What digital did
Copyright and privacy are twin victims of the technological revolution. From the perspective of income for the talent, digital distribution has been a financial disaster.
Values vary according to circumstances, such as desirability or scarcity. Once your audience can access your creative work easily, with little or no payment, pricing goes out the window, and ultimately the talent suffers. The companies owning and administering the talent’s copyrights suffer, but not to the same extent. Remember, the companies’ first obligation is not to the talent that provided the wondrous works of music, art and performances upon which they build their businesses. Their duty is to their shareholders (not to mention share prices impacting executives’ bonuses). Generally once production costs have been recouped from exploitation, the liability to pay third parties kicks in, which is the case with the Spinal Tap creators who are entitled to 40% of net profits. Thus the old Hollywood joke: “Q: Why does nobody play tennis at Paramount? A: “Because there is no net!”
So, why has the revenue from digital distribution led to a crisis in the livelihoods of all, but the very few, authors and performers?
Call it the transfer of value or the value gap, it is the ability of the services run by the tech giants and their smaller competitors to make creative works available online with very little, and often no, payment to the right owners or the authors and performers – see the Value Gap Report in the Fairness Rocks Library. This is possible by relying upon outmoded legislation in the USA and EU from 1999 and 2000. The so-called safe harbour legislation was originally created to protect fledgling technology industries, ironically hatched from counter-culture idealism via government funding sources such as DARPA, NASA and the US Department of Defence. These “start-ups” such as Google, cloud storage entities, Facebook and Apple rely upon legislation that exempts passive, purely technical platforms from liability for the copyright works they carry. The “don’t punish the postman” argument. On top of these long-outdated legislative shelters, these giants rely upon a wilfully erroneous interpretation of the right of “communication to the public” (see How Copyright Protects Authors). They claim there is no true communication to the public that takes place when they carry the works of others – that they are merely passive carriers. For example 80% of visitors to YouTube use it to access music. In 2014, data company Nielsen and IFPI established that YouTube delivered 52% of songs streamed on demand, yet their licence fee formed only 13.5% of revenues in the sector. The boast from YouTube that they pay US$1 billion annually to the music industry for its 800 million music users (less than one dollar a year per user) is pretty hollow when set against Spotify’s annual US$2 billion payment to record labels (nevermind publishers and CMOs) for their 100 million users (only half of whom are subscribers at US$9.99 per month).
After years of free access by audiences, the record label and music publishing industries eventually managed to negotiate music licence fees on digital music services, on YouTube and latterly, on Facebook. But they are invisible, under non-disclosure agreements, so the talent is prevented from knowing either the terms or the value of the deals. All they know is the pitifully low level of reward for their work arising from such platforms. Worse, these lump sum licence fees are distributed according to the terms of the contracts signed with the talent. Royalties will usually only be passed on if the money is, according to contract, “directly and identifiably” attributable to the individual work. This makes the chance of the talent sharing in these sums uncertain. Those three little words represent a built-in disincentive for labels and publishers to maintain correct data to match usage with individual songs or tracks. That said, the Worldwide Independent Network (WIN), representing the independent music community, has issued a Fair Digital Deals Declaration – a copy of which can be found in the Library.
The music industry has been the canary in the coalmine of the digital financial environment. Authors of books have reported plummeting revenues, and their agents and publishers despair, having to do battle with an implacable Amazon imposing terms from a position of great market power. British authors report an average annual wage of £12,000, the poorest 50% annually earning less than £10,000. The internet has meant that many creators can retain control of the rights in their works (particularly in music) and develop relationships directly with their audiences using, for example, a digital aggregator for uploading – see the Fairness Rocks Library article. But, to be effective, these creators must learn and use a range of tools to register their ownership of their works and collect their income. This can be an enormous business challenge and almost invariably the money that should be paid to this growing sector of independent creators languishes unclaimed – or is pocketed by large companies, justifying this raid on other people’s money on their percentage or market share. Next down the mine are the film and television industries, with more contributors within the work (authors and performers) and much less consistency between legal regimes across the world. In a word, digital distribution has wiped out the livelihoods of thousands (see Audio Visual Remuneration Report in Fairness Rocks Library), as a very few very successful creators garner the vast majority of the money.
The very, very successful are paid, but the chance of a middle class income for authors and performers has, as a result of the digital revolution, become a thing of the past. The long term damage to wider cultures worldwide that the digital age will inflict is not yet completely clear. See Shocking Facts and the Fairness Rocks Library for more information.