It seems like every single day I read about how Internet and mobile companies are struggling to obtain the rights for what they want to do, whether it's about music, videos, TV shows, films, articles, text and images.
Here are some quick examples:
- GoogleTV just can't seem to get the TV studios seriously interested in allowing them to even search their online offerings, while...
- Netflix seems to have been more successful at tackling this wicked problem of content licensing, at least to some degree, by - as cnet aptly puts it - 'building relationships in traditional means' (I guess this means playing nice with Hollywood? Read the article - those are good, old-fashioned golf-club paradigms I'd say)
- Spotify is a fantastic music service, no doubt; very much along the lines of what Dave Kusek and me envisioned as 'music like water' in our 2005 book 'The Future of Music', and subsequently expanded on in my follow -up book, Music 2.0 (free PDF here). Spotify is not officially available in Switzerland but I have been successfully using it via a UK paypal account (after trying simfy.de and not getting anywhere with their really awkward and crash-prone iPhone app). Unfortunately, Spotify just can't seem to get the music labels and national rights organizations to bless their launch in many other territories, including the U.S. (read this Slashgear piece for more details ). All of this - you guessed it - because the record companies and the music publishers have not agreed on the licensing and deal terms for those countries, yet, and despite the fact that Spotify is already spending most of its VC money on paying for the music licenses. The fact is that there are no compulsory licenses available for on-demand streaming and flat-rate access services so unless these deals are negotiated nobody can touch it. Read about it here, or here (my Spotify-related blog posts), or via my July 2009 blog post on specifically why I think Spotify is unlikely to survive, or peruse the Zemanta-enabled links below for more enlightenment by some smart people
So here is the point I am trying to make: I don't think a purely free-market-driven and unregulated approach will work, in the future. Many large, incumbent media companies, publishers, record labels and other traditional intermediaries (i.e. the 'industry' as opposed to the actual creators) have every reason NOT to be flexible or even slightly forthcoming with their licensing terms and thereby support the deployment of new cloud-based, access-on-demand and flat-rated services. This is simply because their very existence may quickly and irreversibly change the entire playing-field, and may make it very hard for the incumbent rights-conglomerates to continue to effectively control distribution (and by extension, advertising prices) in the same way as before. These changes aren't for the better when you currently run the entire show, so why should you agree?
This is why Warner Music Group's Edgar Bronfman has said many times that he will not license any unlimited streaming-on-demand service, why Netflix - despite of (or because?) its vast growth - has been back and forth with the Hollywood studios on getting more content deals done, and why Hulu is losing steam because of the studios' concerns over future cable-TV revenue streams. Clearly, this is all about controlling and milking the market (i.e. the 'people formerly known as consumers') as long as possible. Yes, sure, just like the big telcos used to do before they had to let competition in. This is not about 'getting the artists / creators paid' or about fighting digital piracy - it's about maintaining a comfortable and lucrative monopoly position for the longest possible time. Which is OK, too - if it wasn't for the criminalizing effect it has on every single Internet user.
Most large, international media companies (disclosure: many of which are or have been my clients in some way or the other) and almost all major TV, film and music rightsholders are used to absolute control over the distribution of the works (and artists / producers) that they own or represent, and this simple fact used to result in getting much higher license fees - the other party had no choice but to take it or leave it; no license simply meant no (legal) business. This may sound somewhat reasonable in a mostly offline world (i.e. until just recently, when the mobile Internet started to take of), but on the Net, in a truly networked society, this kind of thinking plays out quite differently: refusal to license at a price that is affordable (and / or financially viable for a new, potentially huge but legally unprecedented player) simply encourages and produces piracy, because the desired content will become available anyway, legal or not, one way or the other. The reality is that there is no real control of distribution of digital content, any longer, and all models based on re-achieving that control will fail miserably. Witness the 100s of illegal movie sites that now stream pretty much any movie on-demand, or the many new IP-cloaking and re-routing services (commonly used to access locally restricted content services) that are currently flooding the market. Not licensing content to new players on actually survivable terms simply lets other, parasitic entities prosper by offering it without permission. Everyone loses.
My thesis is that - just like telecom deregulation - we urgently need new, open and public mechanisms that first significantly encourage and then possibly even enforce the licensing of copyrighted works for new services that require a new and more experimental approach, and that may end up serving the consumers much better than the traditional services. A 'use it or lose it' rule may be useful to that end; and as far as music is concerned I have been proposing a new, public digital music license for a long time.
In any case, I think that a system that continues to be based on deriving future benefits ONLY for the largest and most powerful rightsholders (again, by that I do not mean the actual creators, but the industries that represent them) is, in my view, simply unsustainable and socially indefensible in this dawning broadband-culture and in a connected, networked and interdependent society. We need better and more transparent EcoSystems and less EgoSystems; less empires and more Open Networks.
Let me have your feedback please!
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Wow, brilliantly argued piece, Gerd. My personal favourite is:
"This is simply because their very existence may quickly and irreversibly change the entire playing-field, and may make it very hard for the incumbent rights-conglomerates to continue to effectively control distribution (and by extension, advertising prices) in the same way as before."
Negotiating as Spotify is with a system rather than an individual entity or even a group of entities is certainly not for the faint of heart, but the potential rewards for success are substantial. While the egalitarian in me loves your call for a system in which experimental models requiring licensing are strongly encouraged (I would probably stop short of saying enforced), the business strategist in me relishes the competitive advantage that comes with a successful licensing deal for those who have the fortitude and perseverance to get it.
It is unfortunate but natural for businesses and industries to want to protect a status quo that serves them well. I'm sure I don't have to tell you how much effort is required to bring about a level of understanding among legislators for the kind of legislative change you are proposing, and in most cases legislators won't move until the market already has. So, while you fight the good fight with the legislators of the world, I'm going to hold fast to my belief that a true zeitgeist carries with it ideas and people that can work for evolution and change within existing commercial structures and thereby evolve the structures themselves.
Posted by: Mediazoic | December 29, 2010 at 02:29 PM
True and good points, but nevertheless one has to wonder if a system that is self-perpetuating by using outmoded laws as a hammer is fair to innovators, and by extension, to consumers. And while it is natural to want to protect your business (and OK:), it is quite another thing to outlaw everyone else or criminalize consumers (Hadopi, 3 strikes, ACTA etc), as a consequence.
Posted by: Gerd Leonhard | December 29, 2010 at 02:35 PM
It seems to me that the consumer and the companies with these various forms of content are in conflict. Consumers want access, at a lower price, and want to consume whatever they want from anywhere at anytime. Companies know that creating scarcity creates value which in the end impacts their bottom line. So they're holding on as best they can to control and at times limit access.
Consumers have choices. Some legal and others not. It's no surprise since the days of Napster (the 10 years ago version) illegal sharing of music, movies, tv shows, etc one could provide and/or consume content freely as long as they were smart about it and didn't get caught. It would seem to me that in order to have these experimental approaches be successful, there needs to be incentives that go beyond what illegal/free downloading do.
That is what needs to be sold to companies, who are doing much of the opposite in going after sites and consumers. It's the old saying, "if you can't beat them, join them." I don't know what these incentives would be, but they can't be interpreted by the consumer as being controlling or profit driven.
Brian Franke, Singer/Songwriter
www.brianfranke.com
@bfrankemusic
www.brianfranke.com/thinkingaloud (blog)
Posted by: Brian Franke | January 07, 2011 at 10:34 PM
Thanks for the thoughtful comment, Brian!! Cheers from Switzerland
Posted by: Gerd Leonhard | January 07, 2011 at 11:17 PM