October 2006


In the UK, the Institute for Public Policy Research (IPPR) has released a report recommending that consumers should be allowed to copy/rip CDs they have purchased for use on music players such as iPods.

According to the BBC, the thinktank has called for a ‘private right to copy’, allowing people to copy for their own use CDs that they have purchased, stating that “it is not the music industry’s job to decide what rights consumers have – that is the role of the government” (the above article also has a link to the full report).

The author understands that the Australian Government has currently reviewed/amended copyright legislation. Most consumers tend to believe that they are within their rights to copy music for their own use – it is after all using the same music but simply changing the delivery mode or device. I am sure many consumers of music would be interested to learn just what their rights are when it comes to their use of purchased music, and whether the government is at all concerned with ensuring their rights are protected and preserved.

Hot on the heels of YouTube removing Japanese copyrighted material, MySpace.com has announced that they will be using proprietary DRM software Gracenote to block users uploading copyrighted music and audio content. This blocking of content would apply to copyrights held by majors and independent studios/musicians alike.

While the move to block such content may be a quick solution, it is far from complete, and more importantly, may reduce artists’ ability to profit from the platform, either financially or as a promotional tool. Many smaller bands, however, have their own MySpace site, which they can use to gain access to potential new listeners.

According to Reuters, News Corp, who now own MySpace, are planning to use the site to sell songs from approximately 3 million unsigned bands. Such a model would represent a viable platform for new bands to not only be discovered, but also provide the potential to create a new revenue stream.

YouTube has become a great resource for office procrastination and other a new medium to use in communicating with friends and loved ones. Yet there seems to be an increasing amount of lengthy, copyrighted material on posted that makes you wonder “should this be here?”

Apparently not. The Japan Society for Rights of Authors, Composers and Publishers (JASRAC) demanded that YouTube remove a large chunk of their ‘clients’ content that appeared to infringe copyright laws.
According to an AP press release (found in The Age), nearly 30,000 files were deleted after JASRAC complained on behalf of 23 TV broadcasters in Japan.

Working towards a revenue-sharing model, YouTube has reached agreement with several large copyright holders allowing the website post copyright music videos and other content in exchange for sharing ad revenue.

The situation would be made more interesting if it were the content creators, not the broadcasters who owned copyrights to this content.
1) would creators have the same filip to prevent the ‘unprofitable’ use of copyrighted material by third parties?
2) would they be less capable of pursuing those who infringe copyrights?
3) would a profit-sharing model with creators be fairer and logistically possible?

Citing the positive effects telecommunications and mobile networks have had on developing countries, the World Bank’s International Finance Corp. has announced plans to invest in content and media companies, and is understood to be exploring how it can best invest in creative industries. The news article at digit describes both the profitability (for investors) and value (for residents) mobile telephony has provided in Africa in recent years.

The World Bank and the IFC are making investments in media and content in the belief that it is part of the ‘next cycle’. For the World Bank, the investment appears to be based on the rationale that a) it will provide high return on investment, and b) it will do good things for people in developing countries.

It also assumes that content is one of the next industries to experience rapid growth. Yet (to take a highly nuanced account of the history of content) content has ‘always’ been around, and it’s distribution has been limited by and reliant on the production and distributive technologies of the day.

Suffice to say, the announcement is further evidence of the growing consensus of the complementarities between network infrastructure and content, and that the presence of content supports the growth of ICT networks and economic development. Content creation however, is arguably a much tougher investment than network infrastructure, so it will be interesting to see how the World Bank chooses to enter the content fray.

In a marked change from news about the music industry lobbying for tax incentives, several articles in the last week have trumpeted UK’s film and TV production sector as ‘the best in the world’ (see

The comment refers to independent producers, and the creative power that these agents have in coming up with original and innovative content.

A key point here is regulatory reform that enabled producers rather than broadcasters to maintain copyrights for content they produce. In broadcasting, the copyright holder wields significant market power, and with traditional broadcasters already imbued with a domineering role due to the oligopolistic nature of broadcast licences, control of copyright gives these firms excessive market power (see Caves and Nakamura (eds) 2006, Digital Broadcasting).

The case above is an example of how allowing ‘upstream’ content producers to retain copyrights has allowed the industry to develop further, enhancing its international competitiveness and differentiation from producers in other nations. This puts the incentive to innovate back on the producer, and prevents a situation where creative talents are simply consigned to produce content for commercial broadcasters, who are likely to make fairly conservation decisions about content (see Hotelling’s Law).

Reducing the potential abuse of market power and providing producers with more incentive to innovate appears to improve the competitiveness and sustainability of the industry rather than tax concessions and other financial incentives that benefit incumbents. (Notably, the UK Government did however provide funding to assist the independent producers)

Anyone could have seen it coming.
With the amount of attention some governments (such as the UK) have been paying to the economic potential of creative industries, it was only a matter of time before the traditional moneymakers came knocking on policymakers’ doors asking for handouts.

The UK music industry is now calling on its government to extend the research and development (R&D) tax-credit scheme to music companies.

Naturally, the industry lobby group appeals to the notion of keeping the local industry at the forefront of the global music scene – something that often appeals to politicians regardless of the industry – and a boost in VAT the government will collect from increased sales.

Government assistance to ailing and beleagured cultural and creative industries in small nations is something that most people would not take to task. But seriously. The UK is one of the largest exporters of cultural goods in the world, and is the UK music industry seriously under threat from lower cost or more innovative producers from foreign lands?

This attempt at lobbying fires a salvo across the bow of policymakers around the world looking to boost investment in R&D and in the creative industries in general: caution needs to be taken when formulating industrial policy and incentive packages. incumbents will always come knocking.

This blog is dedicated to reporting and discussing developments in the world of content, entertainment, creative industries, and intellectual property.