While piracy remains an oft-cited problem for the creative content industry, it is the ‘Byzantine maze’ of copyright law that is stalling monetisation of new business models better designed to deliver content in the digital age, panellists at the World Intellectual Property Organization said last week.

The internet has presented the “greatest opportunity in human history,” said Joe Kennedy, CEO of internet radio service Pandora (currently only available in the United States). The digital era has provided chances for “expansion of access to culture,” an inexpensive way of forging between people, and an “opportunity for millions of content creators to connect with billions of consumers around the world.” he said. “Creators benefit from [a] bigger audience [and] market; consumers benefit from greater choice.”

But the problem is that this market “is extremely inefficient” and copyright a “Byzantine maze” one must navigate, said Kennedy. “Copyright is more important than ever, but the copyright framework that exists today will not allow the opportunity to be realised.” `

Critical changes to the copyright system need to be made with the “same urgency” as the fight against copyright piracy, he said.

“We are going to end up in a purely digital world.” said Scott Martin, executive vice-president of IP and associate general counsel of Paramount Pictures in Hollywood. “The difficult part is the transition.” He predicted streaming, rather than downloading, would be the future for content.

New business models are already springing up, but it has proved difficult to make them work, said several speakers on a panel called Licensing Content Online: New Trends. The panel was a part of an event on copyright in the digital environment, held at the World Intellectual Property Organization on 4-5 November.

The system as it is set up “does not permit us to maximise the economic benefit to rights holders,” said Zahavah Levine of digital media giant YouTube.

“Millions of dollars in YouTube is sitting on the table unearned by YouTube or content owners because of the complexity of the [copyright] system,” which she agreed was a “Byzantine maze.”

Collective licensing approaches designed for digital music services and the “rationalisation of inefficient national services that ultimately conspire to diminish compensation to creators” are important steps, Kennedy said.

Other panellists said companies should look to online streaming rather than downloads, developing markets, and subscription services as potential future outlets for business in the creative arena.

New Models in Music

One potential new model that made headlines in recent years was the release of the album In Rainbows by Radiohead. The band released the album online and allowed users to pay what they wanted – including nothing at all – for the music during the first several weeks of its release. Another band, Nine Inch Nails, later released two albums under a Creative Commons licence. Radiohead’s manager, Brian Message, spoke to Intellectual Property Watch at the WIPO event. Message is also chairman of the Music Manager’s Forum (UK).

This “notion of control of [a] copyright” is a “fabulous financial engineering tool,” Message said in the interview. That mechanism for investing is attractive because it is “something that the financial world understands,” and that “drives capital into the business.”

Traditionally, artists sell or long-term lease their music to a record label. But that causes “disharmony” because one party has a different objective than another party, Message said. So there is an “artist versus label” mentality – “and it doesn’t have to be that way.”

Message is trying a new model. In music, as in any other business, you have small start-ups, he said. Young artists are like a start-up, and treating them as such yields a very different business model than the traditional one of fractured copyright ownership. Instead, there is an “investing partnership” where there is “aligned financial interest” between artists and manager.

In his model, artists retain their own copyright. “I like artists owning their own rights; it is very empowering,” Message said. This new investment model allows a great deal more creativity in how music is monetised, as the artist and manager “exploit the world together” in ways that can go far beyond just album sales and merchandise, he said. During the panel he also said he appreciated “new trends where artists and consumers can collectively work together, [and] a licensing arrangement that is not about control, [and] not about exclusive rights.”

One example of this is the band McFly, he said. After being dropped from their record label, the band launched a new website and charged £40 to be part of it, limiting the number of potential members to 10,000 people. They sold out in a morning, and had 55,000 requests, Message said. This is “not about hits or album sales but about the relationship between artists and the fan base,” said Message.

“One of the major trends [in the digital age] is the development of this two-way relationship between the creator and the fan,” said Message. Peer to peer sharing – often seen as an enemy by the recording industry – “forms an important part of that relationship, it’s an important dynamic,” he said. Several artists have used” peer to peer networking as a way to develop a business.

Another example is the band Metric, which sold stems to its songs (that is, the individual components of the songs, such as voice or base, separated to allow for easy remixing) for $2, encouraging people to remix them. Within four weeks, Message said, there were 12,000 remixes. These remixes were re-issued under a Creative Commons licence, useful for their flexibility. It is “not so much the existence of copyright but how it is used,” he said, adding “let’s liberate it.”

“Part of my challenge,” said Message, “is trying to get investing communities to see young artists and young talent the way they see young businesses.”

In a €1 billion euro investment plan intended to jump-start small businesses in the United Kingdom, none went to music. Message said he had tried with a start-up band called The Rifles but they were unable to get any banks to give them money. They were told, said Message that “if we were a Domino’s pizza franchise we would have gotten” the loan, but the banks cannot “get their heads around the complex environment of music.”

New Models in Video

“The biggest issue [in copyright] is administration … how can we pay you for what you control if we don’t know what you own?” said Levine, adding that collection societies often resist telling YouTube what they own and that there is no publicly available database that provides this information.

The video of a birthday party with a hit song in the background has several rights holders: the user who took the video (and owns the visual), the song (most likely owned by a record label), and then often several music publishers who own the music publishing. All must be contacted for the video to be monetised, and often country-by-country through different collection societies.

To make matters worse, it is often unclear what collection societies control what songs. “It’s a nightmare, and if we do not fix it, if we do not simplify licensing and create a global rights database, we will continue to leave millions and millions of dollars on the table,” she said.

Francis Keeling, vice president of digital for Universal Music International in London stressed that even with new models, “piracy is stunting the growth of everything we are trying to do. It is impossible to compete with free.” This launched an extended conversation on the oft-cited example of bottled water and whether or not it is relevant to the creative content industry.