Wide Area News
Facing the music
by Russell Brown
Record companies have new ways to make money from their artists’ tunes.
Music copyright owners and composers are outraged by the implications of the rapidly spreading new technology, and are responding by unleashing lawsuits to try to stymie what they regard as the illicit use of their property.
Sound familiar? It should, but perhaps not in the sense you think. The narrative above is nearly 100 years old, and it relates not to the internet but to the advent of another medium: broadcast radio. It is related on the website of the American cyber-rights group the Electronic Frontier Foundation (EFF).
What happened next was not the collapse of either radio or the music business, but an accommodation. For the right to play music, radio stations would pay a blanket fee to a collecting society, which would distribute it among its members.
This is the system that still operates in most countries, including New Zealand, where the Australian Performing Right Association (APRA) and Phonographic Performance New Zealand (PPNZ) take an agreed share of commercial radio revenues. APRA operates a similar system for live performances and businesses (such as gyms and cafés) that use music.
This is the model that the EFF and others believe will solve the music industry’s problems with the internet: a global fee levied (the EFF suggests a monthly rate of $US5) from internet service providers, which will add it on to customers’ bills. In return, both the ISPs and their customers will be freed of the risk of copyright infringement. And the industry will make billions of dollars annually – more money than it makes now, in fact.
There are many questions about such a solution, not least the fact that the borderless nature of the internet makes a nonsense of national collecting agencies. But the basis of a system to track the use of music already exists in the form of companies such as BigChampagne, which monitors file-sharing trends and sells the information for use in record company marketing plans.
One implication is that this solution would make digital retail sales almost irrelevant. That’s a scary idea if you’re a business – like, say, a record company – premised on retail sales.
But it’s hard to escape what’s already happening. With the record companies laying off staff, APRA last year declared its best annual result yet, with gross revenue of $A141 million, almost 90 percent of which was passed on to nearly 50,000 members. APRA’s sibling agency, AMCOS, which collects royalties on the reproduction and distribution of copyright works (which these days include the likes of mobile ringtones and the use of music in commercials) pulled in another $48 million.
There is another dimension to this. Many commentators agree the role of radio is changing. Negotiations on royalty rates have long been premised on the idea that radio play is, in part, an advertisement for new music. But most commercial radio stations concentrate more now on playing music that listeners already know. They’re using music, cheaply, and the focus of music discovery has shifted to the internet.
You can see this shift in action at websites such as last.fm and Hype Machine (hypem.com). Hype Machine aggregates hundreds of “MP3 blogs”, where individual fans post tracks they’ve ripped themselves, and allows the tracks to be played on (but not downloaded from) its site. Although it scrupulously provides links to online sales on iTunes and eMusic and “best price” CD deals, it breaches copyright.
Yet independent record companies in particular would rather have their artists all over Hype Machine than not, and some positively welcome it. And you’re more likely to have heard that hot new band at the Big Day Out on Hype Machine than on your local commercial station.
Radiohead, famously without a record deal since it declined to renew its contract with EMI, was huge on Hype Machine after its name-your-price stunt for downloads of the new album, In Rainbows. About 45 percent of “customers” paid an average of $US6 each. The hype then helped sell truckloads of a subsequent licensed CD release. Radiohead made more money, more quickly, than it ever had. Not every act is Radiohead – but In Rainbows served to suggest that the music business is already a very different place than it was.
Email: russb@dubwise.co.nz
