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Wednesday, 22 February 2012

Knocking heads together: Creators and Consumers workshop on copyright, licensing and protection

Yesterday I attended a day-long workshop on copyright, licensing and content protection.

Some heavyweight individuals in the intellectual property arena took part (see the published line-up, pdf). Justice Richard Arnold, now famous in the digital community for his Newzbin ruling, chaired a session on enforcement; professor Lionel Bently of the University Cambridge Faculty of Law gave a keynote speech and Richard Hooper, leading a government feasibility study into a digital copyright exchange lead a group discussion.

The major difference between this and other workshops I've sat through recently was the inclusion of creators - as in the people who actually write words, play music or take photographs - and the absence, either through quirk or design, of the normal group of lobbyists who claim to represent these people.

This is an important distinction, as groups like the BPI and the Publisher's Association typically represent the corporate entities exploiting copyright for commercial gain and tend to have a disproportionate voice in the discussion.

The event was a chance to cut through the lobby-gloss and hear a wider range of voices, many simply representing their own views.

Blame it on the internet

Yet the revised mix of participants at the workshop didn't significantly alter the tone of much of the debate; there was still a lot of distrust of all that is digital: the internet in general, Silicon Valley and UK tech start-ups all came under fire for making often unrealistic demands, "wanting it all and wanting it now" and, in the process, disrespecting the rights of individual authors and creators who want control over their own work, distribution and pricing, etc.

The internet industry was heavily under-represented but the workshop gave me an important chance to respond to demands e.g. for a levy on digital storage media. What proportion of digital storage in commercial use is storing infringing content, and why should e.g. a firm selling cloud-based accountancy software pay a levy on all their storage?

Consumers who buy from legitimate sources end up paying twice: a levy on the iPod and again for each track from iTunes.

A levy on ISPs might make more sense, but this path is beset by moral hazard. A sizeable levy of say £5 per month may leave consumers wondering why they should ever pay for a single track of music. Consumers may mistakenly believe the levy represents a license to file share. ISPs may question the legality of web blocking injunctions such as the Newzbin ruling if there is a compensation scheme in place.

A reward scheme heavily based on collective remuneration might skew the entire market, encouraging volume of output, not quality.

Fair distribution of the money collected will be difficult in the absence of accurate information on what is being shared, and accurate monitoring is most likely disproportionately intrusive under Article 8 of the European Convention on Human Rights.

And on that note, what is the point in trying to regulate private copying when enforcement is clearly impractical. Yes I infringed copyright by putting my father's CD on my own mp3 player, but how can this be enforced without extensive surveillance to monitor our use of media in our homes?

Putting creators in control

Trying to understand the concerns of both sides I heard how technology companies often overlook the necessary complexity in licensing in an industry that has learned to deal with reward and remuneration in its own way over many years.

Recording a music track didn't just involve a group of musicians as the public sees it. A singer or pop group is just the public face. Behind the featured artists are numerous session musicians, or non-featured artists. Plus of course the producer, song writer and lyricist.

Copyright licensing is an intricate system of reward for all those involved in creative production.

Whilst a person in full time employment finds it hard to understand why those involved should receive annual remuneration for something they did 30 years ago, those very musicians find a life of wage slavery an equally odd concept.

Surely their remuneration model is better than being forced to sit behind a desk for 8 hours a day, helping a corporation get rich off the back of your creative input, never to receive future recompense for a moment of creative genius which directly helps to make a company very rich?

Copyright gives artists independence in funding, linked directly to the sale of each copyrighted product (collective schemes aside).  This I'm told is something the technology industry should try to understand and respect when they're facing licensing hurdles.

In fact one attendee suggested the entire technology industry should move to the copyright model, with each coder retaining individual rights in their contribution and receiving royalties over their lifetime.

Software engineers should move to the creative model, rather than trying to commoditise the creative industries.

That said there's clearly some serious down-sides to copyright, and in particular copyright maximalism (trying to ensure every minute contribution is licensed).

Creative freedom can be stifled by the administrative burden of clearing each and every contribution (a creative equivalent of the knowledge economy paradox).

Copyright can act as a veto by a rival who doesn't want you in particular to re-use their work.

And of course there's the sum of the parts problem - when the market value of the new creative work is way less than the cost of licensing each individual part.  A particular problem with some music styles heavily based on sampling.

The three-legged stool: creators, publishers and consumers

As pointed out early (the event was held under the Chatham House Rule so I can't identify the speaker) we must be clear on the distinction between those who create (artists, authors etc) and those who exploit for commercial gain (publishers, as well as internet intermediaries such as iTunes, Amazon etc) as their mutual aims are sometimes aligned and sometimes opposed.

For example, it is in the publisher's interest to reduce the cost of content creation; to exploit the creator at a minimum price to maximise profit.  Clearly in this respect the aims of each party are in opposition.

But there is symbiosis, as publishers play an important role - with or without the internet. Reducing infringement, marketing creative works and ensuring consumers pay a fair price for content. In this regard, the aims of publisher and creator are aligned.

But not always, as even in this respect issues such as copyright term extension can divide the creative community.  Term extension can represent a windfall for publishers, having originally signed deals based on a 50-year protection term they suddenly find themselves presiding over 20 extra years of income.

Recent EU law extending recorded music terms to 70 years (2011/77/EU, pdf) makes some effort to provide a level of redress to performers.

Non-featured performers can claim from a fund of 20% of revenue generated in each year of the extension period, and featured performers are to be paid without deductions or repayment of any advance.  The Directive also provides limited rights of reversion.

On term extension, the speaker took us back through history to the copyright battles of the 18th and 19th century. Copyright extension created a rift between writers and publishers.

Writers like Wordsworth saw benefit in a perpetual copyright as an author's right; an analogue of the writer's "freehold" over his work (ref, p 128).

In effect, Wordsworth rejected the link between literary work and commodity, a position at odds with publishers, who were concerned mainly with recouping the cost of setting up a printing press to publish a book.  The primary concern of a publisher signing a book deal today, as it was 180 years ago, is making a return on their investment in the near term: 5-10 years, 20 at a stretch.

Wordsworth argued the work of a great writer would be valuable in perpetuity, whilst the concept of a fixed-term copyright, the extension of which was under debate in Parliament at the time, promoted the publication of books but not necessarily "good books", books intended for future generations.

Blame it on anything but the internet: price

A very useful discussion took part amongst creators themselves.  Drops in revenue and fees available for licensed content such as photographs, music and journalism do not necessarily represent a failure in copyright, they could simply be a feature of the market.

Simple market economics - oversupply - not piracy - is responsible for some of the tales of woe from the audience.  Yes, your photograph could have earned £1000 from a newspaper ten years ago when it is only worth £100 today, but this comes at a time when some press outlets are actively turning to amateur and citizen journalists.

In some respects The Internet *is* to blame. It has allowed anyone to become both a creator and a publisher.

The net effect of increased availability of photographs, more writers and more musicians in the absence of an increase in demand is a reduction in the fees available for these professional creators.

Note I said "in the absence of an increase in demand".  We heard how bloggers, small businesses and schools actively want to license content for online use - podcasts and videos being two common examples - but are being priced out of the market.

Affordable and understandable pricing for small volume licensees could represent an opportunity, not a threat; and perhaps help redress the supply/demand equation.

Creators are quick to point out fees are a commercial decision for the rights-holder alone. I'm free to take it or leave it.

Absolutely, but my gripe isn't about the fact I can't have what I want for my blog. I'm highlighting a common folly of many licensors: to price themselves out of emerging markets then complain that the new market is untameable and represents nothing but a threat to their existing business.

Complexity and scale - a Digital Copyright Exchange

Many sensible contributors highlight the lack of a digital market or appropriate payment tools.

Some suggest a micro-payment service allowing down-loaders to be charged 1p per listen would be welcome.  But not only would internet users have to be persuaded to adopt, the matter is in the hands of the banks and payment service providers, even if consumers were happy to participate.

But micro-payments alone wouldn't fix the licensing conundrum - how to extract fair remuneration from small scale and non-commercial online use without suffering some of the perils of mass collective licensing.

Today the system is complex and disproportionately expensive for many small volume uses of content.

For example, PRS, the Performing Rights Society, charges a minimum of £200 per year to license music in podcasts, or 8% of revenue, whichever is greater.  For websites it costs 3-times the average total annual cost of hosting a website on a custom domain to include a 2-minute music track on that website.

What is reasonable to a specialist digital publisher might be steep for a small business embarking on an occasional podcast, and off the scale for a school or enthusiastic amateur.

Cost aside - because that is, after all, a commercial decision by rights holders - music licensing is complex.

A PRS license is not the only permission a podcaster using commercial music needs. According to a guide on out-law.com, an additional license is required to cover the mechanical copyright royalty, and this has to be done for each track by negotiating directly with each record company concerned.

Enter the Digital Copyright Exchange, the concept of a market place to facilitate licensing directly between rights holders and potential licensees.

For such an exchange to benefit the online industries above all it must bring simplicity.  It must offer a clear price for any given copyrighted work and that price must cover the entirety of licensing. It must cover the mechanical recording rights; songwriter, producer and performers' rights.

The rest is then down to the creators to set an appropriate price for the target market they're aiming at.  I have no issue with producers pricing themselves out of the market if a market exists for other producers to step in and service the demand.

Of course not every digital business would benefit.  For example, online streaming services may still opt for the kind of bulk licensing deals struck today.

The Digital Copyright Exchange (or exchanges, as I see no reason why there can't be many) should be seen primarily as a tool to open up new markets rather than simplify existing markets, although the latter will probably result from the former.


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