article
The end of music copyright?
22 February 2008
The general consensus seems to be that the music industry is in
crisis. Illegal music downloads have created panic in the industry
and fear amongst the major record labels that they will not
survive. Increasingly, copyright in recorded music has become of
little value, as consumers bypass legal methods of accessing
music.
This view has some truth, but the underlying causes and the
potential effects are more complex and subtle. A market previously
driven by the power and influence of the major record labels is
indeed becoming an uncertain market, and this is being driven by
consumer power.
However, it is also opening up new opportunities. People are
changing the way they listen to and access music. The IFPI Digital
Music Report 2008, published January this year, notes that, for
example, 15% of all music purchased globally is downloaded. Global
digital music sales in 2007 totalled £2.9 billion, an incredible
figure given that digital music only really became widely available
for purchase in 2004. In some countries, notably in Japan and South
Korea, consumer behaviour is increasingly driven by the convergence
between MP3 players and mobile phones, with mobile downloads now
accounting for up to 90% of total digital downloads in Japan.
This sea-change in consumer behaviour creates major problems for
rights holders. The rise in legal downloads is set against a sharp
decline in CD sales. Furthermore, it is set against an exponential
rise in illegal downloads. Estimates for the ratio of illegal/legal
downloads range between 5-to-1 and 10-to-1.
Principally, these downloads are effected through peer-to-peer
protocols, that use software developed by the likes of BitTorrent
to allow individuals to connect to each other and share content,
rather than download content from a central source. This is much
more difficult to regulate.
The result has been has been a sharp decline in revenue in the
last few years for many labels and retailers. Enders Analysis, a
media research company, has predicted that total global sales are
likely to stabilise at around £23 billion in 2009, way down from a
peak of £45 billion in 1997.
The question therefore, is whether it is actually possible to
protect music anymore. Does the internet ultimately mean that the
idea of copyright protection for music is defunct?
The debate is not really about whether copyright law needs to be
changed. Copyright law in most jurisdictions theoretically provides
ample protection for rights holders. Database rights also give
further protection in the EU, with "extraction" and
"re-utilisation" of a substantial part of a qualifying database
constituting a breach of the EC Database Directive. The issue is
more of a practical one, in that it seems that the law is currently
unenforceable in relation to copyright in recorded music.
Dealing with the problem will mean changing the habits and
mindsets of millions of consumers. The subject also touches on some
fundamental issues. In an information society, to what extent
should material be freely available, and to what extent do schemes
developed to monitor illegal downloading infringe upon civil
liberties? What would be the effect of making music
copyright-free?
The Problem Of Perception and Enforcement
Most people recognise that downloading free music is likely to
be illegal. However, copyright theft over the internet is seen as a
victimless crime. the myriad blogs on the subject demonstrate that
most illegal downloaders do not see the reduction of profits for
major record labels as particularly immoral. Furthermore,
downloading – certainly in the UK - currently has few major
repercussions. Of course copyright infringement carries with it all
of the potential remedies set out in ss.96-115 Copyright, Designs
and Patents Act 1988, but there is clearly no point in a rights
holder taking action against each illegal downloader.
With no moral framework and no effective legal framework
preventing people from infringing, it is unsurprising that illegal
downloading has become rife.
Changes In The Music Industry
These new behaviours and technologies have spurred the music
industry into action. The music industry has begun to diversify its
offering and, whilst 5 years ago an artist's new release might have
been available in 10 formats at most, in 2008 it could be over 100.
Downloads, ringtones, mastertones, videos, wallpapers for mobiles,
subscriptions and networks all form part of the standard offering
for a major artist. There is an inherent paradox in that, whilst
the internet has caused many people to abandon buying music, it
also creates the opportunity for new types of product. Further, the
ever increasing value of celebrity means that music labels have
increased opportunities to '360 degree market' their big names and
generate income through merchandise.
Subscription services continue to increase in popularity, with
companies such as Napster and Rhapsody leading the way. Currently,
subscription services are held back by the incompatibility of the
various formats available (principally the iPod and everything
else), but this is surely set to change and the increasing move
towards non-DRM music (ie music that is not access controlled to
limit usage) means increased interoperability.
It seems some within the industry are also considering radical
new ways of allowing music to be legally accessed. Qtrax, an online
"P2P" file sharing service, recently claimed that it will allow
consumers to download free music with the authorisation of the big
labels. Brilliant Technologies Corp, the company behind Qtrax, had
stated that a deal was being negotiated with Warner, but that deals
had been signed with the other three major labels, Sony BMG,
Universal Music and EMI.
The Qtrax business model appears to work on the basis that free
access to music downloads is combined with advertising, resulting
in revenue (most of which would go to the labels) and promotional
possibilities. Ultimately, it appears that the Qtrax announcement
was something of a false dawn, as it sought to launch its site
before deals had been concluded. However, it seems clear that the
major labels are (or were) in negotiations with Qtrax. Whether
Qtrax's disastrous first attempts to launch its service precede a
genuine product is unclear, but the debacle does suggest that some
in the music industry are finally starting to believe that music
cannot be 'bullet-proofed'.
Unsurprisingly, the record labels are lagging behind the artists
in finding new ways to distribute music. Radiohead recently
released its new album "In Rainbows" over the internet, on the
premise that consumers could pay what they wanted for the album.
Prince also released his recent album "Planet Earth" exclusively
through the Mail On Sunday (causing Sony BMG to withdraw UK
distribution of the album). These initiatives are so far isolated
but they illustrate the extent to which the relationship between
the record labels and artists is in flux.
If these business models are taken forwards, they raises
questions about the value in protecting copyright in recorded music
at all, since effectively all value in the 'product' would relate
to the surrounding brand.
ISP's
In recent months the debate on how to prevent e-infringement of
music copyright has moved to the internet service providers
(ISP's). Giving ISP's legal responsibility for the activities of
their customers has been advocated by the music industry for some
time. The theory is that, since ISP's ultimately control internet
access, creating ISP liability/responsibility for infringement
could result in much more effective policing.
In fact, the law has continued to develop in recent years with
regard to ISP's. The Copyright Directive, implemented in UK through
the Copyright and Related Rights Regulations 2003 inserted s.97A
into the Copyright Designs and Patents Act 1988. S.97A gives the
High Court the power to grant injunctions against internet service
providers where there is actual knowledge of a third party using
its services to commit a copyright infringement offence. Such
knowledge can be effected through a notice to the ISP from the
copyright owner. The Electronic Commerce (EC Directive) Regulations
2002 require ISP's provide such contact details so that notices can
be served.
However, many voices in the music industry are calling for the
law to be changed further and it appears that governments are
listening. In 2007 France began to take firm action against ISP's.
A commission led by Denis Olivennes, the CEO of the Fédération
Nationale d'Achats pour Cadres (FNAC), France's largest retailer,
has developed a scheme that has received the backing of the French
president Nicolas Sarkozy. The "Sarkozy Agreement" essentially
involves a 3-way pact between ISP's, the French Government and
rights holders, under which illegal downloaders will be warned by
emails for illegally downloading music, and ultimately have their
accounts suspended or terminated.
Now, the UK Government is planning to follow suite. On Friday 22
February 2008 the Government launched a Green Paper on the Creative
Industries, which advocates a similar policy, in which identified
illegal downloaders are first warned, then suspended and then
ultimately banned from using the internet by their ISP's. The Green
Paper states: "We will consult on legislation that would require
internet service providers to cooperate in taking on illegal file
sharing – with a view to implementing legislation by April
2009".
Key recommendations in Government Green
Paper
- Government will "encourage the adoption of voluntary or
commercial agreements between the ISP's and all relevant sectors,
but "will not hesitate to legislate in this area if required…by
April 2009".
- UK-IPO will "explore options" for an enforcement fund for
mobile crackdown teams
- UK-IPO will launch a "fake free" campaign in London
- UK-IPO will establish and fund a National Centre of Excellence
to deliver expert police resource focussed on tackling IP
crime
- UK-IPO will work with Trading Standards to best use the
proceeds from the Proceeds of Crime Act, which generates around
£500,000 a month
- UK-IPO will work with the association of police officers to
provide extra focus on enforcement activity
- UK-IPO will establish a ministerial and administrative forum to
bring together rights holders, consumers, governments and
technology groups to discuss ideas and problems created by new
technologies
- Government will consult on introducing an exceptional summary
maxima (above £5,000) for online and physical copyright
infringement
- Government will encourage IP law to be included within the
school curriculum at key stage 3 and in relevant Diplomas
The proposals actually reflect proposed voluntary schemes
reportedly being negotiated between Tiscali and the BPI, amongst
others, under which persistent infringers will be sent warning
letters directly - though the same reports suggest that the two
parties are not yet agreed as to how these letters will be
funded.
However, it is questionable whether these schemes will actually
solve the problem.
Firstly, the sheer volume of illegal downloading could mean that
ISP's could be forced to suspend or terminate the accounts of
millions of people. Presumably, the hope is that such harsh
penalties would result in an immediate and drastic change in
consumer behaviour. Certainly it would need to, or a dramatically
high percentage of internet users could find themselves being
suspended or banned from the internet with potential economic
consequences.
It is also unclear just how ISP's would track illegal
downloaders. Certainly they would have to implement some fairly
robust and complex structures of administration to effectively
track all illegal downloaders of music. The exercise would neither
cheap nor simple and clear parameters would have to be given to the
extent of enforcement. Even once tracked, is not always certain
that the identified party is to blame, with users now able to
“wi-fi piggyback” on other users' pre-paid wireless networks.
Another issue is how infringers can be prevented from simply
registering with a new ISP. A system of data exchange would need to
be implemented, which has precedents in the insurance industry, but
would require unparalleled cooperation between competitors and
exchange of customer lists.
There are also data protection issues involved. This would not
necessarily require legislation, as the Data Projection Act 1988
already provides scope for unauthorised data use. Paragraph 6 of
Schedule 2 Data Protection Act 1988 gives some legal basis for such
a scheme, in that data processing is permissible "where necessary
for the purposes of legitimate interests pursued by the data
controller or by the third party or parties to whom the data are
disclosed, except where the processing is unwarranted in any
particular case by reason of prejudice to the rights and freedoms
or legitimate interests of the data subject".
Of course, this sets up a potentially vigorous debate on just
what are the legitimate interests of consumers, do they extend to a
right of access to free music? Why is music commoditised at all in
an age where it can be freely distributed? And it is these points
that creates the real difficulties for the music industry, ISP's
and governments: music is vitally important to many people and
access to music and perceived exploitation of consumers by
corporate bodies is a subject that people get passionate about (on
both sides of the debate). Removing access to free music would
create an almighty bru ha ha, in which the legal basis for action
would be tested to its limit. Given the necessarily invasive
strategies that ISP-related action would require, that legal basis
cannot be put forward with absolute confidence.
This article was first published in Copyright
World
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