Some Economics of Collecting Societies

Collecting Societies are often framed as natural monopolies. The presence of multiple societies would be inefficient and fail to capitalise on economies of scale (per unit price falls as quantity increases). In some countries, Collecting Societies are monopolies by legal mandate. As Josef Drexl, finds, even where legally granted monopolies are not present, Collecting Societies still develop as natural monopolies. All in all, Collecting Societies are an efficient solution in their brokerage of a market with many buyers and sellers.

Computer scientist katfriends tell me that there are no technical barriers to an automated licensing system that could grant, monitor and enforce licensing. Technical solutions could reduce the creation of Orphan Works and human error. Yet, an automated system would, like most things in the digital world, drastically lower the cost of doing business and place more power in the hands of buyers. This may sufficiently reduce the economies of scale as to erode the natural monopoly status of Collecting Societies. Alternately, it could exacerbate economies of scale and result in mega-societies. With these changing barriers to entry, competition could increase and new licensing organisations may emerge.

Alternately, the changing market might mean smaller players emerge. Artists could manage their own licenses via an app. Swipe left if you agree to a license, swipe right if not. There could be an eBay of copyright licenses. Kayne West would start his own Kollecting Society and Miley Cyrus could send her Wrecking Ball in for enforcement.
This is not to say that Collecting Societies are sitting idly by. Indeed, they too are further digitising their business. [Merpel, acting as research assistant, asks that Collecting Societies make their exciting digital plans more visible on their websites because she knows they exist and she'd like to link to them.]
It's important to remember that Collecting Societies offer more to creators than simply management of rights. Christian Handke and Ruth Towse suggest they also serve as “authors’ trade unions, as instruments of cultural policy and as a form of social insurance.” This makes Collecting Societies important for artists and also conveys a significant amount of bargaining power. Couple that with ministers' predilection for mediagenic news stories, and you can see why Collecting Societies are also strong lobbyists. Yet the star power of artists such as Taylor Swift, and her recent public spats with Spotify and Apple Music, also suggest that there may be shifts in lobbying power ahead.
All of this will be played out in the UK's Copyright Hub, the evolution of online services and the strategies of Collecting Societies. In the next years, will the show go on, will there be a set change or will curtains close? The spotlight is on...