Promoting a Level Playing Field Among Rightholders

Malevanny, Nikita

doi:10.1007/978-3-662-59699-9_10

Nikita Malevanny⁴

Part of the book series: Munich Studies on Innovation and Competition ((MSIC,volume 12))

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Abstract

The objective of promoting a level playing field among rightholders may seem intuitive to many, although the question of what a level playing field is may still lack a common understanding. Copyright theorists have so far barely embraced this concept. At the same time, those familiar with recent public discussions of online music topics will have noticed that the desire for a “level playing field” is very much up in the air. As this regulatory objective is currently less elaborated in comparison to classical objectives of copyright addressed in the other chapters of this part, this section will discuss the theoretical underpinnings of this normative goal in greater detail and attempt to further develop its theoretical basis, supported by empirical observations.

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Notes

1.
See for example IMPALA, EU Digital Assembly – IMPALA Calls for a Level Playing Field, Brussels, June 18, 2015, available at: http://www.impalamusic.org/content/eus-digital-assembly-impala-calls-level-playing-field-online-platforms-and-strong-0 (containing a call from the Independent Music Companies Association [IMPALA] to tackle issues arising from digital platforms’ power over small suppliers); Cushing, Indie Musician Zoe Keating Defines Transparency; Breaks Down Exactly How She Makes A Living, Techdirt of August 10, 2012, available at: https://www.techdirt.com/blog/casestudies/articles/20120809/16272919981/indie-musician-zoe-keating-defines-transparency-breaks-down-exactly-how-she-makes-living.shtml (citing the self-releasing artist Zoe Keating as follows: “I’ve said multiple times what my issue with Spotify is: fairness. I care about making the playing field level for all recording artists: signed or unsigned. Let it be a meritocracy.” [emphasis added]). Similar ideas are sometimes expressed by referring to the need for a “new music ecosystem” (see e.g. the description of Future of Music Coalition, available at: https://futureofmusic.org/: “Future of Music Coalition (FMC) is a Washington D.C.-based nonprofit organization supporting a musical ecosystem where artists flourish and are compensated fairly and transparently for their work.” [emphasis in original]). With regard to the area of dissemination see Villasenor, 19 Issues in Technology Innovation 1 (August 2012) (pointing out that the current copyright royalty landscape creates significant inequities among different types of online music services). More generally, see also Smiers/van Schijndel, Imagine there is no copyright, p. 38, calling for a level cultural playing field and describing it as “a situation in which no single party is able to control or influence the market or the market behaviour of others to any substantial degree”, while pointing out that “it is crucial for a lot of cultural entrepreneurs – artists, their representatives, producers, publishers and the like – to actually be able to trade”.
2.
See Palmer, 12 Hamline L. Rev. 261, 280 (1989); Reich, Die ökonomische Analyse des Urheberrechts in der Informationsgesellschaft, pp. 94–98 with further references.
3.
See above Sect. 8 A.
4.
See e.g. Landes/Posner, The Political Economy of Intellectual Property Law, p. 22.
5.
See also Lehmann, GRUR Int. 1983, 356 (speaking of “restrictions of competition facilitating competition”).
6.
On the concepts of dynamic competition and dynamic efficiency see also below Sect. 10 A II 1 a and footnote 16.
7.
See Kolstad, in: Drexl (ed.), Research Handbook on Intellectual Property and Competition Law, 3, 6–10; Drexl, in: Drexl (ed.), Research Handbook on Intellectual Property and Competition Law, 27, 45–46; Landes/Posner, The Economic Structure of Intellectual Property Law, p. 374; Yow, 34 World Competition L. & Econ. Rev. 287, 288; for further references see Hilty, in: Rosén (ed.), Individualism and Collectiveness in Intellectual Property Law, 3, 5, footnote 7.
8.
Landes/Posner, The Economic Structure of Intellectual Property Law, p. 374; Drexl, in: Drexl (ed.), Research Handbook on Intellectual Property and Competition Law, 27, 45–46.
9.
Drexl, in: Drexl (ed.), Research Handbook on Intellectual Property and Competition Law, 27, 46; Heinemann, Immaterialgüterschutz in der Wettbewerbsordnung (2002), pp. 25–28.
10.
See Arneson, in: Zalta (ed.), The Stanford Encyclopedia of Philosophy, with numerous further references. In these equal opportunity theories, distinctions are commonly drawn between formal equality of opportunity (i.e., all have an opportunity to fairly compete for advantageous positions in society, with most qualified persons gaining these positions), substantive equality of opportunity (i.e., all have a genuine opportunity to become qualified in order to gain such advantageous positions) and the level playing field conception of luck egalitarianism (i.e., unchosen circumstances of individuals are to be equalized). The term “level playing field” as used in this study is in no case to be equated with the rather narrow latter approach, but should be considered as based on the whole range of the mentioned philosophical approaches.
11.
See Fisher, 73 Chi.-Kent L. Rev. 1203, 1214–1215 (1998).
12.
On the “creative competition” approach of Drexl, who was the first to coin this term, see below Sect. 10 A II 1 a.
13.
See below Sects. 10 A II and 10 B.
14.
See below Sects. 11 B II and 11 B III.
15.
See above Sect. 10 A I 1.
16.
Drexl, in: Torremans (ed.), Copyright Law, 255, 273; this understanding is rooted in the concept of “creative destruction” of Schumpeter (see Schumpeter, Capitalism, Socialism, and Democracy, pp. 81–86), according to which price competition or a competition “within a rigid pattern of invariant conditions, methods of production and forms of industrial organization … is not that kind of competition that counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization (the largest-scale unit of control for instance) – competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.” For further scholars embracing dynamic competition see Blaug, 19 Rev. Ind. Organ. 37, 41, 44 (2001) (expressing a rather fundamental critique of the static efficiency approach: “But if perfect competition is impossible, and Pareto-optimality almost impossible, what is the basis of this belief in the desirability of competition? It is based on a concept of dynamic efficiency, the outcome of competitive processes, and not the static efficiency of Walras, Pareto and the First and Second Fundamental Theorems of welfare economics.”); Yow, 34 World Competition L. & Econ. Rev. 287, 304 (pointing out that dynamic efficiency is “more far-sighted than its static counterpart and is focused on promoting innovation and not merely on improving upon existing methods of production”); Kolstad, in: Drexl (ed.), Research Handbook on Intellectual Property and Competition Law, 3, 6–10 (embracing dynamic competition as a common goal for IP law and competition law); Handtke, The Creative Destruction of Copyright, pp. 36–41, 179–310 (conducting a test for creative destruction within the recording industry after the advent of digitization). See also above footnote 7 and below Sect. 10 A II 2 b.
17.
See European Commission Staff Working Document “Study on a community initiative on the cross-border collective management of copyright”, Brussels, July 7, 2005, available at: http://ec.europa.eu/internal_market/copyright/docs/management/study-collectivemgmt_en.pdf, p. 36.
18.
Drexl, in: Torremans (ed.), Copyright Law, 255, 274.
19.
Ibid.
20.
Id., at 274–275.
21.
Id., at 275.
22.
Id., at 278.
23.
Id., at 275.
24.
Yow, 34 World Competition L. & Econ. Rev. 287, 304–306.
25.
See Handtke, The Creative Destruction of Copyright, p. 102.
26.
Adopted in Paris on October 20, 2005 and currently having 141 parties (not including the U.S., but including the EU and its members; for the list of parties see http://www.unesco.org/eri/la/convention.asp?KO=31038&language=E&order=alpha#1).
27.
Bracha/Syed, 92 Tex. L. Rev. 1841, 1864–1865 (2014); Bracha/Syed, 29 Berkeley Tech. L.J. 229, 243 (2014); Yoo, 79 N.Y.U. L. Rev. 212, 252–253 (2004); see also Handtke, The Creative Destruction of Copyright, p. 25; Johnson, 93 JPE 158 (1985); on the counter insight of product differentiation theory that “more is not always better” see below Sect. 10 B I 1.
28.
And the existence of such “trends” can indeed be observed, as will be shown in Sect. 10 A II 2.
29.
See above Sect. 8 B I 1 b.
30.
Ibid.
31.
Ibid.
32.
See Handtke, The Creative Destruction of Copyright, pp. 4, 107, 179, 208.
33.
Id., p. 4.
34.
Id., pp. 208–235.
35.
Id., pp. 280, 305.
36.
Id., p. 348.
37.
Id., pp. 357–363.
38.
Id., pp. 358–359.
39.
See above Sect. 10 A II 1 a.
40.
Gersdorf, AfP 2012, 336, 337.
41.
Kloepfer, AfP 2010, 120, 124; Holznagel/Ricke, DuD 2011, 611, 613.
42.
Kloepfer, AfP 2010, 120, 124; Gersdorf, AfP 2012, 336, 337; in turn, retailers have a right to return unsold articles to wholesalers, who have a right to return them to the publishers.
43.
Gersdorf, AfP 2012, 336, 337; see also Schöner/Soltau, Press wholesale system to end as we know it?, ILO of March 22, 2012, available at: http://www.internationallawoffice.com/Newsletters/Competition-Antitrust/Germany/CMS-Hasche-Sigle/Press-wholesale-system-to-end-as-we-know-it.
44.
See Paal, in: BeckOK InfoMedienR, Art. 101 AEUV (TFEU) note 105.
45.
See Paal, in: BeckOK InfoMedienR, Art. 101 AEUV (TFEU) notes 81–88 and 104; Paal, AfP 2012, 1, 1–3 (distinguishing between “economic competition” and “editorial competition”, while seeing them as interconnected); Gersdorf, AfP 2012, 336, 337–338; Bach, NJW 2012, 728, 729; Biermeier, Pressevertrieb in Europa, pp. 34–42.
46.
Gersdorf, AfP 2012, 336, 337–338.
47.
See Sec. 30(2a) GWB.
48.
See BVerfG NJW 1988, 1833.
49.
See BGH NJW 2012, 773. Hereby, BGH argued that this does not inhibit the market entry of small producers because the wholesaler entity still retains its dominant position in the market; a number of scholars have noted that this line of argument is no longer valid if numerous publishers opt out of the system, see Paal, AfP 2012, 1, 7; Guggenberger/Ulmer, AfP 2013, 183, 184.
50.
See BGH Case KZR 17/14, Judgment of October 6, 2015; on this ruling see BGH, Bundesgerichtshof bestätigt Zentralverhandlungsmandat des Presse-Grosso, Press Release No. 170/2015 of 6 October 2015, available at: http://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py?Gericht=bgh&Art=pm&pm_nummer=0170/15; Beckendorf, MMR-Aktuell 2015, 373527; Gleiss Lutz, Bundesverband Presse-Grosso successful thanks to Gleiss Lutz: Federal Court of Justice confirms central negotiating mandate, Press Release of October 7, 2015, available at: https://www.gleisslutz.com/en/node/15020/pdf.
51.
See Gleiss Lutz (supra note 50).
52.
Ibid.
53.
See above Sects. 10 A I 1 and 10 A II 1 a.
54.
See Paal, AfP 2012, 1, 1–3.
55.
However, see Netanel, 106 Yale L.J. 283, 350 (1996): “It bears emphasizing that the constitutive role of copyrightable creative expression in a democratic civil society is limited neither to works of authorship that explicitly address matters of political or social importance nor to those that present ideas in a rationally apprehensible manner. Many creative works have broad political and social implications even if they do not appear or even seek to convey an explicit ideological message. […]To be understood by their audiences, films, songs, and television programs must deal in the currency of prevailing practices, ideologies, and stereotypes, and in so doing must either reinforce or challenge them” (emphasis added).
56.
For various definitions see Krämer/Wiewiorra/Weinhardt, 37 Telecommun. Policy 794, 795–798 (2013); Maniadaki, EU Competition Law, Regulation and the Internet, pp. 20–34.
57.
For an overview see Krämer/Wiewiorra/Weinhardt, 37 Telecommun. Policy 794, 795–800 (2013); Lyons, 54 Ariz. L. Rev. 1029, 1033–1038 (2012); Atkinson, 35 Telecommun. Policy 413, 418–419 (2011); Atkinson, in: Szoka/Marcus (eds.), The Next Digital Decade, 327, 340–341.
58.
See FCC Open Internet Report and Order on Remand, Declaratory Ruling, and Order, adopted on February 26, 2015, released on March 12, 2015, available at: https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-24A1.pdf.
59.
See FCC Open Internet Report (supra note 58), paras. 104–132.
60.
Maniadaki, EU Competition Law, Regulation and the Internet, p. 2.
61.
Regulation (EU) 2015/2120 of the European Parliament and of the Council of November 25, 2015 laying down measures concerning open internet access and amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services and Regulation (EU) No 531/2012 on roaming on public mobile communications networks within the Union, OJ L 310/1, November 26, 2015.
62.
See Art. 3(3) Open Internet Regulation.
63.
See European Commission, New rules on roaming charges and open Internet, October 27, 2015, available at: https://ec.europa.eu/digital-agenda/en/news/new-rules-roaming-charges-and-open-internet.
64.
See Temperton/Burgess, European Parliament votes in favour of ‘two speed’ internet, Wired of October 27, 2015, available at: http://www.wired.co.uk/news/archive/2015-10/27/net-neutrality-european-union-vote.
65.
See European Commission, New rules on roaming charges and open Internet, October 27, 2015, available at: https://ec.europa.eu/digital-agenda/en/news/new-rules-roaming-charges-and-open-internet; FCC Open Internet Report (supra note 58), para. 76.
66.
See Wu, 2 J. on Telecomm. & High Tech. L. 141 (2003); it should be noted that the net neutrality debate in the context of internet can be traced back to Lemley/Lessig, The End of End-to-End (2000) and Lessig, The Future of Ideas (2001), who in turn elaborated on the end-to-end principle of network design by Saltzer/Reed/Clark, 2 TOCS 277 (1984).
67.
Wu, 2 J. on Telecomm. & High Tech. L. 141, 146 (2003).
68.
Wu, Why You Should Care About Network Neutrality, Slate of May 1, 2006, available at: http://www.slate.com/articles/technology/technology/2006/05/why_you_should_care_about_network_neutrality.single.html.
69.
Ibid.
70.
Ibid., adding that “[a]t the extreme, a market where centralized actors pick favorites isn’t a market at all, but a planned economy.”
71.
See Lee/Wu, 23(3) JEP 61 (2009).
72.
See Kloepfer, AfP 2010, 120; Kloepfer, Vielfaltsicherung durch Ebenentrennung in der Massenkommunikation, pp. 13–19, 22–25; Paal, AfP 2012, 1, 3.
73.
See above Chap. 8.
74.
See above Sect. 8 B I.
75.
See Handtke, The Creative Destruction of Copyright, p. 101,
76.
In fact, the extreme “free market” world without copyright protection in the OMD field would still be consistent with the uniform pricing aspect of the level playing field objective, as all musical content independent of its source would be available online at the same price—i.e., zero.
77.
See above Chap. 9.
78.
See below Chap. 11.
79.
See above Sect. 10 A II 1 b; according to this theory, between the extreme states of pure competition and pure monopoly there is a state of “monopolistic competition” in markets where many producers sell products that are differentiated from one another and therefore are not perfect substitutes, see Chamberlin, The Theory of Monopolistic Competition, pp. 9, 56–70; Harrod, 43 Econ. J. 661 (1933); for an overview and further references see Yoo, 79 N.Y.U. L. Rev. 212, 236–246 (2004); Bracha/Syed, 92 Tex. L. Rev. 1841, 1845 note 14, 1859 (2014); Bracha/Syed, 29 Berkeley Tech. L.J. 229, 241–242 (2014). The “monopolistic competition” approach belongs to mainstream economics, which concentrates on static efficiency, i.e. optimal allocation of given resources at a constant state of technology—this approach differs from the Schumpeterian perspective of “dynamic competition” that belongs to structuralist-evolutionary economics and regards innovation and technological change (rather than allocative efficiency) as the main drivers of economic growth, see Handtke, The Creative Destruction of Copyright, p. 40.
80.
See Handtke, The Creative Destruction of Copyright, pp. 98–99; Abramowicz, 46 Wm. & Mary L. Rev. 33, 38–40 (2004); Bracha/Syed, 92 Tex. L. Rev. 1841, 1864 (2014).
81.
Handtke, The Creative Destruction of Copyright, p. 98; Yoo, 79 N.Y.U. L. Rev. 212, 253 (2004); Bracha/Syed, 92 Tex. L. Rev. 1841, 1859–1863 (2014); Bracha/Syed, 29 Berkeley Tech. L.J. 229, 243 (2014).
82.
Yoo, 79 N.Y.U. L. Rev. 212, 251–276 (2004) (also claiming that product differentiation theory should displace the incentive-access paradigm altogether, as it is allegedly an approach that makes copyright capable of promoting both incentive and access simultaneously—for a refutation of this claim see Bracha/Syed, 92 Tex. L. Rev. 1841, 1871–1883 [2014]).
83.
Abramowicz, 46 Wm. & Mary L. Rev. 33, 97–104 (2004); Abramowicz, 90 Minn. L. Rev. 317, 331–332, 342–363 (2005).
84.
Bracha/Syed, 92 Tex. L. Rev. 1841, 1904–1905 (2014).
85.
Id., at 1905–1918.
86.
See above Sect. 8 B I.
87.
See above Sect. 8 B I 2 a bb.
88.
See above Sect. 8 B I 2 a aa.
89.
See above Sect. 8 B I 2 b.
90.
See also Handtke, The Creative Destruction of Copyright, p. 100 (arguing that copyright protection cannot solve the problem of excessive product differentiation, and that this problem should not be exaggerated).
91.
See above Sect. 10 A II 1 b.
92.
See Lyons, 54 Ariz. L. Rev. 1029, 1035 (2012).
93.
See above Sect. 10 A II 4.
94.
Lyons, 54 Ariz. L. Rev. 1029, 1068 (2012); Yoo, 3 J. on Telecomm. & High Tech. L. 23, 61 (2004).
95.
Lyons, 54 Ariz. L. Rev. 1029, 1068 (2012) (discussing Canada’s dominant telephone provider Bell Canada providing investment for the U.S. mobile broadband provider Clearwire on the condition that Clearwire uses Bell Canada as its exclusive provider for VoIP and certain other services).
96.
See Sect. 11 B III.
97.
See Nuechterlein, 7 J. on Telecomm. & High Tech. L. 19 (2009); Lyons, 54 Ariz. L. Rev. 1029, 1036 (2012).
98.
See above Sects. 10 A II 2 a and 8 B I 1 b.
99.
See above Sect. 10 II 4.
100.
See above Sect. 10 II 1 a.
101.
See above Sects. 9 B II 3 b and 9 B II 4.

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Nikita Malevanny

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Malevanny, N. (2019). Promoting a Level Playing Field Among Rightholders. In: Online Music Distribution - How Much Exclusivity Is Needed?. Munich Studies on Innovation and Competition, vol 12. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-59699-9_10

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DOI: https://doi.org/10.1007/978-3-662-59699-9_10
Published: 31 August 2019
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