Copyright Collecting Societies A Morass Of Bad Incentives

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Collecting societies, claiming to represent artists, are gathering billions of euros and claiming to represent the artists. In reality, there is little difference between their actions and that of organized crime. One simple solution may be to raise the bar for "originality" to exclude music.

copyright-brandedIn the America, Europe and elsewhere there is a copyright-monopoly-related system with “collecting societies”.

These organizations, which have a practical monopoly on what they do, are tasked with collecting royalties for music performances in various forms, and redistributing those royalties to the artists that were played.

With the support of law, this activity takes place at a best-effort level. More often than not, these organizations don’t actually measure what was played in every individual case, but use a number of formulas to estimate what has been played – like playlists on the top radio stations – and assume a distribution from that data. It’s easy to see how this can be justified as a good enough approximation. This leads to bizarre incentive structures.

So, let’s zoom out a bit and see what has happened here. We have given a private organization an authority-like mandate to collect tax-like fees in the billions backed by threat of force, and tasked them with finding the appropriate receiver of the collected funds. If they don’t find the receiver, with no formal requirement of actual effort to do so, they get to keep the money for themselves. What could possibly go wrong here?

If somebody in the private sector had negotiated a deal like this, they would just not be fired on the spot; they would be sued in civil court for gross negligence for the billions lost by this construction.

Admittedly, the EU directives on the matter changed just slightly this year. Still, there has been decades of this incentive in effect, creating a total morass of a culture in these organizations. The sense of entitlement has become pervasive and the larger mission lost.

The German collecting society GEMA has had no problem demanding royalties for performances that are explicitly royalty-free through Creative Commons licenses or similar, effectively running a large-scale organized criminal operation in that aspect.

The Belgian collecting society SABAM, meanwhile, doesn’t limit itself to collecting royalties for music. When asked, it confirmed that it represented various names (that were actually household brands for everything from kitchenware to restroom equipment) and asserted that these were “100% protected”, and that anybody playing “music” from a kitchen wok must pay money to SABAM.

GEMA again, meanwhile, has accomplished Germany as the most-censored country on the planet from YouTube’s point of view. Not exactly flattering for a country aspiring to Western freedom-of-expression standards. Out of popular videos on YouTube, GEMA has demanded that over 60% of them be censored to the German public.

Following a complaint filed by an artist back in 2004, a judge began investigating SABAM’s finances. His findings mean that SABAM will now face court accused of falsifying accounts to cover up bribe payments, abuse of trust, copyright monopoly fraud and embezzlement.

When looking out across Europe on the behavior of these organizations, it becomes clear that these examples are the norm and not exceptions.

There’s also the matter on how these collecting societies fraudulently claim that they “represent artists”. While it is true that musicians have signed up with the collecting societies, that is because they don’t have a choice in the matter. Cartel-like constructions made sure, for example, that they were not allowed to manufacture music CDs at all unless they were members of these collecting societies, and by signing up as members, they are forced to agree to be represented. They’ve effectively been prohibited from trade in a practically medieval guild-like construction unless they give up rights to representation, business models, and their own political opinions.

To make things even worse, the collecting societies have rights to collect fees on behalf of artists that haven’t even signed up with them, just “in case they would”. This has led to bizarre situations where entrepreneurs can’t play their self-composed and self-performed music in their own hair salon without paying copyright monopoly fees for it to the artist – that is, themselves – because they “may sign up later”. But they’re not getting anything of those fees, as they haven’t signed up.

It’s a complete morass.

At this point, the collecting societies have gathered so much money they’re a vested interest that can pull a lot of weight to preserve themselves; self-preservation has become a much more important goal than fulfilling their tasked duty, as is the case with anything that institutionalizes. The only clean and easy way to solve this problem may be to restore copyright monopoly legislation to its original reasonable requirements of originality, which was a book-size work or up. That would effectively exclude musical works from copyright monopolies altogether, which would eliminate the monopolized mandate from the collecting societies in one much easier stroke than trying to regulate them more. Fortunately, such a move would not hurt modern artists in particular, who have already moved away from copyright-monopoly-based business models.

Of course, the collecting societies would claim – no, scream loudly – that such a move would be a “blow against the artists”, and throw out numbers on how many artists they “represent”. At this point, it helps to remember what choice the actual artists had in the matter due to the decades-long cartelization that has taken place.

The only difference between collecting societies and organized crime is that the actions of collecting societies aren’t, technically speaking, criminal. They would be by a landslide if they were in any other industry, but they’re not. That’s a sign that the entire copyright industry is fundamentally broken.

About The Author

Rick Falkvinge is a regular columnist on TorrentFreak, sharing his thoughts every other week. He is the founder of the Swedish and first Pirate Party, a whisky aficionado, and a low-altitude motorcycle pilot. His blog at focuses on information policy.

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