Sam Rudy: Private Copying Of Music - A New Model For Artist Compensation

26 Mar 2015

Written by former MA Music Business Management student, Sam Rudy, and published March 2015 by MusicTank Publishing, this white paper argues for an immediate EU-wide statutory introduction of an improved blank tape levy and proposes an evolution of the concept of private copying.

Sally Gross, MA MBM Course Director, University of Westminster: “Extensively researched, this paper positions a timely and convincing argument that a private copy levy, even in these days of streaming, should still make up a substantial part of music industry finance.”

Presenting this issue and Sam’s conclusions as an opener to a necessary debate – This complex aspect of rightsholder remuneration is timely – October 1st 2014 saw an end to the UK’s ‘odd-man-out-in-Europe’ status, by ratifying the Copyright and Rights in Performances (Personal Copies for Private Use) Regulations 2014, granting consumers the legal right to copy CDs and DVDs onto personal computers, mobile devices and internet-based cloud locker services, for their own personal use.

However, despite this directive calling for ‘fair compensation’ for rightsholders, no such provision currently exists in the UK, resulting in a Judicial Review at the behest of UK Music, The Musicians Union and BASCA.

With the European Parliament’s Private Copying report (17.02.14) highlighting that there is currently no other alternative approach to compensation systems for private copying that would ensure appropriate remuneration for rights holders, this paper addresses European Parliament’s call for further discussion to be conducted in order to update the mechanisms and make them more effective.

Author Sam Rudy suggests that this new levy could provide urgently needed remuneration to rightsholders and proposes a solution which is innovative and accurately targets music that is most likely to be copied, and with those facilitating format shifting remunerating rightsholders in a way that is fair, proportionate and transparent.

Grasping the nettle, June 25th will see MusicTank taking forward this complex aspect of rightsholder remuneration and basing an event’s discussion on this paper (full details).  Part of MusicTank’s Future Thinking strand of critical thinking, this discussion panel will consider the author’s proposal – a bold evolution in the concept of private copying exemption that effectively balances the need for rightsholder compensation with a harmonious, equitable and transparent process that accurately and appropriately charges those who enable copying – the device and hardware manufacturers who profit from the copying of music.

Here’s the executive summary; links to download the FREE paper are at the foot of this post.

Executive Summary

Compensatory systems for private copying are in urgent need of modernisation.  Current systems not only show a lack of transparency but also fail to take into account the most recent developments in information technology, which are transforming how music is consumed.

Compensatory system models that are currently enforced throughout the European Union focus on the price and storage capacity of devices that allow the duplication of copyrighted material in order to collect copyright compensation fees.

However, it is now possible to use these devices to access externally stored music catalogues instead of creating multiple copies and storing them locally – typically cloud storage and on-demand streaming services.

The assumption that sales of devices are directly related to the level of private copying that is performed is therefore no longer valid and the emergence of access models of music consumption has called into question the enforceability of current compensatory systems for private copying.

Different territories within the European Union have enforced various models of compensation systems that do not necessarily share the same fundamentals.  This has led to a heterogeneous situation where the interaction between the different models often leads to inconsistencies, such as duplicate payments in cross-border transactions, as a result of different models having differing points of collection of compensation revenue in the supply chain.

Thus there is an urgent need for the harmonisation of the fundamentals within different compensatory systems for private copying throughout the European Union – a single legal framework needs to be put in place in order to ensure a high degree of transparency and equal conditions for every stakeholder.

Currently in the United Kingdom, it constitutes copyright infringement to make copies of lawfully purchased CDs for private use.  Immediate action is required in order to standardise current practice within all territories of the European Union, which entails reaching an agreement amongst all stakeholders involved in order to guarantee a legal framework that provides fair remuneration for creators.

It was announced by the Government that the implementation of a private copying exception would take effect from the 1st June 2014, which did not provide for compensation for rights holders; the government arguing that the harm caused by private copying was not significant enough.  However, the implementation of the private copying exception has now been postponed to the 1st October 2014[1].

Compensatory systems for private copying need to be reviewed in depth in order to propose a model that does not become obsolete with the evolution of technology and this dissertation aims to propose the fundamentals of a model that responds to such a requirement.

It consists of a fee-per-sale model whereby a fixed tariff is charged on each sale of music, whether a single or album.  Periodically, the tariffs from each sale are accounted-for and the total that is generated is then charged on to the retailers of devices that allow the duplication of copyrighted material.

The advantages of such a model are several.  It would provide a higher degree of transparency due to the immediate identification of rightsholders that occurs at the time of accounting the total.  It would also guarantee that the revenue generated from the system is proportional to the level of revenue of the ownership model of music consumption, which sources private copying exclusively.

Therefore, in the light of an ever-growing tendency of change towards access models of music consumption, the compensatory system for private copying would not suffer the threat of obsolescence.

Content industries need to address this issue as a matter of urgency, especially given the fact that private copying and blank levies are of broad and current interest within the European Union and its official bodies.

The European Parliament published its latest report on Private Copying on the 17th February 2014, where amongst other statements, it stressed that there is currently no other alternative approach to compensation systems for private copying that would ensure appropriate remuneration for rights holders, while simultaneously calling for further discussion to be conducted in order to update the mechanisms and make them more effective.

Although it may seem inadvisable for some of the more authoritative voices in this area that a major change in the way compensatory systems for private copying are enforced be carried out, the failure to fully address the question of technological change and transparency will inevitably pose a threat to the stability of the compensatory systems put in place.

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