The Potential Demise Of Another Natural Monopoly: Rethinking The Collective Administration Of Performing Rights

In most countries the right to publicly perform music is not administered individually by the copyright holders but rather collectively by performing rights organizations (PROs). The common explanation behind the proliferation of collective administration is that some aspects of copyright administrations are natural monopolies. It is often argued that individual administration is impracticable or at least non-economical. Collective administration is therefore promoted as the most efficient method for licensing, monitoring and enforcing those rights. In addition, because the market is a natural monopoly, regulation, rather than an attempt to foster competition, is thought to be the optimal regulatory response. This is the first in a series of two articles that critically analyzes this natural monopoly argument. In this article I argue that the case for PROs is not as straightforward as it is assumed to be. I show that many of the underlying cost efficiencies that are attributed to PROs are usually simply assumed and, in many cases, could be equally achieved under less restrictive arrangements.