Andrew Harrison: Music industry embraces spirit of co-operation

In the past month there have been three high-profile developments in the previously somewhat private and arcane world of music rights licensing. All have implications for media owners and platforms.

First, six of the UK’s biggest ISPs – including BT, Virgin Media, BSkyB and Carphone Warehouse – have agreed a plan with the music industry to tackle the illegal file-sharing of music. The deal is either hailed as a breakthrough in rights practice or a huge own goal in customer relationship management for ISPs, depending on where you sit in the argument.

On the one hand, music industry advocates argue that this voluntary, industry-led approach is the start of a mutually beneficial process to unlock the true value of digital music. On the other hand, critics are astonished that ISPs would send threatening letters to their own subscribers for apparent illegal activity that they conduct via their platforms.
It’s a bit like the Royal Mail being asked to police the daily post for signs of fraudulent letters.
This urge to prosecute consumers who enjoy freely available music is also behind a second aggressive move from the rights holders. Throughout June and July thousands of small businesses – especially offices and factories – have been sent a series of threatening letters, outlining steep fines or the threat of court action for those who don’t have a licence to play music in a public place.

Now, all of us who enjoy music would agree that songwriters and musicians should receive fair payment for their work, but threatening legal action against small businesses means that they are far
more likely to switch the music off all together. This means less music consumption all round and therefore less money going back to the songwriters and musicians. It is clear that who pays the piper doesn’t so much call the tune as risk the threat of legal action.

Finally, media owners fought back to secure a controversial EU decision that bans certain copyright handling practices of the European music licensing bodies that had been identified as anti-competitive. This should reduce some of the current barriers to the provision of music across borders and afford European broadcasters more opportunity to obtain pan-European music licences from a single collecting society.

All this reflects the well-documented turmoil in the music industry across the last decade, with significant pressure on revenues as technology and digital file sharing transform an industry whose business model was based on repeat purchasing of the same content in new formats – vinyl, tape, CD.

Technological convergence and the rise of the consumer have fundamentally altered the music creation/music use value chain. What’s now apparent is rights holders have a clear choice – do they recognise the mutually beneficial and symbiotic relationship with those who pay for and promote their music, or do they threaten to prosecute their key customers?

Put in those stark terms, it’s obvious that partnership is the only way forward. In the media sector, boundaries are increasingly blurred between content owner, platform and consumer.

In the music world, new partnerships that continue to recognise and value both the output and joy musicians bring to consumers, as well as the commercial value that broadcasters bring to musicians, are the only way forward.

The commercial radio sector, for example, is the biggest customer for music rights in the UK and is therefore the biggest contributor to artist royalties. Moreover, every single plugger at every single record label confirms radio’s vital role in the promotion of music. It’s a symbiotic relationship.

The key will be to establish mechanisms to use this mutually beneficial relationship to best advantage – in the fight against piracy, or the development of new promotional opportunities, for example. Companies like Virgin Radio, with its planned subscription music service, or GCap media, with its iTunes download deal, are leading the way in commercial deals that enhance relationships with record labels in a way that is out of scope for the publicly funded BBC.

These new deals confirm that the days when a monopolistic supplier of rights could hold customers to ransom are gone. Instead, new partnerships will foster a growth in music listening for all, building revenues for broadcasters and musicians together.

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