article
Striking the right note
22 June 2009
The European Parliament recently voted in favour of an extension to
the copyright term for sound recordings, taking the European
Commission’s proposed change significantly closer to becoming law.
However despite the compromise of a 70 year rather than a 95 year
term, there remains considerable opposition to the extension from
both academics and musicians themselves. Why?
At first glance one would think that an extension would benefit
performers, and indeed the proposal has been supported by such
powerful voices as Sir Cliff Richard, Sir Paul McCartney, U2, and
Roger Daltrey. However, a closer look at the debate reveals that
many musicians in fact oppose the amendment, including the Featured
Artists Coalition (amongst whose illustrious members are Robbie
Williams, Radiohead, Annie Lennox, Kate Nash and Sandie Shaw) and
Dave Rowntree from Blur. So, is an extension really to performers’
advantage?
The present position
The Copyright, Designs and Patents Act 1988 provides for sound
recordings to be protected by copyright for 50 years from the first
publication of the recording. This preserves the duration set out
previously in the Copyright Act 1956, but limits copyright in
unreleased recordings to a maximum of 50 years from the end of the
calendar year in which they were made.
Proposed extension
On 16 July 2008, the European Commission adopted a proposal to
extend the term of copyright protection for sound recordings from
50 to 95 years, for recordings whose initial term of protection has
not expired at the time the proposed provision would come into
force.
Following publication of the proposal, there has been
significant public debate and lobbying on both sides, resulting in
the delay of an initial vote on the issue by the European
Parliament. On 23 April, MEPs voted by 377 votes to 178 to adopt
the proposed legislation; however, not without a resolution
amending the proposal to a 70-year term of protection.
The next stage in the lengthy European legislative process
involves discussion by the Council of Ministers, whose approval is
required if the measure is to become law.
Premise for change
The Commission’s Impact Assessment, which informed the proposal,
looked at the economic, social and cultural impacts of various
options. It began with the premise that there was a problem with
the present term of protection: essentially, that maintaining the
present term would mean that thousands of performers would lose the
income they receive in respect of their recordings, and that record
companies’ revenues would decrease due to large scale internet
piracy.
However, less than two years previously, on 6 December 2006, the
Gowers Review of Intellectual Property for the UK had concluded
that the arguments proposed in favour of term extension were
unsupported by evidence and that an extension could in fact have
negative effects.
Performers: income gap?
One issue on which all parties agree is that performers should
receive fair remuneration for their work.
The Commission’s proposal claims that most European performers
face an ‘income gap’ at the end of their lives, and that many
lesser known performers’ income therefore decreases ‘when they are
at the most vulnerable period of their lives’. Feargal Sharkey,
once lead singer of the Undertones and now chief executive of
British Music Rights, also welcomed the proposal on behalf of the
“'invisible' members of our industry - the musicians, engineers and
session players whose names are hidden away in the liner notes and
credits." But is any of this true?
Firstly, copyright in sound recordings belongs to the ‘author’
of the recording – the producer, which for the vast majority of
recordings is the record company. Although the ‘producer’ could in
some cases include musicians, engineers and session players, in
general sound recording rights are not a ‘performer’s right’. The
benefits that performers gain are usually indirect, through
contractual relationships with the record labels and, more
recently, through equitable remuneration or ‘airplay royalties’
payable when their recordings are played in public and through
‘private copying’ levies imposed by many countries in Europe
(though not the UK or Ireland).
Secondly, is there actually an income gap? As stated in the
Proposal, “Only famous performers, so-called featured artists that
have signed a royalty-bearing contract with a major record label,
are able to make a living from their profession”; “most need other
jobs to supplement their incomes” and “between 77 and 89.5% of all
income distributed to performers goes to the top 20% of
performers”. Also, evidence shows that the majority of the income –
at least 60% - generated by sound recordings is produced in the
first 10 years of release. Combining these facts, the logical
conclusion is that the majority of the ‘lesser known performers’,
who tend to receive only a small income even in the most profitable
years of the recording, would be collecting an extremely small
revenue (if anything) from it 50 years after release; how can there
be a gap if there is no income in the first place?
Those performers who will be affected are those whose recordings
have been so successful that they are still being sold and played
50 years on. Opponents to an extension point out that any performer
who will really notice a change will therefore have received
sufficient income in that 50 year period to reward them for their
creative efforts in making the recording. The widow of skiffle
guitarist Lonnie Donegan put forward an impassioned plea that her
husband had worked “all his life and there’s nothing at the end of
it, not even a pension”. However, Lonnie died aged 71, at which
time he was still receiving royalties for his most famous
songs.
This highlights the fact that an extension to 95 years, or even
70, would extend protection to long after the artist’s death -
which could have detrimental knock-on effects for living
performers. Record companies, recognising that they can generate
huge revenue from continuing to promote older recordings from
bestselling artists like Cliff Richard and the Beatles, may
consider this a better investment than the far more risky course of
searching for new talent. Additionally, as the number of licences
required to play recorded music in public increase, collecting
societies such as PPL would face the choice of either negotiating
increased fees with its licensees (such fees being generally
dependent on the size of establishment, not the amount of music
played), or dividing the existing income generated between more and
more beneficiaries. With record companies taking a large proportion
of the licence fee and many of the remaining recipients being
wealthy performers and their estates, this leaves an even smaller
share for the lesser known performers.
Fairness and parity
Another argument put forward in support of term extension is
that composers’ copyright lasts for the life of the composer plus
70 years, which is significantly longer than the ‘rights’ for
performers on a sound recording. Is this fair? There are many
examples of recordings where the performance or performer has
proved to be more memorable than the song. Anyone who has listened
to a jazz recording would surely agree that a performance can be
considered creative in itself; often a particular performer all but
guarantees a recording commercial success.
In terms of both songwriting and performing, the artistic merit
of what is produced is in the ear of the beholder; arguably
copyright should provide a balance whereby the ‘better’ output is
rewarded by more sales and therefore more revenue for the right
holder.
The counterarguments say that extending the term for sound
recordings does not necessarily redress the balance between
composers and performers. A term of 95 years would still leave a
huge disparity, both in duration and because the extent and
statutory ownership of the rights are still very different.
Moreover, many academic studies emphasize that a balanced copyright
system would be one in which the length of protection matches the
necessary incentive to produce a creative work. Arguably, as most
revenue is produced from a recording in the first 10 years after
its creation, the necessary incentive is much less even than the
current 50 year term. Perhaps, in a digital age in which the public
find it increasingly acceptable to copy and reuse material, it is
the other rights that should be revised to ensure ‘fairness’;
similarly, changing the length of the rights fails to address the
fundamental difficulties posed in achieving fair contracts with
record companies.
Claims that an increase in term improves parity with other
countries were rejected in the Gowers Report2, which noted that
although protection in the US has been lengthened to 95 years, the
extent of that protection is very different (for example, the
copyright owner does not have the right to authorise public
performances and broadcasts, except on digital radio).
The Commission also point to the other measures they plan to
introduce as part of the proposal to improve ‘fairness’. These are
an obligation on record producers to set aside 20% of revenue from
primary use of recordings into a dedicated fund for session
musicians and a statutory ‘use it or lose it’ clause, where the
right in a recording which has passed the original 50 year date
would revert to the performer on request if the producer does not
publish it, or to the public domain if neither uses it after a
year. Despite the distinct potential of these provisions to improve
performers’ situations, opponents of the proposal contend that more
research needs to be done into the effects and workability of these
provisions; furthermore, their introduction should not provide
justification for an extension, but should be considered as
discrete parts of a possible solution.
Record companies
The obvious beneficiaries of term extension, apart from the
bestselling artists, are the record companies. The Proposal claims
that, because of the difficulties posed by online sales and
increased piracy, “the European record industry faces the challenge
of keeping up the steady revenue stream necessary to invest in new
talent”.
The evidence compiled by PwC in the study fed into the Gowers
Report on behalf of the British Phonographic Industry4 suggests
that term extension would benefit record companies, estimating that
total additional revenues could range from £8.3 million to £162.8
million over the next 50 years. In the short term, the four major
labels (Song BMG, Universal, Warner Music and EMI), are likely to
be the main beneficiaries, as they own the copyright in the
majority of the bestselling sound recordings from the 1960s.
The natural corollary to this is that the revenue must come from
somewhere. As discussed above, some may come from increased licence
fees for playing recordings in public. It follows that much of the
rest must be provided by those purchasing the recordings.
The European Consumers’ Organisation, BEUC, certainly believes
that consumers will end up paying higher prices, a stance supported
in the Joint Academic Statement addressed to the Commission by a
large number of international academics. The Statement describes as
‘bizarre’ the Commission’s claim that “the prices of sound
recordings that are out of copyright are not necessarily lower than
that of sound recordings in copyright” – a claim based on PwC’s
report “on behalf of the record industry”. The Gowers Review notes
that economic theory suggests that competition to publish public
domain recordings will drive down the price, as has happened with
classic literature. It appears that there is no clearly reliable
evidence for either view, particularly taking into account the
difficulties of comparisons during a period of huge change in
musical styles.
However, even if there is no significant price difference, there
remains the question of where the millions of pounds worth of
additional revenues would come from. If prices are the same for
copyright works and those in the public domain, then surely the
revenues must be generated at the expense of what the PwC report4
terms “public domain specialists”; in fact, the report assumes in
its calculations that 50% of record companies’ market share is lost
once copyright expires in a recording. If this is true, is this not
a proposal which simply takes from the poor to give to the rich? If
not, then the financial impact data in the PwC report (cited in the
Impact Assessment as a study which “enables us to add a concrete
dimension to the results”) is based on a fundamentally flawed
assumption.
In terms of “investing in new talent”, there is a possibility
that extra revenue generated by the extension will be reinvested
into the promotion of those ‘cash cow’ recordings which would gain
companies an extra 20 years of guaranteed income. Nonetheless, as
these older records will require relatively little promotion in
order to keep producing a return, if surplus funds are available,
companies may well use this for further A&R. This seems
increasingly likely in current market conditions where, without new
talent and ideas, companies will struggle to compete with online
providers offering existing music for free.
However, the idea that an extension would increase the number of
works available because record companies would have a financial
incentive to do so seems fanciful. The reality is that for most
works, there will be no worthwhile incentive, and keeping the
recordings protected by copyright will prevent them being made
available to the public (and in some cases to the performers
themselves). This is also increasingly relevant in view of trends
towards reuse of music and the growth of sampling.
Conclusion
Despite the laudable aims of the Commission to improve the
economic and social situation of performers, such evidence that
exists appears to support the claim that the majority of performers
will receive only marginal benefits from term extension, while
there is a possibility that existing airplay royalties may be
shared ever more thinly. On the other hand, the clear beneficiaries
of an increased term for sound recordings will be record companies
and bestselling artists, and this is likely to be at the expense of
either the consumer or companies selling out of copyright
recordings.
Despite the unequal gains conferred, it is admittedly hard to
ignore the emotive appeals of some older artists: why should they
be denied even this small amount of additional income from their
work? However, it should not be forgotten that term extension does
not address the core problem for performers: that they are hugely
dependent on the terms of their recording contracts, which are in
the main dictated by the record companies. The nagging feeling
remains that if the Commission really wanted to help struggling
performers, it would have put more effort into investigating these
issues and alternative solutions, and that artists may be justified
in wondering whether their interests are merely being used as
window dressing for a multi-million pound bonus for record
companies. Either way, once this legislation is passed, they may
find they have lost any political support to redress the balance of
power.
This article was first published in Copyright
World
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