Music licensing continues to be a subject creating much heated discussion and debate.We recently complained that some rights holders are clinging to outmoded attitudes about the rights they hold and the way in which the value of those rights should be calculated. Specifically, we complained that some licensors cling so hard to an economic model where there must exist a set minimum value for use of a song that they end up stifling innovation and new services. The negative impacts of such attitudes can currently be viewed clearly in Spotify’s failure to secure a license from Gema to launch in Germany. Closer to home, ambitious UK launches such as Virgin Media have come unstuck when faced with inflated payment demands which cling to old models and fail to grasp possibilities for lower per-use revenues, but with much larger economic scale.
Google recently complained about the huge complexity faced by any one seeking to license music rights. At the time we took its complaints with a pinch of salt, arguing ‘if Apple and all these other digital service providers can do it, so can Google’. But this justifiable viewpoint probably doesn’t do enough to admit the massive challenges which are faced by those who seek to license music. The complexity of the rights model challenges faced by such companies were beautifully illustrated this week in a graphic provided by Pure at the launch of its 7digital and Shazam affiliated FlowSongs service - check it out. Make no mistake, the picture of music rights faced by potential licensees is incredibly complex, fragmented and a huge cause of friction. This graphic doesn’t even tell half the story about the number of clearances which a service mush attain – consider the fact that ‘Record Companies’ are grouped as one single entity here, whilst clearing ‘CELAS and other overseas societies’ similarly involves multiple individual negotiations, not just one as depicted in the diagram.
No one can argue that the music rights picture isn’t overly-complex. But we hear very little in the way of useful suggestions about how it can be simplified. Indeed, recent attempts to improve things actually achieved the opposite – we think specifically of EU demands for pan-European licensing which created a whole new tier of societies such as Celas, which demands an additional layer of clearance on top of the local rights bodies in each territory. Simplification doesn’t come easy. We quite understand why, for example, record companies would not willingly hand over the administration of all digital rights to an organisation such as PPL – it involves a loss of control over the rights which are their most important asset. With this understood, some voices in the industry argue that a compulsory licensing approach is the only one which massively simplifies rights clearances and encourages widespread innovation. Problems with such plans however include that they would also require the establishment of a massive new layer of administration of rights, whilst they could also decimate the existing legal music market and destroy those companies which have successfully managed to navigate the existing rights minefield.
Could there be a third way? We take some interest in the joint initiative of music publishers and digital services to establish a Global Repertoire Database – currently inviting proposals from developers. This initiative seeks not to change the entire licensing model but to greatly simplify the process of identifying who owns which rights. It’s not a new idea – a number of similar proposals have been mooted since the late 90s. Nevertheless the scale, forethought and ambition involved in this new project is indeed serious. The existence of an authoritative global source of music rights info would be hugely welcome. However, several key issues remain unclear. Most importantly – who will own this database and how will it be funded? Can the organisation which builds the database justifiably charge for access to data which they may have compiled by doesn’t ultimately belong to them? Will rights holders view the access to this database as a revenue opportunity rather than an enabler? We’d love to imagine a free to access, global resource for rights information but we suspect this is not what’s going to be delivered. In the meantime, licensing music remains a sticky, complex business requiring massive patience and determination. Anyone got any good ideas?
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