An Evaluation of Collective Copyright Management in Canada
| Author | Jacques Robert |
| Pages | 403-442 |
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chapter 5
An Evaluation of Collective Copyright
Management in Canada
Jacques Robert1
A. INTRODUCTION
1) Objectives of Copyright Management
e general policy objectives of the copyright policy are to encourage
the creation and dissemi nation of original works. e policy should
reflect the fairness values of Canadians while promoting economic ef-
ficiency. e copyright policy should accomplish two main objectives:
) Promote the creation of quality and diverse origi nal works. Allow
creators to earn revenues from their creations in order to provide
strong incentives for the creation of original works.
) Promote access to quality a nd diverse original work. e market
for original work should be open, without barriers to entry for new
creators. Independent creators should be able to compete w ith
creators backed by large corporations.
e first challenge for copyright policy is to find a reasonable way
to balance the two conflicting object ives: providing access to origin-
al works and rewarding creators. On the one hand, one will wish for
Professor in the Depar tment of Information Technologies at HEC Montreal
and a Fellow at CIRA NO.
404
open and free access to all original works, and on the other hand one
must recognize the rights of creators to gain rewards for their origin-
al efforts. If we seek to minimize royalties and enhance competition
among creators, they will share less revenue and there will be fewer
incentives to create. e role of the copyright policy is to balance these
opposite objectives and provide a fair and efficient solution. Hence, the
fees on the licences should be fair a nd not so high that they become a
barrier to the dissemination of original works.
Original works such as music, literature, multimedia, digital pic-
tures, and drawings enter i n the category of what could be called
information goods. W hile the initial cost of production is large, the
marginal cost is virtua lly zero. e essence of what is created can be
stored as bytes on a disc, dist ributed, and reproduced at virtually no
cost. Without the copyright protection, information goods would be
similar to pure public goods and creators would not be able to earn
revenues from their work. Hence, the issue is to find a way to fund the
creation of original works while maintaining their access as cheap and
open as possible. Granting t he creators copyright provides them with
the legal right to exclude, and hence provides some form of de facto
monopoly on the commercialization of their works.
e second chal lenge associated with copyright protection is en-
forceability. It could be very costly for a creator to monitor the use
of his original works by end-users. In practice, creators must rely on
the support of t he law and on specialized third parties or technology
to monitor and enforce their copyrights. With the advent of Internet
technologies, notably the PP technologies, the enforceability problem
becomes even more acute.
e worst-case scenario would be to have creators limiting access
to their work by i mposing large access fees and complex clearance
systems wh ile a large majority of users choose to access these works
illegally using new download technologies. In such a scenario, law-
abiding citizens would find access costly and complex and the creators
would find the number of paying customers progressively shri nking.
is could be the future that lies ahead of us. In this context, the copy-
right collect ives could play a major role i n responding to t hese chal-
lenges. Copyright collectives should help end-users obtain legal access
to copyright-protected work, while helping creators extract more rev-
enues from their work.
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e general objective of this study is to provide an assessment
of the Canadian copyright management system based on a m icro-
economic rationale. Does the current Canadian system of copyright
collectives achieve its general goals? Should a lternative designs and
mechanisms be proposed? Eventually, what would be a more appro-
priate model and what challenges would Canada face in moving to
another system? What is the logic of the current system and is it con-
sistent with the general interest?
2) Structure of the Paper
is study is structured as follows. In Section B, the study draws from
the economic literature in order to better understand the fundamental
market failures (if any) that would justify the need for regulation in the
original-work markets. One proposed argument in favour of regula-
tion is the fact that collectives save on transact ional costs: a collective
can more efficiently negotiate, enforce, and collect fees on behalf of
creators than creators themselves. While this argument explai ns the
existence of firms that specialize in copyright management, it does not
justify per se the existence of a regulated monopoly. While the ration-
ale for a regu lated monopoly cannot be based on a transactional cost
argument alone, we believe that welfare can be improved by bund-
ling copyrights. Setting a blan ket licence that bundles all the rights is
often the best pract ical mechanism to market copyrights. ere are
many examples of bundled information goods: licences for academic
journals (JSTOR), news service subscriptions, cable television sub-
scriptions, etc. Fa ng and Norman study t he optimal provision mech-
anism for multiple excludable, non-rival public goods. ey show that
the optimal mechanism involves a fixed fee and bund ling. Bakos and
Brynjolf sson show that bundling information goods increases both
revenue (incentive for creation) and efficiency (reduces dead weight
losses). In these cases, there is an economic rationale for the creation
of a (regulated) collective: it makes it possible to bundle rights on all
creation works.
H. Fang and P. Norman, “An Efficiency Rationale for Bu ndling of Public
Goods” () Micro eory Working Paper s online: microeconomics.ca.
Y. Bakos and E. Brynjolfsson, “Bundling Information Goods: Pricing, Profits and
Efficiency” () : Management Science [Bakos and Brynjolf sson ()].
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