During the last decade, there has been a rapid growth and development of the Internet as a source of music acquisition and as a consequence challenging the established ways of managing music rights, and the collection of royalties. The digital music market is also challenging the business structure of the record companies. Essentially, the current structures are from another era, especially when you consider music licensing and the collection of royalties across international borders. The existing system is arguably no longer fit for purpose.
Recent figures suggest that sales of compact discs (CDs) are declining in Europe and USA at an annual rate of about 12% to 15%. To illustrate the problem of keeping up with the digital music market, Warner Music Group's revenues fell 15% in the last quarter of 2010. Figures reflect that digital sales rose 1.6% to $187 million, but represent 23.7% of the company's total sales. Digital revenues for Warner's publishing business fell 26.7% to $11 million for the final quarter of 2010.
DIGITAL REVENUES FOR WARNER’S PUBLISHING BUSINESS FELL 26.7% TO $11 MILLION FOR THE FINAL QUARTER OF 2010.
Although there are many legitimate download sites such as iTunes, Pandora and Spotify, unlawful down loading and piracy remains a serious issue on a worldwide scale.
It is not all negative as an increasingly urban market and the rise of the Chinese economy is seeing a healthy interest in Western music and vice versa, much of it being provided digitally. Another driver is for instance the Indian film market whereby the films are becoming more popular worldwide, including the accompanying soundtrack music.
Some countries have a fairly well developed system for registering ownership of copyright, and also to collect royalty payments due to a music publisher and/or the composer. As an example the United Kingdom's PRS (Performing Rights Society), and in the USA organisations for instance BMI (Broadcast Music Inc) and ASCAP (American Society of Composers, Authors and Publishers). However, the overall world system for collecting royalties, and data bases for identifying ownership of music is very disparate.
The IMR proposed report will intend to consider the following:-
- Identify the current system of information sources and registries for collecting data and royalties. This would be in respect of both music and sound recordings
- Identify how all these different bodies are linked together and coordinate themselves
- Consider how a basic global music industry information set up would work in practice
- The Report would identify the different dispute resolutions systems that are available worldwide
- Identify the various forums facilitating discussing and setting standards within the music industry
The Report is being prepared by Paul Jessop, Principal Consultant of County Analytics and Executive Director at the International Standard Recording Code (ISRC) Agency. It is hoped the report will be completed during May 2012.
Once the report has been prepared it will then lead to discussions as how best to implement its findings and recommendations. The World Intellectual Property Organisation (WIPO) will also provide additional comment, particularly regarding its involvement with dispute resolution.
There are a number of parties who have an interest in the outcome of the Report including Internet Service Providers(ISPs), mobile phone (cell) operators and device manufacturers. Also, there are all the other organisations and systems including RMO's (Rights Management Organisations), Performing Rights Organisations (PRO), DRM (Digital Rights Management), West African Network (WAN) and ISNI (International Standard Name Identifier), and IPN (International Performer Number). Hopefully, Mr Jessop will not overdose on acronyms in the preparation of his report.
THE PROPOSED REFORMS MAY NOT ONLY HELP THE MUSIC INDUSTRY, BUT THOSE WHO HAVE A NEED TO BE ABLE TO IDENTIFY OWNERSHIP OF MUSIC SUCH AS BROADCASTERS AND FILM MAKERS.
Hopefully, the outcome of his proposals will be to create a more unified system, and make it easier to identify ownership and other rights or entitlements, as well as a better and more effective method of collecting royalties especially in relation to digital plays.
As mentioned, WIPO hope to play a significant role in respect of dispute resolution for instance, if there is a bilateral dispute between countries then WIPO could be invited to act as arbitrator, or appeal authority of last resort. WIPO can provide a neutral forum for the music industry and has the capacity to assist developing countries to establish music management systems compatible with more developed international systems of information and royalty collection.
BluePencil will report in later editions as well as online at www.bluepencilset.com on the proposed reforms and also highlight the impact not only upon the music industry, but those who have a need to be able to identify ownership of music such as broadcasters and film makers.