Digital Copyright Exchange – two key drivers to make it fly

Some key elements are starting to emerge as discussions rage around the Digital Copyright Exchange and the tantalising ideas set out at suitably high level in the Hargreaves Report.

How will this thing work and what will it look like? People are asking. A common description is starting to emerge that sees the Exchange as having three tiers. A “telephone directory” type top level – simply aggregating links to existing licensor websites and known rights holders. This is Tier One – a general gathering together in the way of useful roadsigns to that which is already there. Not terribly useful but quick to achieve.

Tier Two starts to be a bit more analytical and have a little more of the Exchange quality. To the gathering of links is added some intelligence which asks what kind of functions an end user wishes to perform on what kinds of content and the seeks to match appropriate licenses to the need – but still in the form of links to third parties who would do the actual licensing.

Tier Three functionality would see the Exchange then actually facilitating the licensing itself and becoming much more involved in an integrated license, search, discovery and execution process. This final stage would therefore really start to have the effect of speeding up the experience of licensees and of automating functions of the licensors.

So far so good – a routemap of sorts and a broad consensus that if we’re going to do this – then this is the right direction of travel.

So it seems to me in the context of this growing understanding, that there will be two key deciding factors on whether the DCE will fly.

First: The ratio of fixed price licenses to negotiated ones.

At present there is no clear data on the proportion of actual deal,  by volume or value, that are individually negotiated in airless rooms by huddles of lawyers – and those licenses that are issued based on published terms and tariffs – and therefore more immediately automatable. Professor Hargreaves is now actively encouraging rights owners to standardise their terms, scale up their offerings and get away from huddles of lawyers. But no one has much idea whether there is greater value in the lawyer beaten out license or the blanket term deals.

Some research on the respective value in the current market of negotiated and non-negotiated  license deals across rights owners would be very timely.

Second: The other key driver will be the extent to which the DCE can start to sign rights directly and begin to take a more immediate licensing role for a very wide range of individuals or rights owning groups. This is much more controversial and potentially complex. I believe that the legacy problems  of poor data and inaccurate record keeping across much of the catalogue of past published works may well be insurmountable. The task of trying to clean up the data, match its veracity across 27 European collecting societies and consolidate into one new database is a task of sysphean dimensions. Our noble friends the music publishers and their Global Repertoire Database are embarked upon just such a project. They have Deloittes at their sides and I wish them god speed.

But in the meantime, let’s get busy. The only way to set up a new model that will provide rapid clarity and global transparency is to draw a line in the sand and start afresh and put new release information into a new set of containers which are not beleaguered by the travails of the past.

It might just be that the DCE becomes more relevant more quickly, not as a telephone directory struggling through its first yellow pages era but as a new vehicle for large scale new rights to be assigned into. It would not need to be in competition directly with the likes of PRS and PPL, in fact it could make use of some of their capabilities – particularly in terms of royalty distribution. But, if it could take on bundled rights that brought together for example in music, the recording and the publishing rights for new works, it could well provide the UK with the most exciting new opportunity to create a 21st Century licensing agency fit for purpose and to lead the globe in digital rights licensing.

And in turn, that might encourage existing rights owners to speed up the publishing and making transparent of their terms and tariffs as Hargreaves is now exhorting them to do.  The thing about great markets is that the prices are there for all to see. It is extraordinary, although understandable in marketplaces where cultural value has been at stake, that transparency has not been its key characteristic. But as cultural value in mass markets seems to be declining that strategy cannot be said to be working. That needs to change, maybe this is a way of achieving it.

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One response to “Digital Copyright Exchange – two key drivers to make it fly

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