The highly digitalised era that we live in has had a profound effect on the way we all access music, we’re over exposed to it, many of the traditional boundaries have been eroded and attitudes to consuming music are constantly being changed . Music today is a mere commodity and obtaining any aesthetic value such as we saw a generation ago with the LP or CD is extremely hard. Indeed, it is extremely hard to fix music to a source in its current MP3 format and the speed of access of technology is serving to create a hypermodernity nature [1]
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The dramatic rise in music piracy via the internet networks correlates directly with the decline in of traditional formats and in general the downturn in music sales. The intangible nature of the format and the decline in ‘fair use’ [2] threatens to undermine the frameworks of copyright which is essentially the currency in which artists operate and can make a living, as Greenfield and Osborne note, “copyright is the vehicle that drives the music industry” [3]
With large record companies such as EMI constantly postings losses [4] coupled with their reliance in exploiting their publishing subsidiaries copyright of back catalogues, is the music business now unsustainable? Have we moved into the era of the independent label and start-ups like sliceofthepie.com, indeed is the very structure of the record company under threat and can a copyright actually work in a digitalised world?
Speaking with key up starters within the industry and analysing up to date documents and policy I which to establish the relevance of copyright In the current climate, and more importantly whose interests does it serve the musician or the company? Has copyright become outdated in the digitalised world or is new legalisation able reclaim rights that have been eroded by the huge expanse in the digitalised MP3 format.
The UK background
In 1709 the statute of Anne, whose full working title was conceived as ‘An Act for the Encouragement of Learning, by vesting the Copies of Printed Books in the Authors or purchasers of such Copies, during the Times therein ” [5] sought in an elementary manner to provide a basis of rights protection to the producer of a literary piece and of equal importance set the very foundations of modern intellectual property law. This framework protected the authors work for up to 14 years and after the expiration of the term, it became part of the public domain of work and operated primarily on a publisher-to-publisher basis. A key point of discussion in the legal framework of copyright as a product stems from the story of the French composers in a Parisian cafe. [6] Not only does it capture the notion of modernity but it also generated much discussion. Essentially the message outlined in this instance remains the same today. How can a composer keep his work his own and protect from other would be entrepreneurs especially if they witness an opportunity for profit overseas. In some part the Berne convention deals with this, essentially, it requires signatories to act multilaterally in recognition of copyrighted works; therefore, a UK song would be protected in a country who has signed up. So this really expanded the initial ideas and provided a western union which currently has the signatories of 164 countries [7]
Domestic UK law 1911 the law was extended to include early forms of music and sound recordings, indeed, in chronological analysis of copyright, its apparent that the legal system keeps a close reign on new forms of emerging media, alternatively speaking; ‘copyright is heavily connected with the market for information and new innovation’ [8] This suggests that the law may have been connected with technological advancements but there has been countless examples of a transient phase in which the law has been slow to react. Individuals and publishers look to capitalise on the interim period between legislation and use it to their advantage for example i
Finally then we arrive with the 1988 copyright designs and patterns act of the United Kingdom which with its amendments are the current statutes in operation. The 1988 framework sought to develop a number of key factors; chiefly it provides value to the industry in the sense that musical work is theoretically bound for 70 years and sound recordings and broadcasts 50 years. So in effect, this added a limit to exploitative life of a piece of creative work falling subsequently into the public domain whilst balancing the public and private domain. In relation to the explosion in the digital market, especially the internet, the law did not provide adequate protection for authors, artist, and the creative sector as a whole. The European Union’s copyright directive of 2001 in particular article 6 [9] led to a formal amendment in the domestic law
The idea of fair use in first generated here, in essence means that certain use of a copyrighted material in certain circumstances does not constitute as infringement [10] and as outlined in PIP law that sufficient acknowledgement is required when using a copyrighted item. [11] So for example if an individual was researching or providing a critique of a particular act and required a copy of their material to formulate thought ,then under the concept of fair use one would be able to copy for personal home use. Such a concept does to an extent relies on the good will of the individual not to make duplicate copies and profit from them, especially as since 1988 the pace that one can access and distribute a piece a music has advanced tenfold, I continue with looking to see if fair use can be more encompassing, in the digital world late on but firstly I feel its important to establish the value chain of the entrepreneur in the digitalised world.
Adding Value
Firstly, the overwhelming problem when applying IP to the digitalised world of music is what exactly is the value in copyright and how can you accurately measure it. Large consultancy companies such as ‘intangible businesses’ [12] seek to unravel the value IP. A key consideration during the process of copyright valuation is to understand the notion of what drives the value of the copyright. For instance, a living musician generally supports their back catalogue of recordings through personal appearances and new releases, buoying their copyright valuation. After their death or after the musician stops recording their copyright value may diminish more rapidly than expected, as the support is no longer there. [13] Today the control of works in tyied up in a ever decreasing number of companies.
80% of the world market in sound recording is controlled by five record companies [14] who also all have extensive publishing arms and who part of large multinational companies. For example, Time Warner also owns AOL [15] So
The traditional model in value attribution and copyright is demonstrated in figure 1 (see appendix). An artist creates a composition and then can strike a deal with a music publisher who effectively purchases a stake and in turn offers various channels of promotion in return or can give 100% rights to the Performing Rights Society (PRS) and ‘go it alone’. As Roger Wallis discusses music, publishers in the past were concerned with “printing and distributing sheet music and sought to persuade artists and record companies to perform and record the songs that they represented.” [16] As sheet music production deteriorated so the economic value that a composer could possibly receive from a collection agency fell too, essentially any particular format is dictated by its social importance at any given time. Therefore, for a popular artist to produce sheet music today is likely to produce only limited revenue, many publishers only seek to produce in order to broadcast the technical value of their work and provide authenticity and technique to the artists’ current catalogue.
In reference to the traditional value chain of IP the use of mechanical rights needs clarifying. If a track is used on a physical product released by the record company then potential returns can be up to 8.5% of the wholesale price of the product, this distribution process is overseen in the UK by MCPS now a part of PRS. Although this initially appears a high rate of return, I would argue that these high figures of return are unattainable for the vast majority of artists and that the whole distribution royalty system is symbolic of a top-heavy pyramid. In 2005 2,700 composers and songwriters earned £328m, this is an average of £121,481 per person. [17] Clearly, a select few artists are obtaining most of the money.
This is very much an area where we have all witnessed a huge loss in potential earnings for the artist at the bottom of the pyramid, because of digitalisation has taken hold copyright value in relation to the tangible product. Been lost and although one can still expect earnings from royalties there very much now limited… Although such amounts from use of an artist property appear drastically diminished with the emergence of new technologies, new collecting societies for the distribution of revenues have emerged an example being iTunes. Any artist regardless of whether they are signed to a publishing deal can expect to receive royalties if their music is downloaded and as ill discuss later I believe The traditional model of value attribution is becoming more fragmented and hard there is a series of new value chains emerging which are replacing the traditional model.
The situation today
Im dealing with small band as the entrepenuer
My first case study focuses on Johnny Tams, guitarist, songwriter and producer with Gold Teeth The band have enjoyed a successful period of late. Their debut single has featured on national radio networks such as Radio 1 and digital networks such as XFM, NME Radio and BBC Radio 6 and subsequently they have been on two nationwide tours. The band have a management deal and as a part of this a percentage of revenue generated from royalties goes to them also worth noting is the band have no record or publishing deal. What I am aiming to establish is whether in the digitalised world copyright has any incentive in the creation of music. Firstly the bands management company, monster music management, do not seek to exploit the bands rights instead they are focused on taking a cut from live performance and online music sales; indeed they actively promote the free download of their songs using websites such as MySpace. Since an incalculable amount of people can get access to the songs the bands reputation could rapidly expand, indeed as the internet is global the band could tap into emergent markets a decade a go that would have been unknown to them. For a young band member like Johnny the internet is an additional market without the constraints of copyright and a way of opting out of the highly exploitative nature of a publishing deal. It provides a new model, a type of counter culture and is an ever increasing trend even amongst established acts. Radiohead for example pioneered this new terrain. The release of 2004’s ‘In Rainbows’ marked the beginning of an internet only “pay what you like” model. Having fulfilled a 6 album contract with EMI which started in 1994, [18] Radiohead no doubt felt the constraints of an old system were affecting their creativity. In the following quote, Thom Yorke, the lead singer of Radiohead points to not only the tired rights model but to an industry on the verge of disaster ;
“I like the people at our record company, but the time is at hand when you have to ask why anyone needs one. And, yes, it probably would give us some perverse pleasure to say ‘Fuck you’ to this decaying business model [19]
With the ‘pay what you want’ release of ‘In Rainbows’, Radiohead received and were in full control of direct rights. They used publishers Warner Chappell as a consultancy to create a new distribution and rights model and begin to reorder the traditional value chain. In a press statement the CEO of Warnel/Chappell says;
“These new ways are iconoclastic in nature; they acknowledge the realities of a digital society and they challenge existing commercial assumptions. It is in this spirit that band and publisher are working together.” [20]
For Radiohead it was perhaps the combination of their leftist persona and of a large number of other situational factors that contributed to the emergence of this particular model. They were well aware of the current situation and that their work is widely circulated using P2P networks. Radiohead cleverly packaged the product by adding an additional experience, in this case a countdown website and a Speight of cryptic emails. In doing this they were able to draw upon the fact that human beings will actually pay for something if they deem it of value, as data gathered by gig wise suggests Radiohead actually recouped on average £4 per download. [21] It is also testament to the inginuentive trailblazing nature of the model that the band was able to generate revenue from a particular moment in the constant changing process that is digitalisation. In suggesting this it’s easy to imagine a small band with out the financial clout really struggling to adopt such an approach.
At the time of release all of the appropriate measures were taken to ensure that traditional collection methods with PRS were in place although the band has their own studio, these proved key to covering distribution cost which the band had funded themselves. The band also generated a significant income from an extensive world tour which since their last tour in 2004 has significantly higher ticket prices. Many theorists have suggested that creating such a model leads to a large amount of ‘positive externalities’ [22] in which revenue can be potentially generated from the free distribution of music. For example the short term sacrifice in costs associated with making an album and releasing it for free may giveaway to unprecedented media exposure and
Tours which venture into new territories. In the digital world many bands rely on these externalities to suvuve.
In recent years major global labels have caught on to the potential revenue in externalalitie such as image rights and many larger acts are viewed as a brand image. This is defensive measure in securing revenue in an age when value once associated with copyright protection of works is no longer present.
It’s now commonplace for record companies to adopt an exploitative approach as a defensive measure in the climate of perceived threat of lost revenue. This happens in both in terms of minor and major artists and has been dubbed the ‘360 deal’ [23] It’s increasingly commonplace for a small aspiring young band to be offered this type of deal. Labels play upon a young artist’s naivety by offering them a large sum of cash up front. In return labels demand a cut of their future earnings as a brand, everything from merchandise to tour revenue. A similar process but with more at stake happens with major recording artists. [24] Subsequently there has been a call for independent legal advice body as a necessary intermediately channel before the signing of contracts.
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Although well established superstar acts such as Radiohead have successfully pioneered a way of generating revenue, cutting out the middle men and protecting their rights, Johnny’s band Gold Teeth may find it considerably more of a challenge in protecting their intellectual property by moving in such channels. Firstly, and most obviously, they simply don’t have the mass audience or level of resource that established bands have. Secondly, copyright today, is viewed by many as actually putting an unnecessary constraint on young artists. Photographic orality [25] an idea developed by Toynbee suggests that putting young artists under the constraints of copyright is actually counterproductive in generating creativity. Artists at the early stage borrow and draw upon other musical influences to establish their particular sound. This well may be true; indeed Gold Teeth as soon as their first and most popular [26] single was recorded and distributed were formally advised by a major label to change a 12 second rhyme section as it sounded too similar to a band they manage the right for. They weren’t purposefully adopting a bands sound more subsconsiously adopting an influence. The problem of unknowingly sampling without adopting due consent may become more prevalent especially if we couple the rigidality of current copyright with the financial situation major labels are in.
Gold Teeth are entrepreneurs of their times, digital in every sense the band have never released anything physical, and they view the internet as a new field of opportunity. Their music is readily available to download for free on MySpace or via ITunes, where an individual track costs 79p. Gold Teeth haven’t received any revenue from Apple instead relying on live gigs and PRS for rights based revenue [27] . Although it prides itself as a digital medium no money has actually filtered back to the smaller artists who make it work.
Sceptism arises with Apple and ITunes as the chief rights holder for music on the internet. Unlike publishing companies Apple has no legacy in music. Its chief goal is in the development of hardware and is clearly driven by the profits associated with this, Acquiring the permission to sell music online is only present to enhance the ITunes experience. Apple also has the ability to manipulate an artist’s work without infringing copyright for example Apple puts emphasis on the download of single songs therefore destroying the feel of an album. It also uses the AAC format to stop the copying and sharing of its files. This file is unique to ITunes and requires an apple product to play it, although this protects against copying it also privatizes the digital economy
If digital transactions are inevitably to become the standard way of operating in music then a new procedure in balancing the rights of the consumer and the artist have to be put in place. Also a level of regulation is required to protect
New distribution models for a digitalised world
At the beginning of the last decade Lawrence Lessig developed the creative commons model. It seeks to weaken copyright for the creative good of the artist, offering alternative ways of licensing. As part of the copy left licensing movement it builds upon the ideas of fair use, first brought into the legal jurisdiction of the UK in the EU directive of 2001. Essentially it allows artists to protect their work in the digital world, with which the required level of copyright protection that they see fit. Some artists may be aware of the inefficiencies of the current laws and do not want an “All Rights Reserved” printed on their works. Some might want a “Some Rights Reserved” or even a “No Rights Reserved” [28] Drawing upon this the model has four choices in licensing their music these are, Attribution, No Derivative Works, Non Commercial and Share Alike. A well informed music entrepreneur, in this case Gold Teeth are aware that potentially file distribution and mass circulation of ones music is not only inevitable has the potential to actually gain more financial success in the long run.
If they chose the No Derivative license they would centrally register their work with creative commons, any sharing or distribution of their work wouldn’t count as infringement as long is it remained true to the original sound. These labels offer clear and consise boundaries in which consumers and bands can operate. The model also offers founders copyright, this relates to the statute of Anne and offers 14 years of rights protection. Upon expiration, another single term of 14 years can be obtained therefore the model that work entering the public domain in a reduced time period gives rise to creative expression and adaptation. Adoption of such ideas would allow artists to be more expressive, sample and operate efficiently because of a more flexible attitude to protecting their property. Finally, given the economics of the digital world and the Attitudes to file sharing small bands should actively adopt digitalisation simply because distribution methods are much more efficient. Radiohead have successfully proved that promoting musical works over the internet is a positive updated method. If more bands follow the growing suit the major inefficiency of the respective deadweight loss through a copyright monopoly would be abolished at least in this end-consumer market and thus the dilemma be ameliorated a lot. [29]
Within the past few years, there has been a huge surge in online music start-up companies. Where as the creative commons approach provides an alternative way in licensing ones music, Sliceofpie.com brings the whole processes of A&R, Marketing and Financing a band onto one centralised domain whilst providing a high level of transparency to proceedings via a social networking platform. It allows a user to invest in a band by buying shares, the band upload tracks to increase popularity and eventually release an album, which is available for investors. Investors can adopt the role of an entrepreneur by watching their investment grow,
The band and investors are therefore entered into a mutual partnership with an investors cut taken from any future externalities. This benefits the artist as it eliminates the exploitation of rights by the publisher, much like the model Radiohead pioneered but also provides finance for the band. The bands the Alps from Greenwich received £21,000 to record their debut album from fans on slice the pie and were the first band to release an album using the process. The Alps own their own record label ‘Elusive Music’, are self-managed and oversee most of their business internally. [30] Speaking with lead singer and songwriter Daniel Hepinstall , its clear that protection of his IP is paramount.
‘In this day and age what can one do? We decided to go all out and step out the box of the old music model and try something new. I have been in bands before where labels and publishers have hounded us for a piece of our rights. This models different, the fans choose, its more fair.’
The ability of a fan base to pave an artist’s career is not necessarily the ideal solution, but instead a mere step in the right direction. Music fans notoriously switch allegiances and loose interest, just ask any reader of trendsetter NME. Secondly, the main problem is that any alternative approach in protecting rights for the artist has to directly compete in an environment dominated by a dying model. As unsustainable as they are, the large fees put upfront and the PR avenues on offer from record labels are still impossible to match by sites such as slicethepie. Many of the acts from slicethepie achieve success but its relatively moderate in comparison to traditional methods, although more acts are give the chance to express their music to a digital audience with protected rights
. It’s important not to over criticise the potential in sites such as slicethepie as they are very much in their infancy. As I mentioned earlier, the industry, technology and legislation function together, If much needed copyright reform eventually occurs, then a new method would be able to capitalise. What is important to remember is that investors with slicethepie are believers in the music, they actively seek success for the bands. With the resulting rise in digitalisation, this notion has all too easily been eroded.
Digital Rights Act, a missed opportunity?
Downloading today and the systemic disregard for copyright law has reached widespread level. A recent Panorama investigation [31] suggests that 61% of 14-21 year olds download music on a regular basis and as a result, £200 million a year in revenue is lost. [32] These figures directly correlate with the financial position we see many of the major labels in today, as a result there has been a huge move to tighten up copyright law even further.. Indeed, in a recent UN report suggests that on a multilateral the problem requires urgent attention, the following quote highlights this.
Naturally, the control of illegal entrepreneurs with factories producing
pirate CDs and recorded cassettes must be a major priority in all countries [33]
Increasing the law past the 1988 and 2001 statutes is something that many industry bodies have been lobbying the government to do. Change in legislation is the only way to recoup lost revenue,
Laura Marling: ‘Illegal downloaders shouldn’t be criminalised’
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