Public Interest in Collective Licensing #iaspm2017

Richard Osborne, University of Middlesex (UK)

‘Where is the Public Interest in Collective Licensing?’

Queen Anne
Queen Anne. Not even the implementation of a groundbreaking copyright act during her reign could cheer her up.

ABSTRACT: In 1841, Lord Macaulay argued that copyright ‘produces all the effects which … mankind attributes to monopoly … to make articles scarce, to make them dear, and to make them bad’. Popular music has witnessed the reverse. The music industries’ most obvious monopolies are the collection societies. Collective licensing makes music abundant (blanket licence schemes, in particular, provide unfettered access to music) and it prices it democratically (all music costs the same). Collective licensing has shaped our musical environments. It is the reason why, in theory, any song can be broadcast or played in public premises. It is being weakened. Artists, labels and publishers are withdrawing from licensing schemes for streaming. Entrepreneurs are proposing blockchain systems that will do away with the need for collection societies. It is licensors and licensees who have dominated narratives about collective licensing. Questions of ‘public’ interest have been focused on how much businesses should pay and how much creators should receive. It is the argument of this paper that music consumers need to enter these debates. If collective licensing is eroded then music will become more expensive and scarce.

Richard’s favourite form of music, he says, is blanket licensing! He intends to advocate, today, for the needs of the public. Are [copyright] monopolies always inherently ‘evil’?

When campaigners want to limit the scope of copyright, they call on the public. This is an age-old tradition. We see the statute of Anne, and Richard discusses the concept of copyright as a benefit to creators and to society, citing the US constitution and the European declaration of human rights as evidence. He goes on to interrogate the ‘monopolies are evil’ narrative in some detail, providing UK music industry business-to-business figures 2010-11 as illustration.

One argument is: “a book that is protected by copyright will always cost more than one that is in the public domain.” Richard argues that the ‘book’ argument is spurious in application to music, because the scarcity and distribution is so different.

We look at three licences – venues, radio, and streaming. In most countries people voluntarily engage with the monopolies – in fact, most PROs in most countries are themselves monopolies. From a PRO’s point of view, the music is priced fairly, and in many cases free to the public.

What are the options? Making Music Dear? Making Music Scarce? Scarcity is difficult; and all music is priced the same, regardless of popularity. PROs do not make music scarce – they may it widely available to everyone. Blanket licensing works for PROs and for consumers. The BBC, for example, pays millions to PRS in the UK for a blanket licence to use the entire catalogue.

NBC once tried to pull out of ASCAP because they allegedly only wanted to use 2217 songs – they tried to reject the idea of a blanket licence.

We see the same 1994 figures that Kenny’s presentation showed previously (unsurprisingly – this was the last year that PRS published distribution figures with this level of detail).

Richard talks about ‘current hits’ and ‘classics’ which are US ASCAP / BMI special bonus categories – a higher royalty rate for these premium songs. The US, Richard says, is a skewed market because it, unusually, has two competing collecting societies/PROs.

Richard’s view is that the UK system (due to blanket licensing) is not necessarily winner takes all – rather, it is ‘winner’ supports ‘loser’ to some extent.

He is, generally, not entirely dissatisfied with the UK status quo of blanket licensing. The cost of music in public places (bars, hairdressers etc), for example, is simply passed on to the consumer via the goods and services they access in these spaces. PRS and PPL are primarily business-to-business operations. Government investigations into these organisations (PPL in 1988, PRS in 1997) had positive findings [see Richard’s blog for more on this].

So what of streaming? There is a public interest in B2B licensing, and Spotify does not have 100% of the repertoire – they don’t have a blanket licence [JB note – being private businesses, perhaps they shouldn’t? But I agree with Richard’s point – that the streaming services don’t provide a straightforward public benefit through blanket licensing, and the disparity of royalties between airplay vs streams is significant].

There is more good music in TV shows in the UK than the US pro rata, Richard argues, because of the BBC blanket licence. There are still a few anomalies from opt-out publishers (it’s not possible to hear Journey’s Don’t Stop Believin’ on BBC iPlayer) but generally the blanket licence works really well.

A lack of blanket licences is more likely to lead to winner takes all outcomes, with the income distributed disproportionately towards hits through per-song licensing.

Richard concludes with a discussion of the ‘blockchain solution’, of which which Berklee’s Open Music Initiative is the best known example at the time of writing, even though he implies that it may, eventually, obviate the need for PROs.


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