In this Article, we explore a central problem facing creative industries: how to organize collaborative creative production. We argue that informal rules are a significant and pervasive--but nonetheless underappreciated--tool for solving the problem. While existing literature has focused on how informal rules sustain incentives for producing creative work, we demonstrate how such rules can facilitate and organize collaboration in the creative space.
We also suggest that informal rules can be a better fit for creative organization than formal law. On the one side, unique features of creativity, especially high uncertainty and low veriflability, lead to organizational challenges that formal law cannot easily address, as demonstrated by recent high profile cases like Garcia v. Google, Inc. On the other side, certain informal rules can meet these challenges and facilitate organization. These informal rules, functioning through mechanisms like reputation and trust, can sustain organizational solutions without a manager, a hierarchical firm, or formal allocation of control rights. In addition to showing how informal rules can work without (much) formal law, we also sketch out the dynamics involved in more complex cases where informal rules function alongside formal law in organizing collaborative creativity.
Table of Contents Introduction I. Connecting Theories of Informal Rules to Theories of Organization A. Encouraging Creative Production B. Organizing Creative Production II. The Problem of Creative Collaboration and the Shortcomings of Formal Law A. The Challenges of Creative Collaboration B. The Role of Managers C. Why Formal Law Is Ineffective in Organizing Collaboration III. Mechanisms for Enforcing Informal Rules A. How Managers Can Use Reputation and Trust 1. Reputation 2. Trust 3. The Costs of Reputation and Trust B. The Special Case of Creative Collaboration Managed by External Informal Rules IV. Practical Implications of Formal Law and Informal Rules for Creative Collaborations A. When Informal Rules Fail: Garcia and Merkin B. When Informal Rules Work 1. Anecdotes from Industry Participants 2. Reputation Networks and Agents as Reputation Intermediaries C. Conflicts Between Formal Law and Informal Rules D. Crowding Out and the Cliff of Formal Law Conclusion INTRODUCTION
Creative production regularly requires the combination of multiple inputs. A film, for example, will combine writing, acting, set design, costume production, editing, and the like. These creative inputs must be organized, and that organization includes decisions over who controls the inputs and the final output. This raises our central question: how is collaborative creative production organized?
Recent high profile cases, like Garcia v. Google, Inc. (1) and 16 Casa Duse, LLC u. Merkin, (2) highlight the challenge of answering this question. Both cases grappled with the question of how much control an input provider had over the use of a specific input, and thus over the end product that contained the input. (3) The opinions in these cases raised more questions than they answered regarding what it means to be an author for purposes of copyright law, what it means to control a creative work, and even what makes a particular work creative. (4)
The hypothesis we explore in this Article is that a complex set of informal rules, operating through mechanisms like reputation and trust, regulates the behavior of creative collaborators throughout the creative industries. (5) These collaborations feature unobservable and unverifiable inputs producing nonallocable and uncertain outputs that formal law is ill equipped to regulate. (6) When disputes arise, courts force rigid concepts from formal copyright law onto the flexible and messy reality of creative collaboration. (7) Courts struggle to decide these cases because formal law lacks the capacity to deal with the characteristics of creative collaborations. At best, those courts create elaborate fictions to mimic informal norms; at worst, they get things completely wrong, potentially undermining the informal norms otherwise required for creative collaboration to operate in the ordinary course.
The significant and pervasive role that informal rules play in organizing creative collaboration means that copyright theory must account for the dynamics of informal rules in order to reach an accurate understanding of how to allocate control of creative production. (8) But copyright theorists have not fully appreciated the role actually played by informal rules. To be sure, others have recognized that informal rules sustain incentives for creative production in "negative spaces"--such as cuisine, stand-up comedy, and tattoos--where copyright protection is unavailable. (9) But such accounts provide an incomplete description of the influence of informal rules on creativity.
We build on this literature in two ways, expanding the understanding of where informal rules operate and what informal rules can do. Informal rules in fact cover everything from how producers and directors decide when a film is finished, (10) to how coauthors share ideas, (11) to how musicians choose band mates. (12) In this way, informal rules regulate the organization of film, theater, music, television, and publishing. These are not negative spaces on copyright's periphery. (13) Informal rules dominate industries at the core of copyright's domain, proving essential to creative production because they are the key mechanism shaping the organization of collaborative creative work.
This impact of informal rules on all kinds of collaborative creative production makes urgent the need to understand how they interact, and potentially conflict, with formal law. (14) Otherwise, statutory grants of ownership or judicial interpretations of formal copyright law can interfere with long established norms of creative collaboration in complex and unforeseen ways. Understanding how this interaction plays out is therefore crucial to a coherent theory of copyright law. And cases like Garcia and Merkin will only make sense once that understanding is in hand. (15)
Our analysis connects an extensive academic literature on organizational theories--with a focus on theories of firms and teams--to the emerging literature on informal rules in intellectual property (IP). (16)
By linking these two literatures, we develop the novel hypothesis that informal rules are the primary driver behind the organization of collaborative creative production. (17) The IP-and-organizational theory literature has focused primarily on the influence of formal law rather than informal rules on the organization of creative production. (18) The IP-norms literature has focused on the influence of informal rules on incentives rather than organization, (19) To bridge this divide, we explain how informal rules, enforced through mechanisms like reputation and trust, directly affect how creators organize their collaborative activity. (20)
The result is a form of network or community governance, suggesting the futility of copyright law's obsessive attempts at tying together authorship, ownership, and control. (21) For whatever the law tells us about copyright ownership, the facts on the ground may tell us something quite different about who controlled and created a work. Formal rules might be designed to cleanly allocate ownership on the assumption that control travels with ownership; informal rules may nonetheless adapt to frustrate those designs and allocate control wherever the creative community sees fit. (22) Formal law that overrides those norms and forcibly consolidates control (if that is even possible) will have dramatic and unforeseen effects on the network of creative production.
In developing this theory, we also explore the potential downsides to informal rules. For example, informal rules can introduce bias into decisions where formal law might be more even-handed. (23) These concerns are particularly relevant in light of the recent and well-publicized gender and racial disparities in opportunities and pay in the film, television, and other creative industries. (24)
Finally, we sketch out the landscape of potential interactions among formal law, informal rules, and the organization of creative collaborative production. (25) In some instances, informal rules might substitute for formal law; if copyright law leaves an area largely unregulated (as is the case for improvisational comedy), (26) informal rules may act alone to support creative collaboration. (27) In other instances, formal law and informal rules may be complements. In television, for example, formal copyright law's derivative work right may grant power to managers sufficient to enable the manager to organize the team, but informal rules governing credit for work may further support these hierarchical collaborations. (28) In still other instances, formal law may crowd out informal rules (and vice versa). (29) Indeed, non-Western cultural models that import Western copyright law may undermine existing informal rules that are necessary to support particular forms of creative collaboration. (30)
This Article proceeds as follows. Part I reviews the literature on creative organizations and on norms and customs. We show how these areas of study intersect in creative collaboration to raise important new questions. Part II describes the challenges of creative collaboration and demonstrates that formal law is insufficient to address those challenges. Part III first explores how informal rules, enforced through mechanisms like trust and reputation, can be the central organizational rules for creative collaboration. It then demonstrates how creative collaboration may be governed by informal rules that exist entirely apart from any management hierarchy. Lastly, Part IV provides examples of these mechanisms at work and identifies the important implications of our analysis, which enables a better understanding of...