The Copyright Holdout Problem and New Internet-Based Services

This chapter examines the holdout problem involving a copyright holder’s refusal to license digital content to internet users or third-party intermediaries despite the possibilities of socially valuable uses. It begins with two case studies illustrating the classic holdout problem, which often arises when transaction costs are high or when parties have drastically different expectations. The first case study focuses on the developments concerning Google Books. The second case study examines YouTube and the emergent development of user-generated content. The chapter concludes with three sets of preemptive legal responses that can help address the internet-related copyright holdout problem: limitations and exceptions in copyright law, compulsory or statutory licensing arrangements, and exogenous constraints imposed by competition law.