Copyright: locks, levies, lawsuits or licensing? Part 4: licensing

In this series we have been talking about three ways of enforcing copyright: locks (part 1), levies (part 2) and lawsuits (part 3). This article is intended to discuss an alternative to enforcement which is licensing the specific usage.

We really need to ask ourselves an important question in thecopyright debate: are potential customers of copyright holders notpaying because there is some break in the morality of society leadingmore people to break the law, or because copyright holders are notoffering their works in a manner that customers wish to pay for it?

Most people will agree that there is a spectrum with some peopleexisting on both ends. Those who are constantly calling for “stronger”copyright seem to believe that we are decaying as a society, and the“solution” is some sort of “law and order” approach by increasingenforcement. I believe that in the majority case it is outdated methodsof production, distribution and funding that aren’t meeting the needsof potential customers, and that more enforcement of the old modelswill only reduce revenues to creators. I believe the largest problemtoday is that copyright holders are not offering a “buy me now” for their works under reasonable terms.

There are statistics tossed out by special interest groups all thetime talking about levels of infringement, but each time I read one ofthese studies I find major flaws in their statistical methodology.These studies don’t adequately differentiate between copyrightinfringement and past customers who have moved their money to otherperfectly legal activities.

Creators, or people they hire, must think more like entrepreneurs.Copyright is simply a series of activities that require permission fromthe copyright holder in order to do. Copyright holders need to look atthis bundle of rights, analyze the needs of those who want to carry outa specific use, and decide on licensing models that offer the bestmatch. They need to get past requiring royalties for every possibleuse, as sometimes they must offer some uses royalty-free in order toprovide enough value to audiences to make the work worth paying for.

There is no such thing as one size fits all, as every type ofcreativity has different traits, and exist in different markets. Forsome creativity/markets it will be best to use one-off arrangements,such as the deals made between music composers and film producers. Inother markets this same music by the same composer will use acollective society to automatically license the work, such as withpublic performances in bars and restaurants.

There is a full spectrum of licensing options from the one-offarrangements between the copyright holder and the user, licenses whichoffer specific uses of a specific work under common terms accessible byany customer, and collective licenses where a specific range of usesare able to be licensed on a royalty-bearing basis by a collectivesociety for any works in their repertoire.

Breaking it down further, there is a range of options for collective societies. The May 2004 Interim Report on Copyright Reform from the Standing Committee on Canadian Heritage offered a good summary of the options.

Licensing could take one of three forms: voluntary licensing,extended licensing, or compulsory licensing. In voluntary licensing,copyright holders and users contract directly with one another.Extended licensing allows a copyright collective society claiming torepresent a “substantial” repertoire of certain types of material to berecognized as representing the entire international repertoire of suchtypes of material, but individual authors would have a right to “optout” of the collective society. Under compulsory licensing, copyrightowners are legislatively required to allow use of their work accordingto statutorily described conditions and prices.

Voluntary licensing, either through a royalty collective society,through publicly offered terms, or through one-off arrangements isalways the ideal. We sometimes run into the situation where mostcopyright holders of a given type of work want to use royaltycollective licensing, but there was no administratively reasonable wayto verify that all copyright holders wanted to do this. This is wherethe extended licensing comes in.

We discussed under levies (part 2)the least desirable situation, which is when copyright holders arerefusing to license for a socially beneficial use, and the governmentneeds to step in and impose conditions and prices in the statute.

An option that is obvious to me, but that some copyright holdersseem to miss, is that sometimes it is more lucrative to offerpermission for certain uses without any compensation at all. There area wide variety of scenarios when this applies.

In multimedia entertainment (music, movies, television) there is abusiness model where you have some expenses (advertising, etc to gainaudiences) and revenues. Sometimes you can simply offer a specific useroyalty-free as a form of advertisement, securing revenues from otheruses. This is used quite lucratively by some musicians who have used Creative Commonsto offer royalty-free licenses for non-commercial sharing of the musicby fans, while retaining all the traditional commercial uses asrevenue-generating.

There are less biased studies documenting how P2P doesn’t decrease,and can even increase music sales. I strongly believe that this is adecision that should be left up to the artists, and that music fansshould only share that music where the artists have authorized it to beshared. This keeps the activities legal, and actively encouragesartists to license their works this way in order to receive thesemarketing benefits. Music fans should be willing to punish thoseoutdated companies who are frightened of P2P file-sharing by denyingthem any benefits. People who share music without permission aren’t“sticking it to the man”, they are working as pawns for the benefit ofthese outdated companies.

For other types of works, counting and charging for copies lowersthe value of the work. For many types of journals the value in thearticle is not the royalties that will be received, but in having thework read and cited by more people in the field. This is why Open Accesslicensing is growing so quickly, where it makes sense for thepublication to be paid by the source of the material (usually as partof the grants offered to the researcher), rather than paid for by therecipients of the material who are allowed (encouraged) to share thematerial freely with others.

Another example is Free/Libre and Open Source Software (FLOSS) wherecommercial suppliers charge using units that are different than “percopy”. In my case I charge my customers a one-time fee for the servicethat I offer to them, and never charge royalty fees for my software. Mybusiness is dependant on other authors doing the same thing, so that Ican come in to a customer with 95% or more of what they need alreadyavailable in existing FLOSS where I just get paid for filling in themissing 5%. If I had to offer 100% of the solution myself, only thelargest of customers could afford my services, and there would be farfewer jobs in this sector than there are today.

Royalty-based software has always been consolidating, meaning thatwhile there are still large revenues for those few companies thatremain, the sector is getting smaller and less lucrative all the time.The most lucrative option for most software authors is to join theFLOSS sector where such consolidation isn’t an issue, and where we willalways be able to find customers wanting something just a little bitdifferent than what existing software offers, with us having theability to make those changes.

This growing sector is only possible due to the fact that anincreasing number of fellow software authors are using licensing termswhich publicly grant permission to run, copy, distribute, study, change and improve that software without additional permission or payment.

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