On the transformation of everyday culture in an era of liquid modernity

A new, yet formalised way forward

In copyright, cultural industries, economy, file-sharing, media ecology, music, p2p, politics on March 19, 2010 at 10:47 am

Bennett Lincoff, former Director of Legal Affairs for New Media at ASCAP, was in Sweden recently. Although he is not an outright opponent of the current copyright system, he has a radical proposal of how copyright law should work online. The recording industry still bases their entire business model on selling copies; a retrograde strategy, he argues. Instead, he proposes a digital transmission right for the Internet. He argues that the Net is fundamentally incompatible with the old business model of selling individual copies of popular culture.

This is a new type of license, a digital transmission license to replace all other rights on the Internet. In his proposal, anyone who wants to transfer copyrighted material digitally would have to buy such a transmission license: websites that broadcast music, namely Internet radio or other types of streaming media, but also individual file sharers who know that they share large amounts of copyrighted music.

The digital transmission right subsumes and replaces the reproduction, distribution and public performance rights (and the making available and communication to the public rights in jurisdictions where those exist); and it authorizes all transmissions including all forms of streaming, downloading, uploading, and sharing.

See this pdf for the long version of his proposal, see this memo for a shorter version. In what follows, here are my personal reflections on his formal proposal. The blockquote above is Lincoff’s. Any use of “journalistic” or florid language below is my own.

Unlike the recent proposals by Peter Jenner in the UK, Roger Wallis in Sweden, and others (Gerd Leonhard, William Fisher), Lincoff is not proposing a general “broadband tax”. The fundamental difference is that he is adamant that licenses must be voluntary and industry-specific. A mandatory flat fee on top of all Internet connections would become too cumbersome, he maintains. There would be significant risks that the end-user subscription fees would inflate, and the pile of money to be re-distributed would be subjected to a proverbial catfight, when music companies, film studios, the gaming industry, the software industry, publishing houses, the porn industry and public service institutions in each country will want to share the money. Besides being distributed internally, within each industry, the money in such a general scheme would have to be split up among different countries and jurisdictions as well. Moreover, how should this re-distribution be calculated? According to number of megabytes or number of minutes spent by users on the respective medium? No, such a broadband tax would be a bureaucratic nightmare, and most likely a fatal blow for the music industry, as their final share of the pie would be extremely small.

Lincoff holds that the transmission license must be voluntary. If we focus only on the different institutional actors who want to broadcast music online (radio stations, streaming services etc.), his proposal is, in my eyes, mainly an amendment – an upgrade if you wish – to procedures for licensing and payment that in fact already exist. Hence, such already-existing institutional sites will probably be open to paying a license. But in the case of private individuals, people who file-share large amounts of music? Isn’t it naive to think that people would voluntarily pay to continue doing what they already do, more or less for free?

The challenge here, according to my view, is to “sell” the idea, with appeal to people’s hearts as well as wallets. The whole mentality towards the music industry must be reformed for people to agree to pay a license to continue to exchange music freely. It requires transparency, which would show how the transmission license actually would go to the songwriters and artists and not to excessive management and intermediaries. It would require campaigns that provide insight into the fact that the money actually means something for cultural creators – in the sense that I, for one, could never afford to make the necessary sacrifices in my life in order to take a hobby to a professional level, without expecting some form of monetary compensation for this.

Lincoff says that one of the main arguments for making the license voluntary is that the music industry would then actually have more legitimacy in their litigation campaigns against file-sharers. Under the proposed scheme, any file-sharer that they sue could be said to have made an active choice when refusing to pay a license. This is different from the current climate where people have been sued, despite legal file-sharing alternatives not actually existing.

I am convinced that gray areas will always exist. Most file-sharers tend to share certain types of material more than others, and the exchange of file-sharing networks is known to be a varied mix of high and low, narrow and wide. Therefore, Lincoff’s proposed license would ultimately target only that kind of sharing that users associate themselves with, in general terms. The system will never cover all users – many people already encrypt their communications, BitTorrent is already virtually impossible to monitor, and the sheer amount of file-sharing is so vast that people literally disappear in the crowd. The system will only cover the few who see themselves as major (co)distributors and feel compelled to pay a license, either because they actively want to support authors, or because they are afraid of being caught and fined. The former option is obviously preferable! The system will only include those authors who are members of the collecting societies; only they will be able to receive the license money collected. On the other hand, the proposal could thus be a reformation of an otherwise dying revenue model, and be an incentive for songwriters and performers to join the existing collecting societies.

I asked him about Spotify. Doesn’t their business model already entail a movement from free, unbridled, non-sanctioned music exchange to an arena – a “walled garden” – managed by licensed, sanctioned flows? Here, the market has, in practice, already started to maintain a form of licensed radio-on-demand, with a redistribution of money based on advertising and subscription revenues.

He countered this argument by noting that the “radio” parable is only from the consumer point of view. Since the redistribution of money in Spotify is based on the number of times an individual song is played, within a strictly DRM-locked application, Spotify is still based on the idea of selling copies, he argues. His proposal is different in that it allows for a sweeping blanket license, which allows money to be distributed independently of the exact number of downloads of a song, and instead being awarded in accordance with the quotas that the collecting societies themselves use. The allocation should be based on the music people actually listen to, not necessarily on what people are already paying for. In this way, p2p is in fact more like radio and Spotify more like a record store. Artists that are heavily file-shared but not contracted to Spotify would benefit more from a transmission license.

What Spotify perhaps most of all shows, however, is the small monetary value of each song played! Reportedly, songwriters and artists can collect only around $325 per million plays of the respective track. Although that remuneration is better than that of radio airplay, it still shows how difficult it is to price a playback of an mp3 file. Illegal downloads do not compare with streamed music, however, since the streamed music entails a file transfer each time the song is played, while a non-DRM protected mp3 of course can be played a limitless number of times after having been downloaded. From a purely resource-efficient point of view, the latter would be preferable. But the commercial development right now seems to go in the direction of greater Spotification, more “walled gardens”.

Lincoff believes that his idea has better chances for response in Europe and Canada than in the United States. He argues that American policy tends to be so manipulated by lobbyists so that a proposal like this would have small chances for positive feedback and even less chance of being implemented – despite the fact that the entire business model he criticizes is in decline, perhaps even risking complete meltdown.

Personally, I assume that we in Europe and Canada also have a political culture that permits the idea of (corporative, state-sanctioned) licenses of the kind he is advocating. We already have TV licensing schemes based on the British model in many European countries; a license which now risks being expanded to include computers as well as TV sets, argues Swedish centre-right MP Karl Sigfrid, who was sceptical against this during our conversation with Lincoff. The idea of a general broadband tax has been drummed up among parts of the Swedish left as a kind of panacea, despite the idea having been rightly criticized for being both naïve, clumsy and, in fact conservative.

In that view, Lincoff’s proposal of a transmission license is more realistic. It would especially be good if it was designed so that the redistribution of the money was targeted directly to the songwriters and performers, rather than through record companies. Ideally, it could also give money to those artists who are not tied to any record company while still having a major hits online, via those channels that are still seen as “alternative” today (YouTube, file-sharing, MySpace, Last.FM).

Sure, Lincoff’s ideas require a bureaucratic framework administered by collecting societies and legal agreements – much like already existing licensing schemes, which can be criticised for always being somewhat arbitrary and general – and certainly it still transforms culture into a form that divides the multitude of actors into formally defined transmitters, receivers, consumers and producers. But it is a radical departure from the idea of selling copies, and it seems like a more sensible way of organizing business than we see today. This type of structural shift is something that almost always happens in media history, albeit with completely different outcomes depending on the respective materiality of each medium, and the surrounding historical facts. But that is another story.

This is a translated version of my original Swedish posting, here.

  1. I think you are exactly right in how you distinguished my proposal from the “broadband tax” as proposed by Jenner, Wallis, Leonhard and Fisher.

    I think that you are correct in your observation that there will be a strong need to “sell” any new paradigm to the P2P community. I also agree that my proposal will “never cover all users,” that there will always be those who refuse to participate in a lawful marketplace. However, I think that my proposal actually marginalizes the negative impact of the Darknet. As long as the music industry’s fortunes are no longer tied to its sales-based revenue model, the fact that there are (even many) unlicensed P2P file or stream-sharers will not undercut the market for the digital transmission right over all. Whereas, of course, a single unlicensed file sharing group could completely and nearly instantaneously undercut the market for the sale of a new recording.

    As to Spotify: Another shortcoming of this model is that the record labels own a significant (approx 20%) equity share of the company. Therefore, considerable amounts of money that otherwise would have been part of the royalty pool for authors, publishers and artists is withheld entirely for the benefit of the labels alone.

    As to royalty distribution generally: Please don’t forget that my proposal provides that authors, publishers, artists and labels shall each be allocated a 25% share of all royalties to be paid from license fees earned from digital transmissions (whether downloads, streams, uploads, sharing, or otherwise) of their recordings. I disagree with those who want to exclude the labels from the group eligible to receive royalties. But, by the same token, my proposed new apportionment would give the singer-songwriter a 50% of every Euro earned from digital transmissions. That is much more than artists as a group have ever received.

  2. […] version av detta inlägg finns här, inklusive kommentar från Lincoff […]

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