creators and performers, not their conditions of work’62, are there any methodologies for
examining the effects of copyright contracts? One approach in the literature starts from the empirical phenomenon of artistic production, and considers the professional life of authors. As authors need to make a living in order to be productive, it should be possible to generate a taxonomy of possible sources of earnings (of which copyright contracts will be only one!) that can be empirically captured for each professional group. However there are very few studies that can be used as a starting point for this exercise. It is part of artistic folklore that many authors have lived at some stage of their career on the breadline, are holding down a second job, or are supported by members of their family. But is this true? If so, does it hold equally for all professions copyright law treats as authors in the sense of the Berne Convention: e.g. novelists, journalists, photographers, composers, screen-writers or architects? To what extent does it apply to professions that are populated by non- Berne artists, such as musical performers and actors (who are protected by related rights)63, or
television format developers, sound engineers, set designers or gourmet chefs (who may have no statutory rights at all)?
60 Under the concept of ‘indirect appropriability’ developed by Stan Liebowitz, record companies or journal publishers may be able to charge higher prices because of unauthorised private copying: S.J. Liebowitz (1985), ‘Copying and Indirect Appropriability’, Journal of Political Economy 93(5): 945-957. For further discussion, see R. Watt (2005), ‘Indirect Appropriability: 20 Years On’, Symposium RERCI, 2(1), and Section 1.4 below.
61 The effects on authors’ earnings of digital rights management systems (DRM) are even harder to gauge. Some proponents of DRM technologies claim that by tailoring prices to the customer’s ability to pay, DRM protected markets become more efficient: ‘The prescription, then, is to so structure rights that they enable differential pricing, except where transaction costs–the costs to copyright owners and users of locating and negotiating with each other–will defeat the practice, as they presently would with book resales.’ – P. Goldstein (2003 [1994]), Copyright’s Highway: From Gutenberg to the Celestial Jukebox, Stanford UP, p. 201. Even if this proposition held (for counter-arguments, see for example J. Litman (2001), Digital Copyright, NY: Prometheus), what would follow for the author’s share of the surplus?
62 Ruth Towse, invitation to Bournemouth Symposium on Copyright, Contract and Creativity (25 September 2009): http://www. cippm.org.uk/symposia/symposium-2009.html.
63 The most important international treaties for related or neighbouring rights are the Rome Convention (1961) ‘for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations’, the WTO TRIPS Agreement (1994), and the WIPO Performances and Phonograms Treaty (1996).
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In an earlier paper64, I have suggested that the
earnings’ portfolio of cultural professionals can be analysed under the following four categories: (a) Statutory right: Individually negotiated
income
This type of income is likely to be based on publishing or production contracts, and poses conceptual problems in identifying the effects of the underlying statutory right.
(b) Statutory right: Collectively negotiated income
This type of income income is collected and distributed via collecting societies, typically for secondary use of protected subject matter that is difficult to monitor. These fees can often be directly linked to regulatory intervention, such as a statutory licence or a licence set in a copyright tribunal.65
(c) Income from artistic activity: Non-statutory subject matter
This type of income includes fees for live
appearances (such as performances or readings), grants, teaching in the artist’s field.
(d) Income from non-artistic sources This category includes income from any non- artistic ‘day time job’, family support, capital income and benefits derived from the social security system.
Empirical data in these four categories are not easily available, unless collected through a specifically designed questionnaire instrument. However, there is a context of income, tax and insurance data available from government statistical sources that can be applied to the cultural professions. There is also useful information contained in surveys of creators. Finally, it is possible to make inferences on the likely balance of incomes from the published distributions of copyright collecting societies.66
Before the empirical evidence on artists’ earnings is reviewed in detail, the conceptual approach is illustrated through the income profiles of two creators.
64 M. Kretschmer (2005), ‘Artists’ Earnings and Copyright: A review of British and German music industry data in the context of digital technologies’, First Monday 10/1 (January): pp. 1-20. The approach has been used for the 2007 ALCS survey Authors’ Earnings from Copyright and Non-Copyright Sources which provides an important source of data for this review.
65 Several European Directives have created rights that can only be exercised via collecting societies (rental 1992/100/EEC; cable retransmission 1993/83/EEC; droit de suite 2001/84/EC).
66 The UK collective licensing bodies include: Authors Licensing & Collecting Society (ALCS) – secondary reproduction and audio-visual rights in the literary and dramatic copyright area; Broadcasting Dataservices – licenses programme listings; Christian Copyright Licensing International (CCLI) – licenses the reproduction of songs and hymns; Copyright Licensing Agency (CLA) – licenses reprographic copying of literary works; ComPact Collections – licenses cable retransmission rights for films; Design and Artists Copyright Society (DACS) – administers reproduction rights for visual artists; Educational Recording Agency Ltd (ERA) – licenses recording off-air by educational establishments;Filmbank and Motion Picture Licensing Corporation – licenses the showing of films in public; MCPS – mechanical reproduction rights of composers, lyricists, publishers;Newspaper Licensing Agency (NLA) – issues licences for copying of newspapers; Phonographic Performance Limited (PPL) – licenses certain uses of copyright sound recording; Publishers Licensing Society (PLS) – administers certain rights on behalf of publishers; PRS – performing rights of composers, lyricists, publishers; Video Performance Limited (VPL) – licenses certain uses of music video recordings. There are currently more than 150 collecting societies acting for right holders in the EU. Europe’s largest society is Germany’s GEMA (administering music performing and mechanical rights) with an annual turnover exceeding €800m (Annual Report 2008).
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2.2.1 Two professional profiles
The electronica artist
X grew up in the techno/dance scene of the 1980s, forming various bands. His music is entirely produced on a computer, and the traditional subject matter categories of copyright law are difficult to apply. However, contracts and income follows these categories: the composition as musical work67 (also known as ‘publishing’); the
sound recording68 (also known as ‘master tape’);
and the performance69.
Following a record deal with a major company, three of X’s tracks made it into the UK Top Ten. The recording contract was structured as advance plus royalties, with ownership of the master tape resting with the record company. As is usual in the business, the advance was never recouped as the label can offset ‘clearing samples’, production and promotion costs. Thus no royalties have been paid, and a notional debt was retained against subsequent releases. ‘You spend your pipeline before you get paid. The record companies don’t want you to stop working.’ X eventually changed the record company and now works on a ‘per release’ basis with an independent label. The delivery of the master tape to the record company includes a payment for the performance of musicians who have been recorded (which may well be a MIDI file created by X). Subsequent broadcasts and rental of the recording entitle the performer to a small collectively negotiated royalty administered by collecting society PPL.
X also has concluded a separate exclusive contract with a music publisher, which now covers 30 tracks (including his three chart hits). Publishing income on the one hand is automatically linked to the sales, rental and broadcasting of sound recordings of the musical work (i.e. the work of the record label); on the other hand it depends on the promotional activities of the publishing company itself which may attempt to place tracks for advertising or TV. The composer’s share of revenue for ‘air-time’ is collectively negotiated, and according to the statutes of collecting society PRS, the publisher’s share cannot exceed 50%. This income stream therefore is less vulnerable to bargaining pressures.
Thirdly, X’s band gives live concerts, and X personally is regularly invited to perform as DJ at major clubs, nationally and internationally. Due to X’s fame, these gigs are well paid.
Looking at X’s current income, there are three major elements: (i) advances paid by the record label; (ii) publishing royalties (of which the
performing royalties for ‘air-time’ paid via PRS are the most important); and (iii) live performances as a DJ. (i) is based on a recording contract assigning statutory subject matter; (ii) is based on a publishing and collective administration contract licensing statutory subject matter; (iii) is not based on statutory subject matter.
The children’s book illustrator
After graduating from art college, Y worked as a graphic designer in the advertising industry. For a period, she was employed for a major agency that under her contract of employment owned her artwork70.
67 In the UK, CDPA 1988, s. 1(1)(a) and s. 3 68 In the UK, CDPA 1988, s. 5A
69 In the UK, CDPA 1988, ss. 191, 192
70 An artistic work under CDPA 1988, s. 4(a) includes ‘a graphic work’. Section 11(2) provides that ‘[w]here a literary, dramatic, musical or artistic work, or a film, is made by an employee in the course of his employment, his employer is the first owner of any copyright in the work subject to any agreement to the contrary’. See section 2.5.1 below.
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In mid-career, Y decided to have a break in order to establish a family. The advertising agency continued to commission work from Y on a project basis against one-off fees.
Through a number of chance encounters, Y also began to illustrate children’s texts, initially for free. Her partner continued to work full-time. Following a surprise best-selling success of one of her titles (for which she had received only a buy-out fee), Y briefly became one of the best-paid illustrators, commanding royalties in excess of 10% of the retail price but has been unable to repeat her early success. Her best-selling book is still a public library favourite. She now visits schools, and gives creative seminars for which there is a steady demand.
Y’s income profile has been very different during the three phases of her professional life. As an employed or commissioned graphic designer (i) her income was derived from the production of statutory subject matter, but her payment structure was that of an employee or freelancer. It is not clear whether the statutory protection of artistic works was relevant to the income received. During the second phase, artistic production was undertaken in an environment in which the main source of income was non-artistic (ii): the partner’s job. During the third phase, income shifted to art-related, but non-statutory subject matter activity (iii): seminars and workshops, but there was also (iv) a small royalty stream from some of her earlier publication contracts and via the public lending right (which collects fees for the lending of books from public libraries).71
It is not claimed that either of these profiles is typical. In fact, studies on artists’ labour markets stress that cultural workers constitute a very heterogeneous population.72 The historical
example of pre-copyright contracts (section 2.1.2 above), and the earnings profiles constructed here merely demonstrate the methodological constraints that need to be overcome in order to identify the monetary contribution of copyright contracts to creative production.
The remainder of this paper is structured as follows: The next two sections review the available data on creators’ earnings (2.3) and to what extent they can be assumed to reflect the current empirical outcome of contract bargaining (2.4), the final two sections provide an international comparative review of regulatory tools that may be used to adjust the bargaining outcome (2.5), and their potential effectiveness (2.6).
71 In the UK, the public lending right (PLR) scheme was established under the Public Lending Act 1979. The Act defines PLR as an intellectual property right, entirely separate from copyright. In the conceptual framework presented in this paper, PLR is closest to category (2) ‘Statutory right: Collectively negotiated income’.
72 F. Benhamou (2003), ‘Artists’ Labour Markets’, pp. 69-75 in R. Towse (ed.), A Handbook of Cultural Economics, Cheltenham: Edward Elgar.
73 The sections on Copyright Earnings draw on M. Kretschmer and P. Hardwick (2007), Authors’ Earnings from Copyright and Non-copyright Sources, Bournemouth: CIPPM and ALCS. Exchange rates are calculated at the average exchange rate for the year in question.
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