Music Industry Grasps Wrong End of Carrot

A UK Parliamentary report is out today, 26 September 2013, that represents a fierce fight back by the creative industries, led by music, against a rogues gallery of pirates, ISPs, and technology and digital advertising and media companies.

No doubt it will be greeted with a few cheers, and a pint or two in the pubs around the trade associations. It manages however spectacularly to miss the mark on a number of points; more of a Maoist Great Leap Forward than a Stakhanovite revolution in creative industries thinking.

The committee had a clear brief, to discover how Government could better support the creative economy. Several other Govt sponsored groups are looking at this very subject, from the Technology Strategy Board to a new academic initiative called CREATe. Some very obvious themes consistently emerge when experts manage to get behind the curtain.

The first to appear is usually sclerotic licensing, driven by internal industry competition rather than a desire to maximise the size and dynamism of the sector. This ‘beggar my neighbour’ approach sees groups who should be cooperating, record labels, music publishers, artists, for instance, openly at war with each other. Only this year a prominent manager issued a call for peace at the BPI AGM. Why did he need to? Why do the various music sector lobbyists always reserve the right to lobby independently from their collective voice? No amount of public money or effort has shifted this problem one iota, and nor would anyone sane expect it to while there is so much to gain for those at the top of the licensing tree.

The latest initiative, the Copyright Hub, is welcomed by the committee, but even such a confused and ineffectual vessel apparently needs a shot across its bows. Membership should be voluntary says the report. Hargreaves wisely suggested a bit of push might be required as well as pull to get enough engagement to deliver a meaningful benefit to downstream users of music licences. That, for this committee, would clearly be an outrage. Similarly the EU’s ambition for a digital single market gets short shrift. Again, apparently, there is no problem. Licences are available. Of course they are, but only under the strictest secrecy, so we shall just have to take their word for it. Given the short term of licences in the market and the devastating effects of withdrawal of the major content companies, no rational licensee will turn whistleblower.

So what could Government do to help? Perhaps it would be too drastic to compel some information about licences into the open for analysis, so that creators and new entrants to the creative industries could see what they are getting into. But it most definitely should not just take the licensor’s word for it that ‘everything is hunky dory just look at Netflix and Spotify guv’. And if there is one party that the committee should feel a very strong responsibility to it is the 20 year old who will have to decide whether to get a job with MegaContent Corp, or try to bust the market right open with a new venture. And I hope it is completely obvious that Government should always prefer the innovator and market entrant to the incumbent, no matter how many dinners and gig tickets it might have to forgo.

Back to the exemplar expert, peering behind the curtain, who sees soon enough that the stage machinery is rusty, frayed, creaking. The creative industries have failed to keep their collective infrastructure in synch with the digital age. Standardisation is happening in a patchy way, but is very much too little and too late. Even now the music industry has no consistent way to identify an artist globally, and governance of the sound recording identifier scheme is woeful. Supply chain data that should have been developed in the 1990s is creeping towards normality, but sales reporting is still ad hoc and fundamentally broken. Even the moral right to be identified as the creator of a work has been lost in digital incompetence.

This is very important but seems to have been completely invisible to the committee, who presumably made sure that they did not talk to anyone who has to grapple with the problems, rather than who benefits from the misallocation of resources that is the inevitable result. How could the Government help? Small amounts of cash for training and conferences and workshops would be transformative. Currently the cost of the dysfunction and the overhaul is being disproportionately born by the small and the innovative while the larger players drag their feet. In particular collecting societies should be shamed into using international standards as part of their code of conduct.

Metadata and supply chain reform and reconstruction is also the pachyderm house guest of the committee’s table thumper, copyright infringement. And here is the spectacular fail. It would be reasonable and justified for the committee to recommend that the small minority of mostly well off young men that Ofcom tells us are the diehard infringers should be hit with a Soviet style re-education campaign. Make them polish Billy Bragg’s boots for a month, or do community service in a music recording workshop for 14 year olds. But to introduce new systemic monitoring and notification infrastructure is to give too much of a franchise to enforcement at a time when the creative industries should be trying every thing they can think of to make it unnecessary.

In a world where there are tens of thousands of legitimate ways to book a hotel room in Bognor, 60% of search result links to hear or download a pop song is a music industry failure and requires first a music industry response specifically targeted at making legitimate music ubiquitous. Broad licensing, freedom for retailers to advertise their services, and industry approved whitelists all would help. Perhaps the target 70% of revenue that the music industry seeks from licensees is not a rich enough margin to encourage the variety of music services that consumers need. Instead of asking these sorts of questions the committee seems to have taken a Mandelsonian shortest path between ear and mouth approach to industry lobbying.

So, evidence of crowding out on Google search results should be taken as a sign that there are not enough retailers competing for the public’s attention, and that those there are have their hands tied either economically or contractually on how they can advertise. The Government should ask the simple question to the creative industries and their business partners, ‘can you tell Google definitively what you have to offer and where it can be found?’ If the answer is no, then it’s back to the workshop for another round of supply chain reform. Stopping people from finding pirates should always come a distant second to helping people find legitimate and remunerative ways to enjoy content.

The committee criticised Hargreaves for bringing forward flimsy evidence to support his recommendations, but did not care to inoculate itself against the same charge. And it missed its chance to become the promoter of open and fair markets for creators, underpinned by IP law just as today’s are, preferring to become a booster for incumbents and a protector of their interests.

Help train the young and retrain the workforce, encourage and enable cooperation where appropriate, arbitrate if necessary on things of common utility such as standards; if the Government would do that the creative industries would look after themselves with the enthusiastic support of citizens and consumers. That it was so much at the music industry’s prompting that the Culture, Media and Sport Committee came out 100% stick shows that music is still a reluctant passenger in the digital economy, clinging firmly to the wrong end of the carrot.

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