bob tarantino

The Fragility of Digital Delivery

This story, about YouTube blocking music videos in Britain due to a failure to reach a new licensing agreement with the PRS (Performing Rights Society), which collects royalties in respect of and administers the licensing of the public performance right of songwriters, highlights the fragility of the music delivery mechanism in a digital age: due to the mind-numbing complexity of managing the rights issues involved, any rupture in the chain results in the consumer being unable to access music.  This is a relatively trivial example, since no one exactly *needs* to watch videos on YouTube, but if the great hope of subscription services is ever realized (i.e., listen to (but not be able to download) any music anywhere at any time), it will become critical: one broken-down negotiation and suddenly you can't listen to the music anymore (obviously excluding music you already own and can play on your own).

"it could be quite shocking or it could be quite gratifying"

An English publisher and author are experimenting with a "pay what you wish" model for the author's next book (a book which bears the perhaps unintentionally hilarious (in light of this initiative) title What Price Liberty?.  Which is an excellent idea, but one thing might make it even better: the publisher should add an option which allows purchasers to "top up" their payment afterwards.  In other words, it would be interesting to see if purchasers who decided to pay $0 or, say, $5 would, after downloading and reading the book, be willing to "top up" their payment - in effect saying "I thought I was going to get $x worth out of this purchase, but in fact I got $x+y - here's the $y".

Lawyers and Blogging

The Lawyers Weekly published an article this week by Mark Herrmann entitled "Is blogging worth it?".  Herrmann seeks to answer two questions: Is blogging "worth it"? and Is blogging a worthwhile business development tool?  It's a decent article, and touches on most of the plausible answers to those questions.

However.

Here is the blog at which Herrmann writes: Drug and Legal Device Law.  Take a look at it.  Notice anything?  Notice anything pertinent to the audience of The Lawyers Weekly, which is "the first newspaper for the Canadian legal profession ... serv[ing] the national market with bureaus in Ottawa and Toronto and correspondents across the country"?  Herrmann is a US citizen, writing a blog about US law.  Much love to the good folks at The Lawyers Weekly (who have been gracious enough to publish a couple of things by me in the past), but, seriously, thirty-three million Canadians and we couldn't find one blogging lawyer to write a piece on whether blogs add anything to the practice of Canadian lawyers?

Herrmann notes, "As a result of two years of blogging, I’ve appeared on television shows on CNBC, Bloomberg and C-SPAN. I’ve been interviewed by, and quoted in, The New York Times, The Wall Street Journal and countless regional papers. I’ve been invited to speak at academic symposia, continuing legal education programs and state Bar conventions. A major academic press has approached me about a book deal."  The Canadian blawgosphere is a diverse place, and I can't claim familiarity with everyone who inhabits it and the success they've had blogging, but I can personally guarantee you that setting up a blawg in Canada will produce nothing similar to those results.

Canadian blawggers aren't difficult to find.  Stem Legal maintains a whole list of 'em.  And I certainly don't mean this to be some kind of chauvinist whine about sourcing a Canadian for the article, because the issue is somewhat more subtle than that: Canadian blogging, and by extension Canadian blawgging, is a quite different beast from American blogging/blawgging.  To crib from Clay Shirky, more isn't just bigger, more is different.  The sheer size of the American legal community and audience for legal writing means that blawgging in Canada and the US are inevitably going to be endeavours with radically different results.  It would have been interesting to see what, f'rinstance, David TS Fraser had to say on the topic, or read the insights of the writers of the Hoyes Michalos bankruptcy blog (timely!).  Regrettably, the impression that blogging is blogging is blogging has delivered an informative but perhaps less-than-useful installment.

Canadian Domain Laws

I've been unbelievably remiss in not getting around to this earlier (i.e., Jeffrey Behrendt emailed me about this back in, oh, August 2008), but better late than never, I suppose: Jeffrey interviewed Zak Muscovitch about domain name law in Canada and the result is this informative post.

US Online Public Performance Royalty Decision

The big web-related news late last week was the release of the US federal district court decision which set the license fees that AOL, RealNetworks and Yahoo! have to pay to ASCAP for public performance of musical compositions (a copy of the full decision can be read here).

There is a wealth of information in the decision (despite the redaction of much of the financial information), and it serves as a handy guide to the range of licenses which are in place for public performance royalties.  At page 83 begins a discussion of the "experimental" licenses which ASCAP had been offering to online service providers, which contained a 3% license fee.  Starting at page 93 is a description of the license agreements which ASCAP had entered into with a variety of music users (inlcuding Music Choice (which provides music to satellite and cable TV subscribers), the Big Three US TV networks, commercial radio stations, cable TV stations, and "music intensive" cable TV stations.  At page 98 begins a discussion of the license agreements entered into by the online services with record companies for the right to communicate music videos.  At page 105 begins a discussion of the licenses which have been entered into by BMI (a rival public performance rights society).  Starting at page 116 is the court's conclusion, which makes for interesting reading (well, for an entertainment lawyer - YMMV), as it details all of the factors the court took into account in arriving at its rate of 2.5% of adjusted "music use" revenues.

Glancing through the decision put me in mind of a comment I had started to write about a year ago relating to the then-recent decision by the Canadian Copyright Board with respect to mechanical royalties payable for online music sales.  Mechanical royalties and public performance royalties are obviously rather different, but the opening paragraph of the comment conveys (rather poorly, reading it now), one of the frustrations that I think many in the industry feel:

It took nearly three years to the day, but on March 16, 2007 the Canadian Copyright Board released its tariff decision regarding “mechanical royalties” for online music sales.  To summarize: the royalty is 8.8% of the retail sale price of a “permanent download”, except that there is a minimum royalty of $0.59, unless the song is sold as part of a bundle, in which case the minimum royalty is $0.45; that being said, there is an entirely arbitrary “temporary discount” of ten percent to the foregoing rates for the life of the tariff.  Oh, and this tariff expires on December 31, 2007, so all of this could and likely will change.  And we haven’t even mentioned the other types of online uses to which the tariff applies (“limited downloads” and “on-demand streaming”).  Confused yet?

Which is a long way of saying that it really is a shame that the various regulatory and governance structures in place (and I'll include as a "governance structure" freely-contracted agreements) have been so hard-pressed to make "final" determinations of these issues (I use the quotes around "final" advisedly, since as noted above in the Canadian context, the tariffs expired at the end of last year - and as the Copyright Board noted in its April 2008 decision relating to the next round of hearings to establisht the post-2007 rates, those new rates could be "lower, higher or the same").  SOCAN's Tariff 22A, which covered online public performance royalties in Canada the period from 1996 to 2007 was released in October 2007 - in other words, if you were in a position to be streaming music online in 1996, it would be eleven years before you found out what public performance royalties you owed. 

It's been, what, nine years since online availability of music started becaming relatively widespread (with the rise of mass internet adoption and broadband availability)?  And only it's only in the last couple of years that we're starting to get clarity on what that costs?  Amazing.  And, without getting too melodramatic, tragic. 

This level of complexity and uncertainty is troublesome, since it acts as a retardant to market entrants and does its part to prevent a healthy multiplicty of options in the marketplace.  Having to set aside reserves against a contingent liability (without having any clear idea as to when that liability will crystallize) means that capital is lying idle, rather than being profitably re-invested.  Smaller US players (i.e., those without the financial or legal wherewithal to embark on a fight through the courts with ASCAP) were put in the position of signing the "experimental" licenses - at a rate higher than what the rate court found was fair in the context of larger competitors.  And the decision-makers are still playing catch-up.  When the history of the internet is written, I'm guessing the chroniclers will shake their heads in disbelief at how intransigent both the actors and the regulators were in addressing these issues in a timely manner.