Alternative Revenue Sources for Copyright Owners in the Digital Age

– Victoria Hall (MJur, Durham University) vicky.hall@durham.ac.uk

With regard to the music industry, there is one major source of revenue which is, unsurprisingly, usually left out of copyright owners’ calculations when producing profit and loss reports. Clark argues that ‘revenue opportunities being afforded to touring, live performances and merchandising outstrip record sales by some distance’. Moreover, the live music industry seems to be going from strength to strength. Pollstar claims that ‘Between 1999 and 2009 concert-ticket sales in America tripled in value, from $1.5 billion to $4.6 billion.’ This trend was set to continue, as in 2012 the ‘Top 100 Tours in North America generated a combined gross of $1,125.9 million, up 1.2 percent over last year [2011].’ The continuing growth and popularity of live concerts can be attributed to one key fact: ‘There is no way to digitally recreate the excitement and atmosphere of a live concert.’ Concert lovers will always pay to see their favourite artists live, irrespective of whether or not they own the track(s) performed. This is surely a key way in which copyright owners can continue to obtain substantial revenue, to help subsidise a far cheaper retail value for their recorded material.

Advertising will also be a key factor in the reshaping of the copyright landscape. It offers a good, reciprocally beneficial arrangement to both the advertisers and the host forum, and, ultimately, the consumer at the end of the chain.  This could be achieved both through the website selling the concert tickets, as well as at the venue itself. This two-fold advertising campaign could realise even further profits. Artists are simply not taking sufficient advantage of the alternative revenue sources available to them. Perhaps this is because, although it is in their own interests, it is not in the interests of the ultimate copyright owners: their record labels. Before too much pity is felt for recording companies however, it should be noted that, despite the prevalence of copyright infringement, ‘Digital music revenues to record companies grew by 8 per cent globally in 2011 to an estimated US$5.2 billion. This compares to growth of 5 per cent in 2010.’ Claims that record companies will struggle and fail in the current climate do not seem to be upheld by the real facts and figures.

It would appear that the creators themselves, those being the individuals copyright law was supposedly developed to protect, generally support these alternative systems. Many artists have experimented with these methods, and have, by and large, been successful in doing so. Some bands have provided free copies of their music to fans to publicise their live tours, of which McFly, The Kinks and Prince are just a few. Indeed, Prince found his album giveaway to be so successful (it led to a record breaking, sell out concert tour) that he repeated the experiment with his next album. Whilst it is undeniably unfortunate for high street record shops to have to suffer as a result of this, this cannot be a sufficient reason to deter the trend. High street retailers will simply have to adapt to the new changes in digital technology, just as producers of floppy disk and VHS cassette equipment (to name but a very few examples) were forced to do before them. Technology will not wait.

Yet it seems to be a commonly held belief that it should, or that providers of outdated technology have some sort of right to continue to profit on their increasingly redundant products. Duboff states for example that ‘In the United Kingdom, digital growth during 2011, reported at 24.7 per cent by the BPI in February 2012, only offsets two-thirds of the decline in income from sales of physical  music products.’ But why should digital sales have to ‘offset’ physical products? The decline in sales of physical music products, is an unfortunate (for those involved in their production) but inevitable consequence of technological advancement, and has been throughout recent history. There should be no obligation to, in some way, ‘subsidise’ this sector. Many retailers of physical music products have altered their business models to suit the now flourishing digital market. This is arguably how it should be.

For the most part, consumers tend to support this model too, as the consistent growth of concert ticket sales mentioned above indicates. This may be because live concerts are seen as special events by consumers, to be remembered long afterwards, and are categorised entirely separately to the purchase of a track or album. As Wing points out, for some there is no substitute for the experience. The time and expense expended on organising and producing the event is more evident to the consumer, who is therefore more willing to pay a relatively large sum for a ticket.

So if artists and consumers are in favour of using live concerts as a major source of revenue to subsidise low material sales, why is this not now merely commonplace? The answer, unfortunately, leads to a serious obstacle. Record labels, which make their profits from record sales, are against this sort of shift in revenue sourcing. Bearing in mind that they now tend to be the copyright owners, it becomes clear why more artists are not changing their business models to accommodate this new change in demand. Until a more fundamental overhaul of the nature of copyright itself has occurred, this convenient and sensible option will most likely be shunned by the powerful creative industries.

It is not only music artists who have used the potential of free material to tempt individuals to ultimately pay for more in the future. The BBC has recently released a Youtube-only nature documentary channel, aimed at teenagers. It aims to attract a new audience to what the BBC has to offer. Clearly it recognises the direction most new users are taking when it comes to material for entertainment. The channel is a good example of a short term loss in order to, hopefully, reap long term rewards by attempting to secure the patronage of the next generation. A more cynical view may be that the BBC has decided that, ultimately, ‘if you can’t beat them, join them’.

 

Sources:

• Clark, R ‘Sharing out online liability: sharing files, sharing risks  and targeting ISPs’ in Strowel, A (ed) Peer-to-Peer File Sharing and Secondary Liability in Copyright Law 2009 Edward Elgar Publishing Inc. At 196-228, 197.
• Duboff, A ‘IFPI Digital Music Report 2012 – what’s the story?’ [2012] 23(4) Ent.L.R. 96-98, 98.
• Wing, M ‘The digital copyright time bomb in the BRIC economies, some ideas from the UK for the Indian market’ [2012] 54(4) Int.J.L.M. 302-210,307.