Music Industry Grasps Wrong End of Carrot

Posted on September 26, 2013 by ratpie

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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Preserving the Open Internet the Easy Way

Posted on July 7, 2013 by ratpie

No regulation is easy of course, so to start, here’s an apology for the misleading title. Sorry. But it need not be as difficult as it might seem to make the few small adjustments needed to ensure that the next decade does not see the effective end of the open and public internet which promises to deliver so much to humanity.

Consumer ISPs love to shout about how much bandwidth they are offering their customers. Just look at the words they use! “Unlimited BT Infinity 2 Superfast broadband” screams BT, the UK’s former nationalised network owner. In this case the consumer offering is 76Mb/s download speed, and 19Mb/s upload. But those are qualified – ‘up to’, which of course starts with zero Mb/s.

As alternatives to the commoditised ADSL 2Mb/s heavily contended offerings appeared in the market, the UK’s Ofcom felt the need to help ISPs avoid misleading the public with false promises. Here’s their key message:

There has been a noticeable trend for some ISPs to advertise their products based on faster and faster headline speeds . However, the evidence from Ofcom’s research indicates that these headline speeds are rarely achievable in practice by the majority of consumers that buy them.

from the 2010 Code of Practice that you can read in full here:

http://stakeholders.ofcom.org.uk/telecoms/codes-of-practice/broadband-speeds-cop-2010/code-of-practice/

Observant regulators will of course have noticed that the speed being advertised applies only to the connection from the consumer to the ISP’s own network, and that thereafter it is anyone’s guess how much bandwidth will be available to a given content provider or service. And, that while to an extent the consumer ISP has no control over how much bandwidth a third party will have provided to get their message to the public, they do have some control over the way and with how much capacity their networks connect to the world.

The movement of large and popular services off the public internet and into private connections is well understood and well documented by now. It would be an ignorant regulator who somehow conflated Google, Facebook, Amazon and the rest with an open internet agenda; surely such a regulator would be laughed out of town. For these large network owners, ‘open’ is simply an unfortunate stage you have to go through before cajoling consumer ISPs into closing again, and shutting public traffic out of the connections that carry their traffic.

Faced with the prospect of competing on price per Mb/s, while making large investments in their core networks almost solely for the benefit of third parties who themselves are turning their backs on the open internet, it is not entirely surprising that the ISPs with the means to do so are trying to develop their own content services. In the UK, BT has bought sports video rights to try to tempt people into its TV service. Other ISPs around the world are buying film rights and other bundles of content, in the hope that their own bandwidth intensive services will enable them to compete internally for their customers’ attention and money in a zero sum game of their own making,

So there, in a nutshell, is the intersection of several strong commercial incentives, which between them are conspiring to deprive the open and public internet of the investment it needs if it is to continue to enable the innovation that created the private peering behemoths in the first place. If trends continue, what’s left of the internet will become the ‘third service’ alongside ISPs’ own services and the major private networks (Google et al.). It would not be surprising, given that everything politicians hate – from illegal content to freedom of speech and protest – will be flowing down it, this third service will not be high on the list for care and protection.

Neglecting the open and public internet would be a mistake however, even for Governments which are naturally concerned with preserving their currently pre-eminent internet business sectors. Here’s Neelie Kroes summarising for us at the IGF meeting in Kenya in 2011:

The Internet is changing the world, and it’s not just trillion dollar marketplace. It is a forum where people connect, a platform for astounding innovation, and a powerful vehicle for human rights and fundamental freedoms.

Kroes will surely recognise better than almost anyone else on the planet that if you have to define those terms, innovation, human rights, freedoms, and even the more narrowly focused network neutrality, you have failed before you start. As an aside, a proxy measure for the scale of this failure might be found in corporate spending on non-corporate activities – higher is worse – as companies spend to defend their franchises, not to open them to competition.

The opportunity here, the ‘easy way’ in the mischievous title, harnesses the competitive nature of consumer ISPs to investment in the open and public internet. It pushes the proper questions of who should be allowed to run a computer network, and who should be allowed to connect their network to the internet, to where those questions are best answered, in national regulations and internet governance. It recognises the central role of IXs, internet exchange points, in enabling the internet to be what it is. Topically, it borrows the idea of capital adequacy from international banking reform efforts.

It is simply this; ISPs should be obliged to provide a reasonable percentage of their total sold bandwidth through public peering at an internet exchange. Then as consumers we could be sure that we really are buying reasonable access to the open and public internet, and as participants in business and culture we could have confidence that our access to the world will not be starved away by neglect or by gatekeeping on the last few hops. And as an important side effect it would remove the incentives Governments have to help corporate interests grow unfairly at the expense of the conditions on which future innovation and freedom rest.

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Netflix Explains Why The Internet Is Not Good Enough For Them

Posted on July 5, 2013 by ratpie

The migration of new digital services off the public internet is an established pattern. Driven by economics, and with real money at stake, it is not likely to slow down any time soon.

To recap, large content providers such as Google (with YouTube), Facebook, Amazon (mostly driven by its Web Services division), and Netflix, among others, are taking their traffic out of public exchanges and setting up private connections with consumer ISPs. They make a compelling offer. ISPs save costs by connecting directly and the exchanges that ISPs largely fund avoid the investment that would enable this traffic to remain on the public internet.

Helpfully, Netflix has been sharing its technical architecture and its offer, called Open Connect, to ISPs. Here’s a presentation from a recent network operators’ meeting:

[file no longer online – 5/11/2017]

and you can see the original powerpoint (link updated 2017) here:

https://dknog3.dknog.dk/agenda/

and here’s the horse’s mouth:

https://signup.netflix.com/openconnect

Free is a very convincing price, and few network operators have the tools to measure the future impact of a lack of investment in common resources.

Netflix even sweetens the deal, by offering a higher quality video stream to subscribers who accept the Open Connect equipment and connection. And this illustrates the policy issue very well indeed.

If our policy makers believe that the open and shared internet is a driver of innovation and value for the public they should be concerned. It is being re-engineered to deliver a second rate level of service. We are still a long way from the point where ISPs don’t need the public internet at all, but arguably that is a destination now in sight.

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Inspiration for Privacy from Copyright and Beer

Posted on June 9, 2013 by ratpie

It is quite impossible to make informed choices about privacy, and about the uses of content and data we generate. The terms and conditions of services we use are too long and complicated to read and understand, and anyway are drafted to conceal as much as they reveal. Third, fourth, and fifth parties make their livings off our traces. As individuals, we simply don’t have a way to insist that corporations, or even other individuals, show us proper respect online.

To some degree we accept our weakness, preferring that these useful services should be there rather than not, and celebrating the disruptive force of digital business even where we know we are both fuel and product. Perhaps we have a sense that we are still at the start of a journey, and hope that the destination will a humane and respectful place. Not many of us want to be evil, no matter where or for whom we work.

Should we accept this compromise, as unwilling parties to a trade that is at best tolerated and at worst coerced? I do not think it is inevitable that we need to lose so much of our privacy or our expectations of good behaviour and respect in the online world. We have dealt with similar situations in the past, and steered the ship off the rocks. There is no reason we should not do so again.

When aristocratic patronage and its cousin, censorship and State control of speech, failed to keep pace with the modernisation of societies, with technological advances, and with population growth, authors and composers, artists and performers found themselves similarly empowered by the accessible technology of the printing press, and exposed to growing corporate exploitation. Some used their new power to test how far the tolerance of the State for sedition would stretch. Many found themselves victims of plagiarism, bowdlerisation, and copying for sale and profit.

This abuse led to real hardship, and a sense of injustice. The earliest uses of the word ‘pirate’ to describe a copier of another person’s writings actually precede England’s first authors’ copyright act by half a century. Here’s Daniel Defoe writing in 1704 in ‘An Essay on the Regulation of the Press’:

[Abridgement] is the first Sort of the Press-Piracy, the next is pirating Books in smaller Print, and meaner Paper, in order to sell them lower than the first Impression.

a practice he says is “down-right robbing on the High-way, or cutting a Purse.”

Defoe had no doubt at all that the press should be regulated, and authors punished for scurrilous writings. But he sought an equilibrium of interests rather than the imposition of top down prohibitions. In brief his answer was to remove the right of anonymity for published work, define as clearly as possible what was out of bounds, set penalties for transgressions, and establish that the rewards of the labour of writing should go solely to the author or his assignees.

To achieve the last of these aims Defoe proposed a construct by which words, previously considered a crude kind of property which only force or secrecy could protect, came under the regulation of the law, fully identified with their author for both their consequences and any material benefits that might arise. Copyright substituted a new tradable authors’ right for the failed printers’ monopoly right, and then customised it for its expressed purpose, to benefit society by encouraging learning and publishing.

Defoe’s argument largely carried the day in the first authors’ copyright act, the Statute of Ann, enacted in 1710. Over the following three centuries Defoe’s principle, of a balance between responsibility and benefit, has been extended in scope and term and geography and remains the dominant theme of copyright law and regulation. It recognises the weakness of individuals as well as their propensity for mischief, and seeks to draw all authors into a healthy relationship with society and commerce. By the end of the 18th Century it was possible, if still difficult, to be a professional author, selling copies or copyrights, the private patronage system was in retreat, and literacy was the norm. It had worked.

Like the printers and booksellers of 1704, today’s digital services want all the benefits of the content and data we provide them, but none of the responsibilities either to the creators or to society. They make this very clear if you do manage to struggle through the terms of service and privacy policies, placing compliance with law and all the consequences of offence and infringement with the creator, but an unbounded freedom without compensation to abridge, adapt, publish, sell, and every other kind of exploitation in all media throughout the universe and forever with themselves. It looks almost as if they collectively anticipated the ‘right to parody’ being proposed now to governments; record companies could never get away with such terms!

It would be unfair to suggest that anyone other than ourselves should accept responsibility for our words and deeds. Yet most of us would I expect be perfectly happy going about our business without a printer and bookseller embedded in every trivial act of conversation or commerce. It may turn out that we cannot have the benefit of these services without ceding control over our speech and data; this is a conversation we should have from a position of understanding, not denial and ignorance.

Nor should we accept unquestioningly that digital services are more like public spaces and not an extension of our private lives. For a start, there is nothing public about any of them. They are owned by private corporations, they require a formal agreement before you can enter and use, and your use is entirely on terms dictated by their owners. That they publish is not evidence that they are public. Concomitantly,  looking at a web page or using an app should by presumption be private. Why should anyone be allowed to observe without your explicit permission?

To illustrate, imagine that your local pub forbade you from grumbling about tax evading technology companies until you had assigned them a perpetual licence to exploit your presence, image, and conversation with no compensation. Those t’s & c’s would for sure be described in very colourful terms! In fact, ancient laws and customs give Inns and Public Houses duties rather than rights, to serve equally anyone who is able to pay and in reasonable condition.

This comparison is relevant in another way too. Centuries before the internet protocol networks we now depend upon, Inns performed a different kind of packet switching, taking letters and documents for the Crown and later for the public. Their importance was recognised by another regulated duty; many were obliged to keep stables and horses. (Some even developed an early form of parallel currency, issuing coins and operating exchanges much like Bitcoin today).

As so often, the signposts to show us the way to solve present problems lie partly in a good examination of how similar problems were solved in the past. Drunkenness was contained not by ever stricter control on the supply of alcohol, but by a liberalising law that allowed any householder to become a pub and make and sell beer, as long as it was of good quality, and they kept good order. The old mediaeval Inns, part of the fabric of society, adapted to become relatively safe places of rest, refreshment and recreation for an industrial nation. The intention was clear in the 1830 Beerhouse Act:

…for the better supplying the public with beer in England, to give better facilities for the sale thereof than are at presented afforded by licences to keepers of inns…

Any person, being a householder, who shall be desirous of selling beer etc to apply for and to obtain an Excise Licence for that purpose

Our digital problems today will yield to the same principles as were brought into the regulation of printing, and of pubs, in the past. Our words and images are of course our own, but it required a gift from society in the form of copyright laws before we could usefully exercise control, and that gift was given in order to create a benefit for all, not a private monopoly. Printers fought the early extensions in term because they feared the price they had to pay authors would increase. 21st century record labels lobbied hard for extensions to their rights because they knew artists could not benefit from the extra years.

Behaviour on digital networks is now studied and debated as a social harm, like drunkenness in the early 1800s, with cyber-bullying, indecency, and downright illegal content widely available to children as well as to responsible adults. Defoe understood that it was not enough just to legislate to hold authors accountable. They had to be brought into a different relationship with society, and that meant making them property owners. Again, the law stated its purpose, to encourage learning and increase the supply and availability of books, as well as their quality and authenticity. More good beer in better facilities justified new freedoms for the creation of pubs.

If we owned our privacy and the data and content we generate, digital services would be required to trade with us for them. With that ownership would come responsibility, as we would need to be strongly identified with our online selves in order to benefit from that trade. Of course laws could be developed to constrain online service providers, and attempt to enforce privacy and data protection. And a fierce debate is taking place over control of hate speech, harmful content, and all sorts of undesirable behaviour. But ownership would allow us to regulate ourselves, making irresponsibility and intrusion a risk for the perpetrators, not for society, and making prohibition and enforcement the exception rather than the rule.

So, if we want to steer our online relationships away from harm and towards a productive relationship with society and commerce then we could do worse than heed the lessons of beer and copyright. To guide us away from irresponsible anonymity, we should consider strong rights for all of us over the content and data we generate. Services should be held to standards, required to serve anyone in reasonable condition, risk penalties for trespass into our private conversations and commerce, and carry the King’s messages if necessary.

Most importantly, we should understand that as individuals we are simply unable to maintain our digital rights and principles against well funded corporations. Printers fought against the gift of rights to authors; distillers fought laws that opened the beer and pub market to householders. Government and lawmakers faced them down, and regulated for citizens. We need our digital lawmakers to do the same.

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Copyright, Human Rights, Development, Privilege

Posted on June 3, 2013 by ratpie

Two things in particular I have been enjoying surprising people with recently. The first is that copyright is part of the Universal Declaration of Human Rights. All right it is near the end, so fewer people will have had the stamina to read through and find it. But it’s clear and unambiguous at Article 27.

Article 27.

(1) Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits.
(2) Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.

http://www.un.org/en/documents/udhr/index.shtml#a27

The second surprising fact is that the UN maintains a ‘best practice’ set of music industry  contracts. Here’s their justification:

First and foremost, the fight against music piracy involves the use of contracts drafted in compliance with good professional practices. In order for music contracts to achieve their desired effect and be used on a widespread basis, artists, themselves, must be convinced of contracts’ usefulness. Therefore, UNESCO, trusted by artists from around the world due to its ceaseless efforts to promote creativity, cultural industries and cultural diversity, believed it important to produce this guidebook in order to assist artists and music professionals in overcoming their distrust of current music contracts and to provide them with information about their rights and good professional practices.

download it from here: http://portal.unesco.org/culture/en/ev.php-URL_ID=40107&URL_DO=DO_TOPIC&URL_SECTION=201.html

One of the oddest interactions in the story of UK Government fiddling with copyright came when Professor Hargreaves was challenged at a Parliamentary hearing on the assumption of the value of an exception for private copying.

The exception, covering the transfer of music to portable players for instance, had been valued in a report at £2billion, which does indeed seem a lot for what appeared to MP John Whittingdale as a technical tweak to stop normal and everyday behaviour remaining infringing. Hargreaves pointed to general confusion and ignorance about what copyright allows and forbids, and makes a fairly bland comment, ‘well it might increase confidence in the market’.

See it here at about 10m 50s http://www.parliamentlive.tv/Main/Player.aspx?meetingId=12191

Perhaps John Whittingdale is too busy to spend the hours required rummaging around in the human rights and development literature. Perhaps he, along with many others, imagines that the UK and other developed markets are beyond the kind of concerns that our taxes promote for less fortunate societies. Perhaps he has just forgotten what it was that created our prosperity in the first place. Categorise this fault as looking down the wrong end of the telescope.

Whatever, I wish that Professor Hargreaves had had the courage under fire to point out to the politicians that all participants need confidence in our markets if they are to invest in creating value; and that music, an intangible and fragile market, needs more confidence than most in an age of non-excludability.

The billions of decisions that collectively make up the market are diffuse and complicated, so we can be sure that we will never really know how much confidence there is in the market, or whether more might deliver that extra £2b for the UK. Turn the telescope around however and look at the whole world in sufficient detail, and confidence seems to be one of the most important ingredients in the markets that support musicians and culture.

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The Internet is No Longer a Duck

Posted on April 3, 2013 by ratpie

It waddles and quacks, but is the Internet still a duck?

The Guardian published on March 28th 2013 an article by Cory Doctorow with the headline ‘Copyright wars are damaging the health of the internet’. His argument is simple and persuasive – that the Internet has become too important to our civil, cultural, and personal lives and well-being, and our ability to protect our freedom, to be compromised in the attempt to prevent copyright infringement.

But many people, mostly without knowing it, have already deserted the Internet. Their traffic is now carried over private networks owned by large content and service providers. The Internet is by definition a network of networks, and your packets used to find their own way often across many other networks. The Internet still exists, but compared with these high capacity and well connected private networks, internet traffic is decidedly second class.

If this seems surprising, consider a few of the more popular internet activities. Watching a cat video on YouTube, for instance. Google has been keeping up with YouTube’s huge traffic requirements by connecting to all the large consumer ISPs directly. GMail the link to a friend, G+ it, and you use the same private connection. Tweet it and even for such tiny data demand as tweets, quality of service issues could well have driven your message via Twitter’s private connections. Your DropBox is hosted by Amazon – yes really, the online shopping site -, another private network currently spinning its own web. If it is big or successful, the chances are it is getting off the Internet as fast as it can.

This does not mean the Internet is not healthy. Far from it. The open Internet is enabling extraordinary innovation all over the place. Having the giants on their own expressway ensures that the smaller players don’t get flattened on the common roads.

It does mean, however, that for ordinary users, including bloggers and tweeters of all persuasions, the health of the Internet is irrelevant. Regulators are now dealing with the behaviour of a relatively small number of very big companies, not with anything that can really be considered a ‘common’, or public space.

A much deeper understanding of today’s reality and direction of travel is needed if those regulators are to protect open innovation and communication for us. The fact that internet protocols make seamless the connections between networks that allow public ‘rights of way’ – the old public Internet – and the new private networks, should not confuse us. It might still waddle and quack, but the Internet is no longer the duck it once was.

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Collectives versus Pools in Pursuit of Copyright Efficiency

Posted on February 19, 2013 by ratpie

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’:

http://u-bee.biz

with its own surprisingly corporate promotional video:

http://www.youtube.com/watch?v=F7m3GWJjJuU

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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A Humane Approach to Copyright Term

Posted on December 31, 2012 by ratpie

As the increasingly frantic public domain regurgitation business trawls through 1942 deaths of authors and composers (sadly we shall have to wait another 4 years for a copyright free revival of Chu Chin Chow unless someone wants to set the lyrics to new tunes), it seemed the right time of year to offer a different approach to the question of an optimal length for copyright.

If you buy the arguments of either extenders or shrinkers, copyright term has the ability to change things for better or worse, for creators and for the public, and for investors as well. Of the shrinkers, the favourite argument was advanced with some almost robust reasoning by Rufus Pollock. Here’s the formula:

a single simple equation which defines optimal copyright term as a function of exogenous variables potentially estimable from available data: the discount rate, the rate of ‘cultural decay’, the supply function for creative work and the associated welfare (and deadweight-loss) associated with new works.

Without going into a lengthy discussion, what Pollock leaves out is as important as what he includes. His answer seems to me to be more an artefact of our current complex of interrelated interests and terms than a ‘start from elsewhere’ route to optitopia.

Lengtheners either cite a fundamentalist belief in property – in which case any diminuendo from infinity is a blow against natural justice – or appeal to ‘fairness’, sometimes on behalf of people they neither represent nor intend to benefit. Lobbyists managed to halt the slide into the public domain for sound recordings in Europe at 1963 – that’s Love Me Do for us ordinary folk who had to make do with another remastered special edition. Citibank must have breathed a sigh of relief.

It would seem absurd to cite a crisis of supply, when the available catalogue is rapidly climbing through the 20s of millions; or indeed a crisis of quality as the production cost of music is often now dwarfed by the marketing cost, and there are many efficiencies yet to be realised in the processes that bring new music to market. So for those reasons there is little to justify any change at all. If incumbent catalogue owners are behaving badly with exclusive rights perhaps some incentives need a shuffle, but that is no reason to weaken the position of the creators. They are as much at a disadvantage as the rest of us if the global music groups decide to hold businesses and consumers to ransom over how we may buy and listen to music.

No. In the age of nutraceuticals, the only justification for fiddling with term of copyright has to be a humanitarian one. Here’s a suggestion.

Artists and other creators famously die young and often lead troubled and wretched lives. It is often a young person’s career, involving the stress of fame and overwork, and the prospect of abandonment by the industry when the hits dry up. Here’s a heart wrenching story from 2000 about Steve Strange, style icon and Visage singer. Thankfully he seems to be a music industry survivor.

So, what about linking copyright term to the national average life expectancy (NALE) and bundling it with a compulsory life insurance scheme to deal with the genuinely unexpected? In the UK, an average 20 year old would need a 60 year term to see them out. So lets make it life for the creators and artists, and bribe record companies and other exclusive assignees with an additional two years for each year that the artist lasts above NALE minus 10.

In case you think I have really lost the plot, here’s a bit of research that shows how much ground needs to be made up.

South Korea has given us a fantastic global hit recently, but spare a thought for the already mature pop star Park Jae-sang, 35 years old, who according to Professor Kim Jong-In (in Korean here) is likely to live only 65 years. That’s right, entertainers have about a 15 year handicap over other professions. Even politicians live for 79 years in South Korea. How unfair is that?

So an entertainer or artist who failed to live the requisite length would be doing their label out of valuable years of protection, at no benefit to themselves, as well as depriving the beneficiaries of their life insurance of whatever the extra premiums might buy. Would this not give creators the right kind of incentive to lead long, healthy and productive lives, and assignees the motivation to help them? And Government too would have a much easier route to helping the ‘creative industries’, via policies that benefit all of us.

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Yet Another Private Internet

Posted on December 18, 2012 by ratpie

Lobbyists sometimes try to simplify issues, for policy makers and for grassroots and other supporters, and one of the most potent ideas surrounding Internet policy is that what you don’t like will ‘break the Internet’.

Here’s John Naughton neatly encapsulating this approach for the UK’s Guardian newspaper in a comment on SOPA/PIPA early in 2012:

…the most worrying aspect of these bills is that they would distort the architecture of the internet in ways that would cripple its capacity for enabling innovation

Read the whole thing here under the headline ‘Sopa and Pipa: don’t let big business break the internet’: http://www.guardian.co.uk/technology/2012/jan/08/online-piracy-challenge-sopa-pipa

The attraction of this is easy to understand. For any highly technical question with complete uncertainty about the outcome of any policy decision, all the attention-deprived Government official or politician has to do is ask, ‘will it break the Internet?’ If there is sufficient noise in the ‘ayes’, risk that they may be right will ensure inaction.

While this is going on in public, privately companies are breaking the internet in all sorts of useful and interesting ways. For a small business I am a large buyer of datacentre services and connectivity, operating a highly connected music platform hosted at Interxion in London. For many reasons we own and manage our hardware – but I can now, should I so wish, buy private connectivity within the datacentre to Amazon’s Web Services. Here’s what they say about it:

Using AWS Direct Connect, you can establish private connectivity between AWS and your datacenter, office, or colocation environment, which in many cases can reduce your network costs, increase bandwidth throughput, and provide a more consistent network experience than Internet-based connections.

A quick survey shows that Amazon has been rolling out private connectivity via high quality datacentres around the world. You can bet also that the peering points which connect consumer access providers to the Internet also benefit from these direct connections, alongside connections to Google, to Akamai, Limelight, and other providers of media and application delivery services.

The chances are increasingly slim these days, if you stick to fairly popular sites and services, that your bits will ever touch the Internet. In fact the real Internet is already significantly more expensive, more congested, less reliable and less consistent than all these private platforms.

Why is this important? Well, perhaps monopolies built on private networks should be regulated as private businesses, rather than as users of a miraculously unlimited and unfettered Internet commons. So when Google in Germany launches a campaign saying ‘Defend Your Network’ (Verteidige Dein Netz), it is important to understand that Google no longer uses our public Netz, it has its own, private Netz.

Google’s property rights in its network should of course be respected, and robustly defended, in all the territories it operates in. Help them if you wish, but not in the name of the extraordinary communal efforts that enabled them to achieve their scale, and which they have now left behind.

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Leapfrog or Lag? Music Tech in Developing Markets

Posted on December 15, 2012 by ratpie

We have been conditioned to think that developing nations are somehow privileged to have the opportunity to skip whole generations of technologies, moving straight to what we in developed economies are embracing because of its promise for the future.

Here’s the Economist, writing in 2008:

The mobile phone is also a wonderful example of a “leapfrog” technology: it has enabled developing countries to skip the fixed-line technology of the 20th century and move straight to the mobile technology of the 21st. Surely other technologies can do the same?

The full article is here, and despite the common sense conclusion, that sometimes new technologies are dependent on a whole set of building blocks that might not be present, it reflects a prejudice against the past that only the rich can afford.

Another example, from an arbitrary blog:

The internet is growing in India, and most of it is on the mobile phone.  Many, perhaps most of the world, will access the internet only on their phones.  They are skipping the PC and not even blinking or thinking twice.

So how important is the mobile OS market?  It will rule the digital world sooner than you think. (the rest here)

On a visit to Vietnam in 2008 I too was struck by the way that the mobile phone had become the ubiquitous and essential tool for business, and for all the normal traffic of life. But there was something else too. Computer shops came in two types, one familiar from poorer shopping streets in developed countries, with components and a few low end desktops and laptops, second hand and repairs. The other type presented top end tower systems in perspex cases, objects of aspiration and desire.

Market research site iSuppli sees this same pattern in China, with the PC being the aspirational home media centre for emerging middle class households.

…the PC appears to be winning as the main source of evening entertainment in China’s households—for playing games, reading, watching videos, listening to music, communicating and emailing, as well as shopping.

The fact that we are excited about our smartphones and tablets, and are devoting less attention to our two year old home PCs, should not lead us to assume that a broadband connection and a PC would not therefore seem like the apogee of well equipped home life in countries where it has so far been unattainable for the vast majority of families.

So perhaps when you have had a fully connected and well equipped home for ten years the next frontier might be mobility. Ordinary families in developing economies might prefer to catch up with the rich, rather than go without the benefits of the last decade of connected home computing.

For music this means preserving what we have learned about music on the PC, about downloads and home media servers, and about a more social and versatile approach to delivering music. It might well mean multiple modes of acquisition, including peer-to-peer, for much longer than seems likely in developed countries. Synching with cheap and portable MP3 players would be much more important than music through the cloud to smartphones and tablets.

In fact, while the CD remains a mass market music product, we see in some developing markets all the conditions that fed the growth of Napster, but on a far larger scale. The disutility of a music subscription service, tethered inconveniently and expensively to an account and a limited number of devices, seems to be less exciting a vision of the future than the idea of ‘leapfrogging’ suggests. I suspect, given a choice, many of us would happily leapfrog right back to 1999. Maybe in China, Latin America, Malaysia, Vietnam, and many other countries there will be more of an incentive to embrace and develop with the market rather than fight it this time around.

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