1709 Blog: for all the copyright community

Wednesday, 19 November 2014

Do you want to hear about the UK Copyright Tribunal?

If so, then somewhat belatedly, this blog has discovered, thanks to Justin Watts, that the place to be next Monday, 24 November, is at a meeting of the UK chapter of the AIPPI (Association Internationale pour la Protection de la Propriété Intellectuelle), where there will be a presentation from a man who knows - Henry Carr QC.

This is what AIPPI says:

Since its inception in 1988, the primary purpose of the Copyright Tribunal has been the resolution of commercial licensing disputes in relation to the use of copyright material, often dealing with licensing schemes offered by collecting societies. Standing at the interface between collecting societies and copyright users, the Copyright Tribunal is no stranger to controversy. The subject of swingeing criticism in a 2007 IPO Review and accused of having rules and procedures that were “pernickety” and “otiose”, it was challenged to improve. 

Henry Carr QC, elected as a Deputy Chairman of the Tribunal in 2010, will describe the work of the Copyright Tribunal as it has risen to the challenge of improving its procedures and has navigated the growing digital landscape. He will discuss major disputes on which the Tribunal has adjudicated, including BPI v MCPS [Blogger's note - a superb judgement from Robin Jacob QC, as he then was] and Meltwater v NLA.  

Baker & McKenzie LLP has kindly agreed to host this event (100 New Bridge Street, London, EC4V 6JA) and to provide drinks afterwards. 

We are told that attendance is free for UK members of AIPPI and new applicants for membership, and a bargain at only £25 for non-members.  The event qualifies for 1.5 CPD hours, for those who are ken to collect such things.

If you would like to attend this event please register at: https://copyright-tribunal.eventbrite.co.uk

BLACA - a interesting evening trying to find the new public

Last Thursday saw a packed house at the BLACA evening seminar simply titled Linking. The topic was primarily aimed at learning from the differing opinions the speakers had on the decision by the Court of Justice of the European Union in Svennson v. Retriever Sverige AB (C-466/12)(Svensson), a case that addressed the issue of hyperlinking and that ruled that the owner of a website may use hyperlinks to redirect users to copyright protected works which are freely available and accessible on another site, without the permission of the copyright owner. The 1709's first blog on this was in February 2014 here. A trio of professors were on hand to offer their expert opinions, and the panel was ably chaired by a fourth, Professor Paul Torremans from the University of Nottingham. 

First up was Prof. Dr. Jan Rosen, Professor of Private Law at Stockholm University, who explained the facts behind the Svensson case and the ALAI paper that preceded it, including the fact that the original website that featured the copyright protected works in question only made them freely available for three weeks (at www.gp.se) and then the site restricted access. As the case was ultimately settled (with Prof Rosen saying that as far as he was aware the claimants in the case, two journalists, were happy with the end result) we are left with the CJEU exploring a new approach to the exhaustion of rights that which may or may not - be entirely rational. ALAI's  ten-page paper Report and Opinion on the making available and communication to the public in the internet environment – focus on linking techniques on the Internetwas adopted unanimously by ALAI's Executive Committee back on 16th September 2014 concluding that with hyperlinks: (i) The making available right covers links that enable members of the public to access specific protected material; (ii) the making available right does not cover links that merely refer to a source from which a work may subsequently be accessed, and, accordingly, courts should not introduce a general presumption of the rightholder’s consent to further communication to the public of what initially has been posted on the Internet with the rightholder’s consent, since this would amount to introducing an exception or limitation to the right, while general exceptions to the scope of the “making available” right require legislative action not least because the provisions of the 'making available' right and 'communication to the public' found in WCT, the Berne Convention, the 1996 WIPO Copyright Treaty as well existing EU Directives and CJEU decisions. "This finding does not exclude that a court may be inclined to infer such consent to permit the link based on the individual circumstances of a case".

Article 3(1) of of the InfoSoc Directuve of course provides that Member States shall provide authors with the exclusive right "to authorize or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them."

Prof. Dr. Silke von Lewinski, Senior Research Fellow, Max Plank Institute for Innovation and Competition, spoke on CJEU's "new public" approach and one thing that stood out from this talk and indeed from the questions at the end of the seminar from a very distinguished audience (with a glittering array of judiciary, practicioners and academics )was how open this concept could be. Whilst a "new public" could be defined as "an audience not envisaged by the copyright owner when authorising the initial communication to the public" if seems to defy detailed definition. If protected content is 'communicated' by the internet to say a London focussed audience even if for a restricted period of time, or even if for example geo filtered - is that audience then the whole of England and indeed is Europe then the envisaged public so there is no 'new public' left? And what will be the effect of technological restrctions placed on content by rights owners? Does the "new public" approach mean that the only way to protect content is to have technological measures in place to restrict acceess - even where the author has not targeted this new public or indeed wanted their work to be under some form of "compulsory licence" once its made available  - a copncept which eats at the very heart of the notion of 'authorisation'. 

Four other cases were mentioned in the discussions: Case C-306/05 Sociedad General de Autores y Editores de España (SGAE) v Rafael Hoteles SL where Advocate General Eleanor Sharpston held that communication of TV programmes to hotel guests by means of television sets which are fed a signal initially received by the hotel constitutes ‘communication to the public’ within the meaning of Article 3(1), The then ECJ went on to hold that "communication to the public" should be interprested broadly and that on the facts the clientele of a hotel formed a new public. The linked cases of C-403/08 Football Association Premier League Ltd and Others v QC Leisure and Others and C-429/08 Karen Murphy v Media Protection Services Ltd where the CJEU held that copyright owners must authorise any communication to the public and such authorisation was required where a person makes the protected work "accessible to a new public", and then finally the TVCatchup case C‑607/11 ITV v TVCatchup  which found that the InfoSoc Directive provides a high level of protection to authors and that it followed from this broad interpretation that the author's right of communication to the public covers any transmission or retransmission of the work to the public not present at the place where the communication originates by wire or wireless means, including broadcasting.  Authorising the inclusion of protected works in a communication to the public does not exhaust the right to authorize or prohibit other communications of those works to the public as made clear by Article 3(3). 

Finally, and before questions, Prof. Lionel Bently, Herchel Smith Professor of Intellectual Property, University of Cambridge, gave a fascinating insight into the European Copyright Society (reavealing that whilst it was composed of renowned scholars and academics from various countries of Europe, seeking to promote their views of the overall public interest, it was "undemocratic", "self selected" and perhaps more importantly, that not all of its opinions are agreed by all of the members. Thoe that agree sign up. The Opinion of the European Copyright Society (ECS) puts on record its views on the questions before the CJEU in Svensson, "which relate to the hugely important question of liability of those who create hyperlinks to material on the Web without the permission of the copyright holder in that material." The Opinion argues that "hyperlinking in general should be regarded as an activity that is not covered by the right to communicate the work to the public embodied in Article 3(1) of Directive 2001/29. The Opinion offers three reasons for this conclusion: firstly, that hyperlinks are not 'communications' because establishing a hyperlink does not amount to 'transmission' of a work, and such transmission is a pre-requisite for 'communication'; secondly because the rights of the copyright owner apply only to communication to the public 'of the work', and whatever a hyperlink provides, it is not 'of a work'; and thirdly because, even were a hyperlink to be regarded as a communication of a work, it is not to a 'new public.' This does not mean that creating hyperlinks in no circumstances involves liability. In fact, as is clear from national case-law, different forms of hyperlinking may indeed give rise to the following forms of liability, such as accessory liability (particularly in respect of knowingly facilitating the making of illegal copies); for unfair competition; and for infringement of moral rights; and possibly for circumvention of technological measures. Only the last of these has been the subject of harmonization at a European level, and thus falls within the competence of the Court of Justice.". Professor Bently made it clear he and perhaps other members of the ECS who has signed the opinion had thought some more on the topic and that the ECS is not saying that hyperlinking means you can "get your music for free" or that "anti circumvention of protection technology is OK". 

It would have been interesting to have heard the panellists views on the recenty decision by the CJEU in BestWater International GmbH v. Michael Mebes and Stefan Potsch (C-348/13) where the Court held that that framing content - here  copyright protected videos - is not a copyright infringement, even if the framing occurred without the permission of the copyright owner because it is not a “communication to the public” within the meaning of Article 3(1) of the Copyright Directive (2001/29/EC)

But time was against us, and whilst this is not a criticism of the seminar or indeed the speakers, to this blogger the matter at hand felt unresolved. Unsurprising perhaps where there seemed to be a general acceptance that Svensson has left us with 'a bit of a mess', that the 'new public' is an as yet to be properly defined concept - and what constitutes legitimate and illegitimate hyperlinking is still not crystal clear. Whilst initially many thought Svensson was 'opening up' the internet, there is now a fear that worried content owners might begin to place more technological barriers to access - paywalls, log ins etc - to avoid the possibility that content had already been made freely available to the public at large.

Previous thoughts on the 1709 blog http://the1709blog.blogspot.co.uk/2014/02/hyperlinks-making-available-and-new.html

Tuesday, 18 November 2014

Still thinking of Deckmyn, parodies and EU copyright? You are not alone!

The original work ...
On 3 September 2014 the Grand Chamber of the Court of Justice of the European Union (‘CJEU’) issued its decision in Deckmyn [here, here, here]

As 1709 Blog readers will remember, this was a reference for a preliminary ruling from the Brussels court of appeal, seeking clarification as to the notion of parody under Article 5(3)(k) of the InfoSoc Directive

This provision allows Member States to introduce into their own copyright laws an exception or limitation to the rights of reproduction, communication and making available to the public, and/or distribution, for the purpose of caricature, parody or pastiche. It does so without providing a definition of these concepts.

Having clarified that ‘parody’ is an autonomous concept of EU law, in its ruling the CJEU held that this must be understood according to its usual meaning in everyday language. A parody has just two essential characteristics: first, to evoke an existing work while being noticeably different from it and, secondly, constitute an expression of humour or mockery. 

... and its alleged parody
The CJEU also stated that the person who owns the copyright to a work has a legitimate interest in ensuring that this is not associated with the message conveyed by its parody if it is discriminatory/racist.

I was very much intrigued by Deckmyn, as it also seems to me that this decision is not limited to parody, but is indeed topical to EU debate on copyright exceptions and limitations in Article 5 of the InfoSoc Directive, as well discourse around activism – rather than mere activity – of the CJEU in this area of the law.

Similarly to what has happened in relation to other aspects of copyright, eg the originality requirement and the notion of work – also in this case the Court might have pursued some sort of de facto harmonization, notably with regard to moral rights.

So, I decided to write an article on this (entitled Just a matter of laugh? Why the CJEU decision in Deckmyn is broader than parody), which has now been accepted for publication in the Common Market Law Review.

My contribution is divided into two parts. The first part explains the background to this reference, and summarizes the Opinion of Advocate General Cruz Villalón on 22 May 2014 [hereand the subsequent findings of the CJEU. The second part discusses specific aspects of the Opinion and the ruling. First, the practical implications of the decision are reviewed. Secondly, the systematic impact of the Deckmyn case is addressed, including the actual harmonizing force of Article 5 of the InfoSoc Directive, as well as whether this ruling has introduced trade marks concepts into EU copyright (notably tarnishment), or even harmonized moral rights.

If you are interested in these issues, you can find my article on SSRN here.

The CopyKat - snippets of copy writes from around the globe

Russia’s State Duma, the parliament’s lower house, has approved a package of amendments to the anti-piracy law, which will cover video, books, music and software, but not photos.  Tass reports that rights’ owners can now demand suspension of Internet sources, which violate authors’ rights, for a period of court proceedings. Two couyrt defeats will lead to an closure of the offending website and the court will decide on a permanent blocking of a Web site. Among the amendments there is an initiative under which a Web site owner must delete during 24 hours any content, rather than limit access to it, upon an electronic request from a rights’ owner. “Our fundamental aim was to protect rights’ owners from professional pirates without creating serious problems for Web’s users, who may not be familiar with details of the law on authors’ rights and are authorized to use the whole content that is available,” Duma deputy speaker Sergey Zheleznyak said in his Facebook account.

The Turtles - happy again?
The Turtles, the 1960s pop band,  have  won a second victory against SiriusXM Holdings Inc. U.S. District Judge Colleen McMahon in Manhattan rejected Sirius' request to dismiss the lawsuit accusing the satellite radio company of playing pre-1972 songs from the band, best known for the hit "Happy Together" without permission or paying royalties. She said that unless Sirius raises any factual issues requiring a trial by December 5th, she will rule outright for the plaintiff, Flo & Eddie Inc, a company controlled by founding Turtles members Howard Kaylan and Mark Volman, and begin to assess damages. The Judge said "Of course, the conspicuous lack of any jurisprudential history confirms that not paying royalties for public performances of sound recordings was an accepted fact of life in the broadcasting industry for the last century. So does certain testimony cited by Sirius from record industry executives, artists and others, who argued vociferously before Congress that it was unfair for them to operate in an environment in which they were paid nothing when their sound recordings were publicly performed.... That they were paid no royalties was a matter of statutory exemption under federal law; that they demanded no royalties under the common law when their product as ineligible for federal copyright protection is, in many ways, inexplicable.  But acquiescence by participants in the recording industry in a status quo where recording artists and producers were not paid royalties while songwriters were does not show that they lacked an enforceable right under the common law - only that they failed to act on it  and Modern federal law supports the notion that an express carve-out is required in order to circumscribe the bundle of rights appurtenant to copyright.  More here and here. Digital Music News opines that based on Judge McMahon's comments  " Although the defendant in the case is a digital service, the ruling would appear to apply to any radio station, nightclub, or any other venue that plays recorded music in New York". So, traditionally free from paying royaties for recorded music in the USA  - is broadcast radio next???

Oracle's 2007 case against SAP, alleging that the latter’s Texas-based subsidiary TomorrowNow had illegally downloaded millions of copyrighted documents and programs from its customer connection website has finally bee settled. In 2010, a jury awarded Oracle $1.3 billion in damages based on the value of a hypothetical license that SAP should have negotiated for using Oracle’s copyrighted software. In response SAP filed a suit claiming that the amount should not be based on hypothetical licenses but on facts. In 2011, U.S. District Judge Phyllis Hamilton rejected the previous claim and settled the amount at $272 million.
Oracle then appealed to the 9th Circuit Court of Appeals to revert the amount to the original $1.3 billion. The court considered Oracle’s appeal and agreed that the second amount was too low. However, earlier this year, Oracle was ordered to either accept $356.7 million or file for another claim and Oracle has now settled the case for $359 million ($356.7 million plus $2.5 million in interest). 

The Federal High Court in Lagos has thrown out a case brought before it by the Musical Copyright Society of Nigeria (MCSN) seeking to restrain the Copyright Society of Nigeria, Coson, from declaring that it is Nigeria’s sole collective management organization for musical works and sound recordings. Justice O.E. Abang ruled against the MCSN In its battle for legitimacy against Coson and the Nigerian Copyright Commission (NCC). In the suit, MCSN had asked the court to declare that Coson fraudulently misrepresented particulars of its membership to the NCC, which particulars the NCC relied upon to grant approval to Coson. MCSN asked the court to revoke the approval and to declare that the approval of Coson as a sole collective management organization deprived MCSN, its members, assignors and affiliates of their fundamental and constitutional rights to freedom of association, freedom to own and enjoy property in copyright and access to justice and as such is unconstitutional, null and void.   Suit No. FHC/L/CS/377/2013. More on the Premium Times here.

The Brisbane Times reports that websites that host or link to copyright infringing movies and TV shows could soon be blocked if the Australian cabinet approves a government submission to tackle online copyright infringement. It seems Attorney-General George Brandis and Communications Minister Malcolm Turnbull are canvassing a range of options put forward in response to their online copyright infringement discussion paper released in late July and intend to present cabinet with their own submission before Christmas. The ministers will likely recommend government put a requirement on internet service providers to forward letters about alleged copyright infringement from movie and TV studios to their customers. It's also likely they will recommend making it possible for rights holders to seek an injunction in court to require multiple internet providers block websites hosting infringing content.

In New Zealand MegaUpload founder Kim Dotcom is facing a number of new temporary conditions to his bail over allegatiuons of multile breaches of previous conditions an an assessment that he may be a 'flight risk' Dotcom's full extradition hearing to the US on criminal copyright charges has been long long delayed - it's nearly three years since his controversial file-transfer business was shut down by the US authorities - and this will be subject to further delays after Dotcom's US lawyer confirmed that he and co-defendat Finn Batato had lost their legal team with New Zealand law firm Simpson Grierson and barrister Paul Davison QC withdrawing from the case. The new restrictions on Dotcom imposed by Judge Nevin Dawson in the Auckland District Court bans Dotcom from travelling more than 80km from his home, and from using helicopters or boats and he must hreport to police on a daily basis. Reports say that prosecutors have  called for Dotcom to be jailed again pending extradition, a proposal that will be considered by a judge next week.

And finally from China comes news that the Government is planning to create 3 Special IP Courts in Guangzhou, Beijing and Shanghai, where, according to a new update on the IPKat, the majority of Chinese IP cases are filed.  This is ostensibly to handle the growing backlog of cases in these jurisdictions and to address the special technical requirements and intricacies of IP cases. The new IP courts would be trial as well as appeal courts and it seems the Beijing IP court may focus more on administrative cases, while the other twocourts would  focus predominantly on civil infringement cases

Sunday, 16 November 2014

From Hypatia to Hugo -- plus lots more!

"Copyright in 2014: The Year in Review & Evening Lecture: Professor Jane Ginsburg" is the somewhat complex title of an event taking place this coming Thursday, 20 November, in the Metcalfe Auditorium, New South Wales State Library, courtesy of the University of Technology, Sydney's UTS: Law and the Communications Law Centre. This blogger, who is sitting in Sydney this very minute as he composes this post, is inwardly lamenting the fact that. by the time this attractive and challenging event takes place, he will be in transit, leaving the bright and sunny Australian summer for the damp, dark winter of North Western Europe.

The event is in two parts: Copyright in 2014: the Year in Review" is a three-part drama starring Vanessa Hutley (General Manager, Music Rights Australia), Joel Smith (a partner in Herbert Smith Freehills) and Nic Suzor (Transformation Fellow/Senior Lecturer, Queensland University of Technology). Then, following the interval, the curtain rises on "From Hypatia to Victor Hugo to Larry & Sergey: “All the world’s knowledge” and Universal Authors’ Rights
", starring Professor Jane C. Ginsburg (who truly needs no introduction).

If you're thinking of attending, the details are here.

Hypatia here
Victor Hugo here
and if you didn't know who Jane is, here she is!

Saturday, 15 November 2014

The CopyKat may not be able to look at the Queen - but the Kat can look at royalties

So - streaming is the future of the music industry is it? Well, hot on the heels of Apple's itune's announcing a 14% drop in revenues from global download sales in the first half of 2014 and the continuing and decade long year on year decline in CD sales - it may well be. A recent survey [1] said that Dutch music fans spend just half of what they spent in 2003 on recorded music - but they spend more than twice as much on live music as on recorded music. That sai, the study by streaming service Spotify this year said that in 2013 and for the first time in 13 years there was a slight increase in revenues from recorded music, and figures from the record label's trade body the IFPI supported this position with 39% of global recorded music revenues now from digital channels and 7% from performance rijghts. So - things are on the up - yes? Well  maybe - but, and its a big but - who gets what from the share of the streaming pie is big news indeed at the moment with artists, composers, record labels, music publishers, collection societies and the operators and investors for both subscription and so called freemium (ad funded) platforms all looking for their share of that pie. So, with that in mind, this weekend the CopyKat is all about royalties and who gets what -with a selection of recent posts from around the globe.

Irving Azoff
First off - the big stars flex their muscles. Some 20,000 works composed by popular musicians including The Eagles, Pharrell Williams, Boston, Foreigner, John Lennon, Smokey Robinson, Chris Cornell, and George and Ira Gershwin could soon be removed from YouTube - just as the Google streaming giant launches it's YouTube Music Key, it's much-anticipated music subscription service that will compete with Spotify and Pandora. Why? Well band manager, ex Live Nation chief and now boss of  Global Music Rights (GMR) Irving Azoff (right) has told The Hollywood Reporter that he is prepared to take 42 of his clients away from YouTube. Azoff had already fired a shot accross the bows of the two big US music collection societies BMI and ASCAP saying "The way fans listen to music is evolving daily" adding "GMR is going to give songwriters and publishers an opportunity to engage in meaningful licensing for their intellectual property. The trampling of writers' rights in the digital marketplace without any regard to their contribution to the creative process will no longer be tolerated."

Azoff's announcement followed hot on the heels of the news that Taylor Swift and her record label Big Machine had  pulled her entire catalogue from 'freemium' streaming services - most noticably Spotify and Deezer. Swift's view seems to be this: why let eager fans have something for nothing - when they would happily buy her album in physical form or as a download? And indeed in the first week of Swift's Spotify free album release her album 1989 sold 1.287 million copies in the US, debuting at No 1 in the Billboard 200 albums chart.  "If this fan went and purchased the record, CD, iTunes, wherever, and then their friends go, 'Why did you pay for it? It's free on Spotify', we're being completely disrespectful to that superfan who wants to invest", said Big Machine's Scott Borchetta.

Indeed the the recorded music industry may be gearing up to cut down on free music. The Wall Street Journal reported that many of Universal Music’s current licensing deals with streaming partners are expiring at the end of this year, and UMG boss Lucian Grainge recently said “ad-funded is not a sustainable business model”. The WSJ says Universal "planned to experiment with price and membership terms, possibly offering subscribers everything from interaction with artists to access to live events" with Grainge saying "But the third phase" is “going to be accelerating paid subscription and experimentation ....  with an enormous, high-margin, regular, recurring prize at the end of it.” Is that right? Ek thinks freemiu drives subscription and - no freemium - do the piracy rates start to soar again?

Next the British Academy of Songwriters, Composers and Authors has extended the debate by pointing to the relative inequality in payments from streaming made to songwriters when comparied to recording artists and labels. Gary Osborne, who chairs BASCA's Ivor Novello Awards, said this of streaming royalties: "No matter how bad it is for the [recording] artists it's a whole lot worse for the writers! People don't understand the difference between the writer and the act, but artists receive a far higher income from streaming than the people who write the songs. This is because deals were done first with the record labels that represent the artists, after which a few scraps seem to have been tossed to the songwriters and their publishers as an afterthought". BASCA Chairman Simon Darlow added: "The Fair Trade Music study just published by North American and Canadian composer organisations reveals that the label/ publisher split is, on average, around 95/5 in the label's favour - this cannot be justified". And BASCA's CEO Vick Bain added "BASCA totally supports the principle that authors should have control over the distribution of their music. The rates received by composers from the streaming services - especially YouTube - are so dismal that very few of the people who create the incredible songs that drive and support the music industry can make a decent living in the digital environment".

Foo Fighters
Ex Nirvana drummer and Foo Fighter's front man Dave Grohl added to the debate - sort of: when asked about streaming royaties and Swift's decision to pull her music - saying ""Me personally? I don't fucking care" adding "That's just me, because I'm playing two nights at Wembley next summer" and "I want people to hear our music, I don't care if you pay $1 or fucking $20 for it, just listen to the fucking song" and underpinned his economic model by saying "You want people to f**king listen to your music? Give them your music. And then go play a show. They like hearing your music? They'll go see a show. To me it's that simple, and I think it used to work that way" although he did temper his critique of Swift's stance by adding "But I can 
understand how other people would object to that".

And High Flying Birds and ex Oasis man Noel Gallagher managed to somehow get coffee into the royalties debate telling Noisey "It infuriates me that people are more willing to sit in a coffee shop and spend a tenner on two coffees, talking about the weather with their friends, and that coffee will last 45 minutes, yet they will physically get angry at you for asking them to buy an album for a tenner that will last a lifetime and might tell you about yourself and might even change your life. It's a strange moment we're in where people are willing to spend money on shit".

Back to the big debate: Spotify's Daniel Ek responded to Taylor Swift and other critics in a lengthy blog post reigniting the debate prompted by Swift pulling her recorded music catalogue from free (freemium) streaming services. Ek begins by saying "Taylor Swift is absolutely right" (referring to remarks the singer made in a Wall Street Journal  and Yahoo interview) adding "Music is art, art has real value, and artists deserve to be paid for it. We started Spotify because we love music and piracy was killing it. So all the talk swirling around lately about how Spotify is making money on the backs of artists upsets me big time". Ek then detailed how the Spotify payment model works and revealed that Spotify has now paid out $2 billion to the music industry since launching in 2008, $1 billion of that in the last year and that Spotify now has 50 million active users, 12.5 million of whom are paying subscribers - an increase of ten million and 2.5 million respectively since the last lot of official figures released back in May of this year. However Ek somewhat failed to address why a relatively small share of these streaming royalties are shared out to recording artists once the money has left Spotify's bank account, not least as the labels who seem to be keeping the lions share of streaming revenues are key partners in his business, both as content providers and shareholders. Ek added "The music industry is changing - and we're proud of our part in that change - but lots of problems that have plagued the industry since its inception continue to exist" ading "As I said, we've already paid more than $2 billion in royalties to the music industry and if that money is not flowing to the creative community in a timely and transparent way, that's a big problem. We will do anything we can to work with the industry to increase transparency, improve speed of payments, and give artists the opportunity to promote themselves and connect with fans - that's our responsibility as a leader in this industry; and it's the right thing to do". In December 2013, the company launched a new website, "Spotify for Artists", that revealed its business model and revenue data. Spotify pays “rights holders” royalties for all the music streamed on the application. The company pays 70% of their total revenue and retains 30%

Ek also points out that, while consumers can access music at this level for free, the artist does still earn a royalty from each play their music receives a stream and compared that  to terrestrial US radio station where labels and recording artists earn nothing for a play (although songwriter earns a royalty from American radio.). In other countries such as the UK both PPL (for labels and recording artists) and PRS (music publishers and songwriters) collect from radio stations. Undeterred Ek continues  "Here's the overwhelming, undeniable, inescapable bottom line: the vast majority of music listening is unpaid", noting that Spotify's main competitors are radio, YouTube and piracy. "If we want to drive people to pay for music, we have to compete with free to get their attention in the first place". Spotify's free tier is vital to driving people to pay, he continues, saying: "More than 80% of our subscribers started as free users. If you take away only one thing, it should be this: No free, no paid, no $2 billion" - not least with a 14% global decline in download sales so far in 2014." Spotify as has many paying subscribers as the other main streaming services pu together - Deezer has 5 million, Rhapsody/Napster 2 million and no figures published for Rdio or Beats in the US.

Thom Yorke 
According to a recent study by UK communications regulator Ofcom, the number of illegally downloaded tracks fell by around a third last year, dropping from 301 million in March 2012 to just 199 million in March 2013. This was attributed in part to the growth of legal music streaming services. But these streaming services have come under fire in recent months for paying relatively low royalty rates, compared to the royalties that musicians receive from traditional CD sales and legal downloads. In July 2013, Over a year before Swift's move, Radiohead and Atoms for Peace frontman Thom Yorke withdrew his independent work from Spotify, later describing the music streaming service as “the last desperate fart of a dying corpse”. In September 2011, US independent label Projekt Records entered a public disagreement with Spotify, stating "In the world I want to live in, I envision artists fairly compensated for their creations, because we (the audience) believe in the value of what artists create. The artist's passion, dedication and expression is respected and rewarded. Spotify is NOT a service that does this. Projekt will not be part of this unprincipled concept. In May 2012, British Theatre vocalist and Biffy Clyro touring guitarist Mike Vennart noted, "I'd sooner people stole my work than stream it from [Spotify]. They pay the artists virtually nothing. Literally pennies per month. Yet they make a killing. They've forced the sales way down in certain territories, which wouldn't be so bad if the bands actually got paid." Yorke's colleague, Radiohead producer Nigel Godrich, noting that both Universal and Sony were shareholders in Spotify, added "The big labels did secret deals with Spotify and the like in return for favourable royalty rates.The massive amount of catalogue being streamed guarantees that they get the big massive slice of the pie (that $500 million) and the smaller producers and labels get pittance for their comparitavely few streams. Back in 2009 Spotify's shareholders included Sony BMG 5,8%, Universal Music 4.8%, Warner Music 3,8%, EMI (now Universal) 1.9% and indie label body Merlin had 1%. With estimates of Spotify's value anything between $1 and $3 billion - that's a nice profit!

And finally the UK's Music Managers Forum followed this by issuing a statement saying that the organisation is a "big supporter of streaming services", and suggesting Taylor Swift and her label  are taking a short-sightedness for pulling her content from Spotify, although the MMF also hit out ar Non Disclosure Agreements that hide the deals between streaming services and the major labels. "Few markets are perfect and yes the 'low rate issue' has conflicted many, but above all, streaming services are a fabulous tool that connects artists and creators with fans", the statement reads. "No longer restricted by physical barriers, streaming gives a voice to those that want to be heard and a platform from which to build multi-revenue businesses that cross borders. There are no guarantees of success but the opportunity is there for all that want to give it a shot".  Finally, the statement concludes: "Non Disclosure Agreements hide how the major music corporations license streaming services and we have grave concerns that the deals contain stipulations that both significantly reduce the amount artists ultimately get attributed and damage the growth of the streaming economy. The real fight is more likely between opacity and transparency, and we call on all major music corporations to take note and react in the best interest of their artists and shareholders". Legendary record label boss Morris Levy reportedly more than told a leading recording artist "You say you want royalties. Then you should try Buckingham Palace" [2]. I don't hear many artists laughing. U2 frontman Bono told the Web Summit conference “The real enemy is not between digital downloads or streaming. The real enemy, the real fight, is between opacity and transparency. The music business has historically involved itself in quite considerable deceit,” [3]

There will be more to come as the jousting continues. Spotify is yet to make a profit as a global business: in 2011, when the music service made its US debut after years of popularity in Europe, Spotify brought in about $252 million in revenues, according to the New York Times. In 2012, revenues jumped to $576.5 million but losses  had grown from $60 million in 2011 to $77 million in 2012, largely due to increased licensing fees. And those licensing fees from Spotify drove a large part of the 75% jump Universal Music Group achieved in 2013 in subscription and streaming revenues to $618 million. Globally Spotify now has 50 million plus users, and Spotify’s UK business was profitable for the first time in 2013, Spotify Ltd’s revenues rose 41.8% from £92.6m in 2012 to £131.4m in 2013, helping the company’s UK arm to move from an £11m net loss in 2012 to a £2.6m net profit in 2013. “This growth can be attributed to a 42% year on year growth in UK subscriptions and also to an increase in advertising revenue,” a Spotify spokesperson told the Guardian. In 2013, Spotify Ltd’s cost of sales – which includes royalties paid to music labels and publishers – were £96.2m, accounting for 73.2% of its revenues. And that's just the UK - the service operates in North and South America, mainland Europe and Australasia - so we are looking at A LOT of money from a global streaming market from just this one player - explaining that $1 billion figure Ek had trumpeted. 

But who gets what from this growing pot has yet to be decided: there are numerous ongoing lawsuits between artist's and their record labels about their respective share of the digital pie - some settled, some not; clearly songwriters feel that recording artist and record labels are getting an unhealthy share of revenues; The collection societies face the threat of being pushed out by direct deals between the major labels and music publishers and services such as Pandora and Spotify - and squeezed by new entrants such as GMR; small labels and independent artists feels they are disadvataged because of the shareholdings held by the major labels in Spotify and 'secret deals' between streaming service and the labels; are the likes Spotify keeping too much of the pie anhyway? And what happens to the revenues from shareholdings in Spotify if it lists on a stock market? Questions, questions, questions! As streaming rapdidly moves into the audio-visual media with services such as Netflix and NOWTV rapidly gathering subscribers and new competition from both Google and Amazon - there will be more quesxtions, debate, arguements and no doubt failures and it will be fascinating to see how this all develops - until the next 'big' technology takes over!

[1] IQ Magazine Issue 56 Nov 2014 based on data from BUMA/NVPI/GfK Netherlands/Mojo Concerts 

[2] The Life and Crimes of the Music Biz  by Simon Napier-Bell Observer Music Magazine, January 2008

[3] http://www.theguardian.com/music/2014/nov/15/taylor-swift-music-spotify

Pie chart image by Jan Burch https://www.flickr.com/photos/53149458@N08/14124697651/

More on Spotify here http://en.wikipedia.org/wiki/Spotify

Friday, 14 November 2014

Performances protected by copyright ? Google gets a new hearing

Google Inc. will head back to federal appeals court over the somewhat  controversial decision that forced the Internet giant to take down an anti-Muslim video earlier this year. The 9th U.S. Circuit Court of Appeals has confirmed that it will rehear the case that sided with an actress featured in an inflammatory movie posted on YouTube called “Innocence of Muslims.” In February, the court’s 2-1 decision  (with the original and amended rulings by Judge Alex Kozinski for the majority) said Cindy Lee Garcia had never consented to being in the movie and her performance could be protected by copyright law.  The court will rehear the case en banc, though the current injunction against Google does remain in place.

Thursday, 13 November 2014

Copyright: the Commission prepares for action

Yesterday, the Digital Single Market team of the shiny new European Commission held their first high level meeting.

The Vice-President of the Commission and leader of this particular initiative Sam the Eagle Andrus Ansip has shown us all how modern he is and blogged about the meeting

He had something to say about copyright, which is repeated here in full.  He identified as one of the six priority areas of work for his team: "removing restrictions (and preventing new ones) and particularly to stop blocking of online consumers based on their location or residence. This will be about reforming copyright rules and getting rid of unjustified curbs on transfer and access to digital assets. Is there anyone who would not want to get rid of geo-blocking, which goes against the core principles of Europe's single market?"

The answer to his question is a resounding yes.  To pick just one example, there are plenty of broadcasters, especially in smaller EU countries like Estonia, from which the Commissioner hails, who would like to buy the local rights to say, an English TV series, in order to air them with Estonian sub-titles, but could not possibly afford to buy those rights absent geo-blocking, because the price would have to reflect the fact that anyone who wanted to watch the programme anywhere in Europe would be free to do so, largely untroubled by the presence of the subtitles.  Accordingly, no geo-blocking would mean depriving those consumers entirely of the ability to see those programmes in their local language.  And what of the BBC licence payer, who would probably, on the whole, rather not end up funding the ability for those elsewhere in the EU who don't pay the licence fee to watch programming on the iPlayer?

That's not to say that geo-blocking is always done for good reasons, but hopefully, Veep Ansip's understanding of the economics of the copyright industries will become more sophisticated as he learns his way around the brief.