Economics of collective management organisations in the creative industries.

Abstract

Collective Management Organisations (CMOs) manage the various rights granted in copyright law to creators and performers in a range of creative industries – broadcasting, live performance, journalism, publishing, the music industry, visual arts et al. They offer pooled services of rights administration in self-governing membership organisations that are non-profit monopolised collectives that have curiously been left out of the list of similar institutions studied. They have the added interest that they deal in copyright, itself an institutional response to an ‘intangible property’ problem that has become increasingly complex due to developments in technologies of producing and consuming creative works, such as literature, art and music. Without CMOs, access to ‘legal’ use would be prohibitively costly for users of protected works, an external benefit of the creators’ need to protect their rights. Digitisation has provided both a threat to smaller CMOs and an opportunity for the larger ones. Increasing returns in rights management makes CMOs natural monopolies that are bolstered by the territorial nature of copyright. Digitisation enables transactional licensing to be feasible, threatening the solidarity of collective rights management (crm) by CMOs. It requires significant investment in IT, which may be too great for smaller CMOs in smaller markets. Regulation to promote multi-territorial licensing within the EU is likely to exacerbate the gap between the big and the smaller CMOs. The paper outlines the workings of and the operation of CMOs, drawing on the economics of collecting societies, a topic that the author has studied in some depth, extending previous work to include these effects.