MAGAZINE

PoliTalk48 : salon 1
// hosted by Paul Hoffert / Jul 31, 2009

PoliTalk48 salon 1 features Mathew Daniel (China’s R2G), Sandy Perlman (Music Producer of The Clash, Black Sabbath, etc), Catharine Saxberg (Executive Director of the Canadian Music Publishers Association), and Simon Wheeler (Beggars Group) on the topic of Intellectual Property. PoliTalk48 is an interactive salon on music and entertainment industry issues moderated by Paul Hoffert, Media Professor at York University and Chair of The Bell Broadcast and New Media Fund. Each of the panellists has 48 hours to comment and interact with other panelists’ comments. Join us in person to explore this particular theme further at transmission.TALKS 2009.

Mathew Daniel is the VP at R2G, a music distribution service provider in China and he has also been a key driver in launching China's biggest online independent music store, wawawa. Being a huge music fan and consumer, he hopes to do his part to make more music accessible in this part of the world and bridge the huge divide in Western and developing markets approaches to the application of intellectual property whilst balancing it with the practicalities of customer relevance and social practices.

Sandy Perlman is the Schulich Distinguished Chair, McGill University; Woodrow Wilson Fellow in the History of Ideas; New School Fellow in Sociology and Anthropology; Music Producer, creator, songwriter, manager and theorist for many of the most important bands and musical trends of the last 25 years: Blue Oyster Cult; Clash; Black Sabbath; Dictators; Pavlov's Dog and Dream Syndicate. Described by the Billboard Producer's Directory as the Hunter Thompson of rock, a gonzo producer of searing intellect and vast vision.

Catharine Saxberg is the executive director of the Canadian Music Publishers Association, where she is committed to convincing everybody that the future of the music industry lies in the hands of the publishers. She s an ex-broadcasting executive who trained as an historian, which means she loves nothing better than a well crafted argument

Simon Wheeler runs the Beggars Group of record labels' digital business. The group consists of the groundbreaking labels XL Recordings; 4AD; Rough Trade (all UK) and Matador Records (United States) and represents a seminal catalogue stretching back 30 years, as well as current multi-platinum acts such as The White Stripes; Radiohead and Basement Jaxx. He is chairman of AIM's New Media Committee in the UK, has made statements to the UK parliament on DRM and has testified at the United States' CRB webcasting proceedings.

// copyright isn't going away...or is it?

Paul "Poli" Hoffert (Media Professor at York University and Chair of The Bell Broadcast and New Media Fund): Our first forum is about copyright. On the one hand, there are signs of increasing copyright protection. Pirate Bay, the poster child for illegal file sharing, was busted in Sweden and its owners fined; '3 strikes' laws that force ISPs to cut off service to habitual infringers have been passed in France and Korea; the US government has put universities on notice that they must provide a legal alternative to their students' unauthorized file sharing; Amazon's Kindle e-book is a big success despite it's DRM (digital rights management) that prevents unlicensed users and unlicensed territories from accessing its content; and file-sharers remain in shock after the almost US $2 million fine ($80,000 per song) imposed on Jammie Thomas-Rasset in the US after an appeal of her previous lower-court conviction for unauthorized music downloads.

On the other hand, there are signs that copyright is under attack. DRM has been dropped for music files on iTunes and Amazon; The French '3 strikes' law is unpopular and is being challenged; Spotify and other new legal music services feel like 'free', with no consumer fees or DRM; Creative Commons, a lightweight copyright regime designed to bring copyright abusers into the fold has come under increasing criticism; and the majors are daring to discuss possible futures in which music is freely traded (in all respects) with revenue coming instead from advertising, hardware tariffs, and/or rights bundled with goods and services.

As CD sales plummeted in the past decade, the value of record companies declined faster than the value of music publishers, because publishers had more diversified income from licensing songs and scores into films, TV programs, commercials, and video games. Major record companies also lose out to major publishers in non-English speaking territories where hit songs and ringtones are re-recorded on local record labels with local artists in local languages, but licensed by the original song publishers. Consequently, most publishers believe they now deserve a larger share of the royalty pie than they did in the days of CD sales dominance by record companies. Songwriters and recording artists argue that their publishers and record companies do not provide as much service in today's online marketplace as they did in the older CD marketplace. So creators also want a larger share of the royalty pie. Many creators wish to completely dis-intermediate publishers and record companies, retain all their copyrights, and license consumers directly.

Consumers and online audio/video services are confused and frustrated by the fragmented and non-aligned music rights that they need for legal commerce. Instead of dealing with the nuances between downloads, streams, reproductions, performances, makers, and creators, they are demanding a quick and simple answer for 'how much will the rights cost me and who can I get them from?'. The free market should be best for resolving these complexities and providing a single licensing source, but the music industry has been unwilling and/or unable to do so. In contrast, the pace of new copyright legislation and the creation of new copyright collectives has been much quicker and more reactive to the changing environment. One can argue about the appropriateness of rapid legislation such as DCMA (Digital Millennium Copyright Act) in the US. but the likelihood is that we will be in for more government intervention unless and until the many music stakeholders provide industry-wide free-market solutions for easy commerce at reasonable prices.

The future of copyright looked dim to me a dozen years ago. I thought that technologies similar to those that caused the business disruption could be harnessed for the business salvation and might obviate the need for copyright. However, the lack of functionally transparent and interoperable DRM along with unreasonable usage restrictions demanded by the major record companies poisoned consumers against such technical solutions. In the absence of any sustainable industry-wide business model, it seems to me that governmental intervention in the form of additional copyright legislation and enforcement are likely in the near term.

So, is copyright still the essential underpinning of music business or has it (will it) become irrelevant? Given the complexities of national and international copyright laws, does the whole system need a major overhaul? Who knows what the [bleep] is going on?

// here's what our panel has to say:

Simon Wheeler (Director of Digital Beggars Group, UK): There's nothing like a big question to get us started!

Copyright in its simplest principle is still the core of what the creative industries build value around, without the protection of copyright many industries would struggle or cease to exist and that change [could] be too hard to bear for many. Copyright... does work and is working still, [although] there could be more clarity and consistency... particularly across territorial boundaries. [For the most part] I can't think of instances where copyright is holding back development or innovation.

There's no treading water or burying heads in the sand. Digital media consumption is changing our cultures at almost every level and impacting every industry that it touches. Music has been the canary in the coal mine for over decade, and now we're seeing that the inevitable is happening to other aligned industries... it's painful at times to watch them make similar mistakes to the music industry...

Mathew Daniel (VP, R2G China): ... I am in agreement that the challenge is not with the principle of copyright but rather the application of copyright in a digital age, both from the perspective of licensing and enforcement.

Catharine Saxberg (ED Canadian Music Publishers Association): As Simon says, the challenge is not with the principle but rather the application of copyright... There is kind of a yin/yang tension between licensing and enforcement. In a digital world, enforcement is currently extremely difficult because the scale of infringement is so much broader than the ability of most enforcement techniques to stop it.

Simon: Copyright laws have been added to piecemeal, bolted on to principles which [were formulated] a long time ago, and arguably are less relevant today. Even the recent 2000 DMCA (Digital Millennium Copyright Act) in the USA feels astonishingly outmoded now. Principles like safe harbours that were originally intended to provide protection for ISP's are now barriers that some copyright users hide behind, to the detriment of copyright owners.

Major changes are needed in how rights holders [manage] their copyrights, and we are starting to see wider and more creative licensing which leads to the development of more innovative services, but this is still very early days. [we have] a longway... to go before we can clear the trees enough to see clearly how copyright should look in a purely digital age.

Mathew: One of the major loopholes that organizations use (in this case abuse) to build value on the back of music content has been the ISP safe harbour provision in the DCMA. As Simon rightly points out, this has been cunningly abused by various organizations.

Poli: Should the music industry continue to focus on preventing ISPs and consumers from accessing the world's music, even if it's without copyright permissions?

Catharine: We are lucky that people want our music. We should be using copyright to focus more on how they can have it (as long as we're paid), not how to keep it from them. Did the RIAA's lawsuits indeed have a deterrent effect? How much? How do we know?

Let people use music however they want, whenever they want, as long as creators and their rights holder partners are fairly compensated, [based] on the type and extent of the use. That s not to say that we should give up on enforcing our rights, but thus far, that seems to have been our primary focus and I think it should instead be providing access to our music. We tend to focus on piracy and piracy alone... heck, we can t even quantify the losses to piracy in a way in which we all have faith, much less add in the implications of all other factors. We know that piracy has had a dramatic effect on the music industry. But so have other things... the unbundling of the album, demographic changes, a song focus rather than an artist focus, unprecedented demands on the discretionary income of key music buying demographics, a more sophisticated consumer who doesn't like the business practices of the music industry... [we have portrayed those] who are, or used to be, our customers are the bad guys... how healthy an attitude is that for a business undergoing a massive revolution?

Sandy Pearlman (Schulich Distinguished Chair, McGill University; Producer Blue Oyster Cult, the Clash, Former Manager Black Sabbath; President 415 Records; founding VP Emusic.com): Copyright law requires immediate and radical change for the special case of 'recorded music objects' [sound recordings]...The extremely hostile technology environment has rendered increasingly irrelevant general copyright and such fanciful extensions of copyright as the DMCA. Given the inexorable parallel advance of technology trend lines... further delay in rectifying this situation will prove fatal for [the recorded music] industry.

However this should not be taken to mean that copyright itself is inherently irrelevant going forward. On the contrary, it is essentially the misapplication and technologically infeasible extension of copyright (i.e. copywrong) as represented, by such legislation as the US DMCA and it's international legal evil twin the WPPT (World Intellectual Property Organization's Performances and Phonograms Treaty) that has created the current copyright spacewreck. it is entirely plausible that technologically informed, state and case specific applications of copyright would actually reverse the fatal trend line.

Poli: Chris Anderson, in his book 'Free: The Future of a Radical Price' argues that digital distribution provides music products at inconsequential incremental cost and so its price should be zero. Creative Commons tries to adapt the older copyright regime to this new reality of free online content access. Does Creative Commons have a role to play?

Simon: Copyright is flexible enough in my mind that Creative Commons is unnecessary. It's within every copyright holders power to allow their work to be gifted for free or to allow people to mash up the works, without working within a secondary layer of copyright.

Catharine: I also agree that Creative Commons is unnecessary, and often dangerous, because few creators understand the implications of a CC license. Simon s reference to copyright that has been patchworked together is an extremely important one, as is the difficulty in seeing into the future...that s why I would focus on the principles in legislation. As a industry, we have not done a particularly good job lobbying for copyright reform.

Mathew: The music industry has been grossly negligent in allowing copyright and licensing issues on a global scale to lapse into a constant state of self-induced paralysis.

Poli: Why is the music industry in such a state of paralysis?

Mathew: 10 years after Napster, large swathes of the world still do not have legal options to download full-length music. Too many labels have their heads up their proverbial [asses] in not making their music easily accessible legally at fair prices in Asia, Africa, South America and the Middle East. That's... several billion people who haven't been given fair access in this digital age, and who have few options other than to navigate the hitherto minefields of P2P and torrent sites and be labeled as pirates.

For example, iTunes, Napster 2, Rhapsody, Spotify, Pandora, We7, eMusic etc are all frustratingly not accessible in these markets users in these markets who are willing to pay have been constantly subjected to the XXX is not available in your country due to copyright restrictions... And now that the larger (and obviously less nimble) labels have been squeezed into a corner like a wounded animal, they are sometimes embarking on desperate / innovative / daring measures (description is based on choice of spin and source) like giving away music for free, moving into non-core competency businesses in the name of 360 etc without realizing that they might further contribute to the erosion of the intrinsic value of music.

Sandy: The recorded music industry succumbed to the grand illusion that it could 'negotiate' any deals it wished, confident in the 'absolute security' seemingly embodied in the unholy trinity of DMCA, WPPT, and DRM, since it possessed legal absolution sufficient to impose its terms. Unfortunately, technology had sufficiently coevolved as to render these inoperative and irrelevant.

Talk about a grand illusion! Technology runs over legality. Wouldn't be the first time. Won't be the last.

Poli: What about 'three strikes and you're out' for ISP subscribers?

Catharine: If a country would decide to enact a 3 strikes law and cut off access to isp accounts for infringers, one at a time, we would have another whole crop of consumers who hate the music industry (is that really necessary?), who no longer would have access to our music.... and we wouldn t be one penny richer. Cutting off infringers one at a time will not build our business. Rather than focusing on the Foucauldian sounding 'control and punish' aspects of copyright, we should focus on the positive [benefits of relatively easy] licensing that copyright provides.

Mathew: Western lobbyists are guilty of hypocrisy and double-standards in trying to enact three-strikes legislation which basically calls for ISPs or 3rd parties to monitor content passing through their networks, and yet when governments in developing countries decide to similarly monitor their networks for pornography or inflammatory racial, religious or political content, the free speech advocates, especially in Western countries decry these governments. [However] I can understand the rationale of targeting ISPs as whipping boys for some of the woes of the recording industry (note: not music industry). As Catherine put it, 'in the online world, ISPs have built out their networks on the backs of the value of our content'. It is just too simplistic to assume that music is the only valuable piece of content flowing through the pipes or that the ISPs are the only ones guilty of benefiting from the added business that digital music has brought.

There is certainly a case for [suggesting the application of] double-standards... If ISPs are guilty of aiding and abetting the distribution and storage of illegal content, then [what about] manufacturers of hard drives and music players, network equipment companies etc. The huge volume of music files being traded and stored on these other products and services clearly benefit the rest of them too.

Steve Jobs in his famous open letter to the industry [Feb. 2007 http://www.apple.com/hotnews/thoughtsonmusic/ ] stated categorically that ONLY an average of 22 songs per iPod are purchased from iTunes, and that 97% of the music on the average iPod was not purchased from iTunes store. For those who might argue that users probably ripped songs from their CDs and put it onto the mp3s, I would ask how many of you have actually tried to rip your CD collection into mp3s and gone through the tedious process? The corollary of this is that the majority of songs on the iPod are pirated and let s admit it that the primary use of the mp3 player is as a repository for pirated music. Shouldn't this be part of [U2 manager] Paul McGuiness crusade too?

There are already laws in place which were used to prosecute Grokster and Kazaa successfully. If a channel or service actively positions and markets [music] that users can obtain unlicensed music, they are an accessory to the crime. If ISPs are likewise aiding and abetting, then they can be prosecuted. But otherwise where do we draw the line on who in the food chain should we demand for the music industry's pound of flesh?

Catharine: While I think 3 strikes is a non-starter, I also think hypocrisy is a big word to be throwing around... under most Western law, copyright infringement is illegal, and therefore an attempt to end it, like 3 strikes, (however misguided) is an attempt to uphold the law. We prosecute child porn on line because it s clearly illegal. In Western democracies, expressing alternate political or religious views is not illegal, and is in fact a cornerstone of democracy. So yes, we do decry the suppression of alternative views.... you can perhaps make the argument that we are intolerant of government repression, but I think the hypocrisy argument is a bit of a stretch. In Canada, these issues get discussed in public courts if the alternative view crosses into propagation of hate, as defined by law.

It s hard for me to see the ISPs as whipping boys, or victims... ISPs have built their businesses on the value of our content... They were running ads encouraging people to upgrade to high speed connections in order to download music faster at a time when when there wasn t a a single legal downloading service.

We've added to ISP value, we can send them a license, they can send us a cheque... how they pass that on to the consumer is their business. I also think the phrase about the music industry's pound of flesh is misplaced hyperbole. We are trying to be fairly compensated when our works are used to add value to other people s business. There's nothing punitive about that...

Mathew: I... stand by the terms I used in context... just as in the Merchant of Venice, Shylock was not getting paid his due remuneration, he was seeking payment in kind. And similarly as the music industry is not getting paid its dues from consumers, it is seeking compensation from ISPs - for now. If that fails then another recourse will be found and that's what I call its pound of flesh. I simply asked the question of where to draw the line in getting its pound of flesh where the phrase is simply used as a euphemism for due compensation.

ISPs as whipping boys - ISPs that "aid and abet" users to obtain music that is unlicensed via their service can be prosecuted, so I am certainly in no way sympathetic to the errant ones. But if they are not breaking the law, why are ISPs the main ones being targeted? There are a whole lot of others in the food chain too.

Catharine: I guess Mathew and I can agree to disagree on Shylock's intent.

If we focus more on effective licensing, what's needed?....Well, Simon has already identified two key areas: greater consistency of laws and regulations between territories, and a streamlined global process. Matthew is right when he says that music is not the only content going through the pipes, but because our files are small and easy to steal, we have been, as Simon says, the canary in the coal mine. As people gain the capacity to download a feature film as fast as they now download a song, this will become as big, if not a bigger, problem for movies as it is for us.... and again, as Simon notes, the [movie and television industries] don't seem to have learned anything from [the music industry]. We are the first, but certainly not the last.

As for other technology benefiting from unauthorised copying, [I also agree with Matthew] and the remarks made by Steve Jobs were instrumental in our ability to make the case that private copying levies on blank cassettes, cds, etc. should be extended to DARS... many countries in Europe have successfully applied levies to DARS for exactly Matthew's reasoning....perhaps McGuiness hasn't made this part of his crusade because it's a movement that's already underway?

Sandy: If DMCA/WPPT represented a fatal post modern reimagination of copyright as overreach, then invention and implementation of a limited set of new application specific copyright instruments could be the solution. Such copyright instruments would certainly entail compulsory licensing mechanisms, for which a long and successful chain of precedent already exists. These compulsory licenses, would probably be most disturbing for publishers, who [have not experienced the same degree of] loss of control over their assets... as [record companies and recording artists].

Absent adoption [of compulsory licensing] by the publishing sector, entropic collapse of the entire recorded music industry is a forgone conclusion. Implementation of such ideas as 'The 5 Cents Solution' is entirely dependent on crashing the pricing of individual downloadable recorded music objects (including their publishing components) to anything measurable above zero, and, making up that collapse of value on volume. Lacking implementation of nearly zero cost rates for the publishing, will preclude implementation of recorded music delivery systems sufficiently attractive, and, yet sufficiently close to free to compete with free. These proposed compulsory license mechanisms are designed to take much of the deal making latitude out of the recorded music business. Really not everything needs to be negotiated all the time. Mechanism substitutes for negotiation in the interests of friction proofing. In the illusory post DMCA/WPPT environment, absolute deal making freedom for the record companies had come to = paralyzing friction. In the real world environment, where recorded music objects have devolved to commodity instances in such oversupply as to possess no financial value, orderly "transaction states" need to be imposed in the interests of remonitizing the recorded music industry.

Implementation of defined value compulsory licensing mechanisms is an historically validated frictio-proofing mechanism. It will prove especially effective in (re)assigning value to this class of recorded music objects which has effectively lost value. The concomitant nearly zero cost transactional engineering are the absolute sine qua non for remonitization of a recorded music universe almost completely populated by music objects with no monetary value.

Copyright intervention in the form of flattened rate compulsory licensing for tens of billions of nearly zero cost downloads is the antidote to the disaster propagated by original sin of copywrong, the fantasy based copyright overreach of DMCA/ WPPT/DRM. This is proposed not for the sake of the record companies, but, rather in the interests of artists who need to be remonetized.

Catharine: ...Publishers have a long established history of bulk licensing through collectives, charging rates set by government tribunals, wherein we give up a great deal of day to day control over specific uses of specific works. And we're happy with that, and also pleased that not everything has to be negotiated all the time. Furthermore, the current portion [of download royalties] paid to publishers and songwriters in North America is less than a tenth of the retail price, [much less than than portion going to record companies]... As publishers, we can offer virtually all of the world s repertoire through our collectives (territory by territory). A similar system for masters? A way for global users to deal with just one entity, with each territory handling their own back office? Sandy seems to suggest that the labels will have no problem with nearly zero cost downloads; I find that surprising, based on my conversations with them.

Sandy: We already have multiple examples of nearly zero cost (NZC) licensing by the major labels... Qtrax, Spiralfrog and let us not forget YouTube. Whether this is inherently a good, bad or merely naive revenue model [advertising], the fact remains that with the sole exception of Warner Music Group - the majors have all elected to license at NZC... And before anyone (other than Edgar Bronfman) objects that YouTube is not a supplier of downloadables, I've got about 600 YouTube videos (using applications such as Download Helper & VLC) that prove otherwise... And this blatant example from the Sociology of Incompetence in the Record Business, is probably as good a reason as any as to why this business is not so long for this world.

Regarding assorted 'Western Hypocrisy' and 'Relativity of Copyright' remarks, whatever we really think of the relevant (and not so recent) copyright instantiations we all seem to love to hate (International WPPT, 1996 and US DMCA, 1998) - Most countries in the world other than Canada (but including China!!!) that assume they can benefit from an enforceable International IP regime have elected to ratify and accede to the relevant national and international instruments. And these instruments posit an absolute and non relative status for copyright. Whether this represents mere hypocrisy (i.e. China chooses to aggressively non enforce the TRIPS agreement), mere naivete or mere national self-interest doesn't much matter. They've signed because there's something extremely valuable in it for them. Now they're stuck needing to adhere to and/or enforce their obligations - which can prove extremely painful on the local national political scale. In the case of China, enormous and unprecedented unidirectional benefits (like the greatest transfer of wealth in the history of the world) have accrued from their accession to the suite of WTO/WIPO/TRIPS. But enforcement...? When we speak of hypocrisy and naivete, we need to accurately asses just who is the hypocrite and who is naive.

Illustration by Dushan Milic, a Canadian illustrator (frequent contributor to the Globe & Mail) currently making his home in Amsterdam. www.dushanmilic.com.

// share this article

Bookmark and Share

// join the discussion

We invite thoughtful, articulate comments and contributions on this topic. Submitting a comment below will send it to our editorial staff, added to this website pending review.











// comments

1

This is the same circular discussion we have been having for years and I am not hearing any new arguments here, with the possible exception of Sandy Perlman's views. No matter one's bias, it is important to challenge one's own assumptions if we are to have any breakthroughs in discussion.
Much of this discussion is based on the assumption that MP3s will remain a primary mode of music consumption. That seems to be an absurd premise that even Apple Computers Inc. doesn't believe.
The second assumption that seems to prevail here, is that prior to digital filesharing, the copyright laws and ownership structures of "rights" were fair and mostly effective. Unless we have a forum that is truly fearless in challenging these assumptions ( Is it true? Is it partly true? Is the opposite true? ), this discussion will not evolve into something of real value and meaning for participants.

by Keith Porteous / August 4th, 2009

2

I would like to hear more of the panelists views on compulsory licensing. In particular, I would be interested in discussing an initial period where works may be exempt, and following that, graduated fee structures that may apply in regard to works under licence. This may vary in application towards streaming, MP3s, etc.. What might be the rates and terms in regard to a revised fee schedule of payments under compulsory licenses?

by Keith Porteous / August 8th, 2009

3

Music and Art are the Lifeblood of each and every one of us. I don't know the solution, but we have to reach one soon. Every time I see a Music Program go down, I cry inside. The music I was Inspired with all through my Time has made such an impact on my Psyche, that I couldn't envision life without it. What will our children have? "Without Vision, the people perish." Please, please, please; I implore you and I can't emphasize this strongly enough, find a workable solution! that encourages Creativity, Imagination and the consequent Enrichment of Mankind.

by Ellen Roe () / September 26th, 2009

BlackBerry