Does any copyrighted work have substitutes in the market?
For example, the story of the Gray Album (remixing the vocals from Jay-Z's “The Black Album” and the Beatles' “White Album” without permission) by the DJ Dangermouse presents the following question: can the Beatles' recording be replaced by others? Some say no, Beatles is Beatles, no substitutes. Others say yes, you can make a remixed work using other albums in the 60's.
If every work has substitutability, we can expect competition regarding license terms. If EMI refuses to license the derivative right while others do, DJ Dangermouse can use other songs and pay money to “better goods” in the market. Then EMI might think they should license the derivative right, too, to remain competitive in the market. But if we think that each work is unique and thus has at least some limits on looking for substitutability, how can the market work to push EMI to release Beatles’ recordings for derivative use?