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Gridlock at the World Copyright Summit June 9, 2009

Posted by Bill Rosenblatt in Fingerprinting, Law, Rights Licensing, Watermarking.
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The World Copyright Summit convened in Washington, DC yesterday and continues today.  It wouldn’t have been as attractive to call the conference the World Collecting Society Summit, but that’s mainly what it was.  Many of the attendees were representatives of rights collecting societies like ASCAP, BMI, and their analogs outside of the United States.  The conference was organized by CISAC, the international umbrella organization for author and composer collecting societies headquartered in Paris.

If there was one word that summed up yesterday’s proceedings, it was “gridlock.”  This term was introduced by Michael Heller, a Columbia Law School professor who spoke in the morning.  The word came from his book The Gridlock Economy, whose basic thesis is that too much ownership or property, including intellectual property, creates gridlock that results in underutilization of property and stunting of innovation.

As a rhetorical device, the word was extremely effective – perhaps more so than the conference’s organizers had intended.  Heller’s talk was the first of a small number of bombs thrown into what was otherwise an agenda filled with speakers from rights collecting societies, primarily from the music industry.  By lunchtime, “gridlock” was on everybody’s lips, and collecting society representatives found themselves forced to defend themselves against it.

It was hard to deflect charges of gridlock against content licensors when examples kept coming up of companies that had to understand and then negotiate several types of licenses to music – performance, mechanical, sync, etc. – in order to launch a service.  The most prominent case was on a panel that explored the relevance of collecting society models in the digital age.  Zahava Levine, chief counsel of YouTube, had to defend herself against executives from ASCAP, Harry Fox, and other agencies who ended up arguing over arcana such as unresolved differences among streaming, downloads, and cache copies of content.  With statements like “All we want to do is pay creators for content, but no one can tell us how,” and “’Gridlock!’  Finally, I am diagnosed!”, Levine won the rhetorical battle handily – even as the audience simmered with thinly disguised hostility during Q&A.

Yet even hotter sparks flew over pending US legislation that would establish a performance right for sound recordings.  The bill, which has cleared the House Judiciary Committee, would lead to another set of royalties that terrestrial radio stations must pay the music industry.  Proponents of the bill argue that it simply brings traditional radio into line with Internet and satellite radio, both of which pay performance royalties.  On a panel discussing new legislation, Ben Ivins of the NAB (the broadcasters’ trade association) had some testy exchanges with the RIAA’s Mitch Bainwol and Del Bryant of BMI over this.

While some speakers called for more efficient ways of licensing content rights, there were precious few panels on technological solutions.  One panel covered fingerprinting and watermarking for play counting and royalty reporting – that is, technological automation of existing rights licensing processes.  One attendee responded to a presentation by Steve Lubin of MediaGuide, a fingerprinting company owned by ASCAP, by asking why, if this technology is so widely implemented, it isn’t resulting in more accurate counting and reporting.  Lubin’s revealing reply: “Go ask ASCAP.”

This panel was one of three concurrent breakout sessions; encouragingly, it was much better attended than the other two panels and was standing room only.  The highlight was the presentation by John Utley of Civolution (the recent spinout from Philips Electronics), which was a superb primer on fingerprinting and watermarking and their utility in rights holder compensation processes.  Utley’s talk should have been pivotally educational to many of the attendees.

Otherwise, the collecting society executives who spoke at the Copyright Summit spent much of their time onstage preaching to the choir, defending their existing models, and squabbling over slices of an increasingly amorphous pie.  My unscientific poll of attendees during the opening cocktail party found that they were of two types: collecting society people, and people who said some form of “The collecting societies just don’t get it.”

It’s clear that copyright collecting societies truly appreciate the works of content creators.  Two panels’ worth of artists from many fields evoked heartfelt responses.

Yet it’s equally clear that they can’t merely keep on congratulating themselves on the job they do and complaining about pirates and free riders; they have to come up with better ways of licensing content for legitimate use.  Even such incremental advances as the 1997 merger of MCPS and PRS into a single UK music licensing entity seem out of reach for the US, and pan-European licensing is years away at best.  It was either hard or disingenuous to refute the assertion – made by many at the conference – that people are willing to pay to license content if it’s easy enough to do so.

Congressman Robert Wexler’s (D-FL) fiery lunchtime speech promised the new Obama administration’s commitment to strong intellectual property enforcement.  If Rep. Wexler stuck around the Reagan Center and listened carefully enough for the rest of the conference, he should carry the message into Congress that strong copyright is enabled by straightforward licensing schemes, along with technological innovations for greater accuracy and efficiency.

Comments»

1. Copyright, Copyleft, Copyfight and Digital Sharing « Clyde Street - June 10, 2009

[...] Downes (9 June) has linked to a post by Bill Rosenblatt about ‘gridlock‘ discussions at the World Copyright Summit stimulated by a presentation by Martin Heller. [...]

2. Stuart La Rocca Mitchell - June 10, 2009

Interesting article.

My 2cents is that the real problem here is that the means of distribution and production of all media have fallen in cost and increased in availability.

What this means is that the value relationships between the constituent parts of the chain from creation to reception have, from the creator and consumers perspective, changed – it’s the middle guys (think publishers and distributors) who are losing out here and (quite frankly) probably should.

When it costs next to nothing to package and distribute, why should publishers still receive the lion’s share of the end price?

3. Jim Bostwick - June 11, 2009

The problem with this theory is that while certain production costs have fallen, the marketing costs have skyrocketed. Publishers promote an artist’s music and create opportunities for that music to be heard. Very important. I find quite amusing that while a lot of people want to talk about how content has no value and yet people are not going on You Tube for consumer created videos. They are there for the music videos, movie clips, etc. Meanwhile Google and these other websites are making a fortune. Artist should be compensated for their work.

4. Bill Rosenblatt - June 16, 2009

Jim,

Thanks for your comment. There are, of course, many unresolved issues between YouTube and the music industry. However, there was no suggestion that Google/YouTube shouldn’t pay for content. It had to do more with the fact that YouTube launched a service that ended up having massive amounts of commercial content but did not pre-negotiate royalties before launching. This put the record labels and publishers in a weaker negotiating position. They would like online services to work out royalty payments in advance rather than “beg forgiveness” later.

The problem is all of the ambiguity in defining what licenses you need to launch your service. This is a separate matter from the amount of the royalties, but it’s related through the economic concept of “transaction costs.” This was the point that Michael Heller made in his talk. He took it as axiomatic (as do I) that artists should be paid for their work. His issue was over the complexity and cost to assemble bundles of rights necessary to use content in innovative ways.


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