Hastings Law Journal

Article Title

Loyalties v. Royalties


Sarah Polcz


Friendship rewards us with a bond of loyalty and equality. The marketplace rewards us based on what we have to offer. When friends work together to create something, and when the market judges their creation to have value, this sets up a clash between realms. Should the pie of profits be sliced according to the values of friendship or the values of the marketplace? The answer matters for policymakers concerned with creative incentives. How satisfied people are with their monetary rewards can turn more on how much others are getting—their relative rewards—than on the absolute amount received. Nevertheless, it is the latter that has been the focus of empirical legal studies casting doubt on the central premise of copyright law—money motivates creative output. But relative rewards have not been addressed. This Article closes the gap, making three contributions that advance empirical research on copyright law and the psychology of creative incentives. First, I present empirical evidence of a link between creators’ relative rewards and the quality of creative output, providing support for the incentive theory of copyright law. Second, I argue that the joint authorship rule on license proceeds is an area of copyright law that gets creative incentives right. Third, my findings suggest the cross-industry uniformity of copyright law’s approach to relative rewards is leaving value on the table. I identify a certain social context—prior friendship—as an important predictor of creators’ relative reward preferences that can inform the design of industry-specific incentives.

These insights are drawn from regression analyses of a novel dataset built around a creative relationship central to the music industry: songwriting in music groups. The data span sixty years and comprise 1,000 music groups, each of which has earned at least one Gold Record. The first study reveals that groups that share royalties pro rata, even when some members’ contributions are small, produce songs that garner more Grammy Awards and earn higher revenue than groups that channel royalties to major contributors. What consideration is outweighing economic self-interest in songwriters’ royalty split decisions? The second set of studies identifies a key predictor through a preregistered experiment with over 600 participants and further analysis of the Gold Records dataset. Prior friendship—specifically friends’ desire for equal standing with one another—is essential to understanding songwriters’ relative reward preference for pro rata splitting. Loyalties trump royalties. My findings suggest that the predominance of prior friendships among collaborating songwriters drives the industry-level equal-splitting norm uncovered in my prior work. The insight that copyright industries differ, in terms of predictable relative reward preferences, supports the viability of an industry-specific approach to joint authorship rules. While predictable, co-songwriters’ judgments about fair reward distributions are socially contingent—in stark contrast with a central premise of modern moral and political theory that morality is concerned with values and obligations owed to all persons equally. This suggests some limits on the evidentiary role moral psychology can play in nonutilitarian accounts of authors’ rights. These relative reward insights into copyright law’s monetary incentives may extend to coinventorship in patent law and beyond intellectual property to corporate ownership structure, such as startup founder equity splits.

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