At a recent event organised by collecting society PRS for Music, MEP Mary Honeyball noted that the debate around copyright reform and the ‘value gap’ has split the European Parliament like never before.
“We have had some heated discussions – which doesn’t usually happen in the European Parliament,” she said. “It is two very opposing points of view which so far have proved irreconcilable.”
Is that worrying? Jean-Noël Tronc, CEO of French authors’ rights society SACEM, thinks that such a clear division is actually a sign of progress from the music industry’s point of view.
Why? Tronc suggests that until recently, the industry felt that the Parliament was not listening to its lobbying for copyright reform at all. If more MEPs are now backing the industry’s calls for modernisation of safe-harbour laws, he sees that as a step forward.
“Honestly, to have the European Parliament divided on this subject is a major progress, because in 2012, when there was a vote at the European Parliament on an act whose purpose was to be more efficient at fighting piracy, 90% of the members of the European Parliament voted against it,” he tells Music Ally.
“So from that moment to the situation we are in now, honestly there has been a major improvement… A lot of MEPs in countries like Italy, Germany and France do strongly support the European Commission revision that we need, to change the regulatory landscape to make platforms pay more to creators, publishers and producers.”
Tronc claims that SACEM played a key role in getting the issue of the ‘value gap’ (between consumption of music on platforms like YouTube and the royalties that generates for rightsholders and creators) onto the radar of European politicians.
“Three years ago, the European Commission’s attitude towards rights-owners and the copyright industry was negative,” he says. “For the first time, in September last year, the European Commission proposed a change where our capacity to negotiate licences with the digital players will be strengthened. Now the debate is at the European Parliament and the member states.”
Last December, Sony/ATV boss Martin Bandier suggested to Music Ally that YouTube should be paying out five times more royalties than it currently does – “They paid out $1bn but, you know what, we should have been paid $5bn…” – but Tronc declines to follow suit in putting a specific value on how much more SACEM wants these kinds of services to pay.
For SACEM, the focus remains on changing the dynamics of the negotiations between these companies and the music industry.
“It is clear in our negotiations that we must be in a position – and this is about changing the regulations – to negotiate with a stronger base to get a better proportion of the revenues from digital players, including YouTube, for our creators,” he says.
The tone of the safe-harbour debate is such that music rightsholders and bodies are often painted as ‘anti-YouTube’ in their stances. That’s something that Tronc is keen to argue against, noting that YouTube among other services has played a notable role in offering an alternative to filesharing piracy.
“What is very encouraging for the music industry, piracy, which still exists, has been rapidly diminishing – and we have to celebrate that,” he says, before drawing a distinction between YouTube and some other large internet companies.
“We have still today a problem with ‘piracy’ – and this is about the value gap – where there are many ways where firms create value thanks to our copyrighted content online and they do not share any of that value,” he says.
“This is about social media. When it comes to YouTube, it is another story. The difference between YouTube and Facebook or Twitter is that, with YouTube, most of the players in the industry like SACEM, do have a licence. For example, with YouTube we have a global licence covering more than 120 countries in the world.”
This partnership does not stop Tronc from criticising one of the key planks in YouTube’s argument that it is a friend rather than a foe for the music industry: its ContentID system for tracking, monetising and/or taking down user-uploaded videos featuring copyrighted content.
“The CMS [YouTube has] put in place doesn’t work – it’s as simple as that. Every player in this industry would say the same, which is that it simply doesn’t work,“ he says.
“On top of clarifying the regulatory framework for rightsholders to be able to simply negotiate licences with everyone who benefits from our members’ works, we also need to clarify the obligations for services like YouTube to provide better information.”
The music industry has plenty of views on how YouTube needs to improve, but what about addressing some of the problems that lie within the industry’s own practices? Tronc accepts that there is plenty of work to be done, citing metadata as a key challenge – particularly in an age where streams are being processed by collecting societies in their billions.
“This is aimed at improving our own capacity to better identify, claim and then distribute revenues derived from online, especially on platforms like YouTube,” says Tronc.
“We started development with the IBM team six months ago and the platform should be up and running by the end of this year to be fully operational for our online collection and distribution.”
Systems of this kind can’t help to revive memories of the doomed Global Repertoire Database (GRD) project, an attempted collaboration between SACEM and fellow collecting societies ASCAP, SOCAN, PRS for Music, SIEA and SGAE. It fell apart in 2014 after £8m of investment.
Why did it fail? “There were many reasons,” Tronc says, citing the involvement of too many cooks as one of them.
“Another reason was the technological choices being made – where we were creating a unique centralised database – was just not the proper way to address the issue,” he continues.
“Documentation is, by definition, dynamic. Every minute thousands of new works are being created every day. That is across tens of thousands of different databases. Some relate to publishers, some relate to CMOs; and so the idea that we could create a unique and centralised database with the project whose budget was tens of millions of dollars was maybe too ambitious a vision. And maybe not from a technology point of view tackling the issue from the right angle.”
In 2017, one of the technologies that’s been touted as providing an alternative, better way to tackle these challenges is blockchain. It’s no surprise that collecting societies have been making some experimental moves to explore its potential.
For SACEM, that includes the trial of a blockchain-based copyright-information management system, announced in April as a collaboration with ASCAP and PRS for Music.
Its more-focused goal is to model a new system to manage the links between International Standard Recording Codes (ISRCs) and music work International Standard Work Codes (ISWCs) – matching recording and publishing data.
“It is fascinating to see in our industry that for the past 30 years, no one has ever tried to formally reconcile the two [ISRCs and ISWCs] and blockchain can help with that,” says Tronc.
He is under no illusions about the challenge ahead, even with the blockchain approach. While Tronc praises the security and encryption aspects of the technology, he notes that it remains reliant on the quality of information fed in to the system at the start.
“We see blockchain as an enabler that may be less disruptive than some people believe because it will require many years before the whole industry is using blockchain solutions,” he says. “But we really believe it could be a very significant enabler to improve the matching of metadata.”
This is not the only experiment from SACEM that could make waves in the future. Tronc says the society is running tests on a ‘user-centric’ model for distributing streaming royalties.
That’s the system – also being investigated by Deezer – that aims to ensure each streaming subscriber’s $9.99 a month is divided among the rightsholders for the music they listen to, rather than sucked into a service-wide pool to be divided by overall listening share.
(“If you just listen to Ed Sheeran and nothing else, your £10 per month should go to Ed Sheeran,” is how Deezer CEO Hans-Holger Albrecht put it in his Midem keynote. “We did a calculation and this is better for mid-sized artists, smaller artists and upcoming artists as it gives them a good chance. If you go deeper into jazz freaks or classical freaks who never listen to Katy Perry, they are still paying for her. It’s not fair.”)
Putting such a system in place could be a significant upheaval to the financial ecosystem around streaming, so Tronc says that SACEM is taking its time with its tests: if a switch happens, it would have to be done right rather than done quickly.
To this end, SACEM is running economic modelling using real catalogues and real data, to see who the possible winners and losers in a user-centric system would be.
“It may be a very important change for our artists, songwriters and publishers,” he says. “We cannot just tell them we have gut feelings. We need to tell them that these are what the results show. Then we look at what we change or not when it comes to the industry.”