Collective Licensing to Protect Copyright in the Digital Age Veronica Mendell Ashford University

In this, the early 21st century, Copyright & Intellectual Property laws are struggling to keep up with the constantly changing technological landscape. The development of new technologies, including cloud storage, mobile connectivity and inexpensive digital storage, has made the traditional view of physical ownership of content obsolete. New regulations that embrace a subscription model need to be created to ensure that both content producers are rewarded for their efforts and content users needs are addressed. The past five hundred years has seen a steady pace of increasing availability of artistic content. From books to films and from records to software, there is an almost bewildering range of materials available to consumers. For many years, duplication of these creative works was, at best, impractical for the average person. Ownership of the physical medium, be it a book or a record, was required to access the content that medium contained. Gradually, technologies appeared on the scene that allowed for content to be accessed in ways that did not require the possession of the physical media. Initially, these new methods of access were primitive and didnt deliver the full fidelity of the original medium. Photocopied pages from books were a boon to educators, for instance, but photocopying an entire book was awkward, time consuming and expensive. Similarly, early home taping of LP records was useful for sharing rare recordings amongst friends or for creating an alternate version for use in a car stereo, but creating multiple copies was, again, impractical.

Despite the challenges to alternative distribution, industries involved in content distribution saw the potential threat early on. They recognized that technologies that allowed consumers to produce their own additional copies of content threatened their revenue streams. Early efforts included the British Phonographic Industrys Home Taping Is Killing Music campaign of the early 1980s and the landmark Sony Corp. of America v. Universal City Studios, Inc. case of 1984. These efforts to restrict consumers rights in terms of their ability to duplicate some or all of a creative work led to the codification of the principle of fair use. (Leval, 1990) For instance, the principle of time shifting was established by the Sony case (Samuelson, 2006) in an environment where Universal and others claimed that not only was any copying of copyrighted materials was prohibited, but that the very technology that allowed such copying was, itself, illegal. It is interesting to speculate what impact such a ruling, had it favored Universal instead of Sony, would have had on the myriad of technologies that followed the VCR. These early skirmishes between rights holders, the public and technology manufacturers were soon to pale in comparison to the digital revolution which would begin, in earnest, in the 1990s. Perhaps most notable amongst technological breakthroughs in terms of content duplication was the promulgation of the MP3 file format in 1994-6. (Chiariglione, 1994)

Although digital duplication of audio had existed before MP3, the new codec allowed for audio files that were both of sufficient quality as to be nearly indistinguishable from the source content and a small enough data footprint so as to be practical for use with the relatively small hard drive capacities of the time. Alongside this new medium, higher speed connections to the Internet and the launch of the World Wide Web were occurring in this timeframe. This convergence of an efficient codec and a relatively unfettered channel of mass distribution created the perfect storm for a sea change in the way people used music. Although Napster, launched in 1999, is often seen as the start of widespread MP3 file sharing on the Internet, actual distribution of MP3s began as early as 1995, with files being exchanged via Usenet and FTP. (Lueg, 2003) The legal skirmishes that dominated the early years of the 21st Century regarding illegal file sharing had numerous implications for copyright law, the publics respect for copyright law and the fortunes of content providers. Starting with the now infamous A&M Records, Inc. v. Napster, Inc. case of 2001 (UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT, 2001), these years were punctuated by a series of legal actions around the world that attempted to protect rights holders against an ever increasing tide of legal, quasi-legal and illegal copying and distribution of copyrighted content. In an ongoing game of cat and mouse, as rights holders challenged a channel of distribution or individual users, new channels and users seemed to endlessly fill the void, staying a step ahead of both technological solutions and law enforcement. Given the seemingly hopeless efforts of rights holders to maintain any semblance of the old

system, it is, perhaps, time to look at a new methodology for ensuring content producers are able to make money for their efforts while consumers are able to access content in a way that makes sense for them. Given this challenge, there are a number of options that might make sense. The first option is to embrace the natural loosening of DRM controls thats already happening. Given that most potential customers will choose a fairly priced convenient option over a free, but complicated, process, models like Apples iTunes store, where DRM free music is sold at a fair price and can easily be accessed (Arthur, 2010)and Netflix live streaming options both make sense and are being rewarded in the marketplace. What other options exist and what advantages/disadvantages might they have? One model that has surfaced repeatedly is the voluntary collective license. Not wholly unlike music services, such as Rhapsody, that offer an all you can eat model of downloadable content for a set monthly price, the voluntary collective license essentially collects a fee from every music (or film, etc) user on a monthly basis. This fee is distributed to artists in much the same way that ASCAP or BMI distribute their public performance fees to artists. Users would be unshackled from any particular way of accessing content. (Lohmann, 2008) What are the benefits to such a system? Firstly, its straightforward. For a set monthly fee, users are free to access any content, anywhere. Where does this money go and what does it mean. According to a 2008 report from the Electronic Frontier

Foundation, approximately 60 million Americans were engaged in music file sharing at that time. Given that file sharing is generally considered to be illegal in the US, it can be reasonably assumed that the number of people that might engage in file sharing in a legal system would be at least as large, if not significantly higher. In 2009, US music sales and licensing revenue totaled $6.3 billion. (Goldman, 2010) Right now, the Rhapsody model referenced earlier costs users $9.99/month. Lets assume that the 60 million number represents persons with fixed or mobile Internet access. Further, lets assume a license fee as high as $7 per month. The conservative estimate on a gross return from such a fee would be in excess of $5 billion. Although there would be overhead associated with collecting and distributing such a fee, those costs would pale beside the current costs associated with producing and shipping physical CDs, maintaining online storefronts and the like. Further, licensing fees for song use in commercials and films, etc would continue to flow.

$12,000,000,000

$10,000,000,000

$8,000,000,000 Traditional Revenue Collective Licensing Revenue $4,000,000,000

$6,000,000,000

$2,000,000,000

$2008 2009 2010 2011 2012 2013

As the chart above indicates, using the current downward trend of music industry revenues to project future earnings, a move to a collective licensing model would not only stem the downward tide, it would completely reverse it, delivering revenues at least on par with the music industrys best past performance. Unfortunately, all is not as easy as it might appear. Those cost areas that this new model would omit, retailers, online storefronts, CD production, etc. represent a significant source of potential opposition to a plan that would make them obsolete. Further, this model requires buy in from not only the music publishing industry and artists themselves, but from ISPs and others on the collection side of the equation.

Lets assume, for a moment, that these other players are convinced or forced to come around. Clearly, with the model of organizations like ASCAP and BMI, the music industry seems ripe for a solution like this. But music is only part of file sharing universe. The same copyright concerns we see in the music industry are also cascading across the film, television, book and software industries. How do we address these categories of content? Of these other categories, only software presents issues that might not be surmountable. Books, like music, are easily covered by a collective licensing model. Unlike music though, where a physical medium is largely pointless, many people still enjoy the physical experience of holding, reading from and possessing a physical book. It would seem that the potential exists for a consumer to pay for the same content twice in a collective licensing model, once as part of their license fee and, again, when they purchase a physical book. It is not unreasonable to consider that a collective license fee for books might be better associated with e-reader devices than at the ISP level, ensuring that readers that do NOT use e-readers would not be paying fees solely associated with those devices. Film and TV might work well with a collective licensing model as well, although the nuances of such a system might be more difficult to work out, given the absence of models in this arena.

Software, the other large area of copyright protections under fire in the digital age, poses additional challenges. Unlike films, books and music, which are fairly static works, software development is an ongoing and dynamic environment where products are often updated again and again at no additional cost to the purchaser. Also unique to software is the idea of licensing. Most software sold in the US is not, in fact, sold. Instead, consumers purchase a license to use the software, ownership of which remains with the publisher. Given the constraints already placed on consumers in this area, its unlikely to consider collective licensing to get a welcome reception in this space. At least for the shorter term, software copyright looks likely to remain unique and aloof. In short, the idea of creating a copyright protection model focused on ensuring that rights holders are paid for their work and that consumers are neither overcharged or prosecuted for accessing these works in the manner that makes the most sense to them makes good business sense. Clearly, the change in mindset and business models required to transition to these models is immense, but, considering the alternative, which is constrict access to content until consumers start to lose interest, makes so little sense, such a change could be exactly the silver bullet the recording and film industries need to revitalize their incomes.

Arthur, C. (2010, February 25). Apple hits 10 billion songs sold - but what's happening to music sales growth? The Guardian. Chiariglione, L. (1994). ISO/IEC JTC1/SC29/WG11. Press Release (p. 1). Singapore: INTERNATIONAL ORGANISATION FOR STANDARDISATION CODING OF MOVING PICTURES AND ASSOCIATED AUDIO . Goldman, D. (2010, February 3). Music's lost decade: Sales cut in half . CNNMoney.com. Leval, P. N. (1990). Toward a Fair Use Standard. Harvard Law Review, 1105-1136 . Lohmann, F. v. (2008). A Better Way Forward: Voluntary Collective Licensing of Music File Sharing. ELECTRONIC FRONTIER FOUNDATION. Lueg, C. (2003). From Usenet to CoWebs. Springer. Samuelson, P. (2006). THE GENERATIVITY OF SONY V. UNIVERSAL. FORDHAM LAW REVIEW, 101145. UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT. (2001). A&M Records, Inc. v. Napster, Inc. UNITED STATES COURT OF APPEALS.