The Value of Copyrights in Recorded Music: Terrestrial Radio and Beyond

In today’s digital age, copyright regimes everywhere face common piracy threats along with wide dissemination. Meanwhile, rights holders and users contest the market value of copyrights in public forums, legislatures and in the courts. Without agreement on value, there can be no fair copyright regime, leaving unprotected the livelihood of artists. This Commentary discusses one battleground of this copyright battle – recorded music. This sector is particularly important for two reasons. First, recorded music is easily and broadly shared through digitization. Second, new technologies used to resell and distribute music such as Internet radio, webcasting and on-demand streaming raise the possibility of large-scale dissemination and customization, while Internet radio also opens markets to less known artists who may be better able to reach an audience for their works. Whether fought in the media, public policy circles or at regulatory hearings before copyright boards, these conflicts center mainly on the proper compensation for use of copyrighted material. The root of those conflicts is the difficulty of properly valuing the intellectual property rights of authors, composers, performers and makers. This Commentary shows that it is possible to determine the competitive value of recorded music in the terrestrial radio industry from the behaviour and broadcast choices of radio operators. This value can help implement a fair copyright regime. It can also be extended to Internet radio webcasting to assess the payments due to rights holders in this competing sphere. The author’s analysis determines a competitive value of recorded music about 2.5 times greater than the current level of copyright payments. In 2012, this would have meant that royalty payments should have been about $440 million compared to the estimated $178 million.