Copyright has always lagged behind technology. Now that streaming is the dominant force in recorded music and UGC is becoming an ever greater source of income it’s time that the business of rights collection and allocation catches up with the tech. Whether the existing Collective Management Organisations (CMOs) are in a position to play catch up is what I’ll explore here.
Let’s break down some of the basics here first. What is copyright? what does it do? where does it exist? and who owns it?
The basics
A copyright is an intellectual property right, an economic right and it exists to generate money from ‘intangibles’. A copyright in music protects the expression of an original musical work. This can relate to a sound recording, use of music in films or broadcast TV, airplay on radio, but also an individual performance. The copyright needs to be written down or at least permanently fixed in some way.
Copyright exists everywhere, but each country has its own rules. This means that if you were to give a history of copyright lecture it would be different in each country across the globe. That said, there are some international conventions that aim to harmonise the various national laws.
Within music we always deal with multiple rights including:
- the musical composition
- the sound recording
- individual performances
- audiovisual, or sync
The rights that are protected are:
- mechanical: the right to copy and make copies
- distribution: the right to publicly perform or broadcast
- sync: the right to fix a musical work to visual content
These rights are owned by:
- the author or their publisher and/or collecting society own the musical composition
- the label and/or collecting society own the sound recording
- the musician and/or the label or a collecting society own the performers’ right
What to know about those collecting societies? [Songtrust, as always, has a great background article on the differences between various collecting societies]
- non-profit organisations that exist in each country
- mandated to grant collective licenses
- different societies for compositions, sound recordings and performers’ rights
- lots of reciprocal agreements creating an international network
- effectively, they’re monopolies and as such regulated by governments
- they must be fair and non-discriminatory
Into the 21st Century
We all know the painful transition of the height of the CD era in 1999 to the lows of the digital, Napster-dominated early 2000s. With the shift from physical to digital the industry, and especially the labels, had to reinvent itself as a licensing business. New digital rights were called into life:
- streams
- downloads
- linear
- on-demand
A key question here revolves around how well-suited the CMOs are to collect and manage these digital rights. Are companies built around analogue licensing models fit to collect and manage digital rights? Or, to put it differently, if there’s effective monopolies what’s the incentive to innovate?
Embrace the tech
Europe is an example of how difficult the current structures around copyright and collectives are. The EU adopted a new collective management rights directive in 2014 which aims to ‘improve the online licensing of music across the EU.’ This directive became enforceable only in 2016 and member states started implementing it around 2018/19. While this has taken some time, one of the effects of the directive is the option to establish an independent management entity (IME).
These new companies are now starting to make their mark. One example is Jamendo, which started out as a catalogue of royalty-free musical works. They’ve expanded into rights management with a view to provide greater transparancy and better allocation of revenues. Those two elements are key to how newly established IMEs can kickstart change in the management of copyrights.
To understand how this works, we can look at Unison, another IME. They use a broad range of technologies to create greater transparancy and better efficiency. One of the ways they are doing this is by utilizing blockchain technology. Not immediately the kind associated with crypto-currencies, but the Dot Blockchain Media initiative. All of this with an eye to correctly identify rights holders and pay them their royalties. What this technology does is that ‘it offers precise information for achieving increased efficiency in order to overcome the problem of unidentified “black box royalties”.’
The Black Box
The black box is a concept that means that unallocated money paid to CMOs ends up a in a big pool for distribution to, usually, the bigger fish in a specific CMO’s pond. In order to break this black box, Unison not only uses blockchain technology, but also works together with BMAT, a company that allows them to listen to TV, radio, etc. to analyse which music is being played where and when. Unison told MUSIC x that the goal is to end up with no unassigned royalties, no more black box.
Into the future
The IME seems to be pointing the way forward for managing and collecting musical copyrights. They can do this by being more transparant, more efficient, and embracing technology to make that happen. Moreover, they operate independently of both the rightsholders and the users avoiding any conflict of interest. In the future, then, we’ll see more players like Unison come into this market. We’ll have to pay attention to the ownership structures around any new initiatives. Moreover, opportunities bring with them friction and this will continue to play out in defining common methods of usages (is a stream a sale or a broadcast?) and the legal fights between new and traditional players (e.g. Unison v. SGAE in Spain).