YouTube And Others Hide Behind Safe Harbours, Bigger Threat Than Piracy, Music Industry Tells WIPO

If piracy is still very much a concern of the music industry, the growing shadow of free online streaming platforms, in particular YouTube, has now become a bigger stinger, according to speakers from the industry at an event at the World Intellectual Property Organization on 2 May. Hiding behind safe harbour legislations originally designed to protect internet service providers from being responsible for unlawful downloading by users, YouTube and other such platforms are threatening the industry and the artists, they said.

The International Federation of the Phonographic Industry (IFPI) organised an event on the state of the global music industry and its transformation for a digital age. The event took place on the side of the 34th session of the WIPO Standing Committee on Copyright and Related Rights (SCCR) taking place from 1-5 May.

David Price, director of Insight and Analysis for IFPI, presented the recently launched Global Music Report 2017 [pdf]. He said the numbers for 2016 raise “cautious optimism.” With a global revenue in 2016 of US$15.7 billion, the industry achieved a “modest” growth of 5.9 percent over 2015.

It might be modest growth but nonetheless the fastest rate in the last 20 years, he said, after the music industry’s revenue declined by about 40 percent since the turn of the century. In the last few years, Price said, there has been a “dramatic” impact from music streaming.

According to the report, digital income now accounts for 50 percent of global revenues.

Streaming generally comes in two options, he said: subscriptions or advertisement-supported audio streams. Main platforms include Spotify, Deezers, and Apple music. There was over 60 percent growth of on-demand streaming services in 2016, he said.

However, two issues remain to be tackled, he said: piracy which is a constant and consistent threat, and the “value gap.”

Value Gap, Abuse of Safe Harbours, Speakers Say

The value gap refers to safe harbour legislations, which were designed “in the young days of internet” to help passive hosting services to protect themselves against unlawful user behaviour, Price explained. However, active services like YouTube or Dailymotion promote and benefit from a large amount of music. They take advantage of the safe harbour legislations to protect themselves from negotiating fair licences with right holders, he said.

Jonathan Dworkin, senior vice president, digital strategy & business development at Universal Music Group, said the music industry’s mission is to create value for those who create music.

Simon Wheeler, director of strategy, Beggars Group, an independent record labels in London and New York, added that if the industry is not paid for their rights, artists cannot be paid either. However, getting paid fairly is difficult when all actors are not on an even playing field, he said.

There are a number of companies that are not operating on the same playing field and do not need licences because music is already on their services, said Wheeler. When it comes to revenue, he compared revenues generated by streaming services such as Spotify, and those generated by platforms such as YouTube. For the independent sector, Spotify represents a tenth of YouTube users, but generates 10 times what YouTube pays the company, he said.

The Global Music Report 2017 includes a chart showing the difference in returns to rights holders between user uploaded content (UUC) streaming services, and audio subscription services, both paid and ad-supported, that have negotiated licences with rights holders.

According to the chart, there are 212 million users of audio subscription services, ensuring a revenue of US$3.9 billion to right holders. In comparison, UUC streaming services are used by 900 million people (conservative number, according to the IFPI), and only yielded US$553 million to right holders.

Answering a question from the audience on whether the music industry would like to eliminate safe harbour laws, Dworkin said what the industry want to see addressed is the loophole in a law which was designed to keep internet service providers from being sued for people using unauthorised content. “It is the abuse of it that we want to see stop,” he said.

Asked about which is the biggest plague for the music industry; piracy or the value gap, Dworkin said the issue of safe harbour is the largest problem.

“Piracy is a very real problem but piracy … has plateaued to some extent,” he said. “The safe harbour issue, the value gap issue is monolithic and solvable,” he added. Wheeler concurred and said the value gap is “by far the biggest issue.”

Are Royalties from the Digital Pie Sufficient? What the Future Holds

According to Dworkin and Wheeler, artists are savvier about their rights, their revenue, and have more control over their career than before. Dworkin said this increased knowledge makes for more transparency as the artists understand how all the contributing revenue streams work.

Wheeler said that the mid-level of artists are getting “decent royalty checks,” every quarter or every half a year. For recordings which stand the test of time, the revenue stream are going to be “much more stable.”

However, a side event also held on 2 May by the International Federation of Musicians (FIM) said musicians and artists strongly disagreed on this view and said they do not get a fair share of the revenue in the digital age (story to come).

Price said that streaming is still at an embryonic stage, and comes mostly in binary options: subscription or ad-supported. There is room for a “huge amount of innovation there,” he said, such as offering high-fidelity streaming for a premium price for example. There is potential for new services, he added.

According to Wheeler, the strength of music is that it does not have to be the centre of attention. It can be included in any form of new media consumption, such like movies, sound background, even in virtual reality.

Dworkin added that streaming “is going to be deeper and wider,” and music is the most demanded content on the internet, “that [streaming] is unabated,” he said.

Most Popular Artists of 2016

According to the report, the most popular artists of 2016 were: Drake, David Bowie, Coldplay, Adele, Justin Bieber, Twenty one pilots, Beyoncé, Rihanna, Prince, and the Weeknd.

 

Image Credits: Catherine Saez