Abstract
This chapter discusses paratrophic process, a process that effects transfer of benefit from a larger to smaller group. The chapter argues that paratrophic process is characteristic of all property systems, which, unless directed by action of the polity to function distributively, concentrate benefit rather than diffusing it. In a fully paratrophic system, one person owns everything. In an effectively distributive system ownership is more evenly diffused among members of society. This chapter posits that the copyright royalties system is an example of a partly paratrophic system: the royalties system is a regulated by laws that ensure efficient transfer of income from the public to copyright industries in a way that ensures that disproportionate benefit is transferred from public to industries. But the public receives some benefit, meaning that the system is not entirely paratrophic. By contrast, the feudal system, which is discussed was entirely paratrophic.
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Notes
- 1.
Paratrophic action is subsidiary to the larger question of how property systems function as distributive instruments, and why instrumentally they concentrate ownership unless government establishes means of diffusion (such as norms of representation, transparency and accountability). The larger question is not discussed in this chapter, although discussion of paratrophic action illustrates the tendency of all property systems to concentration.
- 2.
Paratrophic is a relatively recent word, probably coming into use in the nineteenth century, implying, though distinguishable from, parasitism. It means ‘deriving sustenance from living organic material’ (Stedman’s Medical Dictionary) or ‘obtaining nourishment from living organic matter; parasitic’ (Random House Dictionary). Whereas the parasitic agent is sustained by a host, a paratrophic agent may live separate from whatever it derives sustenance, and derive sustenance from other sources.
- 3.
As will be discussed in the chapter, the system of feudal dues is an especial manifestation of paratrophic payment.
- 4.
The widely accepted policy of contract law is that a person is free, subject to legal prohibition, such as prohibition against fraud or murder, to agree with another person to do or refrain from doing specified acts. The law upholds contracts made in conformity with the law. A valid contract must be—according to theory—the product of autonomy (freedom to choose) and free exercise of will (voluntary decision). In this essay, voluntarism is contrasted with coercion. It should be noted that some scholars have questioned the extent to whether autonomy and voluntarism, as those concepts are conventionally understood, are to varying degrees absent from much contracting. See, e.g., Robertson (2005).
- 5.
Although the concept of proprietary rights allocation is familiar in economics literature, and Karl Marx asserted that the governing class in any historical period governs by control of the means of production (a term indicating monopoly exercise of proprietary rights), I am not aware of any other writer who has identified the instrumental role of property systems in causing exclusion and inequality. Ronald Dworkin’s description of legal rights as ‘trumps’ is explanatory. See Dworkin (1977), p. 153. Dworkin’s theory of rights-as-trumps could be argued to be a theory of the paramount value ascribed by legal systems to private interest (even, it could be inferred, if the private interest is the sovereign in a totalitarian society). In western legal systems, enforceable private rights, typically proprietary, ‘trump’ public considerations (or perhaps more accurately, considerations of majority benefit): ‘rights are best understood as trumps over some background justification for political decisions that states a goal for the community as a whole.’ Thus exercising exclusive rights is exclusionary.
- 6.
- 7.
Marx ibid: ‘The history of all hitherto existing society is the history of class struggles.’
- 8.
Vinogradoff (1924), p. 559: ‘History teaches clearly in this case that we have to deal in social life with a conflict of principles, each of which is necessary to human development, but neither of which is entitled to claim absolute superiority over the other. The principle of liberty carried to the extreme produces anarchy; even so State power, suppressing all individual freedom, produces a condition of things, the outcome of which may be emigration, separation, and revolution. … a compromise has to be effected and the juridical problem consists in settling how far the line of compromise has to be drawn to the Right or to the Left.’
- 9.
For a useful exposition on how thought and ideation affect behaviour see Altman (1999).
- 10.
The distinction between settled and nomadic society is important. Settlement involves husbandry, which leads to rivalrous claims for land, which leads to protection by arms and so on. Property relations accompany settlement and expansion. Possession is critical to social organisation. Land becomes property and territory. Nomadic society is far less possessive. Nomads may assert territorial pre-eminence but they are not inclined towards formal annexation and their language and observation of nature tends to be relational rather than possessive.
- 11.
See, e.g., Crystal (2008).
- 12.
See Collins English Dictionary. The word ‘possession’ derives from the Latin verb possidere ‘occupy/inhabit/control/seize upon/sit on [strictly sittable]’ and the word ‘property’—via thirteenth century French and Middle English—from the Latin proprietas ‘something personal’ and proprius ‘one’s own’.
- 13.
See Piketty (2014).
- 14.
In 1933, Sir William Owen, Royal Commissioner inquiring into performing rights in 1932–1933 (Royal Commission on Performing Rights) made clear that his purpose in proposing in his report on the royal commission the institution of a copyright tribunal was to benefit the public. He asked in his report, ‘Should not the rights of authors, composers and publishers be harmonized with the general interests of the State, to which individual interests should particularly submit themselves?’. See Atkinson (2007), p. 223.
- 15.
35 Stat 1075.
- 16.
Section 1(e).
- 17.
Geo.6 5(1911) c.46.
- 18.
Section 19(2).
- 19.
The Berne Union, the short name for the original secretariat administering the Berne Convention, the United International Bureaux for the Protection of Intellectual Property (BIRPI now incorporated in WIPO), organised periodic conferences to amend the Convention. In 1908, the Union held a revision conference at Berlin which resulted in the Berlin Act of 13 November 1908. This stated the Revised Berne Convention for the Protection of Literary and Artistic Works.
- 20.
The House of Commons enacted the first public performing right in the 1842 Copyright Act, section XX. The policy of the legislation was to allow dramatists or musical composers, or theatrical impresarios to whom they assigned their rights, to profit from public performance of their works. Legislators contemplated that rights-holders would derive remuneration directly from fees paid by members of the public to watch a performance. See Atkinson (2007), pp. 114–117. Cf the Copyright (Musical Compositions) Act 1882 which provided that to retain the performing right, the copyright owner must publish a reservation notice on the title page of every published of sheet music. The 1911 Copyright Act did not mention formalities.
- 21.
Article 13 Berlin Act.
- 22.
The sentence continues: ‘but the effect of any such reservations and conditions will be strictly limited to the country which has put them in force.’ Article 13 Berlin Act.
- 23.
Section 1(e) of the US Copyright Act 1909 specified a per record royalty of two cents. Section 19(3) of the UK Copyright Act 1911 set the royalty for 2 years after commencement at 2.5% of the cost of each record sold and thereafter, 5%.
- 24.
See Atkinson (2007) chapter 3.
- 25.
Committee of Patents HR 2222 60th Congress 2nd Ses (also SR 1108 adopting). Concerning cartel fears, see Abrams (2010), pp. 219–220. Before 1909, 87 members of the Music Publishers Association agreed to authorise the Aeolian Company to exclusively manufacture piano rolls of 381, 598 copyright musical works, in return for 10% royalty for each roll sold. These works comprised about 75% of total musical copyrights, and its exclusive licence portfolio established the Aeolian Company as the dominant manufacturer of rolls. By 1909, sales of gramophone records were beginning to eclipse those of piano rolls and pianolas. The piano roll industry was powerful into the 1920s. However, whether the prospective monopolist sold rolls or records, politicians feared that one or two would collude with one or two dominant music publishers to establish supply cartel.
- 26.
The US Copyright Act 1976 section 801 (b)(1) provides that Copyright Royalty Judges determine the royalty rate by reference to stated criteria.
- 27.
The ‘radio wars’ in the 1930s in the United Kingdom, United States and Australia. For Australian and the United Kingdom see Atkinson (2007). The battle in the US between music publishers, represented by the American Society of Composers Authors and Publishers, and broadcasters has been examined in books and articles. See, e.g., Wu (2004).
- 28.
The Musical Copyright Bill 1929.
- 29.
Atkinson (2007), p. 171.
- 30.
Delegates agreed without controversy a revised Article 11 bis (1) which permitted members to legislate to vest in authors of literary and artistic works the right to authorise broadcasting of those works. Article 11 bis (2) upon which Moore and Raymond insisted was highly controversial. It says, ‘The national legislation of the countries of the Union may regulate the conditions under which the right mentioned in the preceding paragraph shall be exercised, but the effect of those conditions will be strictly limited to the countries which put them in force.’ Article 2(1) of the Convention provides that the phrase ‘literary and artistic works’ refers to, among other things, ‘musical compositions with or without words’.
- 31.
The reason for concern at challenge to enactment of laws limiting the broadcasting right, for example by provision for arbitration of licensing disputes, was that legal challenge could affect the development of broadcasting. In Australia especially governments were concerned at the prospect of legal disputes restricting the growth of broadcasting in remote areas, which relied on radio to disseminate educational and other services. It should be noted that the broadcast right is separate from the public performance right which is described in Article 11 of the Convention. See Atkinson (2007), p. 224.
- 32.
Justice Owen presided over the Royal Commission on Performing Rights 1932–1933.
- 33.
In Australia, the Victorian Supreme Court found in 1925 that unauthorised broadcast of a copyright musical work infringed the owner’s public performance right: Chappell & Co Ltd v Associated Radio Company Ltd (1925) VLR 350.
- 34.
The precipitating factor in the Australian Government’s decision to call a royal commission on performing rights in 1932 was the collapse of price negotiations between the Australasian Performing Right Association, collecting for musical copyright holders, and the Australian Federation of Broadcasting Stations. See comments of the Royal Commissioner, Justice Owen, during proceedings. Comments in archive transcripts (NAA A467 SF1/). See also Report of the Royal Commission on Performing Rights Commonwealth Government Printer 1933.
- 35.
Report 1933 id.
- 36.
1968.
- 37.
John Keating, legal adviser to the Royal Commission on Performing Rights, said, ‘The general attitude of Counsel for APRA and counsel for the Associated Manufacturers [EMI] throughout the Inquiry might be summed up as if they said: ‘We want to be left alone. There is no need for any legislation to solve present or future problems adverted to here. Leave them to us to settle by private negotiation.’ The radio broadcasters did not join in this sentiment, perhaps because the broadcast industry was the focus of the resentment of both APRA and the record industry Atkinson (2007).
- 38.
APRA did not seek a royal commission on performing rights, nor a copyright tribunal. Its preferred strategy was, in the words of Purcell, the barrister for the Cinematograph Exhibitors’ Association (addressing the royal commissioner Justice Owen), to behave, ‘like a dragon, devastating the countryside.’ (See transcript in National Archives of Australia NAA A467 SF1/43). APRA felt confident that if left alone, it could through courts, extract maximal prices from radio broadcasters. In his commission report, Justice Owen wrote that APRA, in effect the monopoly collector in Australia of public performance fees, ‘can write its own terms … and, unless the law be altered, there can be no restraint upon its demands.’ He went on: ‘It cannot be said that the demands made hitherto have been extortionate, but they can be made so.’ (National Australian Archives and see Atkinson at 222).
- 39.
Copyright Amendment Act 1931 (Canada), passed 11 June 1931.
- 40.
In the United Kingdom, North America and Australia.
- 41.
EMI imposed in the United States that appears to have been less policed.
- 42.
Atkinson (2007), p. 175.
- 43.
Conditions might include restriction of the number of plays and announcement of the name of the record company which had produced the record (EMI or a subsidiary), and the name of the track and performer.
- 44.
See A Short History of IFPI (http://www.ifpi.org/downloads/ifpi-a-short-history-november-2013.pdf). This monograph published by the International Federation of the Phonographic Industry quoted Sterling as follows: ‘I put the radio on this morning. I heard them playing one of our records. I want to know something: are we getting paid for that?’ The recording industry founded IFPI in Rome in 1933 to lobby for enactment of the record performing right.
- 45.
Gramophone Company Ltd v Stephen Cawardine & Co [1934] 1 Ch 450.
- 46.
EMI embarked on the radio bans partly because of concern that a precipitate drop in record sales, which might have been attributed to the effect of economic depression on consumer spending, was caused by the public’s choice to listen to radio instead of buying records. But the bigger reason for the radio ban was that record companies saw collecting societies like the PRS and APRA reaping rich dividends from collecting public performance fees. The assertion of a public performance right in the record itself, outlandish to some observers, was a calculated gambit to profit like the collecting societies.
- 47.
RCA v Whiteman et al 114 F 2d 86 (1940).
- 48.
Atkinson and Fitzgerald (2014), p. 81.
- 49.
Sherman Antitrust Act 26 Stat 209. See Atkinson and Fitzgerald (2014), p. 82.
- 50.
In 1932, ASCAP and the radio stations signed a contract which provided for payment by each radio station a fee plus 2% of gross advertising revenue in 1933, 4% in 1934, and 5% in 1935. Two years later, ASCAP raised its fees by 40%. In the two decades between the wars it raised fees by 900%. See Cirace (1978), p. 287.
- 51.
Atkinson and Fitzgerald (2014), pp. 83–84.
- 52.
Ibid at 84.
- 53.
Ibid.
- 54.
In 1939 10 states passed anti-trust laws directed at trusts intended to fix pricing of licences for the supply of copyright music. In the same year, ASCAP sued the states in the Supreme Court in Gibbs v Buck 307 US 66 and Buck v Gallagher 307 US 95 and the Court issued pre-emption declarations invalidating the legislation. See, e.g., Wu (2004).
- 55.
Atkinson (2007), p. 333. A congressional house committee in 1965 reported the statistic on US copying. Sydney University in 1968 reported annual copying of 874,780 pages and in 1969 the University of New South Wales reported copying of 325,100 pages in a four week sample period.
- 56.
The 1961 commencement of the activities of the joint committee were reported in the 1968 Report prepared by Secretariat of UNESCO and Berne Union on meeting of Committee of Experts on the Phonographic Reproduction of Protected Works.
- 57.
In University of NSW v Moorhouse (1975) 133 CLR 1 the High Court of Australia—following Federal Court determination that unauthorised copying was infringement but that the university did not authorise infringement—determined that the university authorised infringement by failing to adequately warn copiers of infringement liability. In Willliams and Wilkins Co v United States (1975) 420 US 376 USC, eight Supreme Court justices split evenly on the question whether photocopying of articles in medical journals by two government libraries constituted copyright infringement. The government argued that copying was fair use. The Supreme Court dismissed the appeal without providing reasons.
- 58.
In 1987, the World Intellectual Property Organization (WIPO) appointed a committee of experts to draft model provisions concerning photocopying. See also recommendation 11 in the Council of Europe Committee of Ministers document On Principles Relating to Copyright Law Questions in the Field of Reprography (25 April 1990).
- 59.
In Australia 1981 (Copyright Amendment Act).
- 60.
In the United States, six compulsory licences govern commercial use of copyright material: licence for production and distribution of records of musical works and their digital audio transmission; digital performance right for records for some operators of non-interactive digital transmission services; licence for ephemeral recordings used to facilitate digital transmissions; licence for secondary transmissions by cable television; licence for use of certain copyright works by non-commercial broadcasters; licence for satellite re-transmissions to public for private viewing. In the English-speaking world, the state, following the arbitration model first proposed by the Australian Royal Commission on Performing Rights (1932–1933), interposes between parties disputing licensing terms to determine a bargain. In most countries, tribunals composed of one or more judges, and usually one or more non-judicial officer, determine equitable remuneration and related matters.
- 61.
Chapter 1 ‘Collective Management of Copyright: Theory and Practice in the Digital Age’ in Gervais (2010), p. 2.
- 62.
See, e.g., Australian Copyright Act 1968, Part Va--Copying And Communication Of Broadcasts By Educational And Other Institutions.
- 63.
- 64.
If a bargain cannot be struck, a market does not exist. Prior to the institution of tribunal and statutory licensing, markets for public performance of recorded music and photocopying of pages of works did not exist. If markets, governed by the law of contract, do not arise organically, and government edict in effect decrees that parties must reach price agreements, the supposedly sacred idea of a free market is obviated. The seller may be willing but the buyer is not. If we consider the example of photocopying royalties, it might be supposed that if a market exists in copying pages of text, collecting societies would not fail to collect copying fees from corporations, and other private entities that daily copy millions of pages.
- 65.
See, e.g., UNESCO Guide to the Collective Administration of Authors’ Rights UNESCO 2000 (author Paula Schepens).
- 66.
Atkinson (2007).
- 67.
Joe Tipping a federal Attorney General Department officer attending the hearings of the Royal Commission on the Performing Right in 1933.
- 68.
Purcell, barrister for the Cinematograph Exhibitors’ Association speaking at the Royal Commission on Performing Rights (NAA A467 SF1/43 reproduced in Atkinson at 207).
- 69.
See WIPO Series on types of collective rights administration http://www.wipo.int/publications.
- 70.
In Australia, a striking feature of the statutory licence for copying and communication is that it applies to government agencies and educational institutions. The reason that companies are not levied copying and communication fees is that the cost of securing compliance deters publishers. Government is a compliant licensee that undertook to establish the royalties scheme.
- 71.
The question of government’s correct role in market regulation is much debated. In the case of collective administration it is relevant to note that while governments may have benefitted copyright industries by establishing a legal machinery for collecting, they have deprive potential licensees of the freedom to refuse or avoid licences. Compulsory licensing may also be interpreted as coercion.
- 72.
In Australia, shortly after Federation, Parliament passed the Conciliation and Arbitration Act (1904), inaugurating an industrial relations system that would establish greater parity in bargaining between workers and employers. The policy of the Commonwealth in involving itself in wage bargaining was to uphold, in the public interest, a minimum wage and minimum standards in working conditions. The arbitration system, unlike the copyright tribunal system, was not intended to specifically benefit proprietary rights-holders. Commonwealth intervention in private bargaining, outside the establishment of the Copyright Tribunal, has been rare. Some contract-related statutes, such as the Australian Consumer Law, involve government in private bargaining, but they do so strictly, usually on limited grounds, for public or ‘consumer’ protection.
- 73.
None of the exclusive rights of copyright is a right of remuneration.
- 74.
The transcripts of discussions between Sir William Owen, the Royal Commissioner, and John Keating, his legal advisor, at the conclusion of the Royal Commission on Performing Rights 1933, reveal that both men considered that the public interest must conform to the requirement of creating commercial harmony, which they considered could be achieved by establishment of an arbitral tribunal. Keating said the public ‘[is] vitally interested in seeing that they [the industries] work together harmoniously.’ Owen said, ‘ … to what extent should the conflict between those rights of public demand, assuming the public interest is there, to what extent and in what way should these differences be adjusted.’ (Atkinson at 219).
- 75.
See, e.g., that of Gervais (2010).
- 76.
The so-called exclusive rights of copyright and other subject matter enumerated in copyright legislation and first provided for in embryonic form in the Berne Convention 1886.
- 77.
Thus copyright is stated as an exclusive right to do certain acts (see, e.g., section 31 of the Australian Copyright Act 1968). The right of prohibition is implied in the exclusive right.
- 78.
Not stated, nor obviously implied, in the exclusive right to do acts. But implied nonetheless as shown in the discussion of Herbert v Shanley 1917 242 US 591.
- 79.
The absurdity of compulsion is instantly apparent on consideration of the everyday process of exchange. If consumers were compelled to buy goods when they entered shops, chaos would ensue pitting consumers against shopowners and government. Similarly, a music listener might accept the copyright owner’s refusal to sell an album below a certain price. If the law did not permit the listener to refuse to pay the price, revolt against the law would be predictable.
- 80.
See preceding note. The essence of a market, or a system of free exchange, is non-compulsion. Compulsion destroys markets and exchange.
- 81.
See A Short History of IFPI (http://www.ifpi.org/downloads/ifpi-a-short-history-november-2013.pdf). This monograph published by the International Federation of the Phonographic Industry quoted Sterling as follows: ‘I put the radio on this morning. I heard them playing one of our records. I want to know something: are we getting paid for that?’ The recording industry founded IFPI in Rome in 1933 to lobby for enactment of the record performing right.
- 82.
[1934] Ch 450.
- 83.
Sterling’s sentiments were echoed, and elaborated by counsel for the associated manufacturers (in substance the Australian subsidiaries of EMI) at the Royal Commission on Performing Rights in 1933. Since EMI in England (through the Gramophone Co Ltd) was preparing for the Cawardine test case, the uniformity of reasoning is predictable. Reginald Bonney, for the associated manufacturers (EMI), told the commission that, ‘The person who uses that record in public for his own profit, who could not otherwise obtain that profit should pay for it; does not justice require that those who have provided him with those means should be provided to pay for it?’ (National Australian Archives A467 SF1/85).
- 84.
As discussed in this article, it might be supposed that statutory specification of proprietary rights, and judicial enforcement of those rights, is a pre-condition for markets to function, but free markets are defined, not determined, by rights: that is, a free market is created by voluntary exchange, governed by rights, not effectuation of a right for the benefit of one class of economic actor.
- 85.
The widely accepted policy of contract law is that a person is free, subject to legal prohibition, such as prohibition against fraud or murder, to agree with another person to do or refrain from doing specified acts. The law upholds contracts made in conformity with the law. A valid contract must be—according to theory—the product of autonomy (freedom to choose) and free exercise of will (voluntary decision). In this essay, voluntarism is contrasted with coercion. It should be noted that some scholars have questioned the extent to whether autonomy and voluntarism, as those concepts are conventionally understood, are to varying degrees absent from much contracting. See, e.g., Robertson (2005).
- 86.
This ‘policy’ is not expressly stated in any literature of which I am aware but probably a majority of governments purport to encourage commercial exchange and uphold contracts related to such exchange. In developed countries, competition and consumer policy is designed to ensure transparent market exchange. Legal literature focuses more on voluntarism as the source of contractual and commercial freedom. See, e.g., Mensch (1981).
- 87.
In Australia Parliament legislated in 1904 to introduce an industrial relations system that in reduced form continues today. The Conciliation and Arbitration Act (1904) (Cth) established the Commonwealth Court of Conciliation and Arbitration to determine wage disputes and the Harvester case (Ex Parte HV Mckay (1907) 2 CAR 1) established a minimum wage. Fairness was the justification for state intervention to counteract on behalf of workers the superior bargaining power of employers. In Australia and other countries, legislatures have introduced consumer protection legislation that impose unfair conditions on purchasers of goods or services. The law has allowed practices such as shrinkwrap licences and contracts of adhesion, ‘take it or leave it’ contracts that state terms service (e.g., car hire contracts or contracts for entry to vehicle parking stations).
- 88.
In the sense that consensus ad idem or at least promissory exchange which offers something approximating free agreement is both a social good and a social necessity. The alternative to free or voluntary contracts is oppression.
- 89.
The concept also implies that a promise must be kept or upheld. The jurisprudence over two centuries of contractual freedom is complex, balancing the inviolability of a promise against the necessity to protect weaker parties from oppression. Philosophically, the value of contractual freedom is clear enough: it is a precondition for commerce, adult responsibility and indeed personal liberty. On the history of ideas about contractual freedom see Atiyah (1985). See also the attack of the American Progressive Movement on Supreme Court judgments that upheld an idea of pure contract, that is, that assent to a contract is per se validation of that contract. The Progressives argued that unless courts redressed unjust outcomes (typically in labour cases) by striking down as unjust bargains provisions or whole contracts, bullying and abuse would become norms of civil and commercial intercourse. Chief Progressives include Hand (1908) and Pound (1909).
- 90.
This point cannot be overstated. A machinery for compulsory contracting that is substantially paid for by government to enable industries to solve problems of consumer capture is testament to the efficient operation of vested interest. It also represents the crypto-overthrow by government (at the behest of vested interest) of the polity’s 200–300 year belief in contractual freedom, however that concept is interpreted.
- 91.
The UK Copyright Act 1956 and Australian Copyright Act 1958 codified recognition in Cawardine supra of the record performing right and the UK legislature followed the Australian (which established the Copyright Tribunal in its 1968 legislation) in creating a copyright tribunal. The tribunals enabled music publishers to effectively enforce public performance agreements. Unlike the record companies, publishers had, throughout the twentieth century, possessed the statutory to prohibit, and thus collect fees, for the public performance of music. The tribunals facilitated collection without contention.
- 92.
Information on Google’s conflict with European publishers over copyright use and remuneration is taken from the dissertation of Joanne Gray PhD candidate at the Thomas More School of Law, and her excellent treatment of Google’s relations with European publishers. Her account begins in 2005 with Agence France Presse filing in a US court a suit against Google for infringement of its copyright in photographs and new stories. In 2007, Copiepresse a Belgian collecting society representing publishers began a law suit for infringement of publishers’ copyright, and in 2009, the Italian publishers’ federation made a complaint against Google under Italian anti-trust legislation, for anti-competitive conduct in the online advertising market. German publishers also initiated anti-trust action against Google alleging that Google compelled publishers to opt-in to its aggregating service. Google replied by refusing to aggregate the publishers’ news items and they swiftly agreed to revert to the existing arrangement. The German publishers filed another suit for copyright infringement in 2016. A 2013 German amendment to copyright legislation authorised opt-in arrangements for no-payment while a Spanish law of 2013 required that publishers could only opt-in to the Google aggregation scheme if Google paid licence fees. In France from 2012, publishers entered into ‘partnerships’ with Google to generate greater online advertising revenue. Google also contributed to a digital development fund—and continued its aggregation service. Ms Gray’s treatise investigates the goals and practices of Google, especially as they affect copyright policy and is likely to be complete in 2017.
- 93.
Determination of value or fixing price is a metaphysical exercise. The important criterion for determining rightness or wrongness of pricing—a metaphysical exercise—is control. What control does the seller exercise over price-determination? If a user is paying a monopolist, the price will be wrong. If we take the example of a beach, users are multifarious. In what way are the fees charged motorist parking vehicles near the beach matched to the value of use? Since the local council is landholder and monopolist fee-collector, the likelihood is that the fee charged is unconnected to value—or more specifically, cost—of use.
- 94.
Under the Act, royalties are payable for copying and communication of broadcasts by educational and other institutions, reproducing and communicating works by educational and other institutions, retransmission of free-to-air broadcasts, broadcasts by satellite BSA licensees. Royalties are also payable under the Act pursuant to determinations made by the Copyright Tribunal of applications under various sections of the Act, as well as in relation to applications to the Tribunal for determination of remuneration payable for making recording or film of a work, in recording for making of a copy of the sound recording, in respect of public playing of the recording, for broadcasting published sound recordings, recording musical works, the manner of paying royalty, and apportionment of royalty in respect of a record.
- 95.
In 1985 in Copyright Agency Limited v Department of Education NSW & Ors 4 IPR 5, the Australian Copyright Tribunal established as the basis for estimating a fee for photocopying pages of works the arbitral method for establishing fair market value. Arbitrators assume that fair market value is ascertained by determining what a willing (and non-anxious) buyer would pay a willing (and non-anxious) seller for a given property or asset, provided that both parties are unrelated, know the relevant facts and are under no compulsion to participate in the transaction. Given these conditions, fair market value should be an accurate representation of an asset’s worth. (The preceding description of fair market value determination is taken from the Allen and Overy document Guide to Extractive Industries Documents – Oil and Gas September 2013).
- 96.
Unwillingness to pay a fee may contravene the law but government’s task does not include legislating to ensure that a person enter into a licensing arrangements that he or she does not wish to accept. If the prospective licensee refuses a licence, of fails to fulfil its terms, the licensor, not government, is responsible for securing the licensor’s rights.
- 97.
It might be possible to distribute tribunal costs by requiring collecting societies to contribute maintenance sums but any such arrangement would invite societies to insist on some involvement in the administration and management of the tribunal. Involvement in tribunal administration and management would not be compatible with judicial independence.
- 98.
242 US 592.
- 99.
A remuneration right is recognised in relation to broadcasting. Article 12 (Secondary Use of Phonograms) of the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (the Rome Convention 1961) provided that users who broadcast phonograms must remunerate the producers of the phonograms (and/or performers of the material recorded on the phonograms.
- 100.
See Pallas Loren (2010).
- 101.
See, e.g., Atkinson (2007).
- 102.
The Shanley brothers, seven brothers from Ireland, operated a number of large restaurants in New York City from 1890 to 1925. The restaurants attracted celebrities as well as ordinary patrons. At one time the Shanley ran four restaurants concurrently.
- 103.
Herbert reputedly expressed a collegiate, as well as personal, reason for taking action, saying, ‘My God, if they’ll do this to my stuff when I can afford expensive lawyers, what aren’t they doing to the others? We’ve got to look after the b’ys.’ Quoted Sobel (1983), p. 3.
- 104.
222 F 344 (SDNY 1915).
- 105.
299 F 2d 340 (1916).
- 106.
Sobel (1983), p. 3 quotes Herbert saying, ‘My God, if they’ll do this to my stuff when I can afford expensive lawyers, what aren’t they going to do to the others? We’ve got to look after the b’ys.’
- 107.
Herbert supra.
- 108.
‘It is true that the music is not the sole object, but neither is the food, which probably could be got cheaper elsewhere. The object is a repast in surroundings that to people having limited powers of conversation or disliking the rival noise give a luxurious pleasure not to be had from eating a silent meal.’ (Herbert supra).
- 109.
One writer friendly to the judgment suggests that Holmes had reason to recuse himself from the case for bias. See Pollock (2014), pp. 15–16: Holmes ‘already the author of a favourable [minority] opinion in White-Smith v Apollo in 1908, approached the Herbert v Shanley decision of January 1917, having been in 1899 the plaintiff on the losing side of his late father’s copyright battle over his book essays, The Autocrat of the Breakfast Table, which had fallen into the public domain over a technicality of the law. (Had he recused himself due to his personal feelings on the subject, would ASCAP, let alone popular music, have recovered and thrived?).’
- 110.
At 595.
- 111.
Holmes’s judgment suggested a presumptive right of remuneration. However, copyright law does not recognise a general right of remuneration. Only phonogram producers and performers have won an explicit treaty right of remuneration. The Rome Convention Article 12 (Secondary Use of Phonograms) provides that users who broadcast phonograms must remunerate the phonogram producers and performers of the recorded work for the broadcast. The WIPO Performances and Phonograms Treaty 1996 (Article 15) requires that the user who broadcasts phonograms or communicates them to the public must remunerate the phonogram producer and performer of the embodied work for broadcast of the work or its communication to the public. A WIPO Committee of Experts and the Council of Europe (Committee of Ministers) recognised (1989/1990) the right of copyright owners to receive remuneration for reprography and a WIPO group experts affirmed (1984) that the Berne Convention and UCC supported the right of the copyright holder to control all aspects of reproduction, including reprography and private copying for non-commercial purposes.
- 112.
Herbert v Shanley (1917) USC at 594.
- 113.
Ibid.
- 114.
Victor Herbert was a commercially successful composer of songs, orchestral pieces and light operas. His income derived mainly from the sale of sheet music copies of his works, and tickets to orchestral or operatic performances of his works. He was thus an actor in markets for the sale of music and tickets: willing buyers purchased copies of his works and tickets to performances of his works. It would be untrue to say that patrons of Stanley’s Café were willing buyers of tickets to performances of his works, that they attended the café to hear performances of his works, or that they demonstrated desire to pay to hear performances of his works at the café. In the absence of evidence of willing buyers, it is misleading to adduce a market for public performances of Herbert’s works outside a theatre of patrons who paid to hear his works performed.
- 115.
Whether or not this was the case, radio stations were not competing in a market for sale of records.
- 116.
By harm is meant reduction in income available to the rights-holder from contracts for performance or sale of recordings. Shanley’s orchestral performance did not reduce contracted income. After Holmes’s judgment, Herbert could have negotiated a licence with Shanley, and had Shanley refused to agree a fee, Herbert could have prevented him from performing his works. Holmes judgment, however, insisted that a fee must be paid, and in effect provided grounds for ASCAP to demand licence fees for all public performances of musical works. Note also the point, derided by collecting societies, that unauthorised performance may often advertise the work performed without authorisation. That advertising may benefit the rights-holder in recording markets.
- 117.
‘The defendants’ performances are not eleemosynary. They are part of a total for which the public pays, and the fact that the price of the whole is attributed to a particular item which those present are expected to order, is not important.’
- 118.
Consider the case of one of Herbert’s ‘b’ys’ (that is, ‘boys’), the group of economically struggling composers known to Herbert in New York. We can say that unauthorised performance of their works by Shanley’s orchestra might have encouraged patrons to seek out their individual public performances, or buy records of their music. We can say that a night at Shanley’s might have encouraged some listeners to avoid attending or purchasing public or recorded performances of the works of individual b’ys. We cannot, however, say that unauthorised performance reduced the b’ys’ prospects for securing contracts for performance or recording. The owner of a performance venue, or decision-makers at a gramophone company did not, if deciding whether to contract with a b’y, calculate the effect of unauthorised performance at Shanley’s. If unauthorised performance entered the minds of these individuals they would presumably have regarded it as an indicator of the commercial viability of the b’y’s work.
- 119.
Holmes does not seem to have been particularly interested in the state of mind of diners. He did consider patrons of Shanley’s to have ‘limited powers of conversation’ and to be apparently uninterested in ‘eating a silent meal’.
- 120.
See Atkinson chapters 5–8.
- 121.
Language is possessive and language predicts action. Humans throughout history have sought to possess their surroundings and unsurprisingly the property theory of settled peoples is concerned with possession. Rival claims for possession must lead to contest, which results in sovereignties and property systems that reinforce sovereignties. Naturally property systems expressing the prerogatives of the sovereign and associates will be designed to benefit the sovereign group.
- 122.
Some historians of the feudal period contest the meaning of feudalism. Since the 1970s, a dominant school of thought has argued that the word ‘feudalism’ does not describe the reality of social life in the pre-medieval and medieval periods, when conditions across Europe and within countries varied greatly. The traditional narrative argues the appearance in Europe, over time, and at different times, of a largely uniform phenomenon called feudalism. See, for example, the different analyses of two leading scholars, Bloch (1940) and Brown (1974). Feudalism, wherever it occurred, instituted a system of social subordination governed by relationship to land, a relationship which enabled those with more land to exert more social control.
- 123.
The direct hierarchy of allegiance was serf to knight, and knight to baron, and baron to earl, and earl to count, and count to duke, and duke to king.
- 124.
For the entirety of the feudal period in England the crown contended with the great earls. The same pertained in France, although the centralising authority proved less successful in restraining the power of great nobles. In England, greater nobles and church sometimes established franchises and palatinates. The great palatinates were not rivals to the king’s power, nor insurrectionary. They administered the king’s justice semi-autonomously. But they could be loci of insubordination, seeking to avoid dues and obligations owed the crown. Franchises and palatinates were not altogether dissimilar from the territories of gang bosses. See Cam (1940).
- 125.
Uses, abolished by Henry VIII, and trusts, allowed great families to retain beneficial entitlement to land controlled by another and trusts became instruments widely used to avoid tax or to govern beneficial use of property. In the centuries after Henry’s death in 1548, as the economic revolution he initiated continued, courts recognised freehold and leasehold, and continued to develop the law of trust. Through the centuries, and the vicissitudes of the crown’s contests with nobility and then parliament, courts never varied in accepting the crown’s primacy as constitutionally-agreed source of political authority.
- 126.
William I promulgated only one law during his reign (1066–1087). Beginning, ‘Here is shown what William the king of the English, together With his princes, has established since the Conquest of England … ’ the decree in 10 parts establishes a requirement of loyalty to William and his noblemen, and maintains the existing land system as amended by Norman laws of property (http://avalon.law.yale.edu/medieval/lawwill.asp; source Henderson 1896).
- 127.
Since feudal times, the status of land conveyed under the English system is that the office of crown—therefore the monarch—is title-holder-in-chief, meaning that ultimate title to land granted by the crown remains with the crown. Land conveyed is reversionary: it reverts, in theory, to the crown on demand.
- 128.
For a brief sociology of feudal hierarchy, depicted as the expression of ‘patriarchal authority’ see Weber (1922/1964) (first publ 1922 as Part 1 of Wirtschaft und Gesellschaft).
- 129.
If a householder’s land was heritable, and not merely a life estate, his heir’s entitlement to inherit, and the household’s to continue to occupy the land as of right, on payment of relief. Until 1267, and abolition (England) of so-called ‘premier seisin’, the lord could claim the product of the devised estate until the heir paid relief, a right (premier seisin) which caused some lords to claim unreasonable heriot, thus delaying transfer and enabling the lord to profit from the household’s output.
- 130.
The lord’s right, on death of the householder, to appropriate the household’s best animal or chattel.
- 131.
Annual household tax assessed on quantum of rent paid/size of rented landholding and livestock owned.
- 132.
If the lord’s exercised his right of refusal to buy any animal that a peasant wished to sell, the peasant was required to pay tax to lord on the price of sale to another person.
- 133.
On death of the householder, his family was required to donate to the appropriate ecclesiastical authority the household’s second best animal.
- 134.
See Jean Froissart Chronicles of England, France, Spain, and the adjoining countries, from the latter part of the reign of Edward II to the coronation of Henry IV (1361–1400) John Alden NY 1884 at 283: ‘It is customary in England, as well as several other countries, for the nobility to have great privileges over the commonalty, whom they keep in bondage; that is to say, they are bound by law and custom to plough the lands of gentlemen, to harvest the grain, to carry it home to the barn, to thrash and winnow it: they are also bound to harvest the hay and carry it home. All of these services they are bound to perform for their lords, and many more in England than in other countries. The prelates and gentlemen are thus served.’ Jean Froissart (d 1410) was a French ex officio literary courtier at the King Edward III’s court and chronicled social and life in France and England in the last third of the fourteenth century, during the period of the 100 Years’ War.
- 135.
Probably the strongest evidence in support of Marx’s description of the oppressive character of feudal relations is supplied by Froissart, when he seeks to discredit the priest John Ball, a leader of the Peasants Revolt, who was hanged, drawn and quartered in the revolt’s immediate aftermath (15 July 1381). Froissart wrote (at 283): ‘A crazy priest in the county of Kent, called John Ball … would say, “My good friends, things cannot go on well in England, nor ever will, until everything shall be in common; when there shall be neither vassal nor lord, and all distinctions levelled; when the lords shall be no more masters than ourselves. How ill they have used us! And for what reason do they thus hold us in bondage? … and what can they show, or what reasons give why they should be more the masters than ourselves? Except, perhaps, in making us labour, and work for them to spend … but it is from our labour that they have wherewith to support their pomp. We are called slaves; and if we do not perform our services, we are beaten, and we have not any sovereign to whom we can complain, or who wishes to hear us and do justice.”’
- 136.
By legislation recognising copying, communication and public performance rights, and, in the case of copying and public performance rights, establishing tribunals to determine equitable remuneration for exercise of those rights.
- 137.
See Statement of Professor Stuart M. Shieber, faculty director Harvard Office for Scholarly Communication, before the congressional Committee on Science, Space and Technology, Subcommittee on Investigations and Oversight, 29 March 2012: Libraries can buy access to a journal’s articles only from the publisher of that journal, by virtue of the monopoly character of copyright. In addition, the high prices of journals are hidden from the ‘consumers’ of the journals, the researchers reading the articles, because an intermediary, the library, pays the subscriptions on their behalf. The market therefore embeds a moral hazard. Under such conditions, market failure is not surprising; one would expect inelasticity of demand, hyperinflation, and inefficiency in the market, and that is what we observe. Prices inflate, leading to some libraries cancelling journals, leading to further price increases to recoup revenue—a spiral that ends in higher and higher prices paid by fewer and fewer libraries.
- 138.
Dispersed primary data on the effect of serials’ pricing on library subscription practices in less developed/least developed countries is difficult to find. Subscription uptake in some of those countries is reportedly minimal or non-existent. The budgetary difficulties caused by the cost of subscriptions in wealthier jurisdictions predict that price of serials is likely to substantially preclude dissemination via academic serials in poorer countries. On 17 April 2012, in a memorandum on journal pricing to all schools, faculties and units, Harvard University’s Faculty Advisory Council advised an ‘untenable situation facing the Harvard Library.’ Journal costs approached $3.75 million, and some titles cost $40,000 annually. The price of two journals inflated 145% in 6 years. Publisher profit margins reached 35%. (Faculty Advisory Council Memorandum on Journal Pricing re Periodical Subscriptions. Refer http://isites.harvard.edu/icb/icb.do?keyword=k77982&tabgroupid=icb.tabgroup143448).
- 139.
An interesting aspect of analysis of the paratrophic process—involving sequestration and transfer of benefit to a minority of people and corporations—is what might be called a struggle between the paratrophic actors and sometimes countervailing institutions. Perfect success for paratrophic actors is to co-opt institutions of state but many institutions are intended to resist claims for regulatory favours of extension of proprietary rights. Courts, for example, should in theory be immune from special pleading about proprietary rights even though courts can be said to have ratified paratrophic property arrangements. In the case of copyright regulation, many people argue that copyright institutions, such as the World Intellectual Property Organization and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), observe property mores while heeding the public wish for access to information. The argument assumes that paratrophic process accommodates the preferences of those who reject prohibition and the imposition of rent. The evidence gathered in this chapter does not much support the accommodation argument. Principles of property and access are not reconcilable, and it falls to the state to create and enforce laws of access. The TRIPS Agreement is said by some to be an instrument of access, but in practice it seems to function as an agent of partatrophic actors. See, e.g., Drahos (2002).
- 140.
Piketty (2014) argued that only in the 30 years after the second world world war, during a period of massive US investment in European reconstruction, did return on growth exceed return on capital. One meaning of this statistic is that outside that 30 year period, developed countries did not significantly redistribute wealth or property, although many countries very significantly redistributed income.
- 141.
APRA did not seek a royal commission on performing rights, nor a copyright tribunal. As noted, its preferred strategy was, in the words of Purcell, the barrister for the Cinematograph Exhibitors’ Association (addressing the royal commissioner Justice Owen), to behave, ‘like a dragon, devastating the countryside.’ (NAA A467 SF1/43). APRA felt confident that if left alone, it could through courts, extract maximal prices from radio broadcasters.
- 142.
In Australia, the Productivity Commission Intellectual Property Arrangements Inquiry Report 23 September 2016 recommended (Rn 15.1) that Australian Government should repeal section 51(3) of the Competition and Consumer Act 2010 (Cth), repeating the identical recommendation in t Commonwealth’s 2014 Competition Policy Review. Section 51(3) exempts from the application of competition law conditions in IP licences or assignments of IP rights in patents, registered designs, copyright, trademarks and circuit layouts. Section 51(3) has not been repealed, which means that copyright licensors can restrict access to, and use of, copyright material in ways that would be considered anti-competitive if retailers or suppliers of excludable goods were to impose restrictions on the sale or licensing of their product. The issue for consideration in principle is why any industry should be legally permitted to avoid competition rules intended to maximise consumer welfare.
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Atkinson, B. (2018). The Royalties System and Paratrophic Copyright. In: Gilchrist, J., Fitzgerald, B. (eds) Copyright, Property and the Social Contract. Springer, Cham. https://doi.org/10.1007/978-3-319-95690-9_10
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