Toward Global Rights

Originially published in the Dec-2011 issue of The Music Business Journal – Berklee College of Music

by Peter Alhadeff, Zosia Boczanowski, Luiz Augusto Buff, and Aaron Gottlieb

Music is a complex commodity bundled with many rights. As intellectual property, it requires licenses to transact legally. But in today’s marketplace, clearances from owners or intermediaries can be difficult to track both nationally and internationally. Often, many parties are involved before permission can be granted for a single trade. In effect, it may be more practical to license a collection of songs rather than a single song, biasing usage against the non-commercial and cultural repertoire of lesser known artists and works. As a result, the diffusion of musical production and the livelihood of music creators, two tenets of international copyright law, are coming under threat.

The problem for buyers and sellers of music has been compounded since the new millennium. Music is bought and sold in TVs, computers, smart phones, and satellite radio. There are more playback devices and distribution channels, so the number of transactions is growing exponentially. More trade, however, does not mean a higher returned value because the typical tradable item before the millennium was the album, and it returned ten times the worth that a single song does presently.  Musical purchases today, in short, are dominated by myriad low- priced transactions.

The perception is that the rights’ shell of music is now hindering business more than ever, not just by adding friction in the music exchange but also by preventing trade. As the fortunes of the global recorded music market have declined catastrophically since the new millennium, with the business only grossing half the value that it did back then, a new sense of urgency is being felt both by music stakeholders and governments.

Regarding stakeholders: When music users are not getting access to creative content because of the logistical difficulties that music intermediaries, including online music distributors, have clearing music rights, the market takes a hit.  As for governments: The State tends to become involved where copyright industries are deemed significant and/or music is thought of as a cultural good worth protecting. Another issue here is the migration of music into the ‘public domain’. The transition can never be seamless unless there is clarity and tractability about ownership rights. The end of the commercial exploitation of a musical piece, of course, is never really accepted gladly by the interested party.

A New Series

The Music Business Journal will start its first ever article series on a multinational effort to build a better infrastructure to trade music.  The object is to draw attention regularly in future issues to a new momentum behind international song registries and one-stop initiatives for global rights’ clearances. As we write, a new architecture for the music trade is being attempted under existing intellectual property laws. (Because of this, the Journal will concentrate its efforts on the creation of such registries and continue to cover general legal developments elsewhere in the publication.)

We will look at all the parties involved, the agreements and compromises that will be necessary to carry these novel ideas to fruition, and the implications of these registries for the future of music. It took many years to get nation states to agree to submit their economic data to the League of Nations, and for the latter to begin compiling national income statistics. Similarly, sellers and owners of music copyrights, as well as public libraries and other publicly owned music repositories, have to come to the negotiating table willingly. The drama is likely to last.

Yet the development of mechanisms for better rights’ documentation, data-collection, and rights’ clearances is arguably as urgent today as when the onslaught of online music challenged the recorded industry after 2001.  Inaction, of course, has a steep price in an economy in crisis, and global efforts to build song registries have derived impetus from the Great Recession. Naturally, the music market has a better chance to discover new trades and reduce transaction costs if it centralizes and lays bare its arcane permit strictures.

IMR, GDR, and CISAC

The Journal has picked up increased coverage on the subject, and done its part1.

The United Nations’ World Intellectual Property Organization (WIPO) is presently focusing on developing an international intellectual property system and has made the case for an International Music Registry (IMR) in the past year. Specialists, academics, and stakeholders have been convened for special forums, for instance at the World Copyright Summit in Brussels in June, throughout October and November in Geneva, and at a Harvard-Berklee Rethink Music workshop in Boston in November.

Earlier, in 2008, the European Competition Commissioner of the EU established a working group which included representatives from Amazon, Universal Music, EMI, iTunes, Nokia, and three collection societies: PRS (United Kingdom), SACEM (France), and STIM (Sweden). The aim was to develop a Global Repertoire Database (GRD) that would stand as the reliable central database for multi-territorial licensing2.

Both groups are of course weary of competing with each other. WIPO has made it clear that IMR and GRD should cooperate to make the most efficient international licensing database possible, while, early in 2011, at a joint IMR-GRD meeting, the GRD Chair noted that the GRD could connect to the system that IMR developed3.

At the same time, the International Confederation of Societies of Authors and Composers (CISAC), an umbrella organization for mostly, but not exclusively, performing rights’ societies, joined the GRD in March 2011. CISAC developed the International Standard Musical Work Code (‘ISWC’), which identifies musical works from information procured by the rights-holders4.  Its expertise in copyright data management is thus political as well as technical.

Our Coverage

Clearly, the trade of music is recognizing that it can benefit from a new and more federated approach. For more in-depth coverage, the MBJ intends to publish, in the months ahead, individual pieces on (i) the potential for a synergy between IMR and GRD, (ii) the technological solutions being discussed, (iii) possible funding mechanisms for a global register or registries, (iv) the politics of stakeholders and the role of government, (v) the management and control of global song databases, and (vi) the unavoidable legal challenges of antitrust concerns, formalities, orphan works, and conflicting claims.

In our next issue, we will be reporting from MIDEM, at Cannes, France.  There, late in January, IMR and GRD representatives will engage in a debate with participants from around the globe. The expectation is that they will release their own independent study shortly after.

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See Luiz Augusto Buff, “WIPO Tallies Song Credits Worldwide”, The Music Business Journal, Oct. 2011, 10; and, same author, “The G8 and Copyright”, MBJ, Aug. 2011, 4 (also at http://www.thembj.org).

Berkman Center for Internet & Society, Rethinking Music: The Challenges of Creating and Maintaining a Music Rights Registry, Working Draft, Nov. 2011, 3.

Ibid., 4.

Ibid., 5.

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by Peter Alhadeff, Zosia Boczanowski, Luiz Augusto Buff, and Aaron Gottlieb

WIPO Tallies Song Credits Worldwide

Originally published in the Oct-11 issue of The Music Business Journal – Berklee College of Music

Considering the vast array of music services that were launched this year, including Amazon Cloud Drive, Spotify, and Google Music, it seems a new order for the consumption of music is taking shape. Indeed, legislation is being reformulated to facilitate new forms of music consumption, with consumers substituting piracy practices and moving to legal services. However, the existing music rights management architecture is being challenged. The difficulty is to know exactly who all the copyright owners of a song really are–and where they can be located. Transactions for the appropriate licenses cannot happen without this knowledge.
For each song recorded there are two copyrights involved: one for the composition itself (©) and one for the sound recording (℗). The first one is owned and controlled by different songwriters and publishers, while the other is usually owned by record labels and performing artists. When each of those rights are owned by a significant large group of people, someone needs to locate all of them in order to obtain licenses that need to be negotiated on a case-by-case basis. Additionally, many popular artists are now emerging outside traditional corporate structures, and not having them in the current databases of copyright ownership impedes the legal consumption of music. Two recent examples are Choruss and SoundExchange. Choruss, an experiment meant to allow college students across the country to download an unlimited amount of music in exchange for a small fee built into the their tuition, was not able to gain traction because of the difficulty in finding out exactly who it had to compensate. SoundExchange, a Performance Rights Organization created to collect royalties from digital music services, has had millions of dollars stuck in its accounts for some time now because it simply cannot find the appropriate right owner.
Jim Griffin, founder of Choruss, is a former label executive that now is channeling his efforts to tackle this situation. As he recently pointed to Billboard, “[the] big problem we ended up facing…is that we couldn’t find at least half the rights holders.” He advised that an extensive global registry of copyright owners be created to facilitate the licensing process across borders.
Such an ambitious plan started to be brainstormed at the end of 2010 and took form as the International Music Registry (IMR), currently functioning under the auspices of World Intellectual Property Organization (WIPO), an agency of the UN. In order to be viable, the organization needed representation of all the stakeholders involved in the process of licensing. Indeed, its first Consultative Committee included Jim Griffin and brought together a wide variety of players in the music industry. In its initial planning stage, the IMR will be an internationally transparent global registry of all rights and right holders sharing all the necessary information needed to ease the process of multi-territorial licenses. “This”, it said “will preserve the public good [character of music] both [for] culture and commerce.”
The system is designed to be an inclusive platform, creating a single point of access for multiple databases already in existence around the globe, tying the information together and diminishing overlapping efforts and conflicting information. In fact, critics of IMR argue that there are a number of similar initiatives trying to achieve the same goal, such as the Global Repertoire Database being developed in Europe.
However, WIPO has advantages over other entities in creating and maintaining a successful global registry. Being an agency of the United Nations ensure worldwide involvement in the project. Furthermore, the agency already developed and runs established global registries in other intellectual property fields such as patents and trademarks. WIPO generates most of their income through the operation of these systems, but also counts on contributions from member states. Due to its public character, the agency is free of antitrust regulations and can focus on developing such a system without being concerned on an immediate return on investment – which would usually hinder the major music companies.
The IMR wishes for a comprehensive geographical representation in order to facilitate a truly global dialogue. The idea is to not only focus on the most powerful countries, but to enforce the inclusion of the BRICS (Brazil, Russia, Indonesia, China, South Africa) and other fast developing regions. Brazil for instance was one of the few music markets that showed growth last year, despite the fact that it lacks download stores such as iTunes and streaming services. The structure and organization that IMR will provide will be essential to the development of new services in these countries, shifting the audience to legal services and therefore reenergizing the music market globally. (Still, how fees will be collected, be it by individual entry or by subscription, is yet unclear.)
Overall, the development of this comprehensive database is a long process that depends significantly on compromise. Skeptics will be afraid of losing control over their information, fearing that data that was private may go public. A good balance has to be found between what data will remain confidential, and thus not hurt licensors and licensees, and what data can be made readily available to promote what really is an ailing music trade. It is not an entirely new problem for the business. Record industry organizations, like the RIAA in the US, have long tallied rival company recorded music sales promising confidentiality to the individual labels. Back in the day, trust was good for business. The hope is that the same will happen with the International Music Registry.
By Luiz Augusto Buff