We rather doubt that until there are very
significant changes in the general culture of the US and the
deaths of a number of members of the Supreme Court - or a
constitutional change that allow them to be thrown off it
- there is any way in which the culture of pork, bullying
and bribery can be changed.
That leaves to us only one area to explore - that relating
to the way the business of copyright is organized and regulated
in cases where there is essentially nothing close to a market
with suppliers competing on price amongst other elements of
In that area we do see a potential way forward.
for streamed or broadcast music?
The way forward in our view could be
to take the sensible view that the one-price-fits-all model
is clearly not a true market or business approach - the music
industry certainly does not see it as such as can be seen
when compilations are offered at bargain prices in the same
way that bargain DVD sets of movies are fold - and look at
constructive exploration of the idea not so much of individual
deals but of a multi-tiered charging system.
We also feel that there is no logical reason to exempt terrestrial
analogue broadcasts from charges, one of the few areas where
we agree with the recording companies that the current US
system is aberrant.
This would not prevent individual company to company deals
but it would give much greater flexibility to webcasters or
broadcasters within the discipline of a pricing structure
and produce a much truer market reflection of the value of
the music on offer.
Because the practicalities rule out small
webcasters doing individual deals company by company there
is clearly the need for a body or bodies such as SoundExchange
that does the job of aggregating amounts due from royalties
and organizing their collection.
We add "bodies" because we see no sound market argument
that this task should be performed by one monopoly body and
quite a few that competing bodies operating within the same
legislative framework and required by law to offer all tiers
would in fact provide an incentive for innovation and efficiency
in the performance of these tasks. Because competition would
provide an incentive to keep administration costs down we
think that active consideration should be given to setting
a reasonable base level to ensure that collection bodies are
properly set up and can pay up or pursue those breaking the
rules if random checks show significant problems and then
requiring that the recording industry and groups make the
same prices available to all such bodies, and then allowing
the market to decide though broadcasters and webcasters opting
which body to use.
From the point of view of such a body it is obviously administratively
easier to deal with a single pricing structure but there is
no sound market argument for this and computer technology
has made it very easy to set up - and amend when needed -
the charge for any item or service: Supermarkets do it on
a much larger scale than the music industry every day!
Thus we see every reason for a tiered structure starting with
a nil charge but mandatory credit and promotional requirement
plus a music sale link that would appeal greatly to groups
starting out and then rising in reasonable increments to a
top level for the most popular artists of the moment.
For the benefit of smaller players we think there is a case
for insisting on a reasonable amount of time before a charge
change can be made - the technology would allow the collecting
body if it wanted to change minute by minute but this would
then destroy the whole point of a pricing structure from the
point of view of a small webcaster whose interest is in enthusiasm
for the music rather than making money from it.
We would therefore suggest that the copyright holders and
copyright collection bodies be required to set their rates
twice a year, a month before those prices come into effect.
This leaves plenty of time to advise all concerned of the
details: We would in fact anticipate that any collection body
would be supplying appropriate lists and software to handle
the logging by users of the songs they have aired in a format
that then calculates the charges and provides appropriate
data to be emailed, together with an electronic payment, monthly
to the collecting body, thus ensuring that all parties are
kept up to date and that there is no reasonable way in which
a webcaster or broadcaster can get very far behind on payments.
This should not bee too complex but
should allow for decisions to be taken within a market discipline.
We would suggest that as a starting point there should be
a total of ten tiers above the nil rate we have already suggested:
This would enable the system to start with for example a bottom
rate of USD 0.0003 and a top rate of USD 0.0030 per performance
- 50% higher than the final 2010 rate set by the CRB.
Groups and recording companies would be required to price
all recordings already available within one of these tiers
- not necessarily the same rate - and all new recordings within
the period from a group at a single per track rate. The rates
would then apply for the following six months but notice of
impending changes would be sent out after five months for
the next period.
This in our view would not be that cumbersome - the software
could easily be made to colour code all music - and it would
offer the benefit of allowing those groups that came up with
a "classic" to charge a higher rate but have a lower
one for other or new material according to their judgment
of how this would affect play- and thus any associated promotion
and music sales through a link.
Webcasters would thus have an incentive to look through lists
and cost what they intended to play whilst groups would have
an incentive to consider how to maximize their benefit through
the combination of payments from the combination of royalties,
music sales and also - and potentially -very important for
up and coming groups - through promotion of their concerts.
The big players might also find benefits in considering this
- we are after all talking in the terms of the tens of millions
of dollars from performances for the very top players.
There is also the question of administrative costs and here
we have already said we feel that the amounts SoundExchange
propose to charge are unreasonably high. We suspect that were
there a competitor body that webcasters could use to make
their payments this could easily be brought down to USD 50
a year or even less through an efficient electronic system.
We cannot guarantee how smoothly such a system would work
but we do think it is an approach well worth trying to get
away from the politics of setting rates to a market driven
approach that would ideally allow the market to determine
what gets played and paid for.
Those who overpriced would find they got less play and this
would either show that there was a financial payback from
the promotion given or that the higher rate was justified.
New groups on the other hand would be operating in a situation
where they could opt to maximise promotion in the hopes of
increasing sales and tour income initially with the option
of changing the balance towards royalty income later if they
felt it made sense,.
Either way there would be no need to lobby or persuade legislators
to take action: The "invisible hand of the market"
would provide the relevant feedback and discipline, leaving
it up to the royalty holders how they wished to balance the