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WARNING – The following article is only of interest to those who find the discussion of musical copyright in the internet age engaging. I think that should be anyone who listens to or pays for music online in the 21st century but I accept some may disagree with that view…
Now the wasters have gone I thank the three of you that have kept reading, you truly are wise souls. What I want to talk about is a recent speech at the excitingly titled “Music 4.5 IP & Licensing” event in London by ERA boss Kim Bayley. The ERA is the Entertainment Retailers Association and represents people who sell all those lovely cultural artifacts that are created by auteurs, geniuses and Justin Bieber and then parceled into easily consumed DVDs, CDs, mp3s and the like. These days that means HMV, some independent retailers and a bunch of online stores. The speech was concerned with only the latter of those and in particular the online stores that sell digital music. The full details of her speech can be found here but in essence she was saying it’s far too complex to get the required licences to sell music online; the fragmentation of rights between labels, publishers and dozens of collecting societies is far too confusing and the lack of decent databases makes even identfying who owns what music very difficult.
Obviously I’m a big and vocal supporter of copyright and do think that online stores should get the right licenses and ensure that creators are paid when their music is used or sold. It’s also not, despite what anyone might want, ever going to be a simple process with the complexity of law and data volumes involved both being hugely challenging. That said I agree with much of what the speech contained, I’ve written about these issues before and no doubt will do so again. The music industry has to stop using 100 year old business models and have an offering that new, agile online businesses can use to offer music digitally. If the industry doesn’t support the services that want to be legal then music fans have no choice but to go the illegal route and that helps no one. Well apart from the pirates I suppose. So I thought it was very sensible in general however some of her smaller points were a little unfair on collecting societies who do a reasonable job in a complex business. I think she could have thought through some of those arguments a little more as right now the industry can point to her mistakes and poor assumptions and write off her whole speech.
Helpfully Bayley outlined her top 10 issues with the process and, as everyone loves an internet articles that includes numbered lists, I thought we could have a close look at each one and see, in my humble view, what stands up and what needs more thought (the original points are in italics, my genius not in italics):
1. Does it really make sense that while in the physical world publishing rights are accounted for in the cost of a CD, in a digital world services need to secure three separate licences?
No, it makes no sense it all. Someone, somewhere managed to make the argument that downloading an mp3 is somehow a performance because it moves down a wire. I know, mental isn’t it? Did I watch Beatles perform last night or did I just make a copy of one of their songs from Apple’s servers? Obviously the latter but the music industry doesn’t think so, instead it’s classed as a performance and a whole load of new rights holders get involved and more complexity for everyone.
2. Does it really make sense that in a supposed Single European Market digital services are obliged to deal with over 30 different licensing bodies to secure publishing rights alone?
No it doesn’t, there is in fact a complete lack of sense, although for once you can blame the EU and not the music industry. The latter wanted to set up one central place for managing the rights but the EU said that was uncompetitive and banned it. A, stupid, short-sighted decision if there ever was one and one of the times when the EU has actually annoyed me. (For some reason the ruling isn’t a key part of the UKIP argument, probably because you need a medicum of intelligence to understand copyright and therefore well outside the capabilities of the average UKIP supporter.)
Anyway thankfully after years of confusion and inefficiency things are changing and a handful of central “hubs” are being created so an online service only need get a licence from a handful of places not 30. It’s taken far too long to get here but least it’s not the music industry’s fault for once.
3. Why is it that songwriters have to fund the costs of all these different collection societies – can it really make sense that five collecting societies alone cost half a billion dollars to run?
History is the only reason – they were set up nationally a century ago and it’s just stayed that way. This may change in next few years as we see more centralisation of processes and systems (Sweden’s ICE database shared by the British, Swedish and German societies is a good example) but it’ll be slow.
As for the cost, I have no idea where that figures comes from. The UK’s PRS only costs about £60 million to run, a reasonable figure for a complex business employing hundreds for skilled people (like me…). I promise if songwriters and publishers each had to manage it themselves it would cost a hundred times that figure.
4. Does it make sense that while almost all digital services account monthly, it can take literally years for the money to reach the artist?
Nope it does not make sense and it doesn’t happen when managed by proper collecting societies, such as PRS, who pay out money from online services in 3-6 months. It is fair to say, however, that not every collecting society in the world is so efficient and those that aren’t shouldn’t be allowed to continue that way.
5. Why is there an apparently arbitrary allocation of the publishing rights between performance and mechanicals in different territories?
A technical question with a technical answer but basically because they can do whatever they want without logic or sense. Generally it comes down to who wins the fight for the money in each country, if the publishers win it goes to the mechanicals, if not then it might go the performance.
6. Is it right that a digital store in one territory is prevented from selling to consumers in another territory?
Actually yes it is, if they haven’t got the the licenses for the other territory. Of course it should be much easier to get those licenses, ideally from only one or two places, but you should still have to get all of those licenses.
7. Can it be right that licensing bodies are unable or unwilling to provide details of precisely which rights they control and therefore services are obliged to provide all their data to every licensor?
Well no I don’t think it would be right but then I don’t know what licensing bodies are doing this, whilst the repertoire that any society, publisher or other body control changes constantly as deals are signed and expire, I’ve not heard of one refusing to say what the license they offer covers. A poor question I think.
8. Or that licensing bodies cannot guarantee that the right artists are being paid once the services hand over payment?
This is the question I have most problems with. Whilst some of the ones above are a little combative or lacking in evidence, the general points being made are fair. This one however is nonsense. Imagine receiving from the various online stores the details of every single of the 1.24 billion tunes sold online in 2013 and trying to find out who wrote it based, more often than not, purely on the track title and the artist. If you’re lucky most of them will match to your database of works but there’ll always be some that don’t (for a dozen different reasons) and on top of that the cost to process that volume of data (the vast majority of which is worth fractions of a fraction of a penny to the artists) is so huge you’ll end up spending more to process it then you received from the licensee in the first place. So the licensing bodies do the best they can and get as much of the money as possible to the right people. It’s not perfect but it’s not a bad attempt.
I’d also like to flip the question and ask most online stores if they guarantee that they pay the labels whose music they are selling? Because as someone owed several hundred pounds from stores due to arbitrary thresholds and criteria I don’t think they do.
9. It surely is not helpful that copyright owners have no obligation to respond to licensing requests at all, or can string out negotiations to literally years, by which time the market has moved on.
Well Tesco’s don’t have to sell us pints of milk but they’ll go out of business pretty quick if they don’t. In the same way the music industry isn’t going to survive without embracing the online world but they don’t have to survive if they don’t want to. So yeah it’s not helpful but you can’t force someone to remain in business if they don’t want to.
10. And it definitely does not help that the need to have a comprehensive set of licences gives a perverse incentive to licensors to be the last to strike a deal.
Not sure I agree on this one either, as we saw last week with YouTube, striking a deal last can actually be a massive handicap.
So there we have it – in general some good points about the archaic nature of the licensing process let down by some errors and a lack of evidence. Maybe she’d have been better off with a Top 5 issues?
You may have noticed that we’ve not said a lot about the recent furore about YouTube and their new streaming service, something you might have thought would be right up our street. Apologies for that, it’s partly because it is all a little too close my day job to get very excited about but mainly because I didn’t think I had much to add, the media (specialist and mainstream) seemed to be saying everything that needed to be said. However having given it some thought I decided I can add a little extra to the debate and point out how it’s the fault of everybody involved and that they’re all pretty terrible. But before I start ranting we’ll start with a little background for those of you that don’t spend that day reading up on the latest licensing deals between web behemoths and the people that brought you Justin Bieber…
You may have noticed that everyone listens to music on YouTube these days, and why not? I’ve long thought the best way to enjoy music is in videos with poor quality sound, regularly bookended with adverts and surrounded by comments from barely literate simpletons. Anyway the bosses at Google have noticed this and decided that they should take advantage of this by creating a proper music streaming service to take on Spotify and similar services more directly. In order to do that they need to secure licensing deals with the record labels and publishers. This was a relatively easy task with the majors and shadowy deals were quickly signed in dark, smoked filled rooms – whether artists will ever make any more from these deals we may never know but I’m sure someone, somewhere will be making a healthy wedge, even if it’s only Google.
However things got more complicated when discussions started with the independent labels. In an attempt to defend the rights of creators and/or their bottom lines they’ve been very resistant to the less than generous terms that Google were offering. Negotiations quickly broke down and various combative press releases were issued – the labels accusing Google of threatening to “take down” all their videos from YouTube, and therefore removing a vital promotional tool, if they didn’t sign an agreement. Google countered that and quickly mudded what “take down” meant so we’re now not sure if it means the videos themselves or just the revenue streams from the videos to the labels. Leaks have also revealed some details of the contracts on offer including clauses that mean the Indies can’t ask for more money than the majors get – everyone gets the same whether they like it or not. In any case the war is ongoing and deals are still unsigned, it’s all very unseemly and not helping anyone. Google don’t get to launch their service, the Indies look difficult, the Majors look dodgy and artists don’t get to make any money from the fruits of their creative juices – whilst the whole time stealing music continues and becomes even more ingrained in people’s lives. So who’s fault is it? All of them, and here’s why:
Google – I love Google’s products and use them everyday. Even this article is written in Google Drive. But they hate copyright. Not the kind that lets them sue Apple for borrowing their ideas of course but the kind that stops them from giving away other people’s creative content for free. Part of the reason why is that it is good business - they can make more money from advertising than by selling on music, movies or software. Their entire strategy is to make cool things then give them away for free, waiting for the cash to roll in through adverts displayed in those cool things. However I also think some of the dislike for copyright comes from the weird, libertarian, Ayn Rand-like view that exists in Silicon Valley that all data should be free and used by all for whatever purpose people desire. The best users will find away to make money and who cares about the rest or whoever created it in the first place? It’s a view I really disagree with but Silicon Valley luminaries don’t take my calls for some reason.
Anyway the point is that whilst setting up their streaming service (as with running YouTube itself) they want to pay the minimal amount possible for the actual content and if they could get it free, they would. Google simply aren’t Spotify and aren’t going to pay out 70% of their revenue to the content owners, they are always going to fight for the lowest rates they can get. Leaks have suggested that this is initially only around 65% of revenue for the streaming service (that’s around a 16% reduction compared to what labels and artists are getting paid at the usual market rate) and don’t forget that if they later reduce the rate with the Majors the Indies have to accept it, even if they don’t like it. Frankly it’s not right and I couldn’t dislike it more strongly. If you want to set up a music service you should expect the pay the same as everyone else, and actually aim to put some money into artists’ pockets not just lining your own.
The Majors – The three big boys are for many the silent villains of this tale, the fight may be between Google and the Indies but it was started when the Majors accepted Google’s piss poor offer. There are a couple of reasons for that: firstly, the agreements include payments based on subscribers and total views rather that usage of particular tracks. This means fat cheques that go to the label themselves rather than being shared with the artists – such general payments can’t be assigned to any one tune after all. So it helps the international media conglomerates profits nicely and doesn’t really cost them anything.
Secondly by getting in there first they take the best piece of the pie, securing most of what Google are willing to offer with those top up payments and leaving the Indies just the basic per play payments. It’s a very deliberate act, they’re very scared by the recent success of the Indies (Adele being perhaps the biggest icon of that) and are desperately trying to stop any more market share going their way, so will do anything to ensure the smaller labels are disadvantaged including allowing a service to go ahead with deals in place that might be far from the best thing for the acts whose interests they are meant to be representing. But the Majors culpability goes further than that. It is their fault that YouTube has become so big and important to the music business in the first place. After MTV became hugely successful in the 80s, purely by playing the content the labels had to pay for, they vowed the same would never happen again. No one service would be allowed to dominate a sector especially when the labels were forced to use it for promotion purposes but made not a penny from it. Yet YouTube is exactly that, far more important to the streaming market than anything else, dwarfing even Spotify, and the main promotion tool for the industry. So not only have they allowed a single service to take over but it’s the one that pays out the least to them and their artists. It’s a complete strategic failure yet that doesn’t bother them, indeed they are now signing yet another deal that will bolster YouTube and further reduce the value of music and payments to artists. It’s idiotic and short sighted but not sure we’d expect much else.
The Indies – Much of their failure here is shared with Majors in letting YouTube get so big. In many ways it was the smaller labels early adoption of it as a promotional tool that helped cement the service’s position but I won’t repeat what you’ve just read and instead point out that a failure just as big is the fact that this is the first time they are having this fight over payment rates. The battle, especially with YouTube, should have been fought years ago but instead they choose to take the offer of free marketing and worry about the money another day. They willfully allowed their artists’ works and indeed the very value of music to be reduced when it suited them, but now as the download market starts a slow spiral into oblivion and the future suddenly looks to be in streaming they try to change tack. Yet it’s too late they’ve given away the value it could have had and you can’t reverse that.
You – Ultimately though this is all your fault. Thinking it’s okay to get your music in poor quality on YouTube or worse, just straight out stealing it. Twenty years ago the value Google is putting on music would have been considered a bad joke but now, thanks to your pilfering and poor choices, it seems a fair position for negotiation. So well done. I hope you feel proud of yourself.
Some quick highlights and headlines for you this week – seems everyone is off on Ibiza or at festivals and can’t be bothered to do anything interesting. Still hopefully some of these tidbits will pique your interest.
First up the ever helpful WikiHow, apparantly without a hint of sarcasm, has laid out the best way to choose your DJ name which includes such key tips as making sure no one else is using the name and that people like your name – so let’s all avoid using Skillex or DJ Hitler shall we…
Thankfully even on a slow news week we can rely on Deadmau5 to mouth off a bit. This week it’s about how much EDM is screwed, once again seeming to not realise that he is very much part of that scene. If people stop watching Calvin Harris then I’m pretty sure Deadmau5 is screwed too, he really does seem to have a total lack of self awareness. But then that should come as no surprise with a man who wears a ridiculous mouse head half the time. To make matters worse he goes on to say he’s not playing festivals anymore because he gets very cross that anything is more famous than he is. Imagine it, a brand that has the temerity to be bigger than a talentless Canadian wearing a bad Mickey Mouse head, hardly believable is it? What a grotty, little man he really is.
Now we’ve covered Deadmau5 let’s turn our attention to my other favourite target, Morrissey. The militant vegetarian announced last week that he was canceling a gig. In itself this isn’t unusual with Mozzer regularly cancelling gigs due to illness, feeling a little sad or the overwhelming need to cuddle a little baby rabbit. However this time he was being supported by none other than the slightly too odd to be a national treasure, Cliff Richard. We’ll skip over the bizarre situation that anyone would book cliff to support Morrissey – I mean surely Cliff supports no one? And who the hell thinks their fanbases even remotely crossover? Instead we’ll take note of the fact that when the gig was first announced Cliff made a slightly cheeky comment that he hoped Mr Meat-Eaters-Are-Worse-Than-Paedophiles might be tempted to nibble on the odd burger or sausage whilst doing the gig. So was this then the real reason for the cancellation? Was Morrissey so offended that he couldn’t go on? Or perhaps he was worried that the original rock’n’roll bad boy (well rock’n’roll very occasionally, slightly naughty boy) would tempt him into a sinful life of sausage consumption? We may never know and frankly the bigger concern for all of us is surely what are Cliff’s fans going to do? First he announces he won’t be doing calendars anymore and now Morrissey cancels the gig too. It’s all just too much. Well fret no longer, Cliff has announced he’ll be doing a gig that day after all and it’ll even be free! What a lovely man. Unlike Morrissey who instead of actually doing his job and singing a few songs is presumably busy hugging a sheep, whilst desperately resisting the urge to slit its throat and gobble the little fella right up.
And finally we end with the news that Brian Wilson is all sad that the haters have been hating. When Brian Wilson is sad I get sad. Brian Wilson is one of the greatest songwriters of all time and if he wants to work with some rather dull pop stars then he’s earned the right. Even Brian Wilson’s last bowel movement is better than anything you’ve ever done or anything you will ever do. So haters, stop hating. (Unless it’s Deadmau5 or Morrissey. That’s okay).
A few weeks back the annual Ibiza Music Summit (IMS) took place and, being one of the more professionally-minded dance music conferences it always produces something interesting. And indeed amongst the usual back slapping, self promotion and piles of drugs was a presentation which outlined the state of the dance music industry (or as the American audience would have it “electronic music industry”). It’s been reported elsewhere that the presentation was by Association for Electronic Music (AFEM) although in fact it came from the IMS organisers themselves. The confusion is a little understandable as AFEM was formed a couple of years back at IMS by many of the IMS organisers. Both seek to promote the dance music industry as well as act as a voice pushing for change that would benefit the scene – including dry but important things such as improving data standards and reporting in an attempt to provide better royalty payment systems as well as many other initiatives focused on combating negative PR and educating the wider world about dance music. Personally I find the AFEM project to preserve the history of dance music (recordings, artwork and the like) really interesting as this is a scene so transient that few remember the hits and stars from last year let alone twenty years ago. But that’s all a discussion for another day. The point is that once again With the DJ brings you the facts unlike other world-famous media brands such as Billboard who simply got it wrong.
Anyway enough tooting our own horn it’s the presentation that interests us and if you want you can read the whole thing here. It covers some predictable stats such as the ongoing growth of dance in the US and indeed globally. 2014 was it’s best year ever apparently although I might argue popularity does not mirror creative output, something confirmed by one slide showing that an Avicii track is the most streamed track on Spotify. There’s also some fairly spurious analysis showing younger DJs who’ve just started gaining popularity have got more Facebook likes in the last year than those that have been huge for some time – I think we can consider bloody obvious.
One slide I found very interesting however was the growth of dance in India, it’s not something I’ve heard people talking about and is obviously a huge potential market that could dwarf America and Europe put together. So it will be interesting to see how that goes in the next few years – probably an opening for some wide eyed entrepreneur or two.
All in all it’s a very positive report (though again ignoring the creative side of the scene of which the reverse could be argued), a view summed up in the final slide where they estimate that the global dance music industry is now worth $6.2 billion (about £3.6 billion) annually. That huge figure is broken down as follows:
Seeing that I was, at first, rather surprised. It seems to be on the high side and several billion more than I would have expected. However thinking it through it may be okay – we start off by knowing that the UK music industry, the third largest in the world behind the US and Japan, is estimated to be worth about £3.5 billion (according to trade body UK Music). Using that number and some others culled from Wikipedia the global music industry probably has a value of around £30 billion annually. IMS’s figures confirm (in their sales charts) an assumption, often used across the industry, that dance music makes up 10-20% of the overall market. So comparing those two figures we can see it broadly adds up – the £3.6 billion value of dance number promoted by IMS is, as expected, just over 10% of the overall global market. So well done IMS you have my seal of approval.
Still I think a certain caution has to be taken as they’ve taken a pretty wide definition of the dance music scene. It includes the music and the events as you’d expect but a lot of stuff in the “Other” category aren’t really what people think of as part of something specifically dance music related. I think we might accept that you should include Pioneer’s earnings from CDJs even if it’s not exactly the creative end of the business, yet Soundcloud have so far only made money for Soundcloud, they pay no royalties to anyone, so I’m not sure you can really include them as it’s a tool used across the music business not just dance music and I’m sure they don’t consider themselves limited to dance music.
Overall though still a very big number and one I assume With the DJ will be getting its fair share of. Some calculations reveal that we are owed around 0.1% due to our tireless promotion of electronic music to our readers. I therefore assume the cheque for our £3.6 million is in the post. Any day now…