From October 2016 to March 2017 the team is joined by Guest Kats Rosie Burbidge and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Tian Lu and Hayleigh Bosher.

Wednesday, 9 December 2015

C'MOn C'MOn - Music Publishing

Ahh, music publishing. While the Collective Rights Management Directive technical review by the UK IPO is still underway (coverage of the Directive on the 1709 blog here), discussions on music publishing are lively.  Today a group of researchers, industry and policy makers gathered at Birkbeck workshop to debate recent research on music publishing.

JB Williams, founder of the
Musician's Union
We started with a trip down memory lane with Fiona Macmillan and Jose Bellido presenting on the history of Collective Management Organisations (CMOs). Granted by access by PRS for Music to the PRS legal archives, the researchers detail the evolution of PRS from the early 1900s. As is often the case, starting a CMO ain't easy, and the early days of PRS required negotiation with other organisations (including a boycott in 1918 by the Amalgamated Musicians' Union) and recruitment struggles. PRS's early litigation was very strategic, typically successful and ran about one case per year from the early 1920s to the early 1940s. (These cases likely represent only about 10% of disputes, with the rest settling out of court.)

Interestingly, the young PRS was very protective of its reputation, and took pains to set the record straight in the reporting of the cases and brought actions for libel. While PRS was a bit late to the CMO game, they were innovative in their data management in the UK. The researchers argued that while CMOs, and PRS, altered the idea of the music industry itself (defining both the concept of the industry, and intangible rights), many of the challenges associated with managing intangible assets persist.

In case you missed that detail above, PRS granted the researchers access to the archives. Something that PRS should be commended for, and something that the research (and possibly policy) community would like to see more of.

Again looking at collective licensing, Dennis Collopy then described the strange relationship between creators and publishers. Content owners are in a battle over copyright in the US, and may be losing. There appears to be a covert attempt by technology companies to take publishers out of the music licensing system. Collopy argued that the value chain is under unprecedented pressure to change. Another interesting point - Europe makes up nearly 60% of collective licensing income, whereas the US is only 22.2% (figures from Collopy, available here.)

"Henny Penny" by Mabel Hill
The sky is falling!
Curious international differences mean that CMO administrative costs (the deductions made on licensing fees before they are distributed to creators) vary tremendously across the EU. Some CMO administrative cost figures (paraphrased from Collopy):

  • UK: PRS For Music, 11% generally
  • USA: ASCAP, 11% generally
  • Germany: 20% + cultural deductions 10%
  • France: 22% + cultural deductions 10%
  • Italy: SIAE, 18.7% + cultural deductions 10%
  • Belgium: ~35% deductions including cultural
Transparency remains an issue. Artists can audit their publisher's books but not their collecting society. A recent report on transparency in the digital music business suggests calls for more transparency are gathering speed. Another problem, and one that Pete Jenner regularly discusses, is that, while music registries are incredibly important (they match songs to the correct owners), a high number of songs are mis-registered (one in six according to Collopy). This high error rate may result in royalties not reaching their intended recipient (a problem that could be solved by good metadata.)  

Kobalt Kats with long tales
amdala6
Could the 1% break free?  As technology companies consolidate the distribution of music, it may be more efficient for the top artists to have their own societies. The long tail has been repeatedly rejected as a myth, or even, should be renamed the 'long tale.' Kobalt, the indie music publisher popped up again (discussed here).

It will be interesting how this research translates into reality.  With codes of conduct discussions ongoing, changes in the market and business models for CMOs, what will happen next?  

Your Katonomist got her claws out and asked the workshop, "why should we care?" A lot of discussions in music, and indeed any creative and cultural industries, are emotive.  The disruption to the music industry is largely the reduction of transaction costs and changes in bargaining power -- market forces which no sector escapes.  Why is music different? I suspect the answer is that it isn't. However, what is different is that the cultural importance of the music sector makes it ripe for special pleading and passionate arguments. Hence alarmist reactions and huge political power. Yet, I'm equally passionate about IP, so perhaps I'm just calling the kattle black...

7 comments:

Anonymous said...

You've already answered your own question. Music is different (as are other areas) because it has a social and cultural significance that cars and computers do not.

Nicola said...

I'm not convinced. You could argue most sectors of the economy serve more fundamental social needs. Pharmaceuticals (health), cars (transport), waste management (public health), and computers (communications and pretty much everything) could make compelling cases that they are different and special.

The market structure and cultural importance of the music industry are not dependent on each other. Why then, should the music sector as a whole get special treatment?

Banjo said...

Humanity started satisfying its cultural needs long before it addressed technology. One could thus argue that cultural needs are fundamental needs, whereas technological needs are not fundamental needs, but merely have become important needs because others also have access to the same technology.

An isolated community will create art and music spontaneously, but will not even desire ibuprofen, Mercedes, the water closet and the iPad until made aware such things exist.

Therefore, the culture industry cannot be said to have grounds for special pleading.

Now, whether copyright &al is the right way to protect and promote culture, that is a different question.

Nicola said...

Technology is probably a red herring - it is less about the technology and more about the needs it addresses or facilitates (such as safety, communications to create belonging etc.) Our first needs are physiological (https://shiftmagazinenet.files.wordpress.com/2015/11/maslows-hierarchy-of-needs.jpg) whereas cultural needs come much later.

But, as Banjo has pointed out, culture and creative goods come about spontaneously. We're intrinsically motivated to do so, once our more basic needs are met. And we should question how copyright & IP is the right way.

I've yet to see an industry which doesn't engage in special pleading. Sector X is a snowflake; unique, just like everybody else.

Anonymous said...

More or less what Banjo said, but I think they substituted "cannot" for "can" there somehow.

There are societal needs that are met by technology, but they have no special cultural significance. The same with all the other things you named. Music, literature and the arts have special cultural significance - even where most arts are frowned upon people find a way to express themselves in that way (ie Islamic calligraphy).

I'm sure this doesn't show up on your radar in answering your need for utility, but it's a true enough fact that economics doesn't have all the answers. Where's the economic rationale for ending slavery? Or giving women the vote? Space exploration? It wasn't economists that made those arguments in the first place (they may be able to come up with some babble about it after the fact, but they weren't in there during the fight).

You shouldn't expect an economics rationale for everything, it just isn't there.

Nicola said...

Anon 12:02, I don't think the fact that creative products and culture arise naturally makes any difference to the argument.

I have yet to see an industry which does not claim that they are essential and a special case. The creative and cultural industries are not immune.

POHA said...

What about the NDA's used by the societies to cover license deals - in the interests of transparency should members not have access to these agreements. Why so secretive?

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