Tag: music piracy

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Business piracy Regs

Is Pre-Release killing the music business? #Digital Britain

In the context of the debate going on over copyright protection in the Digital Economy Bill there is an interesting event happening tomorrow night at the Performing Rights Society in London.

Entitled  “Is Pre-Release Killing Our Business?” tomorrow’s discussion is centred around the fact that in order to raise awareness the music industry conducts promotional campaigns for up to three months before a CD is released.  This stimulates demand for a product that is not yet available and it only takes one promo copy of a CD to be pirated and loaded onto a P2P network for that CD to be freely available which of course eats into sales at launch.

Because of this industry bodies including ERA and the MMF are calling for abolition of pre-release windows in their entirety. Tomorrow night’s speakers including the BBC’s Head of Music for Radio 1 George Ergatoudis, Martin Talbot, MD of the Official Charts Company, Ben Drury of 7 Digital and Emily MacKay of the NME.

It just goes to show that the whole fight against music piracy is something that has to be conducted across many fronts.

More details on the Music Tank website here.

It strikes me that there are so many discussion points/arguments surrounding the Copyright aspects of the Digital Economy Bill that it will be worth collating them all in an easy to access format – watch this space.

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End User internet piracy Regs

The difficulties of licensing music for legal download

In the middle, as we are, of the birthing process of the Digital Economy Bill it is interesting to see how laborious this can be (and I have 4 kids!).

One of the gripes the ISP industry has (regular visitors to trefor.net will have become familiar with a few of them) is the fact that when it comes to copyright protection and the move to kill off illegal downloads there is too much stick and not enough carrot.

The big concern is that the Bill as proposed helps to compensate the music industry for losses incurred to an outdated business model and therefore removes the incentive for rights owners to embrace new business models.

ISPs are extremely frustrated by the difficulties in securing the licensing that is needed to offer consumers legal alternatives to illegal downloading. It has always been our view that a voluntary or legislative commitment to enforcement should only be introduced on the condition that rights-holders also commit to significant licensing reform.

Moreover there is a particular concern that some rights-holders are purposefully resisting reform of the licensing framework because they view legal models of online content distribution as a threat to their own existing revenue.

Lets take a look at some of the difficulties. These are some examples compiled by the Internet Services Provider Association as part of an as yet unpublished paper. There is some brain work involved here though I have tried to simplify it, largely so that I can understand the problems myself.

Existing problems
Taking a fully licensed music service to market is lengthy and onerous. Even if all the rights owners offered easy ways to access their catalogues, the complex contractual obligations wrapped around Intellectual Property rights in the reproduction, performance, and ‘making available’ of both musical works and sound recordings means that there is no guarantee of ending up with a fully licensed service.

Consumer expectations for online music are sky high. Given that many of them share a significant volume of unlawful music over P2P networks consumers are used to being able to download any track. Gaps in the available legal alternatives caused by licensing problems are not well looked upon and legal music services that attempt to offer incomplete catalogues are viewed as uncompetitive when compared with unlawful file-sharing.

Direct licensing or withholding
There are also additional obstacles to efficient music licensing which add cost and risk to the emerging digital entertainment industry.

Rather than using collective or wholesale clearing houses most music rights owning parties insist on licensing the use of their catalogues directly.

This means that direct licensing multiplies cost and difficulty for the licensee and allows each licensor the ability to set terms and rates that could critically damage the viability of a service. Licensors can also choose to withhold the catalogue required to offer a compelling customer proposition.

Ensuring that licensors negotiate through a collective or wholesale clearing house would assist licensees in securing the licenses that are required to offer a service that is attractive to consumers.

Territoriality
Rights-holders are currently able to limit the operations of music services to specific countries which enables them to introduce price discrimination from country to country. Also a single piece of music may well have different owners in different countries which adds cost and complexity to the initial rights negotiations and to the ongoing payment systems.

Advances
The larger rights owners usually demand advance payments and deal and delivery fees. These can be many times the expected royalty payments for the use of the music during the term of the agreement. This introduces a financing risk as well as adding a start-up cost to launching a new service. Often these will be staged as quarterly payments, with the threat of catalogue withdrawal or even insolvency proceedings should they not be met.

These advances are likely to be prohibitive to a provider launching a service. Advances also reduce transparency to other music stakeholders as they break the relationship between sales and royalty payments.

Short-term deals
Many deals have a one-year term with no obligation on the rights holder to renew. This will in almost all cases be considerably shorter than the planning horizon for a large operator and makes a business case more of an act of faith rather than a serious basis to roll out services. It also makes it difficult for a service provider to guarantee that it will be able to fulfil contracts with its own customers.

For example if half way through a one year contract with a consumer a service provider has a certain catalogue withdrawn from its own deal with the rights-holder then that SP is going to be unable to fulfil its own obligations. It could also turn a profitable service into a loss making entity completely outside the control of the service provider if the rights holder decides to jack up the cost.

Minima
Rights owners use contractual minimum payments in order to inflate their revenues over and above the value of the music that is actually sold by a service. In some cases this is relatively benign, such as setting a minimum wholesale price per track and taking the greater of that or a percentage of retail price.

It can, however, be used to set a price per subscriber that is higher than the licensor’s pro-rata revenue share or it can be set across an entire service so that the rights-holder receives a fixed percentage even when their pro-rata share drops. The effect of this is to compel the licensee to pay out over 100% of the royalty pool, eating into margins or operating costs.

Customer proposition approval
Rather than set wholesale pricing and allow operators to develop compelling services, music rights owners seek control over most aspects of the consumer offering and look to insert conditions in contracts that require any changes to be agreed in advance. This would seem to be an anti-competitive measure and detrimental to the creation of alternative models of distribution.

Arbitrary conditions
Rights holders can sometimes put pressure on music services to accept arbitrary conditions, such as using a preferred provider for some aspect of the service, or committing to a guaranteed placement for priority releases. Some other arbitrary conditions might include action against piracy either as a pre-condition of licensing or a commitment included in a contract. It might also include access to a large amount of consumer behaviour data including data that does not relate to the music included in the contract.

All this, and I’m sure the experts can probably dig out more examples, adds up to an extremely difficult environment for the creation of legal music download services.

Categories
Business piracy

Timesonline market research shows music artists revenues on the up.

Timesonline Labs blog published some interesting market research in November suggesting that revenues that musicians receive from non record label sources is on the rise.  The increases seem to more than compensate for the decrease in their incomes from record label contracts.

Record label revenues though are shown to be hugely in decline which says a lot about why they are making such a fuss over Music Piracy. I don’t think anyone should criticise the labels for their efforts.  However in considering the Digital Economy Bill Government should take a 60,000 foot view and recognise that business models are changing and the old record label way might well have to change with the times.

Bob Dylan foresaw this in “The Times They Are A Changing” -you better start swimming or you’ll sink like a stone, for the times they are a-changing.  I think the labels are just swimming in the wrong direction.

Link to the Timesonline article here.

Thanks to boggits for the link.

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Business internet piracy

Alliance Against IP Theft meets MPs

The Alliance Against IP Theft held a meeting yesterday at Westminster Hall in The House of Commons.  Present were 5 speakers from the creative industries – from Fulham FC, Universal Music, a freelance writer and journalist, a publisher from Random House and a construction manager at a film studio – and a panel of MPs including Tom Watson, John Whittingdale, Kerry McCarthy, Lord Corbett and Steven Pound. The meeting was chaired by Janet Anderson who leads the All Party IP Group.

Each speaker gave a talk on how piracy was having a negative impact on things like investing in new talent.  The MPs then asked a series of questions.

Most vocal was Tom Watson who argued that to give the Secretary of State unrestricted power to make rulings on copyright in the future was actually a potential problem for rights holders – MPs would be concerned that a Bill was trying to give powers to the Secretary of State without parliamentary oversight.

Mr Watson also questioned the figures that rights holders produced that suggested that every unlawful download was a lost sale. The panel agreed with him when he said that the creative industries had never been in a healthier state in terms of popularity, despite filesharing.

Lord Corbett gave an indication of how the Bill will progress through the Lords – it will receive its Second Reading next Wednesday December 2nd and is likely to leave the Lords and enter the Commons by the end of January. With a two week half term break in February, it was suggested that as Parliament is rumoured to be dissolved at the end of March for the general election, there was a good chance that the Bill will run out of time.

This is clearly an important phase where lobbying for and against this Bill is going on.  It is the first time I have been involved at such close quarters in something so important – one that is generating high emotion from both sides. The strange reality is that I doubt that there is a single person who is against the proposed regulation on P2P filesharing who actually supports the illegal activity.  It is just that they don’t think this regulation is the right way to go about it.

Also I’m not a particularly political person but it does strike me that we should now just get on with a General Election because we are now entering a silly season where there is a danger that Laws will be rushed in without properly being thought through. Of course I know politics doesn’t work like that…

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Business internet piracy Regs

P2P regulation in Digital Economy Bill ain’t going to work

Now that the Digital Economy Bill has been published we can comment on its specifics. and in particular on the aspects relating to what the Government describes as “Online infringement of copyright” or illegal filesharing/Music Piracy in every day language.  It doesn’t just pertain to music, it includes movies and software as well – many of the abuse notices received by Timico in respect of naughty customers are concerned with the latter.

First of all the proposed Bill grants Lord Mandelson far too much control.  The Secretary of State will have the power to make specific recommendations on costs and impose an obligations on ISPs to use technical sanctions. The uninitiated should read this as “telling ISPs how much they will be allowed to charge rights holders for the implementation of the requirements of the Bill.  Technical sanctions = cutting off broadband connections.

In the first instance the industry thinks these responsibilites should be given to an independant body.  Also the idea that ISPs should share some of the cost burden is contrary to the Government’s own legislation – the Regulation of Investigatory Powers Act (2000) (RIPA) – which considers it appropriate for ISPs to be reimbursed for costs incurred when assisting in serious criminal investigations,  such as terrorism or kidnap.

What the Government is saying here that it believes that it is ok to recover costs for assistance with the pursuit of serious criminals but not for costs incurred pursuing an alleged civil infringement on behalf of a commercial interest. A scenario that normally burdens the party with the commercial interest with the cost.

ISPs are happy to help and indeed are not in favour of copyright infringement but think it is grossly unfair that they have to pay to police it.

Secondly the suspension of users’ accounts as a potential sanction is wholly disproportionate and is in direct opposition to the objectives outlined in Digital Britain to increase online participation. It seems that this will enable the suspension of users’ accounts without a ruling from a judge. This is potentially in defiance of the forthcoming EU Telecoms Package that guarantees users’ rights to a presumption of innocence until proved guilty.

The Government seems to be blind to the fact that serious copyright infringers can easily evade detection by employing encrypted P2P (for example).

Instead of wielding a big stick Government should be asking rightsholders to reform the licensing framework so that legal content can be distributed online to consumers in a way that they are clearly demanding. Currently the online copyright law is a mess spread across many countries and legislatures and the costs to industry of getting it sorted are huge. 

The Government is trying to push this Bill through quickly but it isn’t going to stop the problem. Lift up your heads and raise your voices all!

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Business internet piracy Regs

P2P regulation in Digital Economy Bill ain't going to work

Now that the Digital Economy Bill has been published we can comment on its specifics. and in particular on the aspects relating to what the Government describes as “Online infringement of copyright” or illegal filesharing/Music Piracy in every day language.  It doesn’t just pertain to music, it includes movies and software as well – many of the abuse notices received by Timico in respect of naughty customers are concerned with the latter.

First of all the proposed Bill grants Lord Mandelson far too much control.  The Secretary of State will have the power to make specific recommendations on costs and impose an obligations on ISPs to use technical sanctions. The uninitiated should read this as “telling ISPs how much they will be allowed to charge rights holders for the implementation of the requirements of the Bill.  Technical sanctions = cutting off broadband connections.

In the first instance the industry thinks these responsibilites should be given to an independant body.  Also the idea that ISPs should share some of the cost burden is contrary to the Government’s own legislation – the Regulation of Investigatory Powers Act (2000) (RIPA) – which considers it appropriate for ISPs to be reimbursed for costs incurred when assisting in serious criminal investigations,  such as terrorism or kidnap.

What the Government is saying here that it believes that it is ok to recover costs for assistance with the pursuit of serious criminals but not for costs incurred pursuing an alleged civil infringement on behalf of a commercial interest. A scenario that normally burdens the party with the commercial interest with the cost.

ISPs are happy to help and indeed are not in favour of copyright infringement but think it is grossly unfair that they have to pay to police it.

Secondly the suspension of users’ accounts as a potential sanction is wholly disproportionate and is in direct opposition to the objectives outlined in Digital Britain to increase online participation. It seems that this will enable the suspension of users’ accounts without a ruling from a judge. This is potentially in defiance of the forthcoming EU Telecoms Package that guarantees users’ rights to a presumption of innocence until proved guilty.

The Government seems to be blind to the fact that serious copyright infringers can easily evade detection by employing encrypted P2P (for example).

Instead of wielding a big stick Government should be asking rightsholders to reform the licensing framework so that legal content can be distributed online to consumers in a way that they are clearly demanding. Currently the online copyright law is a mess spread across many countries and legislatures and the costs to industry of getting it sorted are huge. 

The Government is trying to push this Bill through quickly but it isn’t going to stop the problem. Lift up your heads and raise your voices all!

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Business piracy

Peer 2 Peer Piracy – good lord no!

Had a meeting with BIS this morning as the final opportunity to influence the forthcoming Digital Britain bill. Nothing was said really that hasn’t already been published somewhere. We will know the precise content in a couple of weeks.

There is an awful lot of detail that will have to be worked out and with only around 5 months or so until the notional date of the General Election there is, apart from the increasingly vociferous opposition from the ISP industry,  a concern that the time available is not enough to properly consider the bill.

Notwithstanding all that ISPs will have to start working very hard to make sure that all MPs fully understand the issues being debated/proposed here.

This includes Members of the House of Lords which of course introduces a whole new set of issues. What will their Lordships think of a Bill with a major tenet being Peer to Peer Piracy? It is just not the done thing old chap. The Upper House works on a strong basis of trust 🙂 . Seriously though the bill will have to go through the Lords and their Lordships are likely to be closely examining the privacy / consumer rights aspects of the legislation

Notwithstanding that bit of fun I thought it worth adding a few educational points to the debate at this late stage.

Firstly serious P2P illegal downloaders will just move to on to private encrypted networks/Newsgroups that hide your underlying network address and so make it hard to track you down. These do charge which might make it unattractive for Music Pirates wanting freebies. These sites are also unfortunately apparently often attract child pornographers and other lowlife.

If you don’t know anything about them check out the links below:

wikipedia NewsRazor UseNeXT

There is also a continued stream of information suggesting that those that do indulge in Music Piracy also spend more money than those that don’t. Check out the latest market research here.

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Business internet piracy

ISPs meet with Lord Mandelson to discuss P2P

Representatives of the big five consumer ISPs together with Nicholas Lansman of the Internet Services Providers Association met with Lord Mandelson on Wednesday to discuss P2P legislation.  I will have more details of the meeting next week.

There is quite a bit going on here and this week speaking before the Culture, Media and Sport Select Committee under persistent questioning from former Minister Tom Watson MP, Secretary of State Ben Bradshaw confirmed that rightsholders would have to seek a court order before restricting or suspending users’ connections and also explained that users would have the right to appeal before any sanction was enforced. The evidence session in full is available on video here (relevant section starts at 20:35). This appears to be  a postive move from the ISP industry’s perspective.

Also an Early Day Motion tabled by Tom Watson last week has now been signed by 36 MPs, including representatives from all three main political parties. The EDM and signatories can be viewed here.

I would like to thank ISPA for this input. This level of Parliament watching requires some diligence and in the ISPA trade association the industry has a faithful servant.

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End User piracy Regs

Government P2P plans could cost broadband users £365 million a year

In its response to the Government’s consultation on Music Piracy BT has stated that the three strikes approach may cost each broadband user £24 a year (up to £1million a day in total). This represents what BT thinks may be the cost of implementing the legislation and which it might find itself having to pass on to its customers. It would likely be the same (if not more) for all ISPs. It makes the proposed 50p tax on phone lines pale into insignificance. There should be no doubt that it is a tax.

Actually I’m not in principle against raising taxes to spend on the roll out of a national fibre network. It’s just that 50 pence is inadequate. We would all better spend this money on the fibre roll out.

There is clearly a lot of politicking going on in what is the run up to the next general election. The Government is looking for quick PR wins. If it is not careful this is one that is going to come back to bite.

I read the BT position in the Daily Mirror. I obviously have a wide range in tastes when it comes to literature 🙂

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broadband Business internet online safety piracy Regs

UK Government Efforts ISP Regulation Gets Opposition from Unexpected Sources

There has been a lot in the press recently regarding Government plans to regulate the ISP industry. ISPs have been vociferous where they consider that this regulation is unnecessary and adds cost burdens that will have to be borne by consumers.

Quite pleasingly other industries which the Government is likely to think would be the beneficiaries of the legislation have also come out against it.

For example the high profile “three strikes” approach to Music Piracy whereby persistent file-sharers have their broadband cut off is attracting a lot of opposition from the music industry itself. The BBC reports:

Radiohead guitarist Ed O’Brien, a member of the Featured Artists’ Coalition (FAC), said: “It’s going to start a war which they’ll never win.”

Feargal Sharkey’s UK Music allegedly has a war chest of up to £20 million a year to lobby Government on the subject of ISP regulation. This FAC stance seems to be clear disagreement within that industry.

The leak in the Independent this week that the Queen’s Speech currently is planned to propose mandatory blocking of consumer broadband connections for child abuse images has also created a bit of a stir.

The vast majority of consumer broadband connections already have such screening and it seems that the Government is trying to make political capital out of a subject which everyone will of course support in principle.

The issue is how much effort and money will it take to cover the last few consumers not already “protected” particularly as it is smaller ISPs who are most likely to be affected. This is particularly relevant considering that all we are not talking about stopping hard core child abusers who already know how to get around the blocking.

The Register has come out with an interview on this subject with Jim Gamble, Chief Executive of the Child Exploitation and Online Protection Centre (CEOP), and effectively the UK’s leading investigator of online child abuse who has come out against legislation in this area.

There is potentially a lot more regulation in the pipeline. Somewhere in a Government office near you someone is plotting to gain more control ever our every day lives. It is at least nice to see that there are people out there with some common sense who are willing to stick their hands up and say “this is not right”.

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Business internet

Mandelson U-turn on P2P

The Goverment today did a U turn in respect of its approach to the treatment of illegal music downloading. One of the key features of the Digital Britain review is the fight against music piracy. The ISP industry has been in deep discussion with the music industry over this for at least 18 months and probably more and the outline approach being adopted in “Digital Britain” was something notionally agreed by the various stakeholders.

Today Department for Business has today published an amendment to the original consultation on P2P. The amendment contains proposals to give the Secretary of State the power to introduce technical measures and proposals for the cost to be apportioned in the legislation.  The amendment also reintroduces the idea of suspension of broadband service as a final resort.  This is something that is being opposed in many camps for many reasons already discussed in this blog, not the least being that it is difficult to prove who was doing the downloading.

Although I’m not a lawyer I understand that there is a scenario here that the Government’s own Code of Practice on Consultations has been breached.  The amendment is already causing large ripples in the industry and I think we can expect to hear a lot about this in the press over the next days and weeks. 

There are already reports in the press that this change of mind is rumoured to have been occasioned by a meeting between Lord Mandelson and Music Industry mogul David Geffen during the summer break.  I am all for making things happen quickly.  However it does seem to me that Lord Mandelson is inserting the boot here without enough understanding of the issues.

In my mind he would be better off spending his time trying to raise funding for Rural Next Generation Broadband Access, an aspect of the Digital Britain report that has been widely criticised as being a cop out.

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Engineer internet media

Video streaming is going to be a mix of technical and commercial problems

Interesting talk  at Linx66 by Giles Heron, Principal Network Architect for 21CN at BT. I’m not going into it all but towards the end he discussed video streaming on the network and ways that this might be made more efficient.

Whilst ISPs and network operators take on the challenge of managing the growth in video streaming I think there is just as big an issue coming along in respect of the commercial and regulatory aspects.

The time is not far off, I believe, where people will stop buying purpose built boxes and rely purely on their internet connection for their TV watching. My kids already do it. The advent of FTTC is going to accelerate this. If you watch TV over the internet the rule is in the UK that you are supposed to have a TV license. This is not currently policed as far as I can see and it is difficult to do so. Last night someone in the family was playing a game on our TV so I watched Usain Bolt do his stuff on my laptop.

It will not be long before the BBC will start seeing its license revenue take start to decline (maybe it already is) which is going to prompt a very high profile crisis. We are going to start getting the same debate re TV watching as we have been having with music piracy – who is going to police it?

The alternative is that the BBC will have to move to a pay as you go model for iPlayer watching.

Well done to Usain by the way if you are reading this. Very good 🙂

Categories
End User internet media piracy

94 percent say they would choose a legal music site over a pirate one

Bit of a long post title but this is the feedback from research conducted in June on consumer behaviour and preferences in respect of music downloading.  The research was commissioned by music site We7 and conducted on 2012 consumers aged 16 to 60 over 7 days in June 2009.

Its key findings make very interesting reading:

  • 46% of UK music fans do not understand how to legally consume music online
  • 64% do not know how to stream and share music legally
  • 85% of consumers are happy to listen to a short ad in exchange for unlimited access to free music that they can share with others
  • 94% say they would choose a legal music site over a pirate one if it had the same range of music and was easy to use
  • Women and those over 55 are least likely to stream – 85% say they don’t know how and are unlikely to try
    64% of 16-24 year olds share music with friends online and 71% know what streaming is but only 48% have ever tried it
  • Londoners and Bristolians are the biggest sharers of music online but only 39% and 46% respectively have ever streamed music. 
  • The majority of music buyers (78%) would buy the same or more music if they could listen to streamed music too, showing that the We7 model compliments the industry rather than cannibalises it

All this reinforces the ISP industry’s position that what we need is more legal ways for consumers to easily access music online.  7  million consumers can’t be criminals.  We7 is doing a great job pioneering this so thanks goes to Steve Purdham, and his team. 

Tonight I’m going to go home and listen to some free and legal music streaming online. Frank Sinatra methinks.