Traffic Lights: Copyright Education or Leverage?

The PRS has proposed that music related search results should be flagged with a ‘traffic lights’ indicator of whether, according to an independent body, the site linked to is properly licensed for music. The BPI had a similar ‘consumer education’ scheme, whereby approved sites got to display a badge.

This seems a very simple idea. Online music services that want to be licensed would presumably be happy to differentiate themselves, and consumers who want to make sure their business goes to those who pay copyright owners can distinguish them at a glance. Let’s assume that the independent body is well enough managed to keep the list up to date and supply it in a useful way to search engine operators, who are also well enough managed to use it. The PRS proposal simplifies a problem and addresses the consumer confusion set out by Hargreaves.

Dig a little deeper however, and as with so much that comes out of the music industry lobbying machine there is another layer or two beneath this that needs a bit of scrutiny. What effect, for instance, might traffic lights have on music licensing?

The law gives music and recording copyright owners a bundle of rights that they can wrap contracts around for a mix of different uses in different contexts. Some rights are limited, so for instance once a song has been performed or published anyone can perform or record it on payment of a reasonable fee, and can go to a tribunal to get the fee adjudicated. Other rights can be withheld from the market entirely. This is the basis of competitive negotiation in the music industry.

One would imagine that a music service will, if the traffic lights do make the intended difference with consumers, rapidly converge on an ‘essential’ catalogue, the owners of which will be able to charge above their market share as the price for completing the deal, such will be the importance of a green light. To be sure this already happens, but the market can do without a fossilising layer of regulatory bureaucracy to enshrine the behaviour for the foreseeable future.

This would translate into fewer opportunities for smaller or more innovative companies, and fewer choices for musicians and performers when they are selecting their business partners and building their careers. In other words a less open and less fair market for digital music, from creator to consumer.

I have for a long time held the view that the consumer does not need to be patronised and have their time wasted with education schemes. Markets and consumers in them are sophisticated and it is insulting to treat them like primary school children who need to be nudged and bribed to modify their behaviour. The problems the music industry has are the predictable consequences of a dysfunctional wholesale market for music rights, and will be ameliorated by market reform and not enforcement regulation. In fact much of the lobbying I am currently observing seems to me, as a participant in the digital music industry, to be aimed at preserving the market dysfunction to the advantage of the incumbent organisations.

I do not believe that the UK Government has yet made a serious attempt to analyse the copyright market, despite all the fine words about the importance of the creative industries. It would take strong leverage on Government’s part, if not actual compulsion, to discover the evidence which is buried in hundreds of private contracts. Yet we need weights, measures, and fair trading in music just as much as in any other business and none but Government can enforce them for us. There’s a challenge for you Mr Vaizey.

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