Is it a lease? Is it a licence? In the world of digital royalties, Sony wants to know

Billboard reports that Sony BMG has asked a US court to dismiss the latest case filed against the label by 80s icons Toto, who are looking to challenge the basis of the way in which their digital download royalties are accounted for. With The Temptations having recently launched a new action against Universal, who have lost one case in the ‘Eminen’ action (actually brought by the rapper’s producers FBT), Sony BMG has now agreed to pay $7.95 million to settle a similar class action (with Cheap Trick and the Allman Brothers amongst others) but is separately defending the lawsuit brought by Toto, who recorded the hit song "Africa". The music company simply says the band is "dissatisfied with the bargain that it struck."

Billboard report that Sony have said that the argument that artistes should receive a share of ‘licence’ income from digital sales rather than a (much lower) per unit sales royalty is incorrect in this case because the "license" vs. "sale" dispute misses a third word -- "lease" -- which could play a role in determining whether musicians get roughly 50 percent of digital income or merely about 15 percent of the net sales price, as it seems that Sony Music's contracts with musicians appear to have "lease" provisions instead of "licensing" provisions. Is there a difference? Well, Sony says “yes” and Sony has now submitted a motion to dismiss Toto's lawsuit.

The attack on the claim is twofold. Firstly in a memorandum to the court, Sony claims that in 2002 the parties amended their agreement to set forth a new royalty rate specifically applicable to "all records made for digital playback."

If that’s not enough, Sony also challenges the ‘sale vs licence’ argument saying "In an attempt to sidestep this ['lease'] obstacle to its claim, plaintiff alleges that 'license' and 'lease' simply mean the same thing," adding "But plaintiff's allegations cannot alter the plain meaning of the contract. As a matter of both ordinary English and contractual usage, the terms 'license' and 'lease' are not synonymous" pointing to the Black's Law Dictionary, the Webster's Third New International Dictionary, and the Oxford English Dictionary to support the idea that "lease" and "license" are different. Sony also seem to be relying on the initial judgment in the Allman Brother (now settled) claim although I am not sure this is that wise, as a later judgment allowed the earlier class action to be amended to allege that Sony "leases" its catalogue to download providers like Apple's iTunes.

Like Billboard, I am not quite sure of what the ramifications are of separating "licensing" activity in media and entertainment from leasing activity, but as Billboard say “The semantic argument might seem trivial, but it's worth millions”.

http://www.hollywoodreporter.com/thr-esq/sony-bmg-asks-judge-dismiss-toto-africa-lawsuit-304172


Africa here

Richard Hooper to lead Digital Copyright Exchange

The Government has today announced that Richard Hooper, formerly of Ofcom and the BBC, will head up a feasibility study to develop a Digital Copyright Exchange, one of the key recommendations in the Hargreaves Review of Intellectual Property. With over 20 years experience in the information and communications industry, Hooper seems a sensible choice for this project on the face of it; he is certainly no stranger to challenging projects, having led an independent review into the Postal Services Sector.

The Digital Copyright Exchange (DCE) is envisaged as a means to boost economic growth in the creative sector by lowering the costs of licensing and improving access to copyright material for businesses and consumers. However, the Review recognised that:

“A range of incentives and disincentives will be needed to encourage rights holders and others to take part [and that] governance should reflect the interests of participants, working to an agreed code of practice.” (Recommendation 3: http://www.ipo.gov.uk/ipreview-finalreport.pdf)

As a matter of opinion, a functioning digital rights marketplace should ensure the following:

1. That rights holders are fully supportive and willing to allow their content to form part of the DCE;

2. That the right technical people are involved to ensure that the technological infrastructure is fully functional and supported (too often in the past technical expertise around copyright-related schemes has been overlooked, to great detriment);

3. That licences available to purchase are regulated – one of the main problems faced by those who want to use other people’s material is the debilitating sum which is charged, often leading to the failure of many projects such as documentary films. An affordable and regulated licensing structure is key to facilitate the success of this scheme.

The Government has also indicated that it wants the DCE to be self-sustaining and free at the point of access for users.

The feasibility study will look at the licensing challenges facing different sectors and should take all these issues on board, basing its findings on evidence from a number of stakeholders. Views must be acquired from not only the creative industries themselves but also from consumers and individual creators to ensure a suitable balance of opinion. The study will run in two stages: firstly, defining the problems of copyright licensing across the sectors, and secondly to bring forward appropriate industry-led solutions with a view to how these could be implemented. Findings from the study will be reported to the Government before the summer 2012 Parliamentary Recess and will provide the groundwork for a functioning exchange.

Image 'Exchange_Place' from Flickr by _SiD_, used under CC-BY-NC-ND licence

Pan-European Collecting Society for Digital Licensing

Thanks to a tip-off from Hugo Cox - who clearly spent the holiday weekend in the UK browsing the International Herald Tribune and the New York Times - readers might like to keep an eye on progress of a plan being proposed today in Strasbourg by European Telecommunications Commissioner Viviane Reding and Meglena Kuneva the Consumer Affairs Commissioner. The proposal is that consumers be enabled to shop online throughout the EU on the payment of a single licence fee for media products. In justification the proposal says:

"The offer of content online is growing more and more but the current regime is still locked into national territorial licensing, with the result that EU consumers are often prevented from legally watching content anytime, anywhere on any platform."

The New York Times observed that resistance would be expected from the EU collecting society network which administers rights territorially across the 27 states and (ergo) different copyright regimes. You don't say! Like democracy, collective administration might be the worst form of [administration] (pax Winston Churchill] "except all those other forms that have been tried from time to time" - like endless individual owners being sought out by consumers seeking licences, or piracy or file-sharing perhaps?

There is the problem of pricing. If there is a European-wide licensing price, how is such a price point to be determined (or indeed regulated) and accommodate competition concerns? There is the risk of penalising consumers in economies that are less developed by charging high prices that are out of step with their local economic conditions. Alternatively a lower, single EU-wide price penalises creators and owners in countries with a tradition of higher value licence fees who suddenly are faced with such a drop in the value of their copyright revenues that it damages future investment in their local creative and cultural economies. It is not in the interests of creators and owners if consumers can simply acquire media at rock bottom prices in less developed Member States - the bucket-shop effect (left). Nor is it, in the long term, in the interests of consumers, consumer choice or the long term future of creative investment right across the EU (and its international economic muscle) if values of content are driven down right across the board.



One hopes the Commission may look for guidance to Article 5 (2) Berne, namely that "the extent of protection, as well as the means of redress afforded to the author to protect his rights, shall be governed exclusively by the laws of the country where protection is claimed", as a guide to the territory in which the consumer is liable to payment for the licence to download and thus the price would reflect local differences in tariffs or value.