[A2k] Inside Views: A New Business Model For The Music Industry Explained

[Juliette Ancelle]

Inside Views: A New Business Model For The Music Industry Explained


http://ip-watch.org/weblog/index.php?p=3D1124


By Bennett Lincoff

The music industry has been in a decade-long death-spiral. This predicament=
 results primarily from insistence by those who benefited most from how the=
 industry operated before the internet arose that the established relations=
hips upon which their past successes were based be preserved as the digital=
 music marketplace develops.

The major record labels have set the industry=92s internet agenda overall. =
They are single-mindedly committed to making the internet safe for sale of =
recordings on terms and conditions that they alone decide. They risked ever=
ything on the false hope that through a combination of DRM [digital rights =
management] and the force of law they could contain unauthorised internet d=
istribution of recordings.

Simply put, the internet is fundamentally incompatible with the music indus=
try=92s sales-based revenue model. Every internet user, whether or not invo=
lved in P2P or social networking, and every webcaster, podcaster, or other =
audio service provider in the world is a potential source of unauthorised m=
ass distribution of recorded music in pristine and unprotected form. Throug=
h the internet, the market for sale of individual recordings can be saturat=
ed in a moment=92s time and without payment of any royalties. The actual am=
ount at risk may be greater for larger rights holders; but all rights holde=
rs, large and small, are impacted to the extent they derive revenue from sa=
les of recordings.

The industry=92s efforts to salvage its sales-based revenue model have comp=
elled it to resist consumer demand for full, unfettered, DRM-free access to=
 music; blocked consumer electronics makers and technology firms from offer=
ing new products with next generation capabilities; limited the growth of w=
ebcasting and other digital audio services; chilled free speech and interfe=
red with academic freedom on university campuses; caused distortions in the=
 music licensing marketplace; relegated consumers to black-market services =
where adware, spyware, and privacy violations abound; and exposed consumers=
 to ruinous infringement liability damages for conduct occurring in the pri=
vacy of their homes.

And for it all, the industry=92s efforts have resulted in fewer licensed tr=
ansmissions of fewer works and slowed the growth of royalties that songwrit=
ers, music publishers, recording artists and record labels otherwise may ha=
ve earned.

In my view, public policy should strongly support the right and opportunity=
 of rights holders to derive ample financial rewards from their contributio=
ns to culture and commerce. By the same token, however, the music industry =
should not have the right to demand that public policy support its desire t=
o do business in a particular way.

An alternative to the sales-based revenue model is needed for digital trans=
missions of sound recordings and the musical works they embody. I recently =
proposed such an alternative in an article entitled Common Sense, Accommoda=
tion and Sound Policy for the Digital Music Marketplace, published by the J=
ournal of International Media and Entertainment Law. A summary of that prop=
osal follows here:

I suggest that lawmakers aggregate the rights of songwriters, music publish=
ers, recording artists and record labels in their respective musical works =
and sound recordings and create a single right for digital transmissions of=
 recorded music. The digital transmission right would replace the parties=
=92 now-existing reproduction, public performance and distribution rights (=
and, where applicable, the communication and making available rights) for p=
urposes of digital transmissions.

Going forward, the determinative consideration will be whether transmission=
s of recorded music have occurred, not whether transmissions result in sale=
s, promote sales, or may cause sales to be lost. Licences will be made avai=
lable without regard to whether recordings are streamed, downloaded, or tra=
nsmitted by some means not yet devised; whether programming is interactive =
or non-interactive, or contains this, that or another recording; or whether=
 the service that provides the transmission accepts user-generated content =
or operates as a P2P network. The number of copies made in the course of tr=
ansmissions (including server copies, and ephemeral, transitory and buffer =
copies), the type of transmission technology used, and the file format in w=
hich recordings are transmitted will not be of concern.

Ownership of the digital transmission right in each recording will be held =
jointly by the songwriter(s), music publisher(s), recording artist(s) and r=
ecord label who contribute to it. Each party will be a co-owner of the righ=
t in the recording in question. Moreover, regardless of the nature of their=
 relationships to each other under pre-existing agreements, or to particula=
r recordings under current law, under the digital transmission right each r=
ights holder will have independent and sufficient authority to grant non-ex=
clusive licences on any terms to which they and their licensees agree. The =
only limitation on this authority will be the obligation to account to co-o=
wners for royalties earned.

Rights holders of individual recordings may make whatever arrangements they=
 wish among themselves for division of royalties. However, when voluntary a=
greement is not possible, I suggest that the interests of the songwriter(s)=
, music publisher(s), recording artist(s) and record label should each be a=
llocated 25 percent of royalties earned from licensed transmissions of thei=
r recordings.

The digital transmission right would only be enforceable against those who =
provide digital transmissions, retransmissions or further transmissions of =
recorded music.

Accordingly, consumers would not incur any liability to rights holders for =
accessing streams, downloading music, or making copies of recordings for pe=
rsonal use. Similarly, software distributors, technology firms, consumer el=
ectronics makers, and telecommunications and internet service providers, as=
 such, would have no liability.

On the other hand, audio service providers will need licences if they opera=
te websites or other services that provide digital transmissions, retransmi=
ssions or further transmissions of recorded music.

Some sites enable users to upload recorded music, as well as to access stre=
ams and download music. Uploading constitutes a digital transmission of the=
 recording involved; and consumers who initiate uploads will need authorisa=
tion under the digital transmission right. Service providers who enable use=
r-uploading would be jointly liable with their users for that conduct. For =
these services, a single =93through-to-the-user=94 licence held by the serv=
ice provider would authorise both user-uploading to the service as well as =
streaming and downloading from the service; and would eliminate the need fo=
r individual users who wish to upload music to obtain licences in their own=
 right.

A similar analysis applies to P2P.

P2P participants who only download music will not need licences. Those who =
facilitate transmissions by sharing recordings with others will need author=
isation.

Operators of centralised P2P networks would be jointly liable with their us=
ers who share music. These operators would also be liable for further trans=
missions or retransmissions through their servers of transmissions of recor=
dings initiated by their users. A through-to-the-user licence would authori=
se all transmissions of licensed recordings through an operator=92s central=
ised network; and individual users would be free to share those recordings =
through that network without the need to obtain licences themselves.

Decentralised P2P networks do not operate centralised servers through which=
 file-sharing transmissions pass. Moreover, software for these networks tha=
t already has been downloaded is likely beyond the control of the distribut=
ors who released it. Under the digital transmission right, distributors who=
 do not exercise control over the decentralised networks that their softwar=
e spawns would not incur liability for use of that software by file-sharers=
. Because of this, however, there would be no single entity through whom to=
 issue a network-wide through-to-the-user licence. Accordingly, each partic=
ipant in such a decentralised network would be responsible for securing aut=
horisation for their own conduct.

On the other hand, licences would be available to software distributors for=
 decentralised networks who configure future releases of their software to =
allow for filtering to prohibit the sharing of certain recordings (which, a=
s discussed in my article, will likely only rarely be necessary under the d=
igital transmission right), and to monitor which recordings have been share=
d so that rights holders can receive royalties. A through-to-the-user licen=
ce held by the software distributor would authorise the activities of netwo=
rk participants who use the enhanced software.

It stands to reason that the vast majority of those who are interested in P=
2P will seek out centralised and decentralised networks that secure licence=
s authorising their activities; especially if the sharing that is permitted=
 offers consumers what they really want from P2P. More generally, if the mu=
sic industry makes licences available on reasonable terms, the vast majorit=
y of those whose conduct will require authorisation =96 audio service provi=
ders of all stripes and, where applicable, individuals alike =96 will pay t=
he licence fees that are due. No doubt, no matter what is done, a =93Darkne=
t=94 will continue to operate. However, unlike the market for sale of recor=
dings, for all intents and purposes, the digital transmission right is impe=
rvious to copyright infringement.

The digital transmission right would be implemented through a combination o=
f voluntary collective rights management and licence agreements directly ne=
gotiated by individual rights holders and audio service providers. In my vi=
ew, the ideal marketplace would contain at least one collective in each ter=
ritory whose catalogue encompassed all or nearly all recordings and which w=
as authorised to grant worldwide rights at its local rates for all digital =
transmissions of recorded music that originate in its territory.

Accordingly, in the article, I elaborate on the advantages of voluntary col=
lective rights management; offer suggestions regarding governance, transpar=
ency, accountability and regulation of collectives; discuss the relationshi=
p of collectives to their rights holder members; the relationship to each o=
ther of collectives in different territories; the basis upon which collecti=
ves might licence digital transmissions, including transmissions that origi=
nate in one territory and end in another; the role of licensing by individu=
al rights holders in the context of collective management; the conduct of m=
usic use monitoring to support royalty distribution; and the allocation and=
 payment of royalties, including those for transborder transmissions.

Licence fees under the digital transmission right would reflect the benefit=
 realised by service providers from their transmissions of recorded music. =
In the article I suggest a structure for calculating this benefit in variou=
s circumstances including for those site operators who charge users to rece=
ive transmissions; those who transmit recordings in connection with adverti=
sing; those who transmit recordings in connection with the sale of goods or=
 services other than access to music; and those who do not charge for trans=
missions, carry ads, or sell goods or services. I also suggest licence fee =
structures for P2P and social networks and for those instances when individ=
ual internet users must pay licence fees.

Finally, I suggest that a levy be imposed on consumer electronics and techn=
ology products to help sustain the music industry financially during its tr=
ansition. The levy would be adjusted downward in response to increases in l=
icence fee collections under the digital transmission right and would be su=
bject to sunset not more than four years from implementation. After that, t=
he music industry would be expected to thrive in the digital music marketpl=
ace without subsidies.

* * * * *
Implementation of the digital transmission right would not depend on access=
 restrictions or anti-copying measures for its success. Its monetization wo=
uld not involve the imposition of a statutory licence or an internet access=
 tax. And it would not require the enlistment of internet service providers=
 or colleges and universities as enforcers on behalf of music industry righ=
ts holders.

Nevertheless, the digital transmission right would allow transmissions of r=
ecorded music to be made available through the largest number and widest ar=
ray of licensed sources, anytime, anywhere, to anyone with network access. =
Such a result would provide music industry rights holders with their best o=
pportunity to do as well financially, if not better than they have done und=
er the system that my proposal would replace. In addition, the digital tran=
smission right would promote technological innovation, enhance the free mar=
ket for consumer electronics and technology products, and facilitate the un=
restricted growth of all manner of licensed digital audio services (includi=
ng streaming and download services, and P2P and social networks). And, perh=
aps most importantly, it would meet consumer demand for full, unfettered, D=
RM-free, and lawful access to music when, where and how consumers want.

The digital transmission right is the means by which to bring about change =
that meets the needs of all the many competing stakeholders in the digital =
music marketplace.


Bennett Lincoff is an intellectual property law attorney, consultant and wr=
iter with more than twenty-five years experience. He has been involved sinc=
e 1994 in the worldwide effort to create new legal structures and business =
models for the use and protection of copyrighted content in the digital ele=
ctronic environment. The purpose of his work has been to assist creators, r=
ights owners, intermediaries and end users to maximize their benefit from i=
ntellectual property.

Bennett Lincoff may be reached at bennettlincoff@gmail.com.




_________________________________________________________________
Je parie que vous donneriez cher pour =EAtre ici? Cliquez pour savoir o=F9=
=85
http://search.live.com/images/results.aspx?q=3Dtropical&mkt=3Dfr-ch&scope=
=3D&FORM=3DMGDGTL