Monetising Anarchy
By Jim Griffin, Mon Nov 18 12:15:00 GMT 2002

Monetising anarchy – Can we pay for art without controlling art?

If there’s a copyright war between technology and entertainment, between delivery and creativity, between left brain and right brain, between people who use stuff and people who make stuff, here’s a prediction for how it ends: A pool of money, and a fair way to divvy it up, all of which will be supervised by government.

This is a safe prediction: Effective control is impractically elusive, inefficient and counterproductive, and we know it. The history of the intersection of electricity and art is actuarial, not actual control. Pleas for copy protection are elaborate misdirection akin to sending the husband to boil water while the wife is having a baby.

The real battle is where the money is: Control of the pools. Simply for music in the United State alone you can count ASCAP, BMI, SESAC, RIAA-SoundExchange, Royalty Logic, NMPA, Harry Fox, AFM, AFTRA – well, the full list of acronyms and their translations would require pages; still worse, multiply it by well over a hundred countries worldwide.

Neither can all these groups eat at the same table as hardware, software, network and other digital providers, worldwide, without raising the attention of competition regulators in Washington and Brussels. An agreement that tied, for example, broadcasters, technology companies, artists, publishers and entertainment companies worldwide would require either proactive creation by government or reactive supervision as an antitrust violation, just as U.S. rights societies operate under on-going government supervision.

Digital control is an excuse while Hollywood’s Tarzans jockey for position on a new vine, swinging from an old vine they can’t or won’t release. The new vine is surely coming, but the hands may take different places, and some may not make the transition.

As a result, technologists and lawyers fiddle with gizmos and words, whipped to frenzy by executives claiming they are horrified by consumer copying, but in the real world business is a catalog of content let loose into an uncountab

le audience fully-capable of video cassette and digital video recording. This is less prognostication than history. The intertwined story of technology and art is about giving your stuff up for a fair split from a pool of money.

Gutenberg’s pirated papal indulgences begat bibles and mechanized art, but recent history is more relevant. The path from acoustic to electric was far more savage than our mere gradation of change from electric to digital. Solutions born from necessity during the motherly decades of invention surrounding the 1920’s will be with us forever.

Electricity brought public address, radio, television broadcasts, cable, satellites, web casting, digital downloads and now broadband wireless. Portability enables the just-in-time arrival of customized digital content, emphasizing access over distribution.

History is consistent: Technology always wins. The good news: When it does, there is a pool of money and a public or private formula to apportion it. Actuaries can resolve issues of actual control. Owners of public address systems, for example, generally pay a flat fee into a performance fund -- in the United States administered by the likes of the American Society of Composers, Authors and Publishers (ASCAP) -- likewise owners of radio stations and television stations.

The recent U.S. Supreme Court decision regarding newspaper digital re-use (Tasini v. New York Times) says this could be a model for settlement between archive authors and publishers. Likewise, more than a decade ago, digital audio tape’s arrival spawned a public fund administered by the U.S. Copyright Office, and webcasters are offered still another fund by the recently-passed and much-reviled Digital Millenium Copyright Act. Like the mechanical rate paid songwriters by creators of sound recordings, these rates are a matter of public policy, as are the policies and procedures of ASCAP. Similarly, tens of billions in advertising dollars flow on sampling – not actually counting.

Make no mistake, these rates do not preclude private agreements for owners and users who prefer an alternative. These are statutory rates available where control is impractical or inefficient, as it often proves to be.

Radio station owners and restaurateurs (just two examples) need not ask permission to play each song, nor would the owners of those songs want to answer the correspondence permission-seeking would generate. A blanket-rate and divide-the-pool approach makes possible what is otherwise impractical. Eventually we’ll extend the same deal to customers and stop calling them pirates.

Many hands make light work of the money needed to stimulate creation. Easy-to-pay monthly bundles generate more revenue more efficiently than would single songs, shows or stories. Absorbing the uncertainty of users is good business. In the long run, pay-per-view or pay-per-song makes no more sense than pay-per-article in a newspaper. The average American, for example, spends less than $4 per month on CDs and other “sound carriers”, about the same for movies; worldwide, the figure is less than half a dollar. Digital purveyors like AT&T and AOL know flat fees beat per-minute charges for maximum revenues, and bundled price with unbundled choice could double the current take.

Digital Rights Management (DRM) is generally seen as technical control, but we manage our digital rights best when we maximize their value, and insistence on control can reduce value. If you believe in DRM, will you forego money from cable and HBO, where the audience is presumed to have a VCR? How much security is enough? Better yet: For what price will forget your security concerns?

Making art feel free, without being free, is the history of media. Radio, television, newspapers, magazines – almost all take a loss on distribution. The expanding media buffet encourages experimentation, opening paths for previously dead art and new and unusual art; control, on the other hand, can chill expression with its toll on privacy, fair use and other liberties.

We will reward artists and rights holders without control over customers because the customer is always right, whether or not we agree with them. Failure to acknowledge the customer’s supremacy will prove poisonous to a global entertainment economy now dependent on hooking the world’s appetite for style and its sponsors.

Jim Griffin is CEO of Cherry Lane Digital, part of the Cherry Lane Music Group of companies based in New York City. He recently testified before the Senate Judiciary Committee on music rights and the Copyright Office hearing on webcasting.