Collectives versus Pools in Pursuit of Copyright Efficiency

YouTube’s generous approach to on-demand video streaming, while historically the cause of some friction with copyright owners, is also this year a great blessing to anyone interested in the regulation of copyright business. For it has provided a platform to view and review a length discussion between some of the key figures about Europe’s policy on collective copyright management.

Watch here a Midem panel dominated by Maria Martin-Prat:

Simultaneously, large owners of rights in songs have been withdrawing from collective management. Just before Midem news broke that Sony/ATV had struck a private deal with Pandora. The man with the big cigar was reported to have said that it was ‘hopefully the first of many’. And not to be outdone, there are some signs that even where there are compulsory licences available, labels and services are finding a private path more advantageous. For instance, MRI is assisting satellite broadcaster Sirius XM to deal direct at rates lower than SoundExchange offers. The 50% SoundExchange deducts at source for performer payments might have something to do with this, as labels rarely pay out half of public performance, especially where there are unrecouped advances.

The costs of finding rights owners, and the costs of doing the deals, are rightly considered great impediments to the development of exciting and popular digital music services. The number of successfully licensed services might suggest that other problems are equally critical; licensing efficiency does however deserve the attention it is getting from regulators and law makers in the main copyright territories.

Is the emphasis on better regulated collectivisation the right way to consider the problem however? It seems that even the very well informed and cautious European bureaucrats risk taking an idealistic view of the collective, as well as an over-optimistic one of how much regulation can achieve to create better governance and behaviour. ‘Rocked by scandals’ is a very emotive phrase, but has been widely used in the last few years about the world of collective rights management as artists in particular find their voices. Even the Pirate Party’s MEP points out how unambitious the current EU reform proposal is by modern standards of business and administration.

Generalising from some of the changes that are affecting the market during the digital transition suggests that other approaches might be equally valid, and might even be easier to achieve. For instance, once the larger copyright owners develop the capabilities in house that they previously outsourced to collecting societies, simple organisational inertia will maintain them even in preference to a cheaper option. Add to that the ever growing catalogue that has never made it into a collecting society, as digital production and distribution technology breaks down barriers to market. In some markets collecting societies actually know about only the top 25% of the extant catalogue, and are reluctant to bear the costs of dealing with the rest.

Classes of rights are being brought together, particularly by new entrants, in ways that collective administration certainly has not anticipated, and seems still quite radically opposed to. Cooperation between performer and performance rights societies seems still reluctant and rudimentary at best, despite the need for each of their customers to obtain complementary licences. This is pushing rights owners who would ordinarily be collectively minded to find other more transparent and faster routes into the previously blanketed world.

These realities are behind the tendency for Karaoke machines, Juke boxes, and piped music to come as a bundle of service and rights. The internet scales this up to a huge degree, to the point where it is now imaginable for a specialist music service to carry only what it can license ‘all rights’ directly. It might not be the most comprehensive or exciting service in the world, but it will certainly have a value.

And, at the other end of the scale, a phenomenon that is very visible in territories with one dominant record label, a select catalogue provided into a heavily branded service. Without wishing to promote one particular supplier, here’s Universal Music’s ‘one stop shop’:

with its own surprisingly corporate promotional video:

Short of forced collectivisation there’s not much regulators can do to deter rights owners from putting together bundles to suit different customers in different markets. Maybe they should embrace it instead? Just as patent pools enable rights owners to bring complementary technology together to enable markets that would not otherwise exist, perhaps copyright pools could do the same for music. So instead of the owners of each class of rights sitting in their separatist stockades waiting to be regulated, pooling and bundling could create the efficiency that regulators want, with transparency provided through terms of engagement open to all participants.

To me at least this seems much more progressive, and business friendly. How to get there? Well, a command driven economy is as fragile thing as an unregulated one, as we have discovered over the last few decades.

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