Music 4.5 in New York: “It’s not music’s responsibility to manage the growth of the businesses that exploit it”
Last week, the Recording Industry Association of America reported that retail revenues for music in 2016 were up a whopping 11.4 per cent from the previous year, due primarily to paid-for subscriptions from streaming services.
However, the response was not all champagne and confetti. In a blog post on the RIAA website, CEO Cary Sherman wrote:
“The unfortunate reality is that we have achieved this modest success in spite of our current music licensing and copyright laws, not because of them. That’s not the way it should be. For example, it makes no sense that it takes a thousand on-demand streams of a song for creators to earn $1 on YouTube, while services like Apple and Spotify pay creators $7 or more for those same streams.”
Criticisms such as these now have a new raft of research to back them up. A study published – also last week – by the Phoenix Centre For Advanced Legal And Economic Public Policy Studies revealed that if service providers – in particular YouTube – weren’t able to hide behind the safe harbors provided by the Digital Millennium Copyright Act, revenues could increase by “$650 million to over one billion dollars a year.”
The impact of safe harbors on copyright infringement
“30% of Companies report that they do not proactively search for online infringements of their works,” A2IM CEO Richard Burgess explained at Music 4.5 The Economics of Streaming in New York last week (29 March 2017). “While most labels try to curb known infringement activity, 51.5% said it took more than 24 hours for infringing work to be removed. 13.6% said that infringing work was never removed.
“And then, more than half saw infringing copies of their work reappear on the same service,” he added.
Tiffany Almy, Counsel, of Reed Smith, also speaking at Music 4.5 The Economics of Streaming, agreed that a better system for monitoring copyright infringement is needed. “The existing notice and takedown procedures do not work. We need it make it easier for all parties to do the right thing.”
YouTube’s Content ID – and similar applications across other services – are simply not enough. “Content ID is not rocket science – it’s essentially a matching technology,” Steven Marks, Chief, Digital Business and General Counsel of RIAA told the Music 4.5 audience. “It is not a question of cost to make it work better.”
So, what needs to be in place?
At Music 4.5 The Economics of Streaming– a seminar series in London and New York that explores the intersection between music and technology – the issues and possible solutions were discussed, including more tools and notifications systems for labels, and a change industry-wide change in subscription model.
“Most record labels want the ability to control content – including when, where and how it is used – notice and staydown, and a simplified notification system when copyright material has ben infringed upon,” said Burgess.
He also wanted there to be improved incentives for more uptake of paid-for subscriptions, a “growing the pie” of the revenue pool. Dick Huey of Toolshed proposed “The Subscriber Share Model”, where royalties are based on the plays of each individual subscriber instead of pro-rated across all subscribers, as is currently done by Spotify, AppleMusic, and the like. “The current streaming model incentivizes clicks, not subscriptions,” said Huey. “The solution is a share model.”
Address the value gap to nurture industry growth
Marks stressed that solving the value gap is essential not just to address royalties from DSPs like YouTube, but to nurture growth throughout the industry. As Facebook enters music streaming, it is more essential than ever that the value gap is closed. Will it be a Facebook licensing agreement that leads the industry, or will the industry need to close the value gap before Facebook music streaming explodes? Will the latest round of consultations on DMCA’s decidedly broken legislation deliver needed reforms? And if it doesn’t, and the ‘free market’ for music continues, where will the needed changes come from?
Content is valued in the free market, as economist Barry Massarsky concluded: “It’s not music’s responsibility to manage the growth of the businesses that exploit it.”
Music 4.5 will return to New York in the autumn. Music 4.5 What Is The Value Of Music? will explore the business of ‘music as asset’ and will take place in London on 6 July 2017. View the agenda-in-progress and book your tickets here.