Compulsory Licensing vs. the Three 'Golden Oldies': Property Rights, Contracts, and Markets

Intellectual Property and Copyright and Trademark

Article Snapshot


Robert Merges


Cato Policy Analysis No. 508, January 2004


This paper looks at problems with compulsory licensing of copyrighted works.

Policy Relevance

Governments should not require copyright owners to license their work to others, or regulate the price of licenses. Organizations formed to make mass licensing easier should be exempt from antitrust law.

Main Points

  • Some support requiring copyright owners to allow others to use their work at regulated prices (“compulsory licensing”).
  • The fear that copyright owners will abuse their control over copyrighted works if they are not forced to offer access is overblown.
    • There is plenty of licensed content online, showing the system works.
    • No one firm dominates the online music market.
  • In practice, compulsory licensing has serious problems:
    • The terms quickly become outdated, ignoring supply and demand.
    • Officials are subjected to intense lobbying for favors.
  • In the past, firms formed collective rights organizations to make licensing easy, and these should emerge for the Internet. Antitrust immunity would help.

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