Thursday, 10 September 2009

VPL lose key Copyright Tribunal case

In a market where nineteen out of every twenty of your 'sales' are illegal and therefore not paid for, just how important is promotion? Well, according to the Copyright Tribunal, promotion still seems to have its place. CSC Media Group, the company that operates a number of UK TV music channels including Chart Show TV, Flava, The Vault and NME TV, has scored a notable victory at the Copyright Tribunal which will see the broadcaster's royalty obligations to collection society Video Performance Limited (VPL) considerably reduced.

VPL's ongoing deal for the public performance of music videos with CSC is based on the broadcaster paying the collection society a percentage of gross revenue for using promotional videos; the collecting society had been demanding a 20% cut of the revenues, a figure which CSC argued was "unreasonably high" putting forward the argument that their service provides promotional benefits to the record labels who own the material licensed by VPL. After negotiations failed to reach an agreement (with VPL maintaining the 20% share and CSC looking for a royalty of 8%) CSC took the issue to the Tribunal. CSC's legal team argued that the record companies received a promotional benefit from having their videos played on their channels and this benefit had not been taken into consideration by VPL before deciding on the revenue cut which it demanded.

It seems the Tribunal agreed with CSC and it set a royalty rate of 12.5% of gross revenue, more than the broadcaster was hoping to pay, but substantially less than the 20% VPL had been demanding. It is interesting that the Tribunal accepted CSC’s arguments, at least in part, saying that there was “uncontroverted evidence … that promotion remains a significant part” of the role of music videos. The record music industry is seen by many as being in terminal decline and that the very existence of record labels is almost certainly dependent on the industry finding new ways to monetise copyrights – and one clear way to do this is to develop income streams from a broadcast models – which is undermined by the very idea of a huge benefit in ‘promoting’ record sales which no longer exist. The record labels would surely argue that is becoming more and more difficult to accept ‘promotional benefit’ as a reason why broadcasters should get free use of copyrights - this is the same argument which has allowed US FM and AM radio stations to avoid paying for sound recording copyrights and this model is now finally under attack in the USA. Perhaps the principles behind the CSC decision will be ready for the Copyright Tribunal to revisit in the not too distant future.

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