The Present and Future of Music Law

Ann Harrison, Tony Rigg, Ann Harrison, Tony Rigg

• Publisher: Bloomsbury Academic
• Year: 2021
• ISBN:
  9781501367786
• Edition: 1
• Topic: Media & Performing Arts
• Subtopic: Music & Business

The music business is a multifaceted, transnational industry that operates within complex and rapidly changing political, economic, cultural and technological contexts. The mode and manner of how music is created, obtained, consumed and exploited is evolving rapidly. It is based on relationships that can be both complimentary and at times confrontational, and around roles that interact, overlap and sometimes merge, reflecting the competing and coinciding interests of creative artists and music industry professionals. It falls to music law and legal practice to provide the underpinning framework to enable these complex relationships to flourish, to provide a means to resolve disputes, and to facilitate commerce in a challenging and dynamic business environment. The Present and Future of Music Law presents thirteen case studies written by experts in their fields, examining a range of key topics at the points where music law and the post-digital music industry intersect, offering a timely exploration of the current landscape and insights into the future shape of the interface between music business and music law.

Part One

Tensions between the rights of copyright owners and the freedom to create

1

Copyright, royalties and industrial decline

Richard Osborne

Writing in 1988, Simon Frith stated that, for the recording industry, ‘the age of manufacture is now over. Companies (and company profits) are no longer organised around making things but depend on the creation of rights’ (Frith 1988: 57. Emphasis in original). Record companies were able to reach this position because, as well as owning sound recordings, they were the usual owners of sound recording copyright. The ‘rights’ that Frith refers to are the exclusive controls that belong to a copyright owner and which address the different ways in which their work can be employed. These include the reproduction right (at the time Frith was writing, this right would primarily have addressed duplicative manufacture, that is, physical media such as vinyl and cassette tapes) and the performing rights (prior to the 1988 Copyright, Designs and Patents Act (CDPA) these rights encompassed the right to perform the work in public and the right to broadcast it; the broadcast right has subsequently been recast as the ‘communication to the public’ right, which in addition to covering broadcasts addresses the right of ‘making available to the public’). Frith was not suggesting that record production was coming to an end; his point was that the recording industry was thinking of recordings in a different manner. Rather than focusing on them as physical products, it was conceiving them as a ‘basket of rights’ (Frith 1988: 57). He maintained that the job of a contemporary record company was ‘to exploit as many of these rights as possible, not just those realised when it is sold in recorded form to the public, but also those realised when it is broadcast on radio or television, used on a film, commercial or video soundtrack’ (Frith 1988: 57).¹

In many ways Frith’s work was prescient. He paved the way for academics to conclude that the recording industry is a ‘copyright industry’ (Wikström 2009: 17. Emphasis in original). This approach has been accepted by governments. In 1994, Britain’s Monopolies and Mergers Commission (later replaced with the Competition Commission) stated that copyright ‘is central to the operations of the record industry’ (MMC 1994: §1.4). The Congress of the United States has listed the recording industry as one of the ‘core copyright industries’ (CBO 2004: 3). This is also the opinion of representatives of the recording industry. In 2014, the global trade body, the International Federation of the Phonographic Industry (IFPI), declared that the principal task of record companies is to invest in copyright (2014: 4). Today, it is common practice among business analysts to refer to these companies as ‘rights holders’ (AIM 2019).

Yet there are also ways in which Frith’s prognosis can be questioned. In the first instance, manufacture (and the associated right of reproduction) remained the recording companies’ primary focus long after the period in which he was writing. In 2001, according to the IFPI’s global revenue figures, physical sales were still accounting for 98 per cent of recording industry revenues (IFPI 2020: 13).² Moreover, it was only in 2013 that the accumulated revenues from downloading, streaming, broadcast, public performance and synchronisation overtook revenues from physical products for the first time (IFPI 2020: 13).

Secondly, now that the manufacture of physical products has finally been eclipsed, it has become apparent that Frith’s dictum can be turned on its head. Downloading and streaming have been successively prosperous. Downloading achieved a 32 per cent global market share in 2014, and at one point it looked set to overtake physical sales (IFPI 2020: 13). It was superseded by on-demand streaming, which became the leading global revenue source for recorded music in 2017. By 2019, streaming was responsible for over 50 per cent of the recording industry’s global revenues (IFPI 2020: 13). It should have been relatively easy for record companies to equate these means of delivering content with the creation of rights. Streaming and downloading are not ‘physical’ and they are not formats per se. They are also multi-layered in respect of the rights involved. The terms describe complex processes that between them trigger a number of copyright controls. Yet the recording industry has not conceptualised streaming or downloading as baskets of rights. It has chosen to equate them with physical products.

This can be witnessed at a number of levels. Despite the fact that online services lend themselves to the access of individual tracks, the recording industry still retains a focus on albums, a format that makes most sense in the physical domain. The industry has in addition preserved a physical rationale for its popularity charts and its award certifications. Here the access model of streaming, paid for by subscription and advertising, is made equivalent to ‘sales’ (Osborne 2020a: 28–35, 2020b: 47–51). This physical orientation is also in evidence in legislative practice. The advent of downloading and streaming resulted in the creation of the ‘making available’ right, an exclusive control that addresses interactive services in the digital domain. This right has served two purposes: first, to ensure that all activities relating to online access are encompassed within legislation and second, to avoid plurality. It was designed so that it would sit alongside and operate in a similar manner to the reproduction right.

For the recording industry, ‘manufacture’ and ‘copyright’ have not been separate conceptions; rather, it is from the creation of physical products that the industry’s legislative strength has been derived. Therefore, just as it sought to prolong the trade for physical recordings in the face of digital developments, the industry aimed to extend the copyright methodology for these products to the online domain. This is the subject of the first section of this chapter, which addresses the rationale for the development of the ‘making available’ right. The second section of the chapter addresses the limits of this exercise. The recording industry has not been able to ignore the fact that streaming and downloading are different in nature to the manufacture and sale of physical products. Consequently, the industry’s practices have been questioned and to a certain extent transformed. The business activities of recording artists have simultaneously expanded, putting some of them in a position of greater power vis-à-vis record companies. Artists’ situations are nevertheless diverse. While some are better off in this environment than they were previously (due to improved royalty rates and ownership of rights), there are plenty who complain about their situation (bemoaning royalty payments and the categorical quirks of copyright law), while others have a weary sense of déjà vu (being subject to contracts that were drafted in the age of manufacture).

Making things the same

Sound recording copyright is different from most other forms of copyright. The ownership of literary, dramatic, musical and artistic works is accorded to authors in respect of their original creative work. In contrast, the international copyright agreements for sound recordings grant ownership to the ‘producer’ (WIPO 1961 art. 10, 1996 art. 11). This term does not refer to studio personnel. In UK legislation, this producer is, instead, defined as ‘the person by whom the arrangements necessary for the making of the sound recording are undertaken’ (CDPA 1988: §9.2aa). It is the financing and organisation of the industrial, technical and artistic procedures of record creation that matter. As a result, this right has ‘nearly always’ belonged to record companies (Stewart and Sandison 1989: 228).

To a certain extent, the idea that record companies should have ownership has come first and the justifications for this designation have come afterwards. The World Intellectual Property Organization (WIPO) has stated that sound recordings ‘are not works and their producers are not authors’ (WIPO 1992: 32). Their ‘purpose’ has been ‘to have the producer of the sound recording to be the person or legal entity in whom or in which the protection vests’ (WIPO 1992: 39). The rationale for according ownership to record companies has nevertheless varied by territory and has changed over time. Britain’s first legislation to recognise sound recordings, the 1911 Copyright Act, awarded authorship to the ‘owner’ of the recording. This was on the basis that ‘ingenuity’ could be discerned in studio and manufacturing processes (CA 1911: §19(1); Gorrell Committee 1909: 26). Conversely, there has been a refusal to recognise sound recordings as creative works, typified by the suggestion that there is ‘a great measure of what is only technical and industrial in [a record’s] manufacture’ (Gregory Committee 1952: 86). Britain’s subsequent Copyright Act of 1956 was influenced by the neighbouring rights philosophy of Continental Europe and granted ownership to the industrial ‘maker’ of the recording (CA 1956: §12(1)). By the time of the 1988 CDPA there were numerous record companies which created recordings but did not manufacture their discs. More pertinently for the recording industry, there were companies that manufactured discs, but did not contract musicians or develop their recordings. Hence it was expedient to have legislation that accorded ownership to the ‘producer’ who made the arrangements for the recording to take place. In the United States, where sound recordings are legislated for as creative works, record companies have nevertheless been able to assume ownership on economic grounds. This is due to ‘work made for hire’ rules, which grant copyright to employers and commissioners on the basis that they hire artists to undertake the work (Committee on the Judiciary 2000).

Michael Jones has argued that, for as long as the recording industry has a production process, musicians will be made to ‘fit this production process’ (Jones 2014: 55). He adds that by ‘seeking “deals” the effort of musicians can be argued to be expended within the ideological boundaries of an industrial system’ (Jones 2014: 55). The effects of this system are not only ideological, however. Industrial pr...