A Guide for Students and Teachers
Edited by Richard Watt
Chapter 18: Copyright in visual art markets: some economic theory concerning resale royalties and other options
Most copyright holders are able to demand royalty payments in exchange for access to their work. Under a royalty payment scheme, of course, the copyright holder does not actually sell the underlying intellectual property, but rather only allows some sort of restricted access to it in exchange for a fee. For example, a musician might write a piece of music (the underlying intellectual property) that is then recorded onto CDs which are sold on to consumers. A part of the sale price of each CD is paid back to the musician as the royalty fee. The access that is gained by the consumers is restricted, since while they can enjoy the music on their CD as much as they like, they cannot (for example) broadcast it publicly for others to enjoy, or make copies to sell, and so on. Under a royalty scheme the intellectual property can be enjoyed by many users simultaneously, and the copyright holder is able to enjoy an income stream that could last for a great many years (assuming, of course, that the rights are able to be protected from misuse). In this way, a copyright creation is similar in many respects to a financial investment product – an initial cost is suffered in the present to obtain the investment, which then pays off with an income stream over time.
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