A couple weeks ago I had the opportunity to participate in the RightsTech Summit in New York City (full disclosure: Orangenius was a sponsor) where I spoke on a panel about “Rightstech in the Enterprise.” Several of my Orangenius colleagues also attended, including Steve Schlackman, who discussed “Rightstech Marketplaces,” Paul Jessop, who spoke on “Restoring Registration to the Copyright Equation,” and Jim Griffin moderated a panel on smart contracts.
A joint venture between Digital Media Wire and Concurrent Media Strategies, the conference featured an eclectic mix of lawyers, technologists, and businesspeople from all sectors of the creative economy — music, film and television, book publishing, and the visual arts. While the nature of the creative endeavors and associated business models represented at the conference were diverse and varied, it was striking how similar each industry’s rights management issues are. Fundamentally, each business is after the same thing: an accurate, dependable way of managing rights in creative works, and ensuring accurate, appropriate compensation for uses of those works.
Of course, these issues are not particularly new, but the speed with which advances in technology have led to new forms of creativity, more people becoming engaged with creative endeavors, and new ways of exploiting creative works, has led to this critical time in the history of rights management. While each of the creative sectors have built systems over the years to manage rights and the corresponding revenue flows, the same advances in technology that have changed the way these sectors operate in the marketplace are increasingly being applied to the less public-facing aspects of these businesses, to streamline back-end processes, and to ensure that creative professions get the credit and compensation they deserve.
At its core, that’s what the RightsTech conference was all about. As I reflect on the day’s conversations, several themes emerged, which I present here as four key takeaways to keep in mind as we continue to think about rights administration and corresponding technologies in the years to come.
Rights management challenges are omnipresent in the creative sectors, but they are especially pronounced in music and the visual arts.
Although rights administration issues exist in all of the creative sectors, the music and visual arts space are faced with unique challenges.
Music is uniquely challenging because the unit of consumption, a “song,” typically comprises two separate copyrights — one in the musical work (or composition), and one in the sound recording — and almost always, those two copyrights are owned by a multiplicity of rights owners, which means that for any one exploitation of a song, there are perhaps half-a-dozen rights owners that must be properly compensated. If that doesn’t make it complicated enough, today’s digital economy has led to hundreds of new ways to use music, and with each new use comes a new way of monetizing the content, and thus, a need to ensure that royalties are properly tracked and paid to the appropriate parties.
Various collective management organizations, such as ASCAP, BMI, SESAC (which recently acquired the Harry Fox Agency), and SoundExchange, already exist to manage payments to copyright owners along the music industry value chain, but many of the processes remain slow and outdated — anachronisms of the way the industry worked before the digital revolution. Participants focused largely on ways to improve the speed, transparency, and accuracy of payments made to rights holders.
Despite the need for improvements in the music rights management process, one area where the music industry has done a particularly good job is in building a system to identify copyrighted works — namely the International Standard Recording Code (ISCR) applied to sound recordings, and the International Standard Musical Work Code (ISWC) used to identify musical works. While participants at the conference would probably assert that these schemes are not perfect, they are a useful starting point for the visual arts industry, which effectively has no such scheme in place today.
While there have been attempts at creating an identification scheme for visual arts, to date none have been universally adopted. Moreover, there is no universal collective management scheme dedicated to collecting revenues on behalf of visual artists, leaving copyright enforcement and revenue collection up to individual artists or their representatives.
As the web has grown to become a global communication standard, so too has the use of visual imagery, and unfortunately, the unauthorized use of that imagery. Since it’s so easy to “borrow” an image from a website, thereby divorcing that image of any identifying information, works of the visual arts, perhaps more than any other form of creative expression, are far more likely to be “orphaned” and used without paying or crediting the original creator. Put differently, there is yet no one-stop-stop “market” for rights to visual arts works — something that, with time, will hopefully improve.
Transparency is key; tax status not so much.
Discussions about rights management clearinghouses invariably include a debate about whether such organizations must be independent from commercial market participants. For example, could a record label also operate the world’s authoritative registry on the ownership of sound recordings? Typically, people are skeptical about such registries because the entity controlling the data has commercial interests that could influence how the data are managed, or how usage or revenue data associated with the ownership information are recorded. Indeed, in most cases (but not all), collective management organizations are operated as not-for-profit entities, with a narrow mission focused on maximizing the interests of its membership. Notable exceptions include SESAC, which is a for-profit commercial licensing organization, and R.R. Bowker, a commercial publishing organization that’s perhaps best known for Books in Print, the data for which are derived from Bowker’s operation of the worldwide International Standard Book Number (ISBN) scheme.
Interestingly, many participants at the conference dismissed the idea that the tax status of a particular organization — for-profit or not-for-profit — had any bearing on whether data managed, or collective management operations performed, by such an organization were legitimate. Instead, speakers tended to believe that the critical point was whether the operations were sufficiently transparent. That is, a for-profit registry or collective management organization might be just as legitimate as a non-for-profit one, so long as rights owners felt as though they are kept properly informed and have the opportunity to full understand the inner workings of revenue collection, allocation, and royalty distribution — a fact which many commercial outfits with significant data operations (and therefore best positioned to get into the rights management game) should find rousing.
Blockchain technology is promising, but it has a long way to go before becoming a standard; “Smart contracts” have even further to go.
It seems as though everywhere I go, someone wants to talk about the promise of “the blockchain” and how it’s going to revolutionize [insert industry here].
I have yet to be convinced, and nothing at the RightsTech Summit convinced me otherwise.
On the surface, I see value in having a distributed ledger whose entires cannot be changed so much as updated, and where everyone gets to see when an entry was updated and who updated it. In a sense, a thoughtful, properly implemented blockchain is essentially a massive audit trail. The benefits to such an implementation in the rights management context are obvious: the owner of a particular piece of content could add a record to the blockchain, and every transaction associated with that content — e.g., a license, a transfer of the copyright, etc. — would be similarly recorded, allowing any subsequent user to effectively see a complete “chain of title” for the work.
But blockchain is premised on the idea that people maintain the database — err, sorry, the distributed ledger — up to date. In other words, the data are only as good as the people updating it. One of the persistent problems in the music industry is that people simply forget to update their address information with ASCAP and BMI, making it difficult to send checks to the rightful owners. Who’s to say that same issue won’t persist with blockchain? If I’m not going to update my address with a collective management organization, the likelihood of me remembering to update my records on the blockchain don’t seem high either. To be sure, some of this will be handled electronically — transactions, for example, might be recorded automatically when the blockchain bot identifies a particular use of my work — but it still strikes me that blockchain-based rights management systems will likely suffer from the same infirmities that traditional rights management systems currently have to deal with.
Perhaps even more: Add to the list the fact that the security of blockchain seems a bit questionable given recent headlines. Most evangelists of the technology assert that it’s so well secured so as to be essentially unbreakable. But earlier this summer, a blockchain-based venture capital fund was hacked, and in early August nearly $68 million worth of bitcoins — a digital currency that uses blockchain as its underlying infrastructure — were stolen from a currency exchange in Hong Kong.
Adding fuel to the blockchain fire is the promise of “smart contracts” which, while technically distinct, are often uttered in the same breath. There was an entire session at the end of the day on smart contracts, and it ended more or less as it began: with everyone asking “what exactly is a smart contract?” And therein lies the challenge: until we can agree on exactly what such a contract is, and what we want it to do, it’s unlikely that the technology will become a mainstay.
Fundamentally, smart contracts are machine-readable, and perhaps even machine-generated, licenses that permit users to use content within certain parameters, and presumably also to compensate rights owners for those uses as required by the contract. Beyond the license terms, smart contracts can also carry a payload, such as the content itself, essentially allowing a rights owner to send content within the contract, conditioning access to that content on the satisfaction of certain parameters defined in the contract.
Despite the promise in theory, challenges abound. Most fundamentally, the lack of common license vocabularies in most of the creative sectors. For example, as one participant from the audiovisual sector noted, everyone has a different territory list — for example, a license granted by one rights owner for “Europe” or “EMEA” may include different countries than a similar license by another owner. Similarly, in many industries, the way rights are subdivided and bundled may vary across platforms, territories, countries, and even licensees, rendering machine readable contracts perhaps more trouble than their worth.
So . . . Blockchain and smart contracts. Promising, perhaps, but not there yet. Industry standards must evolve and our comfort with the technology must improve (and, I daresay the tech community needs to help us lawyers understand how it all works a bit better than they have). Let’s all stay tuned.
It’s a great time to be a creative, and a great time to be in the rights tech business.
At the end of the day (literally and figuratively), my biggest takeaway is that it’s a great time to be in in the rights technology business, and that leads me to conclude, it’ a great time to be a creative.
The state of affairs right now is mixed. Never before has it been so easy to create content and distribute it to, quite literally, a worldwide audience. And yet, arguably it’s never been more difficult to get paid for that work. That’s not to say everyone wants to get paid necessarily, but those who do should be able to do so easily. Right now, most don’t (and many can’t).
Rights technology, and the people who implement it, are trying to fix that. Despite the bleak outlook for many creatives, the conference gave me hope. Cut through the law and the tech talk, the buzzwords and the abstractions, fundamentally, the conference brought about 100 people together to spend an entire day talking about how to make sure creatives get the money and the credit they deserve. Sure, many in that room make money off of bringing creatives and the users of their works together, but there’s nothing inherently wrong with that, for in a free enterprise system such as ours, the promise of economic prosperity is what drives us to develop new approaches to persistent problems that ultimately help everyone — the “rising tides lift all boats” phenomenon.
The future of our culture relies not only on the creatives who enrich society with the fruits of their labors, but also on those who build the technologies to help creatives turn their passions into a reasonable living.
While the conference was officially about the latter, but it was necessarily also about the former: helping the current generation of creatives get paid for their work, thereby encouraging the next generation of creatives to follow in their footsteps.