Regulating creator contracts: the state of the art and a research agenda

Contracts lie at the heart of the regulatory system governing the creation and dissemination of cultural products in two respects: (i) The exclusive rights provided by copyright law only turn into financial reward, and thus incentives to creators, through a contract with a third party to exploit protected material. (ii) From a user perspective, purchases of protected material may take the form of a licensing contract, governing behaviour after the initial transaction. The renewed interest in the relationship of copyright and contract law can be traced quite precisely to the mid-1990s. There was a major technological shift, with the rapid adoption of the WorldWideWeb as a consumer medium (Netscape?s Navigator browser was released in 1994). In parallel, the media and entertainment sector experienced a wave of consolidation, with multinational enterprises keen to hedge their bets in the rapid growth of Internet services (in 2000, AOL merged with Time Warner to create what was then the world?s largest media company). In the new ?private ordering of cyberspace?, contracts played a major part. Not only was there a sudden question mark over who owned the rights to new digital uses of existing works. Changing contractual practices began to cover these new forms of exploitation, and (if permitted by the governing law) unforeseen uses. Creators deride these new practices as ?rights grabbing?; publishers and producers characterise them as ?due diligence?. The digital environment also changed the contractual relationship between buyers and sellers. Traditionally, the producers and distributors of copyright materials were not much concerned about the consumers? after-sale behaviour. General principles relating to trading standards and the sale of goods applied. Once a physical carrier was bought in good order, the relationship to the right owner was severed ? at least in the private sphere. A consumer could read, play, modify, or even copy a work. The purchased book or record could also be sold on under the doctrines of ?first sale? (US), or ?exhaustion of rights? (EU). In the digital world, the relationship between buyer and seller may persist after the initial transaction, prescribing conditions of use that have no source in copyright law. This article deals with contracting at the beginning of the value chain, i.e. contracts between creators and intermediaries, the first step in bringing a work to the market. Since the article is based on a study for the UK Strategic Advisory Board for IP Policy (SABIP), the focus is on British and European law, with other jurisdictions consulted primarily to assess the range of possible regulatory options