Music Industry Group proposes digital age copyright reforms

August 2006

Internet, record labels, all areas

AIM, the PRS-MCPS Alliance, the Musicians Union, the Music Managers Forum (MMF), British Music Rights and the British Academy of Composers and Songwriters (BACS) have launched a new discussion paper at a July 12 th round table meeting chaired by the Smith Institute. The group, representing 85,000 creative and industry members including artists, musicians, independent record labels, publishers and songwriters, say that they posed the question “is copyright law fit for purpose in the digital age?” and came up with a clear and emphatic “No”. The Group say that the current model for monetising sound recordings works neither for producers of music nor for consumers adding that current DRM systems do not work, that litigation doesn’t work but that a way forward can be found which will benefit both the music industry – which wants the widest possible distribution and enjoyment of its creative products but has every right to be paid fairly for use of its rights; and consumers – who needs to be freed from the threat of criminal prosecution for activity they believe is a proper and legitimate use of technology which they are free to buy legal – a “more enlightened licensing architecture”. With one eye on the UK’s Gowers Review on Intellectual Property, the Group wants to bring Internet Service Providers (ISPs) and Mobile Phone Service Providers (MSPs) into licensing schemes saying that both directly or indirectly benefit from the use of music on their networks – particularly broadband operators. The Group say that presently music creators are not being paid when their music is distributed over unauthorised file sharing networks and at the same time consumers are being sued when they use such networks. Between the two sit digital operators such as ISPs, MSPs and device manufacturers who make MP3 players who profit extensively from the unauthorised distribution of music whilst being protected from legal liability.

The Group are calling for a new Value Recognition Right to be introduced by legislation which would allow the music industry to create a commercial relationship with any company deriving value from either sharing or storing music. AIM had previously suggested Digital PrivateCopying Remuneration right should be introduced into UK law, in conjunction with a system of a digital commercial charge on hardware and blank recording media to deal with private copying and sharing rather than extensive copy-protection systems. The new Right would allow the Group’s members and others to

  • Bring ISPs into the official value chain that links creators and consumers
  • Encourage legal peer-2-peer file swapping legalizing consumers activities
  • Make intermediaries such as unlicensed ISPs the target for copyright enforcement (rather than consumers who are the current targets).

The concept (and perhaps title) of the Value Recognition Right (VRR) will be revised in the next few weeks and sent to the Gowers Review team which is presently independently reviewing intellectual property law in the UK. However it has to be said that as it stands the VRR looks little more than a levy on ISPs, MSPs, device manufacturers and anyone else acting as an intermediary in the distribution of music. Levies, on blank tapes and black CDs for example, whilst broadly accepted in Europe, are not always accepted by consumers. Whilst simple and often effective there is a strong argument that they are basically unfair. There are those in the UK who argue that the BBC’s licence fee is a levy and unfair on those who do not want to use the BBC’s services but still want a TV monitor. The question here is – why should they fund the BBC – a service they do not watch or listen too? But at least the BBC is a public service broadcaster.

In the commercial sphere there is still the fundamental argument that levies are inherently unfair to some (not all) consumers – and those who suffer tend to be the law abiding citizens! Remembering that something like 90% of all music consumed in the UK is from legally purchased CDs and that not everyone has a MP3 player (honestly for those of you under twenty – its true) then the average fortysomething music lover who neither downloads files, peer-2-peer file swaps, rips n burns CDs or bluetooths music into his or her mobile phone but DOES use broadband and does have a mobile phone (for, er, making phone calls) would be supporting the activities of those who do download etc etc. If ISPs like AOL or BT and MSPs like Orange or Vodafone have to pay a VRR they will, undoubtedly, pass this on to ALL consumers unless there is a mechanism in place to quantify who is using what service for what purpose. If this doesn’t happen the legitimate user is subsidising the activities of the illegitimate user which is somewhat hard to accept. The Grouping pointed out that 60% of blank CDS were used for illegal purposes – in many European territories each and every CD would attract a levy to compensate copyright owners. But this means the purchasers of the 40% of CDS used for legitimate private purposes (storing their own data, recording their own music) are subsidising the 60% who rip n burn!

However and hopefully detail on the mechanics of the workings of the system will explain how the right would work in the next few weeks. To be frank, the presentation left more questions unanswered than answered. However one should not forget that the MCPS-PRS Alliance are members of the group and they have spent many years developing systems of sampling and recording use to ensure the fair treatment when charging businesses for music use and fair treatment when distributing revenues to music creators. Perhaps a scheme can be devised that would be acceptable to rights owners, intermediaries and consumers.

It is interesting to note that the group did not dwell on the issue of micropayments. Music Law Updates has suggested in the past could be a viable way artists, music publishers, songwriters and record labels could monetise their copyrights and creative effort. Most mobile phone bills are amazingly detailed – with all calls and texts logged in – and the telecommunications business (of course one of the targets of the Value Recognition Right) have long been able to monetise ‘use’ even down to 1p or even fractional units. And other ways of monetising music were not really mentioned. The ‘commercial radio’ model was briefly covered and it will be interesting to see if other new methods of monetizing copyrights will be covered by the group or brought into an expanded definition of the value recognition rights. That’s said, the new right – if implemented – may go some way to monetising the digital world.

But at least AIM and the others in the new Grouping are making some efforts to address the problems with copyright as traditional economic models for remuneration collide with new technologies collide. It might be a little late – it was as long ago as 2002 that David Bowie pointed out that in the near future music would be like a available like a utility – and turned his mind to touring, live events and unique situations as the main source of his and other musicians financial future – four years ago is a long time in the digital age! But copyright reform is surely overdue although perhaps so too are the mechanisms to reward creative effort. The obvious absence from the Grouping were representatives from the major record labels which is disappointing. In fact as AIM launched their new initiative, the BPI (British Phonographic Institute) which represents the sound recording industry were squaring up with broadband providers Tiscali and Cable & Wireless asking them to close the accounts of 59 suspected prolific file swapping individuals.

If AIM and the other members of the Grouping really want to develop a new model they will need to bring on board the actual creators of music – artists, songwriters, performers – the music business community – the new distributors of music AND consumers. A few basic starting points might pave the way for a “more enlightened licensing structure”

– That music is fundamental to all our lives

– Creators of music deserve to be fairly rewarded for their creative effort

– Consumers must have the right to a fair return for their investment

– It is wrong to punish honest use – copyright laws do need amending here

– Business that use music and profit from this should pay for that use

– Technology will always present new challenges

The Internet Service Providers Association has already rejected the idea (not unsurprisingly!). The ISPs have pointed out that they are unable to monitor all of the data that is being transferred across their channels, but AIM has argued that they are profiting excessively from infringement.
The IPKat weblog comments that “if third parties are to be made to pay what amounts to a licence fee for acts which would otherwise infringe, it does not seem fair that the copyright owners should be rewarded twice by retaining the right to bring infringement actions as well. If the Value Recognition Right is introduced, the IPKat is convinced that ultimately it will be consumers who will pay for it through increased fees for internet access.”

There is strong argument that that a completely new business model is needed for the sound recording and music publishing industries as a whole. Perhaps this new initiative is one step along that way.

By Ben Challis – Editor of Music Law Updates

Association of Independent Music

See also the article by Ben Challis on this site “The Digital DilemmaHow Do We Pay the Piper? – Monetizing Copyrights in the Digital Age” in the Articles section (March 2005 article)

See related discussion “The Great Gig Grab” and the interview at

The Great Gig Grab”

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