Home > Internet > “The Death of the Music Industry” in Canada and other Copyright Myths

“The Death of the Music Industry” in Canada and other Copyright Myths

In fact, the music business appears to be in peril only if we focus on just one element of the business, the ‘recorded music’ segment. Doing that, however, ignores the three fastest growing segments of the business: (1) concerts; (2) internet and mobile phones; (3) publishing rights.

Include them and the portrait changes dramatically, as the figure below shows:

‘Total Music Industry’ Revenues in Canada, 1998 – 2010

Source: Statistics Canada; PriceWaterhouseCooper; Socan.

The music industry is not in decline. In fact, the ‘total music industry’ has grown from roughly $1.26 billion in 1998 to just over $1.4 billion today. Worldwide, the growth has been even more impressive, especially in the fast growing economies of Brazil, Russia, India, China and South Africa (the BRICS) (see here).

But the reshuffling of ‘new’ and ‘old’ elements in the industry has not been kind to the traditional big four global record labels, EMI, Universal, Warner Music and Sony. A few massive concert promoters – Live Nation (Ticketmaster), AEG, etc. – also threaten to usurp their place at the centre of the music universe. Bands such as Radiohead, the Arctic Monkeys and Pearl Jam now go straight to audiences with their music, while picking up whatever slack ensues through concerts.

The fixation on ‘recorded music’ and specific players, however, eclipses industry-wide developments. It also advances a policy agenda being shopped around the planet by the RIAA and IFPI, with the U.S. Government riding shotgun all along the way (also see here).

So far, the push has underpinned the adoption of longer, stronger, and more punishing copyright laws in the U.S., France, the UK, Sweden, South Korea and Taiwan, among others. Canada is next in line.

The politics of copyright in each country means that each of these laws has its own distinctive characteristics, but the standard template being promoted contains four essential features.

First, penalties for unauthorized copying or tampering with digital rights management (DRM) technologies are made tougher. Bill C-32 would have done that too.

Second, ‘notice and take-down’ rules require ISPs and search engines, once notified of a claim of copyright infringement, to block access to P2P networks, MP3 search engines and blogs that link to cyber-lockers of unauthorized music stashes. To its credit, Bill C-32 did not mandate such requirements, although every major Canadian ISP retains the right to take such steps all the same in their ‘acceptable use policies’.

The third item is the ‘notice and notice’ rules that require ISPs to send warning letters to people accused of violating copyright laws and to store records that allow infringers to be identified. By including these rules, Bill C-32 aimed to enroll ISPs and search engines in the copyright protection racket, but without the drastic step of requiring ISPs to cut-off the Internet connections of ‘repeat offenders’ — as is now the case in Britain and France.

Fourth, the proposed Copyright Modernization Act proposed to make it illegal to dismantle the digital locks that lock down content and tie music and movies to specific devices. Digital locks already mean that swapping an iPad for a Playbook, or an iPhone for a Blackberry, requires that we repurchase our collection of movies, tv episodes and (some) music all over again.

This is a huge turn-off, and expensive. Making it illegal to liberate our stuff from such digital cages is hugely problematic.

The ‘digital locks’ rule also clashed with rights set out in the bill allowing people to copy material they have already purchased, and to make parodies and ‘mash-ups’ for sites like YouTube, so long as it was for non-commercial and personal use. This smart reply to user-created content, however, was trumped by the digital locks rules, since prising open material locked to specific devices or swaddled in DRM technologies would be a crime.

There is no doubt that some elements of the music industry and the ‘big four’ – Warner, Universal, Sony, EMI – are in disarray, with all of the latter recently spun off from their former media conglomerate parents, except Sony.

Their market share has dropped too as competition from legitimate online music services grows, including services backed by huge telecom and consumer electronics players such as Bell and Telus in Canada and Nokia and Apple on the world stage. Even giant concert promoters such as Live Nation and AEG are groaning under the weight of debt and fairy-tale financing that they have brought upon themselves through consolidation and financial market chicanery rather than adapting to the fast currents of cultural and technological change swirling all around us.

In a candid revelation of just how prickly the issues are, one of Canada’s leading music and entertainment lawyers and an old friend of mine, Chris Taylor told me,

“It’s fantastic that some income streams have maintained or grown but what has happened is nothing short of an unmitigated disaster for the recording companies and musicians they have supported. Generally, the goal is to reach as many people on the planet as humanly possible and make a decent living doing it. Record labels, independent and major, historically have been the catalyst for that ethos. No one is stepping up to take their place.”

I am the last person to want musicians to suffer, but fear that many in the music industry have chosen litigation and restrictive laws over meeting the challenges at hand.

A memo by a past CEO of Universal Music, Doug Morris, illustrated these points in a recent New York court case deliberating over how severely Limewire should be punished for enabling piracy. The issue was not whether Limewire was guilty of facilitating piracy – it was, said the court last year – but how much of the record companies’ woes could be laid at its feet?

On that issue, Morris’ memo cut Limewire a huge amount of slack by accusing the record labels of failing to innovate, despite the fact that new technologies have always added to the music economy over time — as the charts above suggest.

So, copyright reform? Absolutely.

Picking up where the last Parliament left off will deliver important advances with respect to user created content and limited liability for ISPs. The crackdown on users, attempts to turn ISPs into ‘gatekeepers’ on behalf of the music industry and permitting digital locks to trump people’s rights, however, will lead us down a bad path.

Ultimately, only once the myth that the music industry is in peril, and that it is the canary in the coalshaft for all media, is discarded will we get copyright laws fit for these digital times.

* With thanks for research assistance to Jen Laengert and Sara Bannerman.

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  1. Kip Hardy
    February 9, 2012 at 1:28 pm

    A thought on “piracy” from Neil Young:

    “I look at the Internet as the new radio,” Young explained. “I look at radio as gone … Piracy is the new radio, that’s how music gets around.” – Neil Young, February 2012


  2. Adeel Khamisa
    May 29, 2011 at 8:25 pm

    If you’re looking for that next Globe and Mail article. Here’s a good story:


  3. Kip Hardy
    May 18, 2011 at 9:59 pm

    I currently work in animation, but for many years made my living as a musician; I’m still very involved in the music world. The younger performers/composers/recording-artists I know fit snugly into the current growth trend on the “Total Revenues 1998-2010” line of your graph. Performance revenues have increased for some performers, but more significantly many musicians are self-financing and self-releasing through various digital outlets. Essentially many musicians are forging new work-flows: they initiate most contacts directly, with each other, and with recording engineers, mastering engineers, graphic artists, stage-directors etc., so this current growth is at the expense of the middle management people who used to make those connections, aka “record companies”. Unfortunately for Chris Taylor, the reduction in middle management leads to a reduction in the need for contracts, and thus a reduction in lawyers fees. The revenues shown for the 1998 era were largely driven by re-sales of old catalogues, re-released on CD, which required a lot of legal wrangling. A peak demand for a large portion of entertainment law dried up once that legal wrangling was completed and there were precedents set and models available for future negotiations.

    The old “music industry” was largely based on indentured debt. Record companies brokered services or rented facilities to musicians and musicians signed contracts agreeing to take on debts for these services and rentals. These debts were to be repaid through earnings from airplay royalties or sales of albums, concert tickets, and merchandise. Enter the internet:

    Ozzy-types aside, many musicians are extremely smart. It is the nature of the beast to be self-educating – musicians read and learn from readily available online sources, track down used copies of old “how to” books, and consolidate this information. Naturally they excel at listening to ideas and enhancing them, which means they share (gasp!) this information readily, and often they share it freely (in every sense of the word). For the time-frame at the beginning of the “Total Revenues” graph, the cost of equipping a reasonable studio was six-figures, moving into seven figures if you really wanted work on high end projects. By the middle of the time frame in the graph, mass production of digital recording tools has reduced cost of studio ownership by several orders of magnitude, and today it is even more easily affordable. The newer digital workflows have removed myriad technical problems from the process, allowing any dedicated musician to readily setup their own facility and avoid diverting cash-flow into studio rentals (or worse yet, loans from record companies for studio rentals) – yet another nail in the “record company” coffin. But Mr. Taylor shouldn’t be too concerned – like everyone else, as musicians become more successful, they are happy to job out some of their work load – sooner or later they’ll need lawyers, even if only to buy a house.

    As the “Total Revenues” graph shows, the growth is positive, there has simply been a change in cash-flow. In some ways it is quite analogous to the decline in the number of secretaries that resulted from the introduction of personal computers: the same work is being done, just by other people with different support/cost-flows, and often at considerably lower over-heads.

    As you say, copyright reform, absolutely, but making sure reforms benefit the creators and enhance their ability to create new works is far more economically beneficial than entrenching a failing, passé, and irrelevant industrial model.

  1. February 14, 2014 at 7:42 am
  2. March 8, 2012 at 7:36 pm
  3. October 3, 2011 at 9:04 am

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