Shapley Analysis: A Cautionary Tale

In the United States, an administrative agency called the Copyright Royalty Board (CRB) sets rates for various compulsory licenses. Under those licenses, qualified parties can pay a government- set fee and then use implicated work without obtaining direct permission from relevant copyright holders. Some of the licenses allow cable television systems to retransmit, at regulated rates, copyrighted content originally aired on broadcast television. Others authorize companies like Pandora and Spotify to stream copyrighted music on their technology platforms, again without the need for direct negotiation. The CRB has traditionally used a range of tools to set prices for these obligatory licenses. For instance, the CRB's three judges have historically used simulations to identify plausible rates. They have also used, as benchmarks, privately negotiated deals involving similar rights and similar parties.