivers Voluntary models (e.g. composers’ rights (“contracting into liability rules …”)) Compulsory models (EU Satellite and Cable Directive) Hybdrid models (e.g. Extended Collective Licenses (ECL)) Related areas Joint authorship etc. (Other) liability models: Levies Competition law (misuse) “E-bay-”style decisions

ATRIP May 25 Dias 3 Centre for Information and Innovation Law Why Collectivization? The economic (“hard”) argument: Overcoming transactions costs Turning useless rights into “useable bundles” The cultural (“value”) argument: Protecting authors (Collecting societies as “Authors Guilds/Unions”) There are tensions between these two arguments: Weak exclusive rights/strong Collectivism/individualism Economic/cultural rationale

ATRIP May 25 Dias 4 Centre for Information and Innovation Law Collectivization = Institutionalization The creation of Institutions “collecting societies”, “clearing houses” etc. Co modification of rights Bulk sale of rights One stop shop, blanket licenses (“bundles”) Fixed prices and conditions External control by government agencies Copyright Tribunals, competition authorities etc.

ATRIP May 25 Dias 5 Centre for Information and Innovation Law Effects of collectivization Structural level Changing copyright’s entitlement model from a property rule to a liability rule Market level Opens access to the use of works Strengthens authors’ market power (monopolization) Cultural (value) level New norms: From “authors” to “member” and from “work” to “commodity” Policy level Copyright Societies become stakeholders

ATRIP May 25 Dias 6 Centre for Information and Innovation Law Dangers (challenges) of going too far Innovation dangers Incentive losses from going to a liability system Losses from monopolization (misuse) or from lock-ins to certain technologies or to collective rights administration models Value dangers Loss of traditional values: Historically, ideologically and culturally copyright is based on liberalistic and individualistic grounds (exclusivity, originality, and moral rights) Policy dangers Institutions self-interest

ATRIP May 25 Dias 7 Centre for Information and Innovation Law Dealing with the dangers: Competition law and Collecting Societies The Janus-quality of authors’ organisation: Monopolies for business transactions Collecting Societies vs. users “Guilds”/”trade unions” for authors Collecting societies vs. members

ATRIP May 25 Dias 8 Centre for Information and Innovation Law Organizations vs. Users ECJ in C-52/07, Kanal 5 v. STIM: “it is conceivable that, in certain circumstances, the application of.. a remuneration model [based on a television company’s turn-over] may amount to an abuse, in particular when another method exists which enables the use of those works and the audience to be identified and quantified more precisely and that method is capable of achieving the same legitimate aim, which is the protection of the interests of composers and music editors, without however leading to a disproportionate increase in the costs incurred for the management of the contracts and the supervision of the use of musical works protected by copyright (para 40).

ATRIP May 25 Dias 9 Centre for Information and Innovation Law Organizations vs. Members From the EU-Commission’s CISAC-decision (2008) The interest of authors include at the least (i)the cost elements (commission related deductions, membership fees and associated costs such as pension or cultural deductions); (ii) the quality of service (transparency, accountability, royalty payment terms, information, legal protection and enforcement); (iii) the benefits derived from the membership (such as pension or illness schemes); and (iv) the ability to collect the highest proportion of rights due to the authors. (point 134 )

ATRIP May 25 Dias 10 Centre for Information and Innovation Law Competition Law: An 800 pound Gorilla? Societies vs. users: Also to competition law the individual rights model is the base line and the transaction cost argument only goes so far … Societies vs. Members: Authors have “Member rights” and these go beyond copyright

ATRIP May 25 Dias 11 Centre for Information and Innovation Law Summing up: Dangers of collectivization Dangers of going too far Lose innovation benefits from the property model Misuse problems Lock in problems Lose author’s protection Dangers from not going far enough: Under-use of works and under-compensation of authors Loss of authors’ protection from the “Guild”

ATRIP May 25 Dias 12 Centre for Information and Innovation Law Perspectives Starting point: Copyright should prefer collectivization if this is expected to lead to societal gains. And otherwise not In finding the balance two perspectives: Innovation: As seen from a societal perspective one cannot prefer property rules to liability rules. Nor can one prefer liability rules to property rules Culture: Individual authors need protection Copyright law should regulate (?) the process and the results of harmonization more preciesly Remove barriers to beneficial collectivization (the three-step- test: “certain special cases”, “normal exploitation”, “legitimate interests”) Respond to market changes and new (individual) models (DRM) Regulate institutions effectively to secure both innovation and culture Protect authors as “members”?

ATRIP May 25 Dias 13 Centre for Information and Innovation Law