Superstar effects on royalty income in a performing rights organization |
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| Authors: | Ivan L Pitt |
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| Institution: | (1) American Society of Composers, Authors and Publishers, ASCAP Building, One Lincoln Plaza, New York, NY 10023, USA |
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| Abstract: | This paper examines the economic accomplishments of individual members in a Performing Rights Organization (PRO), sometimes
referred to as a Performing Rights Society. Today, there is the growing importance of intellectual property and copyright
protection for authors and creators of literary, dramatic, musical, artistic and other intellectual works. The digital age
has placed added pressure on songwriters, lyricists and composers in their ability to derive economic benefits from their
intellectual creativity in the form of a copyright. Copyright laws protect and enable the creation of music by allowing authors and composers to license the control and use
of their creations, and receive compensation in the form of royalty payments for their work. The PROs license, collect and
distribute royalty payments for non-dramatic public performances of copyrighted musical works created and owned by its members or affiliates. In this paper, skewness and heavy tail of returns
in the form of member royalty payments are estimated using the skew-normal and skew-t distributions in a parametric approach. We found strong evidence of the so-called ‘superstar effect’ in which the average
royalty payment made by a PRO is still dominated by extreme outcomes, and relatively few members earned a substantial share
of royalty payments from blockbuster hits that have endured over time. There is little evidence of smaller niche members dominating
or replacing the ‘superstars.’ Economists and others will benefit from this empirical study which emphasizes a new understanding
of the music industry from a PRO, member royalty payment and performance copyright perspective. |
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