Friday, March 13, 2009

Sound copyright: How extending copyright term in sound recordings actually works

I has the privilege of attending the First Arcadia Lecture given by James Boyle at Wolfson College Cambridge yesterday evening. As ever, James spoke passionately, eloquently and entertainingly, this time on "Cultural Agoraphobia and The Future of The Library".
James Boyle argues that we have a bias that makes us unduly skeptical of open networks, systems and methods of production. The success of non proprietary systems -- ranging from open source software to Wikipedia and the open Internet itself -- fills us with surprise. He calls this bias "cultural agoraphobia." In a world where all texts were tangible, the institution of the library stood for the proposition that a certain degree of openness was good; that a place that allowed free access to knowledge by every citizen was one of the defining institutions of a liberal society and culture. How will that principle change or evolve in the digital world? Will it survive at all? What is the future of the library in a world grappling with cultural agoraphobia?
His explanation of how, until 1976 in the US, 85% of most cultural works from the 20th century fell into the public domain after 28 years but since then nearly all of 20th century culture has been locked up, had a particularly profound impact on the audience. From 1976 changes in the law, removing the need to register and renew works and successive extensions of copyright term means that, in the US, most creative works since 1923 are still protected by copyright - most of these no longer commercially available and/or copyright owners impossible to identify.

Back in the evidence free world of IP policymaking, sadly the EU presses ever closer to extending the term of copyright in sound recordings by 45 years. They really should read James' latest book, The Public Domain, but given the average attention span of a modern politician maybe they could be persuaded to scan Sound Copyright's relatively short but really very good brief on How extending copyright term in sound recordings actually works and the associated evidence. I'm sure they won't mind me posting it here:
The European Commission has proposed to extend the term of copyright in sound recordings in a move "aimed at performers". We believe this does not address the problem it claims to, while imposing serious costs on consumers, follow-on innovators and re-users of information. We also believe it endangers the basis of public respect and acceptance of intellectual property.

How copyright works
Copyright is a monopoly granted for a limited time to incentivise artists and performers to create works, while protecting the interests of society at large in having access to those works. It exists because copying creative works, as opposed to, say, "copying" crops, or cars, is much easier thancreating them from scratch. Artists need protection from those who would copy their work, and so we have copyright. But a society needs access to its cultural heritage and protection from
entrenched monopolies, and so copyright is time-limited.

It is important that policy-makers get the balance of copyright right. The Adelphi Charter, a framework for policy makers considering changes to intellectual property legislation, urges governments to automatically presume against extending the scope or term of intellectual property rights, stating that "the burden of proof in such cases must lie on the advocates of change".

The evidence on term extension
In 2005 Andrew Gowers, former editor of the Financial Times, conducted an independent review of the UK's Intellectual Property Framework. Working with the Centre for Intellectual Property and Information Law (CIPIL), Cambridge, the review took a rigorous, evidence-based approach. In examining issues of parity, balance of trade, incentive, cost to consumers and fairness, it concluded against extension.

In 2006 a study initiated by the Commission's DG Markt, from the Institute for Information Law (IViR), University of Amsterdam, found that any extra "revenues would have to be paid by users and consumers of sound recordings" and concluded that the case for extension was unconvincing.

In 2008 the leading European centres for intellectual property research released an impact study and review of the evidence. Concluding that the prime beneficiaries would be the owners of large back catalogues, competition would be impeded and consumer prices higher, it, too, recommended against extension.

CIPL. The PwC study, based on analysis of 129 recordings, admits that its findings are unreliable:

[This study is not of] a large number of recordings, relative to the amounts, to be introduced in the future... Hence, there is no certainty that the current observed effect (i.e. lack of price differential of in-copyright and out-of-copyright recordings) will be repeated in the future.

The cost to consumers, follow-on innovators and cultural diversity
It is logically impossible to have benefits for producers or performers with no costs to consumers. The reality for consumers, according to CIPIL, is more likely to be one of significant costs "of between 240 and 480 million pounds."

The Commission's impact assessment ignores the cost to information professionals and follow-on innovators such as musicians, film makers and public domain record labels who will incur costs in licencing recordings that are in copyright for another 45 years, and in seeking permission to use works which may or may not have been affected by the proposed "use it or lose it" clause.

There is no strong basis from which to argue that record companies will be incentivised by a term extension to digitise niche cultural works. The Commission has conceded that "phonogram producers will focus on re-issuing the premium CDs during the extended term, i.e., those with very high profit margins". Contrasted with non-rightsholder efforts to digitise works of historic value, such as those of music fan Christopher Bolling, who single-handedly archived 4,000 tracks from old 78rpm records, it becomes clear that allowing recordings to enter the public domain is of
significant value to cultural diversity.

Who really benefits?
The Commission estimates the performers' share of new sales revenues from the proposed extension at 10%. However, this conveniently ignores their own statement that redistribution will be highly skewed in favour of the top earning 20% of performers. From that 10% share "between 77% and 89.5% of all income ... goes to the top 20% of earning performers".

For the vast majority of performers the projected extra sales income resulting from term extension is likely to be meagre: from as little as 50¢ each year in the first ten years, to as “much” as €26.79 each year.

Performers' remuneration from broadcasting, public performance or private copying compensation will be affected. Assuming that licencing fees remain constant, earnings to performers will not grow but be sliced more thinly and distributed for longer to more estates of deceased artists. Artists living now will not earn more over their life time.

Moreover the proposed session musician fund comes at a tax of 400%. For every €1 allocated to performers, record labels will get €4.

Each major label would be expected to gain €8.2million—€163million over the 45 year term. That, in turn, works out at €205,000—€4.075m per label per year. This is a windfall for record labels.

As the leading centres for intellectual property research wrote to Commission president Jose Manuel Barroso:

"There are many possible measures that would not result in monopolising the back
catalogue of recorded music for another half century.

“[Member states] could regulate of copyright contracts, and social security and insurance schemes; and at the European level, [examine] equitable remuneration rights only available to living performers, and the regulation of collecting societies and licence tariffs, such as the nature and distribution of income from any copyright levy scheme.”

This proposal, unsuccessfully lobbied for at Member State level, is not about helping poor performers despite the claims. In refusing to confront the critical arguments, it ignores the balance of evidence, bringing serious costs to consumers, follow-on innovators and re-users of sound recordings. It also endangers the basis for public respect and acceptance of intellectual property.

As the Commission's own advisers have stated:

[It] reveals an intention to mislead the Council and the Parliament, as well as the citizens of the European Union. In doing so the Commission reinforces the suspicion, already widely held by the public at large, that its policies are less the product of a rational decision-making process than of lobbying by stakeholders.

MEPs now have to defend the rights of ordinary citizens and reject this bogus proposal in the strongest terms."

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