Jane Dyball: Monetisation, Policy Challenges and the Future of Live
30 Aug 2016
Jane Dyball’s speech from Westminster Forum Seminar – Next Steps for the UK Music Industry
I’m Jane, I’m a music fan and I’ve never had it so good.
It has never be so convenient to access such a wide range of music, at such affordable prices. No more traipsing to Woolies to see if a single is in stock, or trying to read the spines of your CD collection to find the one you want to listen to – it’s there at the press of a button.
In the UK, I have the choice of more than 60 licensed digital services – from download stores to a dizzying array of online streaming platforms. Social media is alive with the sound of music.
And, of course, we still have several BBC radio channels catering to a wide musical palette; we have a hugely competitive commercial radio sector; and we foster an unbelievable diversity of live music – leading the world in club culture, in festivals and in iconic arenas and venues not to mention the resurgence of vinyl.
What is undeniable is that we are now in the midst of a tectonic shift, especially within younger demographics, away from the “ownership” of music and towards “access” – whether that’s streaming their favourite tracks and videos on ad-supported services like YouTube, Vevo or SoundCloud, or paying a monthly subscription to Spotify, Tidal, Deezer, Google Play or Apple Music.
This revolution is borne out by the latest market figures.
Last year, according the BPI’s data, revenues from CDs and downloads, even factoring in the ‘Adele effect’ were down 3.9% and 14.7% respectively.
By comparison, the volume of audio streams in the UK market mushroomed by 82% to 26.6bn. Video music streams grew even faster, by 88%, to 26.9bn.
88% that sounds a lot right? That should offset the 3.9% and 14.7% declines referred to above right? Think again. The streaming revolution, when added to sales declines delivers an overall market increase of a mere 3.5%. Streaming usage up by 88%, overall industry revenues up by 3.5%. Whichever way you look at it, this presents a challenge to an industry which relies on a direct correlation between usage and value.
According to UK Music, the industry’s contribution to the UK economy was £4.1bn in 2014, boosted by the continued overseas demand for the works of British artists and composers. Music publishers, the area of the business I represent, were responsible for more than a quarter of the industry’s £2.1bn in exports.
Areas like sync, where music is placed in advertising or soundtracks, is booming – bringing in more than £50m to the music publishing sector alone.
That we’ve actually managed to grow is testament to a really seismic structural transition which has taken place within the music business itself, to embrace digital and to offer the kind of multi-territory licences demanded by commercial music users.
This transition has been challenging at times. There are still services who believe in “permissionless innovation” and who build their business without paying for the raw material. i.e. the music. Search engines continue to deliver an eager consumer to pirate sites on a monumental scale.
And it has meant publishers and labels having to adapt and work with a range of services – from boot-strapped start-ups, to those bankrolled by the biggest and most powerful corporations in the world. Nevertheless we are, in 2016, a genuinely global-facing digital business.
Which is why, I suspect, the industry was so unanimously against leaving the European Union; and why, if we are to continue on this trajectory, we do not want uncertainty going forward.
Having worked so hard to develop our digital business on an international basis, we certainly don’t want uncertainty in licensing. Licensing is what music publishers specialise in. We make no product and so have no product to sell. We merely license the rights that we have acquired. Our interests are totally aligned with a huge global demand for our rights and we need to deliver licences and receive value in order to be able to reinvest in and develop new talent.
And that, I think, is why there has been such an outcry, led by the artist and songwriter community, about “safe harbour” – both in the US and in Europe, with more than 1,000 artists co-signing a letter to the European Commission in June of this year, asking for help in addressing the “value gap” when music is consumed on user-generated services like YouTube.
I recently heard a surprising fact from our colleagues at the BPI. Last year, the record industry received more money from sales of vinyl (£25m) than it did from the consumption of music on user-generated platforms.
Meanwhile, Google, YouTube’s parent company, reported 2015 revenues of some $74.5bn – up 12.9% on the previous year.
I like Google. I use YouTube. But clearly, something here is amiss.
Music, as has been proved time and again, is an incredibly valuable product. It has an immense power to draw a crowd – whether thousands of people in a field at Glastonbury, or millions of eyeballs (and ears) attracted to a music video, streaming from a webpage.
In theory, there is no reason why the latter should not translate into a profitable advertising-based business – not dissimilar to the model of commercial radio.
Equally, it should not be an unreasonable premise that increased consumption should lead to increased revenues – with more money flowing back to songwriters and artists at the other end of the chain.
So what is the problem? Firstly, on a purely commercial basis and speaking in average values, unless an 88% increase in streams is matched by an 88% increase in advertising revenues, there is not going to be anywhere near a constant valuation of music. So the equation that our business depends up on – more music = more money can’t apply.
Secondly on a legal basis the commercial negotiations over rates for user generated sites are somewhat hampered by outdated Safe Harbour laws established in the year 2000 as part of the E-Commerce Directive which predated YouTube by 5 years. For user-generated services this meant a ‘safe harbour’ from copyright law. This allowed platforms to be defined in neutral or impartial terms as a “mere conduit” putting an onus on their users to behave with responsibility, and for copyright holders to request takedowns if any of their intellectual property was uploaded against their wishes. These afforded start-ups and online entrepreneur’s protection from certain legal liabilities, allowing them to gain traction during the initial dot.Com boom.
The consequence of this is that UCG sites, who could easily take out a licence on behalf their customers, instead sidestep any responsibility arguing their “mere conduit” status and require their customers to get a direct licence from the content industry, and point out that the content industry have the tools to enforce takedown where that licence hasn’t been sought or issued. Now that might work when there are only 3 people uploading content but hasn’t a hope’s chance in hell of dealing with the hundreds of hours of content being uploaded per minute onto YouTube.
So long as UGC sites complied with that takedown notice within a reasonable timeframe, and removed the offending content, then they could not be sued.
While the service was actually ‘starting up’, this approach might have made sense. But, 11 years later, and YouTube retains the same advantages with a global audience of 1 billion.
This is a huge disadvantage to copyright holders, whether they’re an individual citizen, a record label, a publisher or a writer, not least because they don’t just have to take down offending material once, they have to take it down multiple times a day. Every day. Forever.
So you might say that while the multi-billion dollar corporations have their safe harbours, we are left in the storm.
As well as picking up the costs of notice and takedown, it also means rights holders are forced into a position where they “have to” negotiate. In other words, if a non-UGC service, like a download store for instance, offered unsatisfactory commercial terms, then as a rights holder you can walk away or demand better ones. But with a UGC service defined as a “mere conduit”, if you walk away then your music will be uploaded anyway. And then you’re locked into a constant game of whack-a-mole.
That is unfair on creators and music businesses, and also it has to be said for YouTube’s competitors.
So how do we fix it? I’d suggest 4 key things:
- In a global market we need internationally consistent and internationally applicable legislation on enforcement.
- Rather than notice and take down – we need notice and stay down.
- We need to stop search engines delivering our customers to copyright thieves.
- But more importantly, we need an overhaul of outdated Safe Harbour laws so they are fit for purpose in the digital age. These were not designed to give a leg-up to billion-dollar corporations.
As I mentioned at the start of my speech, it’s a fantastic time to be a music fan.
But for it to remain so, we need a little help behind the scenes.
We need to close the value gap and for negotiations to start from a level playing field. Only then can we have competitive licensing in a truly free market. And only then will the true value of music rights be fully realised.
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