Monday, June 16, 2014

Congressional Hearings on Licensing System

Congressional Hearings on Licensing System
by Roy Elkins

I just read an article by Ben Sisario of the New York Times who is covering the congressional hearings regarding the rule changes that are needed for music licensing.  I wrote a blog titled One Licensing System a few days ago in response to another article. I really appreciate the reporters who are covering this as we will never hear this through broadcast or any non-internet source.
DC Roy Elkins
US Capitol

The current system of acquiring and paying for music is out of date, so I am glad to see the congressional hearings taking place in Washington. But my fear is that lawmakers, who are known for not even reading the bills they are voting on, will actually wrap their heads around the complexities of the music industry.
I was glad to see Jim Griffin on the panel as I have always had a lot of respect for him.  He is a great thinker and always seems to be at the forefront of most legal and technological advances in the music industry. He suggested a central database of rights holders that could be referenced by those looking to license music. I couldn’t agree more.

One quote from Congressman Darrell Issa to the panel of industry experts, “Every one of you has a vested interest in some part of the status quo, and every one of you is railing against some aspect of the status quo.” Ok, no offense directed at Mr. Issa, but if anyone knows the definition of status quo and the efforts to fight changing it, it’s politicians….on both sides of the aisle. We shouldn't expect any less from the music industry. Hopefully our politicians realize we pay them to listen and legislate the process without prejudice, but they seem to be more interested in lecturing their employers lately.

Back to the topic at hand. In addition to Jim Griffin's suggestion, I would add that audio files be registered in this database as well and the flow of these could be easily tracked at the ISPs. I have written a couple different blogs on this as I believe the technology solution has been in place to solve this problem on the internet for years.  This blog was written in 2006.
There will not be a fully encompassing solution without legislation.  And the real irony, is that all of the pieces are in place to make it work in a very short amount of time.

The technology solution is simple.

If I send you an audio file, it must travel through an ISP.  The ISP could easily recognize it as an audio file.  It checks against the central database and says, “Oh, that is Hotel California by the Eagles”.  The ISP adds a nominal fee such as a penny to your bill and the receiver’s bill.  The ISP pays the appropriate rights holder or one of the performance rights societies. If there is one central database, there can also be one central collection society as an add-on to what Jim Griffin suggested.  See this blog for more info.

Now I know a few of you stopped at the “one penny” comment.  Think about it.  If you only had to pay a penny every time you sent a song to a friend and it automatically hit your ISP or phone bill, you wouldn’t even blink an eye. You would send a song when you felt like it. So anytime a song is transferred from one location to another, then the sender and receiver pay this fee. Whatever it is. If it’s streamed, maybe it’s a fraction of the fee. 

Ok, maybe it’s not a penny, but let’s look at some numbers. The RIAA says on it’s own site that the economic losses equal $12.5 billion dollars per year.  There are 6 billion people in the world and we know at least 1 billion have computers, because they are on friggin’ Facebook. So if 1 billion people accessed music (via the internet, through email or on their phone) at a rate of just 10 songs a month, the problem is solved.  That’s right, 10 songs per person per month, the industry would fully recover it’s loss immediately. I do believe that there are probably more than a billion people using the internet and cell phones…..and the average will probably access more than 10 songs a month, but you get the idea. If there are 50 billion illegal downloads a year, we just added 1 billion to the bottom line of the industry. My guess is that number goes through the roof when folks aren’t thinking about the cost at the time of the transaction. Just like when we are streaming video or data on our cell phones and not thinking about it. Maybe it’s done for a usage fee and wrapped into one package, who knows? But one thing I do believe, it has to be done at the ISP level to solve the problem.

Like I said before, I will never claim to know all the legal ramifications of any solution, but I do know that the technology and payment distribution solutions are already built. They just need to be centralized and streamlined.

Press & educational links – Hangout June 6, 2014, “Blanket” Music Licensing, Industry Projections, Celebrating Sonic Foundry, A Music Platform, Project Famous – Great Photographer, Models of Opportunity: How Entrepreneurs Design Firms

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