Risk Sharing and the Distribution of Copyright Collective Income by Arthur Snow and Richard Watt University of Georgia and Universidad Autónoma de Madrid Abstract Copyright collectives are groups of individual copyright holders who join together in order to save on the important transactions costs that exist in the market for their individual rights. However, transactions costs savings are not the only manner in which copyright holders can benefit from the collective administration of their copyrights. In particular, whenever there is uncertainty as to the final market value of individual copyrights, by joining together and offering a blanket license in the entire repertory, a copyright collective is able to offer a distribution of net income to the members that gives each one a better risk bearing situation than can be obtained by acting alone. Curiously, however, this aspect of collective administration of copyrights has been entirely ignored, both in the theoretical literature concerning copyright collectives, and in the way that real-life collectives distribute their income. The objective of this paper is to analyze the risk sharing benefits that copyright collectives can offer, but currently do not. 1. Introduction Hollander (1984, p. 200) sums up the basic functions of copyright collectives as follows: Copyright collectives are associations to whom authors transfer copyrights for purposes of exploitation. In general, collectives are concerned with the following functions: (1) they grant licences for the use of works in their repertory, (2) they negotiate and collect royalties, and distribute them to their members, (3) they take legal action against those who infringe the copyrights to which they hold title. Each of these three aspects of collective administration of copyrights (as well as the monopoly position that such collectives enjoy) has been subject to the analysis of economic theory. In particular, the literature asserts that the underlying reason for copyright collectives to form is naturally that by joining together and marketing a