Competition in Music Rights: How Does It Work?

Abstract

The current landscape of institutions and regulations for licensing music is complex and seemingly haphazard, with varying standards and institutions governing different aspects of licensing. In this paper, we review the literature discussing the tradeoffs between equitable remuneration, transaction costs, and efficiency that arise when licensing music rights to non-interactive and other radio or radio-like services. We then discuss how these pieces fit together for the types of music services that are the primary focus of our forthcoming companion paper describing a more competitive licensing alternative. We highlight some of the benefits and drawbacks with the current licensing regime and explore whether the technological innovations that have led to changes in the way that music is consumed might also allow for the licensing of music rights directly with individual rightsholders with radically lower transaction costs than has historically been presumed would be necessary, and thereby potentially tilt the balance in favor of a deregulated competitive licensing framework.