The RightsTech Project is pleased to announce the RightsTech Roundtable, a weekly free webinar that will be part of the Digital Entertainment World Let’s DEW Lunch webinar series. Each Thursday we will highlight the important news of the week and a deep dive into a critical topic or issue for the RightsTech community featuring expert speakers and presenters. Click here for more information on Let’s DEW Lunch, and on speaking and sponsoring opportunities.
In 1604 and into 1605, London was ravaged by Plague, forcing much of the city into what today we would call lockdown: Many types of public gatherings were banned, theaters were shuttered, and houses that had been touched by the disease were marked with red crosses and the occupants told to stay indoors. William Shakespeare used his forced downtime to write “King Lear” and “Macbeth.”
Source: Distance Learning
The U.S. Copyright Office will convene a day-long symposium in Washington, DC, on Friday, Dec. 6 to examine the problem of unclaimed royalties in the music industry. The meeting is part of a study mandated by the Music Modernization Act to evaluate steps the newly created Mechanical Licensing Collective (MLC) should take to identify and locate rights owners entitled to the unclaimed royalties and to reduce the incidence of non-payment by better matching data on sound recordings with data on their underlying music works.
The RightsTech Project is pleased to announce the inaugural RightsTech Europe conference, which will beheld on April 9-10, 2019, in Frankfurt, Germany. The two-day conference, at the Instituto Cervantes, or “Spanish Cultural Institute,” in Frankfurt’s West End district, will be co-produced by the RightsTech Project and Frankfurter Buchmesse (Frankfurt Book Fair) organizers of the world’s largest book fair and publishing rights marketplace.
With final negotiations underway among the European Parliament, Council and Commission over the European Union’s proposed Copyright Directive, and lobbying for and against it at a fevered pitch, Article 13 of the directive, which could force online service providers to actively screen content uploaded to their platforms for copyright infringing material, remains at the center of the debate. This week, however, cracks began to appear in once solid wall of support for the measure among major rights owners.
In a letter to the negotiating parties, the Motion Picture Association, representing the major studios, along with the Independent Film & Television Alliance, the Association of Commercial Television in Europe, and several major European sports leagues, took issue with changes being considered in the “trilogue” to the version of Article 13 passed by the European Parliament in September, claiming they would further cement the dominance of major online players such as YouTube, and asked that their content be excluded from provision should those changes be adopted.
“Recent proposals would undermine current case law of the Court of Justice of the European Union (CJEU) which already makes it clear that online content sharing service providers (OCSSPs) communicate to the public and are not eligible for the liability privilege of Article 14 E-Commerce Directive,” the organizations wrote. “Recall that the initial goal of Article 13 was to codify the existing case-law in a way that would enable right holders to
better control the exploitation of their content vis a vis certain OCSSPs which currently wrongfully claim they benefit from the liability privilege of Article 14 E-Commerce Directive. However, unfortunately, the Value Gap provision has mutated in such a way that it now strengthens even further the role of OCSSPs to the direct detriment of right holders and completely undermines the status quo in terms of the EU liability regime.”
The purported “mutations” appears to be a reference to a proposal by the Council of Europe, made up of representatives from EU member governments to adopt certain existing copyright filtering systems, such as YouTube’s Content ID, as the standard to meet for all online platforms, which would leave it to rights owners to identify their content and instances of infringing uses on the platforms, rather than shifting the burden of identifying and filtering infringing content to platform providers.
“Some of the options proposed for discussion at trilogue level indeed wrongfully undermine current law and weaken right holders’ exclusive rights by, among others: creating a new liability privilege for certain platforms that have taken specific steps to avoid the availability of infringing copyright content on their services (but have failed to do so effectively), and conditioning protection of copyright online on right holders bearing the full burden of identifying and notifying copyright infringing content to platforms,” the letter said. “These would constitute gifts to already powerful platforms, and would de facto constitute the only real change to the current status quo in legal terms, thus improving the position of platforms, but not of right holders.”
The groups’ complaints come even as YouTube has continued its ferocious lobbying against Article 13 altogether, claiming it could still compel the Google-owned platform to remove huge swathes of legal content for fear of liability.
The music industry, meanwhile, largely continues to support the measure, pushing back forcefully against YouTube’s claims.
In their letter, the TV and sports organizations suggest narrowing the scope of Article 13 to single out music and exclude other types of content.
“If…any new safe harbour/”mitigation of liability” would be part of a final trilogue agreement, we would respectfully urge you to disapply the entire value gap provision to our respective sectors,” the letter said. “This could simply be achieved by making Article 13 specific to musical works and phonograms, as was the case, for example, in Title III of the Collective-Rights-Management-Directive of 20145.”
One more negotiating session is scheduled, currently for December 14. A final vote on the directive is tentatively slated for mid-January.
The RightsTech Project will host a full, two-day track of panels, keynotes, and presentations again this year at the Digital Entertainment World expo in Los Angeles on February 4-5 at the Marina Del Rey Marriott.
As always, RightsTech will bring together our unique mix of creators, entrepreneurs, technology developers, and rights owners from all sectors of the media world to discuss and debate technology-enabled solutions to the common challenges of managing and monetizing rights in the digital era.
Topics on the agenda for this year include:
- The Future of Rights and Royalties
- What’s Next for the Music Modernization Act?
- Tools for DIY Artists
- Blockchain Goes to the Movies
- Managing Rights at Enterprise Scale
- Metadata Standards and Management
- Bringing Transparency to Royalties and Residuals
- … and more
RightsTech@DEW kicks off an expanded slate of conferences for 2019, which will also include the first RightsTech: Europe conference in Frankfurt, Germany April 9-10, and the annual fall RightsTech Summit in New York.
Click here for information on how to register for Digital Entertainment World.
For speaking and sponsorship opportunities contact Paul Sweeting at email@example.com.
For general inquiries regarding DEW, or information on other conference tracks, contact Tinzar Sherman at firstname.lastname@example.org.
Sony Corporation, along with Sony Music Japan and Sony Global Education, this week issued an intriguing but rather vague press release announcing the development of “a rights management system for digital content that utilizes blockchain technology.”
According to the release, the new systems “is based on Sony and Sony Global Education’s previously developed system for authenticating, sharing, and rights management of educational data,” that Sony developed last year using IBM’s blockchain platform. The latest version, however, includes additional “features functionality (sic) for processing rights-related information.”
That last part appears to point to a system that could accommodate user-generated, or at least third-party content not created or owned by Sony, as the release kinda, sorta spells out:
Today, advances in technologies for digital content creation allow anyone to broadcast and share content, but the rights management of that content is still carried out conventionally by industry organizations or the creators themselves, necessitating a more efficient way of managing and demonstrating ownership of copyright-related information for written works. This newly-developed system is specialized for managing rights-related information of written works, with features for demonstrating the date and time that electronic data was created, leveraging the properties of blockchains to record verifiable information in a difficult to falsify way, and identifying previously recorded works, allowing participants to share and verify when a piece of electronic data was created and by whom. In addition to the creation of electronic data, booting up this system will automatically verify the rights generation of a piece of written works, which has conventionally proven difficult.
The most intriguing part of the announcement, however, is Sony’s claim that the system, “lends itself to the rights management of various types of digital content including electronic textbooks and other educational content, music, films, VR content, and e-books.”
That suggests Sony could have big plans for the system, and indeed, the release states the company “is contemplating possible uses in a wide range of fields.”
Just how big those plans might be, however, is hard to tell from the announcement. The system is still in prototype, and according to the announcement, plans to commercialize it are still under discussion.
Sony wouldn’t be the first major media company to dabble in blockchain only to let it go, should nothing come of this week’s announcement. Disney developed its Dragonchain private blockchain platform back in 2015 and 2016, only to spin it off as an open-source project under the auspices of a non-profit foundation.
But the Sony release contains additional hints that blockchain is a genuine priority for the Japanese conglomerate.
“Sony Group is also considering innovative ways to make use of blockchain technology for information management and data distribution in a host of different fields,” the release said. “Through the technological development and commercialization of blockchains, including with this new system, Sony will continue exploring the possibilities that blockchain technology holds for Sony Group’s diverse and wide-ranging business domains.”
Earlier this year, Sony applied for two blockchain-related U.S. patents that may contain clues as to what sort of information management and data distribution applications it has in mind.
One filing, 20180218027, describes a new type of crypto-mining hardware that includes additional circuitry to compress the data that goes into a new block before adding it to the chain, reducing the storage requirements of the chain. Further, the blockchain supported by the new hardware would incorporate the compression processing into its proof-of-work consensus mechanism.
“As mentioned, the mining process of a block which shall be added to the distributed ledger includes compressing data of the block,” the filing says. “In some embodiments, the mining process is won by the electronic node which provides the smallest block which is to be added, i.e. the block having the best compression may win.”
Each block could also consist of multiple sub-blocks “wherein a sub-block may include at least one of: transaction data, video data, image data, audio data, document data or the like.”
The other filing, 20180219686, describes a type of distributed ledger maintained in part by a number of “virtual nodes” that could continue to maintain the ledger “when the number of [physical] nodes is small, and consensus may be maintained when some devices go offline.”
Together, the filings could point to some sort of restricted, or perhaps permissioned, blockchain-based, peer-to-peer content distribution platform that could accommodate large data payloads by compressing them before adding the data to the chain.
Whether all of those threads ultimately tie together is unclear at this point. What is clear is that Sony is looking hard at potential blockchain use cases.
Sweeting and Kenneally discuss the growing investor appetite for rightstech companies, the emergence of securitized rights and royalties as a financial asset class, data and transparency, and plans for the RightsTech Summit.
“What’s happened in the last two decades at an accelerating pace has been a transformation of the primary mode of consumption from one based on ownership to one based on access,” Sweeting noted. “What that’s done to the media businesses and rights-owning businesses is it’s fundamentally changed how they make money. They no longer sell or they no longer predominantly sell copies of things. They have recurring revenue streams resulting from licensed access. That recurring revenue stream model has meant recurring payout obligations to those media companies.”
Where you have recurring revenue streams, Sweeting explained, “you have a measure of predictability of the returns on rights, because you can measure the recurring revenues and make projections with a reasonable degree of confidence as to what those revenue streams will be five years out, 10 years out. So where you have a measure of predictability in returns, essentially rights are becoming something like a financial asset class in their own right, because investors are always looking for predictability of returns.”
The full podcast is embedded below, but is also available on CCC’s website, and on Apple Podcasts, Google Play and Stitcher Radio.
The full transcript is available here.
One of our goals in launching the RightsTech Project was to help draw attention to the growing amount of, as well as the growing need for, investment in the business-to-business layer of the media value chain.
That’s the layer that connects the creative end of the pipeline with the consumer or market-facing end of the chain. It’s the layer where intangible rights are supposed to get translated into tangible forms of commerce so that market demand can be met and authors and rights owners can capture the monetary value of their work, or at least a portion of it.
Over the past two decades, both the creative and market-facing ends of the value chain have been utterly transformed, in scale and velocity, by digital technology. But the middle layer, the B2B layer, until recently remained stubbornly analog, opaque and slow. The result was a highly and increasingly inefficient system for translating market transactions into remuneration for creators.
There are many reasons for that inertia. Unlike the creative and market-facing ends of the pipeline, the B2B layers is not governed by ordinary supply and demand but by a complex web of contracts, business arrangements, statute, legal precedence, treaty, and tradition, all of which are difficult and resistant to change.
Even where there has been a will to change, however, the means were often not available, due to a significant under-investment in B2B systems, from both a technological and financial perspective. You can’t simply make old systems run faster; you need new systems, which takes both money and imagination.
More recently, though, that investment has started to come, particularly on the technological side. The gradual construction of a large-scale, cloud-based computing and storage infrastructure has made it economically feasible to develop and deploy the sort of secure, enterprise-scale rights management and payment systems media companies need to cope with the scale and velocity of transactions generated by new modes of content creation and consumption.
The emergence of new technologies such as blockchain and artificial intelligence has also attracted entrepreneurs and developers bent on disrupting — or at least improving upon — legacy systems.
Now, the financial side is starting to catch up. In June, the Hipgnosis Songs Fund successfully raised $260 million through an initial public offering to invest in acquiring song catalogs. The capital raise represents a clear bet not just on the future growth of the subscription streaming business and other new revenue sources for music, but on the capability and capacity to translate those revenue streams into value for rights owners and investors.
This fall is expected to bring an announcement regarding what may be the first rightstech-focused VC fund, led by long-time music industry executive and consultant Göran Andersson and former Armonia Online CEO Virginie Berger. The pair are looking to raise a $50 million war chest, with half to be earmarked for musictech startups and half for non-music focused rightstech ventures.
This week brought the announcement of a deal by City National Bank to acquire artist payment platform Exactuals, which recently expanded from its base in managing film and television residuals payments into managing music rights and payments.
Exactuals has plans to target additional media businesses with its payments platform in the future as well, according to CEO Mike Hurst, who also foresees increased financial investment in the rights and rights-management space.
“I think you’re going to see increased in investment in the sector for a couple of reasons,” Hurst said in an interview with RightsTech. “Number one is scale. The volume of uses has just exploded and there’s a real need for automation” of business systems to keep up. “Ten or 15 years ago, in the TV business, you had maybe 20 cable channels that wanted four or five movies a year from any given studio and that was your residuals business. It was almost all in the U.S. and the number of deals was very manageable. Today, every country has 100 channels looking for content, and you have global players like Netflix who don’t just want to buy four or five movies, they want everything you’ve made for the past 11 years. So you need systems that are agile and scalable in a way they weren’t before.”
A second factor, Hurst said, has been the emergence of rights as an asset class in themselves.
“These rights have become tradeable commodities and there’s just a huge amount of rights changing hands now,” he said. “Moving these assets around is very difficult, because of the scale and because there are a lot of moving parts.”
Hurst also sees several factors likely to attract financial investors to the sector as well.
“The returns [for investors] can be very good, it’s a more interesting business than 10-year treasury notes, and the streaming business is exploding,” he said. “So, even if you think you’re paying a high multiple [for rights] today, in five years it could turn into a really tremendous investment.”
That’s certainly the view of the founders of the Hipgnosis Songs Fund, which last month paid $23 million for a 75 percent stake in the 302-song catalog previously owned by composer Terius Nash.
“When we talk about gold, oil or diamonds, we talk about things that the financial world feels are priceless and investable. My ambition is that in the future they will feel the same way about songs,” Hipgnsos CEO Merck Mercuriadis told RightsTech last week. “Today 90 percent of the artists that are being signed are singing someone else’s song. So the song and the songwriter is clearly the most important component of today’s music industry,”
That growing investor interest in rights-based assets can also translate into demand for rightstech investments as well, according to Hurst.
“In our case, we make money when we make payments. And we make payments when uses happen,” he said. “As the market grows, we will make more payments, which will generate more revenue on a relatively fixed cost base. So from an investment perspective, you’re getting the underlying value of the company plus the value of the growth in the market. So it’s sort of a double dip in terms of ROI.”
Mercuriadis will be featured in a special fireside chat at the RightsTech Summit on Oct. 5, along with Hipgnosis advisory board member and Grammy-winning artist and producer Nile Rodgers.
Click here for information on how to register for the summit.
In the calendar year of 2016, the latest year we can capture across all income sources, the global value of music copyright in worldwide revenue terms was nearly $26bn – representing growth of $1.5bn (+6.1%) on 2015. That’s a much bigger figure than IFPI’s value of recorded-music-only in the same year, at $16bn.
The $1.5bn annual growth is exciting when you consider that, in the prior year, the total annual global copyright revenue figure grew by a significantly smaller amount – $941m.