Rights Registry

Last week, in the middle of the TED conference, I had the opportunity to talk to the Westminster eForum about file-sharing, remedies and how to move beyond the UK’s Digital Economy Act. As I’ve worked on this problem and explored what others have proposed as remedies, I am more and more convinced that Rights Registries are part of the solution we need to move to. In a digital networked world where our content moves around in mysterious ways, we need a digital networked solution to mirror and reflect that activity in order to create a new means of managing digital rights in a fluid marketplace.

But this cannot be a wholly owned solution, along the lines proposed by Google.  Instead we need authoritative metadata databases that are open to search and open to updates, that are regulated by governments, moderated by authorised boards and not-for-profit. This kind of structure starts to offer significant benefits over our current proprietary closed systems which are hemorrhaging rights owners revenues.  I have written a white paper based on my talk last week on the subject,  which you can download from here: The Rights Registry 1.5

I’m very interested to hear other people’s thoughts about how we move forward the development of real practical solutions for digital media on the internet,  based on going with the flow of consumer behaviour and encouraging all kinds of  usage not punishing consumers for what the technology allows them to do.

Quotable quotes from TED Global 2010

“Power is no longer a zero sum game”  Joseph Nye

“I’ll simplify a lot of tasks you never had to do before” Patrick Chapatte on Steve Jobs

“The slow hunch – great ideas fade into view over long periods of time” Steven Berlin Johnson

“Re-implement biology but inorganically, so we can grow technology like an organism” Neil Gershenfeld

“Businesses today are built on how you add value not on how you control limited information” Neil Gershenfeld

“Telling me your goal makes it less likely to happen because the mind mistakes the telling for the doing” Derek Sivers

“In order to do good, you have to do something.” Emily Pilloton

“My subject is food, which concerns everyone, it is health which concerns everyone, it is soil which concerns everyone, although they may not know it” Lady Eve Balfour, 1946 quoted by Adrian Dolby

“Personal debt has grown massively because people buy things they don’t want, to create impressions that don’t last on people they don’t care about.” Tim Jackson

“Don’t let life de-genius you.” Buckminster Fuller

“A teacher that can be replaced by a machine, should be!” Arthur C Clarke quoted by Sugata Mitra

“The average cat in Europe has a larger carbon footprint than the average African” Jason Clay

“You cannot wake up a person who is pretending to sleep” Jason Clay

“Images with straight lines in them create a sense of fear in the brain” Alex Kelleher

“Schizophonia – a dislocation between what you see and what you hear” Julian Treasure

“Extracting ice for analysis from Antarctica – each cylinder is a parfait of time” Lee Hotz

“Have a cup of coffee, act fierce and keep on dancing” Andrea Lucard

“If you meet the expectations of women, you exceed the expectations of men” Marti Baletta

How does “public service” work for media and culture in the 21st century?

When the Tate produces high quality videos and broadcasts them via iTunes, when the National Theatre transmits performances around the country via local cinemas, why should they not be funded in the same way as the BBC or Channel 4?

With digital technology and internet distribution, we are all producers. The outputs of our diverse cultural institutions are converging in the digital domain.  Public funding policy needs to be reformed and converged to match.

The UK has long benefited from a globally respected media and cultural sector, often highly subsidised by the public purse. With the purse no longer bulging, we need to re-examine the ways that we direct spending. In fact, we need a comprehensive review to ask:  What is the definition of public service remit in the 21^st century? And who should implement it?

It no longer makes sense for the government to manage its culture and media budgets between the departments of Culture Media and Sport (DCMS) and Business Innovations and Skills (BIS) as well as via the baffling array of organisations: the Arts Council, Design Council, Film Council, NESTA, Ofcom, the BBC’s Board of Governors, and the Museums, Libraries and Archives Council. The list goes on. Each has its different measures of effectiveness and approaches to management. Many of these august bodies have developed out of historical necessity; today they comprise an unwieldy legacy. Now is the time to do more than simply trim budgets.

Commercial interest is growing fast in reviving and globalising our cultural assets, whether they are the orphans of the BBC archive or the British Library newspaper collection. The myriad opportunities that arise out of digitisation represent what I call the “digital dividend”.

Balancing the needs of public service and private gain is the challenge. This is a matter of choosing the right projects and having a clear national policy of what public service is. We will want to avoid the pitfalls of cherry-picking and encourage the custodians of content to digitize their assets when they have a clear view of what to do with them.

Portfolio management in cultural businesses is often a balance between creating popular, tried-and-tested products and innovative, speculative ones. For the longest time, the old Reithian ethic of “educate, entertain and inform” combined those elements whilst avoiding emergent issues that complicate it. Today, it’s not just about what content to produce and exploit, but about who is empowered to do so and how. Whose responsibility is it to create and disseminate an online-curriculum? Who dictates the terms of trade for independent web development companies working for a national institution? The inexperienced institution worries about being fleeced by the commercial player who in turn accuses the institution of undermining his business opportunity, and the small development company feels unable to control its own intellectual property.

Our national portfolio of cultural assets is bureaucratically managed and the investment strategy is out-of-date and inconsistent. Why subsidise and showcase television, but not computer games or applications development? Why put on the Proms, but leave Womad in the mud?

The question is how to re-scope the public service remit and resuscitate the Rethian ethic for the 21^st century.  Who should be charged with fulfilling a public service remit? Why have a TV licence fee but not an internet licence fee? What should be the public service remit of a mobile phone operator?

Sustainability will be key.  The term may be a cliché of policy-makers but, in the context of the digital dividend, sustainability means developing business skills and commercial mind-sets that allow new ecologies of private and public organisations to flourish, based on entrepreneurship – not the skills needed to fill out a grant application form.

Despite its name, the Digital Economy Act (DEA) will do little to stimulate the economy. Its focus is mainly on trying to stop consumers doing what the technology makes it easy for them to do. The “digital dividend” requires the collaboration of new partners to deliver it. It also requires legal reform to boost it. The proposed changes to copyright laws that were dropped from the DEA in the interests of pre-election expediency are still required to enable orphaned assets to become accessible and to allow rights clearance processes to be modernised. We need to consider the entire approach to licensing of rights, the basic concept of copyright when a reproduction right is almost unenforceable, and how moral rights can be better used to protect our creators.

The current debate between rights holders and internet service providers over who should pay for the enforcement of copyright under the terms of the DEA is one piece in the puzzle, defining the new public service remit.  The challenge is to find the other pieces that will stimulate innovation and give us all an incentive to generate digital dividends for public good and commercial gain.

The UK’s status as a leading producer of global culture is at risk. It needs a new body to administer culture, media and digital policy in a unified way. Its first goal should be to re-scope the public service remit and then oversee the necessary legal changes. If there is light to be found in this darkest of budgetary moments, it is in the new efficiencies that will come from reform.

The Metadata Thing

Check out the thinking behind the latest £5m opportunity from Technology Strategy Board. This time, the mission is to make metadata sexy… well someone has to do it…

The Innovation Thing

Innovation is the key to so much of what we need to do, to move beyond recession. The OECD has just published a revealing report that points to the need for innovation more than any other strategy as to the route to growth.

The recently published OECD report on innovation reveals some interesting statistical information about how the UK government investment and support of innovation compares to other countries around the world. It is interesting to note that the report specifically argues that innovation is the single most effective way for economies to build themselves out of recession and that making cuts alone can not enable economic growth.

“Much multifactor productivity (MFP) growth is linked to innovation and improvements in efficiency. Preliminary estimates indicate that in Austria, Finland, Sweden, the United Kingdom and the United States, investment in intangible assets and MFP growth together accounted for between two-thirds and three-quarters of labour productivity growth between 1995 and 2006, thereby making innovation the main driver of growth”

It is interesting to observe in the table below that the UK compared with the United States would appear to spend a little more on direct government funding of business R&D, but provides considerably less than the US in the way of indirect, government support through R&D tax incentives.

A shift in the balance is worth exploring, but it is not an immediate and obvious policy change. The UK has very few technology businesses that grow much beyond the £20m turnover mark before they tend to be acquired by other companies, most often not British owned. There seems to be a significant gap in the UK economy between technology businesses that are £100m turnover and above and those below £20m.  This reflects the great inventiveness and creativity to be found in UK tech businesses, but also the relatively low level of ability to scale such enterprises successfully globally.

If the UK were to reflect the US stance and seek to increase R&D tax credits at the cost of current direct investment, it might have the unintended effect of diminishing the stimulus to the very sector where the UK excels which is in early stage businesses.

From a different perspective, the figures on the relationship between broadband penetration and citizen uptake of e-government services are revealing. Again, the new UK administration’s desire to make savings in public spending is clearly understandable and desirable. The simple cutting of services may certainly be a cure for inefficiency but it does not replace the necessity of service provision. What is noticeable from the OECD figures is the extent to which the UK would appear to be as far ahead in terms of Broadband penetration as countries like France, Austria, Finland but 10 or 20% behind them in terms of the development, delivery and public uptake of e-government services – the Nordic countries and the Netherlands being even further ahead with nearly 10% higher broadband penetration.

Finally, the OECD’s comments about measurement of innovation effectiveness are very revealing.  Their agenda for the measurement of innovation seems highly relevant to the UK, where our ability to be certain of the effectiveness of our innovation policies is probably better than in many of our European neighbours but would still benefit from refinement.

The Piracy Thing

The debate at the British Music Experience did not bode well – eleven speakers on a panel – more of a soccer team than a debate. But the presence of a member of the Pirate Bay team added an interesting dimension. Inevitably the debate itself was rather superficial. The moderator struggled manfully to keep the discussion on-theme and tried rather unsuccessfully to avoid the whole thing circling round the Pirate.

I didn’t manage to say it very well on the night, but while we all lined up to land a rhetorical punch on the visiting Pirate, the ongoing phenomenon of piracy as a globally, technologically enabled catalyst for change is really the key thing to remember.

Considering that he has a criminal conviction hanging over his head, he didn’t seem so bad, the Pirate, even though we all condemn what he was part of. He didn’t seem like a malicious human being out to subvert the very moral framework of our lives.  He seems like a nice, well-educated middle class tecchy, with some impish delight and without much sympathy for an industry so fragile that he could deflate its balloon with his tiny needle.

The anarchic tendency of file-sharers is a social phenomenon empowered by the technology. It is derived from both great technological facility and basic human greed. From a successful artist’s perspective, file-sharing fans may look like ”greedy thieves” but then from the perspective of the developing world that may also be how European and North American consumers appear.  A developing artist may see it that way too.

File-sharing is also a technological capability that, having been unleashed on society, is highly unlikely to go away. I don’t think it’s like a smallpox virus that can be eradicated. Close down the Pirate Bay this week and another Bit Torrent site will pop up next week. Find a way to reduce the popularity or effectiveness of this particular form of unauthorized file sharing and another technology will replace it.  The chances are also that the newer forms of file-sharing will be less easy to detect, less easily identified with the individuals at various ends of the process – until our detection methods improve and seek to clamp them down and so the cycle will continue.

There is a shift in attitude of mind required. We have to look at a world in which the reproduction right and the control of it are progressively eroded.  Given the woefully low level of economic development of alternative methods of funding content, we are fortunate that the rate of erosion is slower than it might have been. Whether the impending new legislation in the UK will slow that erosion any more, I somehow doubt. And unfortunately I believe the cost of that legislation to civil liberties and freedom of speech will be much greater than the likely cultural and economic benefit it strives to achieve.

For those of us toiling in the cultural digital fields however, this kind of legislation also has another negative effect. It continues to provide incumbent businesses with a remedial focus on prevention of piracy rather than on investment in new solutions to the economic problem it causes.  Worldwide expenditure on anti-piracy measures is out of all proportion to the worldwide investment in new digital content business models. More importantly the investment in new ways to invest in content is not coming from the music industry. It’s coming from new entrants who are faced with the prospect of rights holders who make it difficult and expensive to try new things out. Rights holding companies typically demand advances and even equity in companies that dare to enter their sector with a new idea for creating economic growth.

The short term benefits of growth required on a quarterly basis by shareholders and the stock markets, drives the strategic perspective of publicly traded corporations. Quarterly results and end of year bonuses force executive boards into myopic decision-making.  That is what they are required to do. For years I have been angered or frustrated by this, but the harsher the economic environment the more steely their focus must be on making those short term returns.

Incumbent publicly traded companies in the creative industries today have less opportunity than they ever have to take long term strategic decisions. They struggle with the ambiguous “solution and control” approaches of the major technology companies (Google, Apple, MS, etc) who are driving their own agendas in very narrowly harnessed partnerships or direct head to head conflict with the economic goals of the major rights holding companies.

In order to defeat this vicious cycle of wasted energy and denial, we do need to find some ways to intervene. One way is to force the companies to open up their rights to new entrants at low cost. A second way is to address the copyright regime and bring it up to date.

The artist community I believe has to take the lead here in being progressive and forward looking in a way that a creative individual can be, but a corporation cannot.

Artists of the world have to look at their innermost conflict and try to find a way out. Every artist or indeed creative producer today feels a degree of conflict about the fate of his or her work in the marketplace. Artists feel strongly that having created a piece of work they want the world to share in it. Part of the definition of being an artist is fulfilling a desire to communicate. If you have such a desire then you are likely to want to communicate with the largest possible audience you can reach. Very few artists are satisfied with the idea that their work is only made for a small audience. Most artists appreciate their small audience but would feel better if it could be growing.  And then there is the question of getting paid. Here there is much more disagreement in the community both about the scale of remunerative ambition and about the basis upon which it should be achieved. Not every artist wants to be a millionaire, but every artist who believes in him or herself would like to be able to make a “decent living” out of making their work.

The conflict between the artist’s desire to share their work with as wide an audience as possible and their desire to make a decent living, come in to sharp relief when faced with the prospect that once they release their work it will be shared without payment globally.

Artist are used too often as the excuse for why content cannot be made available widely, for why cumbersome one on one conversations are required to gain clearance or permissions. Artists’ ethics and moral values are set up as the barriers which rights exploiters can use as the means to raising prices. “They’ll never agree to that usage. OK for $30,000 they will.”

Rights exploiters use artists as the moral justification for immoral actions or for simply achieving economic leverage. And very often, because of contractual arrangements,  the benefit of such behaviour is greater for the exploiter than the rights owner.

If artists were able to lead in demanding a significant and global change in the law of copyright – the exploiting companies would lose the moral basis for their economic motivations.

Artists could change the world by standing up and saying we do not want copyright to be about a reproduction right in a world where the reproduction of our content can no longer be controlled. We want copyright to ensure that artists get paid for their work equitably, in equal proportion to the effort involved in its creation, promotion and distribution. We want copyright to ensure that artists are credited by name for the work that they create. And we want copyright to ensure that specific moral and ethical requests made by an artist are respected. So if an artist says: “I don’t want my work used in advertising at all” that is adhered to.  But that the default condition of their work is that it is available for use, to be licensed, from day one automatically – without the need for negotiation.

The more that artists and the entire creative community are able to take a lead on pursuing this perspective, the more likely we are to be able to develop new sustaining methods of ensuring a commercial return for creative endeavour. We need to wind down the over-investment in anti-piracy and make the radical changes necessary to start stimulating future investment that will allow for high quality cultural work to thrive.

Published here with thanks to the Music Void who ran it first.

British Council celebrates the past and future of copyright

Very brisk little video featuring some forward looking suggestions about how to develop copyright for the digital age.

Recent video on FAC, DEB and how to move forward

I recently gave this interview at the Music 4.5 conference.

more on collective licensing

So my main man Mike Masnick – he of Techdirt fame has been paying a lot of attention to music recently. When I came out earlier in the week in favour of everyone taking a much closer more constructive look at collective licensing, he said (because he is the consumate professional arguer):

” However, I have to disagree with his suggestion that the answer is a collective licensing regime, because I think that introduces way too many questions where it’s not needed. A collective licensing scheme puts yet another bureaucracy in the middle, just for the music industry (well, not for long, because then suddenly everyone else wants one too: the movie industry, the software industry, the video game industry, the newspaper industry, etc. — and why should it stop there, new industries will jump on board too: don’t we need a collective license for people who view blogs too?). As it stands, I just think that we’re finally seeing free market business models that are working, and it’s way too early to jump in and distort the market with a collective licensing scheme.”

Now that’s a really intriguing comment – and lots of Mike’s thousands of followers have jumped right in to the debate- slagging off any notion of enforcement of copyright at all really …

But there’s a really simple distinction to draw here Mike and you have to capture the essence of the difference. Here it is: back catalogue – tons of it – everyone wants to experience the sense that they can get “all the music all the time everywhere” – then… there’s all the new stuff from people we’re just discovering and just finding out about.

The new stuff doesn’t need to be collectively licensed today because the only people who care about it – find out about it mostly through direct artists relationships of the kind that we’re all pushing so heavily right now.

But the old stuff, the classics, the sex pistols, the eric claptons, the elton johns, dare I say it yes… the frank zappa’s (not to mention the bluenote, motown, led zep and metallica – the bell curve of the top 40) – they are quite frequently the subject of what mass consumer music services want to be able to serve up and those acts are not busily pushing themselves into direct one on one relationship with consumers because their music got hijacked years ago by the labels – who now hug it tight to their corporate chests. So that’s why collective licensing is so important because it would liberate all that stuff…. the argument about what’s needed to make  tomorrow’s Hendrix a totally accessible star – is utterly different from the argument about what it will take to make Hendrix an utterly accessible star today.

License to control?

The Digital Economy Bill that is wending its glacial way through the UK parliament has produced an interesting row between the BPI (representing the interests of the major record labels) and the ISPs, telco’s and mobile network operators. They are arguing over who should pay how much to fund remedial measures to clamp down on illegal file-sharing. The BPI is in a tough place since the cheaper they argue the cost will be, the more the ISPs respond by saying “well then you can pay for it.” Minister Stephen Timms recently suggested the split should be 75/25 (with the BPI paying the greater amount).

The irony of this is that few people really believe that these remedies will make a blind bit of difference. Increasingly, the mood of the zeitgeist is that rights owners are wasting their money by trying to control file-sharing. They are neither succeeding in their efforts nor acting with fiduciary responsibility to the content originators whom they are failing to recompense properly.  Their vain efforts at control are merely Canute like attempts to maintain an anachronism of a business model.

The chorus demanding collective licensing of recording rights is growing ever louder. The argument is very simple, instead of spending money trying to stop file-sharing,  simply agree to monetise all the activity that is out there by licensing it, making it legal and charging for it. Essentially, this would create a baseline of revenue through a flat rate subscription which would legalise and remunerate the flow of music around the networks.

The first point in the argument is that a small levy of say £3 per month per subscriber to every UK ISP would generate more than the current £1bn that the recorded music industry earns at dealer price today. It’s of course a moot point and hard to argue without a) trying out a version of it somewhere small and harmless and b) seeking the active cooperation of the ISPs in trying to envisage how it might work.

The second point is that we could build added value services on top of the baseline revenues.  Services like recommendation and discovery engines, market/user analysis and data-crunching, ticket sales and gig guides, digital bundling with physical products, quality of service – higher speed delivery solutions, etc, etc. What’s not to like? And what’s not to recognise – when all of these kinds of products and services are already being offered by up-and-coming businesses out there online?

One objection from the majors to this, of course, is that these kinds of businesses are not owned or controlled by them and they are all broadly based on the presumption of access to all content – not on the nurturing and distribution of some sub-segment of it.  It’s true of course that innovation comes from elsewhere. They don’t own or control these new kinds of companies – although as we’ve seen very publicly with Spotify – the majors do take a stake if the market-entrant foolish enough to seek to jump over the licensing hurdle. The cost of jumping is very high – in cash and in equity.  If we can’t continue to feed our old business model, the majors argue,  how will we nurture and develop new talent? We invest in talent for the UK and make it internationally successful and these new ideas do not support that model, they protest.

The problem is that they are spending a lot of money defending the old model and it’s hard to find evidence of a single major record company investing in new ways of nurturing talent or developing artists careers online or offline. The nature of the recording contract has not fundamentally changed in fifty years – it has simply evolved recently to try to encompass even broader areas of an artist’s creative output.

So what might be the total added value of all these kinds of new services which live on top of the content?  Nobody knows, but clearly the opportunity is very significant. In fact it is so great that, in my view, it exceeds the value of the entire recorded music and live industries put together. After all,  it represents what the architecture of the new digital content industry will look like.

If we can shift from compulsory control (which has failed) to compulsory remuneration (which is highly feasible) then we can allow file-sharers to go crazy in consumption and we can all make money.

Independent labels (like Beggars Banquet and other smaller labels) are increasingly seeing the economic arguments in favour of the new model. The Zelnick report just published in France has recommended it. The UK Music Manager Forum has been calling for it for nearly a year. The UK music industry group called the Value Recognition Strategy group have been planning to trial a version of this on the Isle of Man for about eighteen months, but the major labels and the music publishers have prevented it. Universal music themselves proposed a form of collective license for unlimited downloads to the Virgin Media group for their music service and this has not launched due to the objections of the other major labels.

Running out ahead of the crowd,  a group of thinkers with a great deal of experience and insight into digital media has been proposing this for some time. Myself, Pete Jenner, Gerd Leonhard, Paul Sanders, Paul Hitchman, Matthew Brown and occasionally our cousin Jim Griffin in the US have been meeting for about five years to develop the thinking around this. But we have often felt ourselves to be in the wilderness. Jim has been trying to work through the issues with his Choruss group courtesy of Warner Music in the US but his proposed trials on US university campuses have yet to launch – hopefully we will see some action this year. Meanwhile, the UK Government’s Digital Britain programme has spawned Digital Test Beds which are being managed by the Technology Strategy Board and which may become precisely the kind of platform that could help try out some of these new models in a relatively risk free fashion – and with some public subsidy – how enlightened is that?

Of course all sorts of issues remain unresolved, desperately in need of further practical examination. It’s only when you try things out in the real world that interested unexpected questions surface and can start to be resolved. If a collective license were compulsory how could artists protect their moral rights? On what kinds of grounds would it be legitimate for an artist to refuse permission for their work to be used?  It is perhaps not well understood or recognised, but today’s songwriters, lyricists and composers enjoy the fruits of a compulsory license by law. But should the law be reviewed for other matters? What is the relationship between the statutory license fee and the contractual sums agreed between artists and publishers? How do we balance the economic needs of creators against the creative competition of the market place? Perhaps artists should be arguing for statutory minimum royalties for any contract – over and above which publishers could offer premiums according to the status and value potential of the artist? What kinds of new agency should we establish that could collect and administer royalties appropriately and with the lightest touch enabled by technology? How could we group rights together using their meta-data tags so that they can be handled with the maximum efficiency and rights owners can get paid in real time – not with the kind of 15% overhead charge and six month delays that are the norm among current collecting agencies?

The Digital Economy Bill has not helped any of these discussions surface. It has sought to listen to the high cost lobbying efforts of the incumbents and paid little attention to long view policy proposals.  It has found political expediency in the short termism of the big business driven by quarterly results rather than really trying to place the country’s long term benefit at the forefront of its objectives. Perhaps the time is right to turn to Brussels for hope in this area with its broader perspective and more radical agenda – despite the bureaucracy and opacity of process – maybe change can be effected across all of Europe?