Music: December 2006 Archives


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Madness at Wembley Arena

Baggy Trousers was one of the first pop songs that really made an impact on me back in 1980 or so. I learnt all the words from Smash Hits (or maybe Number One). But I don't think I've seen Madness live before... until last night. Wembley Arena was a heaving throng (far fewer seats than at Springsteen a few weeks ago), with lots of moshing up front.

I managed to smuggle my camera in - well actually it was spotted in my bag and I was told to deposit it with reception. I seemed to get lost on the way. I also inadvertantly brought in a hip flask (dropped into the lining of my coat at the last moment), and the worst thing you can take to a gig - the single thing that all concert venues ban. Yes - a bottle of water brazenly sitting there on display on the side of my bag. I think the security guard was more worried about the camera.

Anyway, more samizdat photos on Flickr.

Copyright Extension


I wrote at length about the Gower Review the other day, and in particular the section related to music copyright extension. Towards the end I noted that an advert had been published in the FT listing the names of 3,500 - 4,000 people who were in favour of the extension.

If you don't read Boing Boing, or get overwhelmed by the volume and skip bits, you may have missed that some of signatories of the petition are actually dead. More at ORG.

The Gower Review


This week has finally seen the publication of the Gowers Review of Intellectual Property conducted on behalf of the Treasury, and the departments of Trade and Industry, and Cutlure, Sport and Media.

All the press reports have been about the need to protect intellectual property rights more rigorously from pirating and counterfeiting. There are also notes that consumers should be able to legally copy their CDs to their MP3 player (What? You didn't know that as it stands, it's illegal to copy your CDs to your iPod in the UK? Lawbreaker!), and buried away at the bottom of the press release is the following:

"[the review is] recommending that the European Commission does not change the status quo and retains the 50 year term of copyright protection for sound recordings and related performers' rights."

This isn't what the BPI wanted to hear of course. Indeed, here's their response in which they vow to fight on to increase copyright to 95 years.

The Gower Review does a rather good job at knocking down the main arguments made by the record companies and other parties, for extending the period to 95 years. Allow to me to quote at length. It's very readable, honestly:

Extension achieves parity with other countries (e.g. the USA where sound recordings are protected for 95 years)

It is important to note that the term of protection is only one factor determining the royalties that artists and recording companies receive. The breadth of protection is also important. In the EU, the term of protection for sound recordings and performers' rights is harmonised at 50 years. During this period, rights holders receive royalties for almost all public performances of their work. In the USA, the term of protection is 95 years, but under the Bars and Grills Exception around 70 per cent of eating and drinking establishments, and 45 per cent of shops, do not have to pay royalties to performers. In the USA, performers only receive royalty payments when their music is played on digital radio, while in the UK all radio performances carry royalties. If the system in the USA was the same as that in the EU, estimates suggest that European rights holders would receive royalties of $25.5 million per annum for the broadcasting of their recordings in the USA. It is therefore possible that the total royalties received in the EU is no less than, and may even be more than, those received in the USA.

The argument has also been put forward that the longer length of term in the USA encourages artists from the UK to sign to US recording companies, thereby remitting profits to the USA. However, the Review has seen no evidence of UK bands choosing to sign to US labels based on copyright term. If musicians are indeed signing to labels in the USA, there may well be other reasons for doing so, such as the size of the market. In fact, there is anecdotal evidence that bands from the USA are signing to UK labels to develop in a vibrant music scene. For example, the Scissor Sisters are signed to Polydor UK, and their first album sold 2.6 million copies in the UK, and only 130,000 in the USA. Orson, another American band, achieved a number one single with "No Tomorrow" and is signed to Mercury Records in the UK.

Performers and composers should have equal protection (Composers get copyright protection for life plus 70 years, whereas performers and producers only get 50 years)

Performers argue that the incentives to perform are no less than those required to write lyrics or compose a score, and that the performance itself is a work of art. The distinctive voice and aesthetic of the performer adds value to the composition and is vital to making a song a commercial success.

But the fairness argument applies to society as a whole. Copyright can be viewed as a 'contract' between rights owners and society for the purpose of incentivising creativity. As MacCauley argued in 1841, "it is good that authors should be remunerated; and the least exceptionable way of remunerating them is by a monopoly. Yet monopoly is an evil. For the sake of the good we must submit to the evil; but the evil ought not to last a day longer than is necessary for the purpose of securing the good". If the exclusive right granted by copyright (or indeed any other form of IP right) lasts longer than it needs to, unnecessary costs will be imposed on consumers.

Economic evidence indicates that the length of protection for copyright works already far exceeds the incentives required to invest in new works. Boldrin and Levine estimate that the optimal length of copyright is at most seven years. Posner and Landes, eminent legal economists in the field, argue that the extra incentives to create as a result of term extension are likely to be very small beyond a term of 25 years.

Furthermore, it is not clear that extending term from 50 years to 70 or 95 years would remedy the unequal treatment of performers and producers from composers, who benefit from life plus 70 years protection.

This is because it is not clear that extension of term would benefit musicians and performers very much in practice. The CIPIL report that the Review commissioned states that: "most people seem to assume that any extended term would go to record companies rather than performers: either because the record company already owns the copyright orbecause the performer will, as a standard term of a recording agreement, have purported to assign any extended term that might be created to the copyright holder". The British Phonographic Industry (BPI) submitted a report by PricewaterhouseCoopers (PWC) to the Review. Using the maximum revenues predicted in the PWC report, CIPIL estimated that the net present value (NPV) of a prospective change in term would be 1 per cent or lower for performers. The report noted that distribution of income would be highly skewed, with most income going to the relatively small number of highly successful artists whose work is still comercially available after 50 years.


Extension will increase the supply of new music (Extending the copyright term would encourage more investment in new music due to the increased period available to recoup the outlay)

Investment decisions are typically based on the expectations of future returns. Therefore, in order for the incentive argument to hold, it must be shown that prospective extension of copyright term for sound recordings would increase the incentives for record companies to invest in new acts.

In an amicus brief to the Supreme Court in the challenge to the Copyright Term Extension Act, seventeen economists, including five Nobel Prize winners, estimate that extension for new works creates at most 1 per cent value for a twenty year prospective extension (using NPV calculation) and they conclude therefore that extension of term has negligible effect on investment decisions. Furthermore, they noted that the then term of protection in the USA had nearly the same present value as perpetual copyright term. As such, many economists suggest that increasing copyright term beyond 50 years does not provide additional incentives to invest, as monies earned so far in the future fail to impact on current spending decisions.

The incentives argument is sometimes applied to artists as well as to record companies. That is, if musicians were to receive royalties for an additional period of time, they would have more incentives to make music. This seems highly unlikely given there are a large number of bands already creating music without any hope of a financial return. Dave Rowntree, drummer with Blur and The Ailerons, commented that: "I have never heard of a single one [band] deciding not to record a song because it will fall out of copyright in 'only' fifty years. The idea is laughable."


Evidence suggests that most sound recordings sell in the ten years after release, and only a very small percentage continue to generate income, both from sales and royalty payments, for the entire duration of copyright. Before becoming a signatory to the Berne Convention the USA operated a system where copyright had to be applied for and renewed. Between 1923 and 1942, there were approximately 3,350,000 copyright registrations. Approximately 13 per cent of these were renewed. If current law had applied between 1923 and 1942, 3.35 million works would have been blocked to protect 77,000 commercially viable works. In a system where all works receive protection for the maximum term, the vast majority of works remain in copyright despite not being economically viable for the rights holder. Without registration, it is difficult to get accurate estimates of the percentage of works protected in the UK by copyright that are commercially available. Box 4.3 [above] shows that the vast majority of income for sound recordings and books are generated within the first few years of issue. Therefore, extension would only raise revenue for a small minority of sound recordings, keeping the vast majority locked up.

More music would be available to consumers

Extension would impact on all recordings. It would keep works in copyright even when they are not generating any income for rights owners. One study found that parties without legal rights have made more historic US recordings available than have rights holders. Furthermore, rights holders reissue recent works while largely ignoring earlier music. Of the sound recordings published between 1890 and 1964, an average of 14 per cent had been reissued by the copyright owner, and 22 per cent by other parties. These statistics suggest that the costs of renewing copyright or reissuing copyrighted material are greater than the potential private return, but that these works may have enduring social and cultural value.

The lack of commercial availability impacts upon consumers and users, but it is also worth noting the impact this has for all creators and musicians. Chapter 2 noted the increasing prevalance of licensing and the complexity of rights clearance. If works are protected for a longer period of time, follow-on creators in the future would have to negotiate licences to use the work during that extended period. This has two potential implications: first, the estates and heirs of performers would potentially be able to block usage rights, which may affect future creativity and innovation; and second, this would make tracing rights holders more difficult. Thus extending term may have negative implications for all creators.


The UK's trade balance would improve

The argument that the balance of trade would improve makes two assumptions; first, that increasing term is necessary to receive longer terms in other countries; and second, that because the UK is a net exporter of music, more money will flow in from foreign markets. The CIPIL report argues that this is not the case.

Firstly, the term of protection depends on where a recording is played, not on where it was produced; therefore term extension would only be beneficial to the balance of trade if UK copyright owners were able to benefit from longer terms in other countries. However, most countries outside Europe, including the largest foreign markets for international repertoire - the US and Australia - do not apply a 'comparison of terms' to the protection granted to sound recordings. This means that the term of protection offered in a foreign country is not dependent on the country of origin of the sound recording. UK copyright owners already benefit from the longer term offered in the USA and Australia where royalties are collected from those countries, and the CIPIL report notes that changes in British law would not now affect the term granted to British phonograms.

Secondly, the CIPIL report show that the US market, which is worth $12,153 million, comprises only 5 per cent of international repertoire. In comparison, the UK market, worth $3,508.7 million includes 43 per cent of international repertoire. Thus whilst the UK music industry is extremely successful, the UK is a substantial importer of sound recordings, and therefore the extra revenue from 43 per cent of international sound recordings sold would be remitted overseas. In combination, extension to UK sound term would cause little additional in-flows, but would increase remittances abroad. Therefore, as the CIPIL report concludes, "increasing copyright term at home from 50 to 70 or 95 years is likely to have a disproportionate, negative effect on the balance of trade."

Increasing the length of sound term increases the length of time during which royalties accrue. Once copyright in a sound recording ends, no royalties are due for that recording, and fewer licences are required to play those songs (copyright in the composition would continue, and therefore would continue to require a licence). PPL collects monies to remunerate rights holders whenever their sound recordings are played. In 2005 PPL collected £86.5 million from venues, premises and broadcasters to remunerate rights holders. The majority of this was collected from UK organisations and broadcasters. Because the cost of the licences reflects the royalties payable on the copyrights, as those copyrights expire, so the cost of the licences will fall. Term extension would keep the cost of sound recording licences higher for longer. Extension would increase costs for all businesses that play music, for example hairdressers, old people‚Äôs homes, local radio and internet service providers (ISPs). The impact of extension would therefore be felt throughout the economy.

In conclusion, the Review finds the arguments in favour of term extension unconvincing. The evidence suggests that extending the term of protection for sound recordings or performers' rights prospectively would not increase the incentives to invest, would not increase the number of works created or made available, and would negatively impact upon consumers and industry. Furthermore, by increasing the period of protection, future creators would have to wait an additional length of time to build upon past works to create new products and those wishing to revive protected but forgotten material would be unable to do so for a longer period of time. The CIPIL report indicates that the overall impact of term extension on welfare would be a net loss in present value terms of 7.8 per cent of current revenue, approximately £155 million.

So there we have it. Let's hope that despite the blustering of the BPI - which includes a full page ad in yesterday's Financial Times reading "fair play for musicians" and signed by such luminaries as Sir Paul McCartney and Sir Cliff Richard, U2, Yoko Ono, Barry Gibb, Petula Clark and Dame Kiri Te Kanawa - that EU continues with the status quo.

Today's FT has a letter from Jill Johnson, Director of Policy of the National Consumer Council, arguing that, if anything, the period should be reduced. And in a leader in today's Guardian also expresses disappointment that reducing the period wasn't an option that was examined. It uses the pharmaceutical industry's model as an example, where protection is limited to 20 years before others can replicate the drug. The pharmaceutical industry still invests billions in research and development. Read the comments below that Guardian leader too.

About this Archive

This page is a archive of entries in the Music category from December 2006.

Music: November 2006 is the previous archive.

Music: February 2007 is the next archive.

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