55. The Structure, Function, and Operations of Intellectual Property Service Providers
A. Formation and Development (continued)
Governance Structures
The governance structure of any organization offers clues as to its legal, philosophical, and corporate form. The most broadly defined governance structures for service providers are not-for-profit, government-based, or for-profit. There are currently no government-based service providers in the United States. Sometimes, however, service providers are subject to some form of government scrutiny, most notably among collectives because of their potential to develop into monopolistic entities. ASCAP and BMI, for example, operate under antitrust consent decrees designed to address issues of industry monopoly. Government also intervenes in the creation of entities (such as the former Copyright Royalty Tribunal) given jurisdiction to set the compulsory license rates for certain works (e.g., the administration of mechanical licenses for music) administered by some service providers.
Governance structures are not always as clear-cut as they appear. For-profit and not-for-profit status can be as much a philosophical distinction as a legal one. The Media Photographers Copyright Association (MPCA), for example, is a member collective registered in New York State as a for-profit corporation because of that state’s particular regulations regarding collecting societies. However, the MPCA’s central mission is to foster fair and equitable business practices between photographers and users; profit is not its goal, nor is it the impetus for its creation.9 Other service providers incorporated in New York State find themselves similarly defined by a legal status that fails to reflect their mission or goals.
Both for-profit and not-for-profit providers have Boards of Directors/Trustees responsible for the financial health and/or programmatic direction of the organization. Rightsholders’ collectives usually have boards composed of rightsholder members. The Copyright Clearance Center (CCC) has on its board individuals from the various communities it represents (publishers, authors, author membership associations, and even a prominent manufacturer of photocopiers).10 Consortia often receive their formal governance from the entity hosting or sponsoring them, but their day-to-day governance may be administered by a management committee deputized for the task. Outside of the United States, where government-based providers are common, governmental departments, ministries, or sections define the providers’ structure and operations.
Governance structures also hint at a service provider’s reporting accountability to the public. Government-based providers have their budgets and reports available as public documents. Among for-profit commercial providers, public reporting requirements vary depending on whether the for-profit is privately or publicly owned. Publicly owned service providers are required to report to their stockholders on the financial status of their organizations in an annual report. Privately owned providers have no such requirement, and it may be difficult to gather financial and other corporate information on these organizations.
History and Startup Relationships