More Rights, Less Income?: An Economic Analysis of the New Copyright Law in Germany

We investigate the conflict between authors and their publishers that may result from a copyright system that allows authors to transfer copyrights to an additional publisher. A two-period bargaining model analyzes effects of competition, time preferences, and bargaining power on license prices, publisher investments, and authors' lifetime incomes. We demonstrate that authors benefit from the new copyright system if new publishers continue the distribution of their orphaned works. Authors do not necessarily benefit if exclusive publishers are still exploiting licenses, because high levels of competition result in underinvestment by publishers and in internalization effects during contract negotiations.