Business Idea: Digitized Rights Management

29 March, 2005

Summary: We need a unified web-based system for clearing samples and paying royalties on cover versions. Such a system, if it was highly user friendly, both for the licensor and the licensee, would result in the legitimization of a greater portion of the growing "Remix Culture" and, therefore, more money for rights holders, more freedom for creative artists, and more open availability of so-called 'derivative works'.

I recently posted about the new "digital parlour music" being made both by emerging stars such as Keren Ann and Benjamin Biolay and by friends of mine (for example, Amy Sue and Chris Anderson) and other real people. Along with the tide of home recording technology, the aesthetics of sampling -- what is more and more being called "Remix Culture" -- has risen as well.

From Mashups to the popularity of the Creative Commons, Remix Culture (applied to everything from music and the visual arts to software to architecture) seems to be the cultural and, specifically, musical word of the minute. It was the theme of this year's O'Reilly Emerging Technology Conference in all but name; Wired recently ran a cover story called "Sample the Future" which included a copy of a CD with a collection of songs made under a Creative Commons license. It is simply everywhere.

The rise of the digital home music studio brought Remix Culture to the masses. As Richard Koman put it in an introduction to a recent interview with the father of Creative Commons, Lawrence Lessig:

What do you get when you mix P2P, inexpensive digital input devices, open source software, easy editing tools, and reasonably affordable bandwidth? Potentially, you get what Lawrence Lessig calls remix culture: a rich, diverse outpouring of creativity based on creativity.

One of the things that my friends discovered in making and releasing songs of theirs that include samples (Chris's "RU Alone") or are covers (Amy's version of "I'm On Fire") is that going the legal route of clearing the samples or getting permission for the cover version is extremely onerous. Even though the Harry Fox Agency (along with BMI the main entity in charge of licensing) recently added an online system for purchasing a mechanical license there are still a large number of obstacles for the license-seeker and lost opportunities for economic efficiencies.

The difficulties facing a person trying to clear a sample (rather than record a cover version) include the need to obtain both a "mechanical license" (via Harry Fox or BMI) as well as permission from the owner of the recording's master, the lack of a unified search between Harry Fox and BMI and the difference between the two companies' policies and pricing, and, most importantly, the prohibitive cost involved in actually purchasing all the appropriate licenses, especially for small independent artists who will likely never see a dime from their work. Creative Commons was developed to deal with these issues, but it does so only on the copyright holder's side. CC allows artists to make their work available for participation in Remix Culture, but it does nothing to make it easier for remixers to legitimately use the enormous library of music licensed under the existing regime or for license holders in this regime to monetize any of the illegal Long Tail use of their music by independent artists who can't afford the steep fees.

In these difficulties lies the seed of a profitable, maybe even transformative, business. This busines would construct a web front end for both BMI and Harry Fox's libraries. The website would need to be highly user friendly. It should feel as much like the iTunes Music Store as possible and as little like a complex legal transaction. Next, the business would have to convince Harry Fox and BMI to put in place a much more fine grained pricing structure than their outmoded current division into manufacturing more or less than 2500 units. This structure could resemble the variety of available Creative Commons licenses in that it would depend on the specific use to which the licensor was going to put the sample. Further, in order to be available for samples (rather than simply cover versions), the business would need to co-ordinate with record labels to unify "master licenses" with "mechanical licenses" (if not legally then at least practically so that it would be invisible to the consumer) in order to provide one-stop shopping for musicians looking to use samples in their work. Again, there should be variable pricing for the master licenses portion of the price based on the demand for the specific sample (if a piece of music was popular amongst remixers, it could demand a higher fee, but music that has never brought in any royalties might be made to do so if it was easily available and cheap enough).

The payoff for accomplishing all of these difficult things (both for the business and the copyright holders and record labels) would be that some portion of the illegal sampling ecosystem would come into the light and be monetized. Just as the iTunes Music Store brought part of the illegal file sharing market into legitimacy, creating an entirely new revenue stream for labels and bands in the process, this new business would would attract the ethical remixers for whom the only obstacles preventing them from paying for their samples are price and difficulty. We may be headed for a utopia where all culture is easily and freely available to all for creative use, but until we get there, there is a great deal of money to be made making the current badly broken system work better.

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