All Systems Change

Guest Post by Robert Ashcroft, Chief Executive of PRS for Music

PRS for Music exists for a very simple reason.  It is one that makes me immensely proud and motivates me to get out of the bed in the morning with a sense of excitement and purpose.  In the UK and across the world we represent over 115,000 members comprising of songwriters, composers and publishers with 14.7 million songs.  Our role, our reason for existing, is to return maximum royalties to them so that they can continue to be creative and make a living.  This has never been an easy challenge and in an online world, it has become an increasingly complex one. 

The maturation of the internet presents the music industry with tremendous opportunities, and yet it also exerts even greater pressure on it.  It has brought with it an explosion in the volume of data – data which needs to be processed so that the members receive the correct money owed to them for the use of their creative works by digital services as quickly as possible.  Collective management organizations continue to evolve throughout this period of accelerated change and growing number of services.  PRS for Music is investing in ensuring that the infrastructure is future proofed, efficient and fast enough. 

Of course, the challenges of maintaining the mechanics of making the money flow through the pipes are not the only ones in this digital age.  The online market is currently hampered by out-dated legislation that enables some digital service providers to get a competitive advantage using the hosting Safe Harbour defence at the expense of others who pay fair value for the use of music. 

An additional challenge is the way that collective management is organized differently across the globe.  Unlike European societies, those in the United States predominantly separate the mechanical and performing rights and we have a situation where we have no performing right in a download and no mechanical right in a stream.  The situation is entirely different in Europe, where rights flow together.    

Geographical boundaries may not exist on the internet, but they do exist in the licensing environment.  A patchy copyright environment exists across the world, with developed and undeveloped copyright systems and different infrastructure set ups for collective rights management organisations which have evolved in different territories.  The market is shaped by rights flows and those flows are complex and made up of a network of licensing authorities and sub publisher agreements ensuring that no single entity has the mandate to license across all international territories. This makes for incredible complexity, when establishing licensing deals with the widest territorial scope. 

Metadata is the biggest challenge the industry faces right now and it needs to be tackled so that the right people get the right money efficiently and cost effectively.  To do this the sound recording international standard codes need to be matched with the songwriter codes and this requires sound, robust metadata.  As an industry, we’re just not getting that right at the moment.  The wider music industry needs to adapt quickly to evolve in this new market.

But whilst this set of challenges may seem insurmountable, there is always a solution.  Some may simply take longer than others to find.  PRS for Music has worked hard to provide innovation in the online market place since the early days.  We’ve ensured that performing rights and mechanical rights flow together in our licensing deals – releasing our performing rights to publishers so that they may flow alongside the mechanicals where it is in the best interest of our members.  We set about revolutionising the online world in 2005 and we continue to revolutionise today as evidenced in the recent agreement with SoundCloud.  We’ve worked alongside STIM in Sweden and GEMA in Germany to develop the world’s first online and processing hub ICE.  ICE will deliver true innovation and true value to rightsholders.  It will have a transformative effect on the administration of online music rights.

System change is required in order to deal with these challenges and support the industry in being better able to maximise the opportunities brought by the fast evolving world of the internet.  ICE brings that system change and we are certain will be the benchmark model going forward with a solution that will appeal to the widest cross section of rightsholders and digital service providers.

Other new technologies provide us with incredible potential to dissipate the pressure of the internet and help unlock its potential.  One area of interest right now, along with others, is Blockchain.  It has the potential to be the foundation on which the next stage of the music industry is built.  It could be the technology that brings scarcity back to music by allowing the control of exploitation through tracked digital ownership.  It needs further exploration, but it may help us reshape the future for music creators enabling much greater transparency around music usage and bringing value back to music. 

Of course, its future application also invites many questions.  We’re particularly interested in understanding how authority will be established in relationship to rights ownership.  Rights ownerships are not fixed and change.  We believe that linking Blockchain technologies to a designated authority would ensure that publishing rights ownership is accurate and up to date.  Further exploration is needed to understand how an authority could be appointed.  There may well be a role for ICE in this, as it has the potential to be an organically grown alternative to a Global Repertoire Database – the global rights authority that the industry needs urgently.

We want to understand how Blockchain smart contracts may have the necessary flexibility built in so that the technology may be scaled up to serve the industry – rather than simply providing a tool for individual artists.

Furthermore, if smart contracts were to be widely adopted, the obvious question is how will they be respected?  Content platforms will need to accommodate smart contracts and to ensure that this happens, there must be change in the hosting Safe Harbour legislation to make them liable, otherwise there will be no incentive to respect smart contracts embedded in creative content.

Nonetheless, Blockchain is extremely interesting and we look forward to further conversations with likeminded industry partners, learning more and helping find the answers and helping to develop some solutions.

These are challenging times, but they are ripe for positive change and progress in the wider music market and we are actively engaged in bringing about that change with exploration, investment and partnership.