COPYRIGHT, CONTRACTS AND MUSIC PRODUCTION

Abstract

This paper explores the impact of the digital revolution on the development of the music industry. It analyses the conditions of the commercialization of music in an industry structure with, and without, a copyright regime. The paper's main concern is with the relationship between artists and publishers. The particular influence of the continental European, especially Austrian, copyright regime on the contractual design of publishing contracts and the music industry structure, and their differences from US norms, is discussed.

Keywords:

• Copyright
• artist
• publisher
• label
• contract
• industry structure
• digitization

Notes

About the concept of cultural paradigms in the music industry see Tschmuck (2006, pp. 215–217).

In contrast, Tang (2005, p. 869) highlights that ‘digital copyright law could create perverse incentives for innovation’ in a recent article.

For example, most of the music of Johann Strauss, Sr. does not exist in original scores but in simplified editions by his publishers for piano and other instruments.

ASCAP is short for ‘American Society of Composers, Authors and Publishers’.

Bundesgesetz über das Urheberrecht an Werken der Literatur und der Kunst und über verwandte Schutzrechte, BGBl. Nr. 111/1936 i.d.g.F. der Urheberrechtsgesetzes-Novelle 2003.

The so-called Verwertungsrechte (exploitation rights) comprise the publication, reproduction, translation, adaptation, broadcasting, and performance rights (for a comparison of the Austrian and German with the UK copyright law see Rahmatian 2000).

See examples for the US in Krasilovsky and Shemel (2000), Passman (2003), Brabec and Brabec (2004); for Germany in Lyng (2003); and for Austria in Finkentey (1998).

In 2001, only 112 out of 6,455 CD releases (1.7 per cent) of major companies in the US could cover their costs (see Friedrichsen et al. 2004, pp. 39–40).

According to Williamson (1975), the transaction costs rise with the number of contracts, the market risks, and/or the specificity of the investment. In our case, the record company has to make a contract with a publisher for each song (high quantity), without knowing if the record will become a success (high risk), and with no other possibility to exploit it than on the record (highly specific investment).

For example, there was intensive lobbying by the music industry's representatives in the legislative process of the US Digital Copyright Millennium Act 1998 (DCMA) as well as of the EU Copyright Directive 2001.