Handbook on the Economics of Copyright
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Handbook on the Economics of Copyright

A Guide for Students and Teachers

Edited by Richard Watt

Featuring expert contributors from around the world, this book offers insight into the vital theoretical and practical aspects of the economics of copyright. Topics discussed include fair use, performers’ rights, copyright and trade, online music streaming, internet piracy, copyright and visual art markets, and open source publishing. In addition to in-depth coverage of these timely topics, the authors also offer insightful predictions and policy recommendations for the future.
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Chapter 6: Licensing of copyright works in a bargaining model

Richard Watt


Creative individuals, those who produce valuable works of authorship, are typically not the most suitable individuals to publish their work, and bring it to the final user in a way that appropriately captures the value contained in the work. Normally publishing and distribution is the job of a specialist intermediary (or perhaps intermediaries) between the author and the final consumer. When a relationship of this sort happens, it necessarily requires a contract between the author, whom for the sake of argument we are assuming to be the copyright holder, and the intermediary in order that some of the money received from the consumer can be transferred back to the author as compensation for creating the work in the first place. These contracts are what we refer to as ‘licensing’ contracts, since the contract is the means by which the copyright holder licenses the publisher to access the intellectual property in such a way that it can be packaged and marketed to consumers. Licensing contracts fulfil a variety of functions (see Watt, 2013), but above all they serve to remunerate each of the participants in the production-distribution chain for their efforts in adding value, and to share the risks in the business between the supply-side participants.

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