It is not often that you hear a copyright lawyer speeking in a sensible way about copyright laws. So when I discovered this speech of Dutch copyright lawyer Hans Bousie, on the Eurosonic/Noorderslag festival, I tipped Techdirt, one of my favorite blogs and now one of my real few heroes for a free and open Internet, Mike Masnick posted it. Wow!
So this is the original speech by Hans Bousie:
“If  I would only find myself on Twitter and not in real life I would almost  believe that copyright is just a burden, just so much dead weight. And  today I have the honour to exchange ideas with you about whether this is  in fact true. Is copyright the devil?
Before answering this  question, I should first explain, of course, who I am, because when you  hear a message, it is always a good idea to realise who the messenger  is. I am a lawyer specialised in copyright and active in the creative  industries. In other words, I earn my money with copyright. I breathe  copyright. I work for large organizations in the field of music, books  and films that earn their money by exploiting copyright. So I am a  lawyer working for the majors and I fully understand the side of the big  earners in the world of copyright. So tell me, do you expect me to give  you an objective answer to the question whether copyright is the devil,  what do you think? Am I objective or not?
Let’s  take it one step further. As a lawyer I also represent artists and  those who challenge claims to another’s copyright. I summon collecting  society´s, or bring proceedings against them before Competition  Authorities. I advise people how to escape the clutches of BREIN (that  our Dutch copyright police). In recent years, I have provided legal  support for many initiatives launched by people who are trying to create  an alternative, such as Sellaband. As a result, I see the other side of  copyright exploitation in the music industry every day; this other side  often results in initiatives dying an early death. So let me ask the  question again. Do you expect me to tell an objective story, yes or no?
Let  me first make this speech absolutely boring. What in fact is copyright?  Copyright is the author’s exclusive right to exploit a work. Nobody  else has that right. And rights exploited in the music industry are our  subject today. Today we are talking only about the music industry,  because in this industry, copyright functions or hinders creativity  totally differently from the way it works in other sectors. For instance  in the book business, contracts are much more balanced than in the  music business, and so there are fewer conflicts. Another example,  developments in the fashion industry are so fast that copying does not  make sense: by definition, those who copy lay behind in this business.  So let’s get back to our beloved music industry.
And  what’s the excuse from those in the music industry that invoke  copyright? That they are on the side of the creative, because it is the  interests of the poor musician that is promoted by all collecting  societies, music watchdogs such as BREIN, publishers and record  companies. That sounds good, in fact it sounds almost holy, but it is  bullshit. All these organizations are acting primarily in their own  interests. In itself, there is nothing wrong with that. As you might  gather, I also act in my own best interests, as everybody in this room  does. But it is important to get the facts clear here today. These  representatives act in their own interests, not in the best interests of  the composer or artist or the consumer for that matter. So copyright is  not about protecting creativity but about collecting money. That´s why  they are called collecting societies.
In  practice, composers assign their copyrights to collecting societies and  publishers and grant licences to record companies for the purpose of  making recordings. And so, when the dust has settled, the composers’ and  artists’ place is taken over by the middlemen who represent their  interests.  By collecting societies, by BREIN, by  Warner Music, by Sony ATV et cetera. Their priority is not protecting  the author’s creation but making money off the author’s work. Copyright  is not the right to copy, but the right to a creative income.
And  how is this right exercised nowadays? Lets talk about the business of  digital downloads. As early as 2002 there were entrepreneurs that  understood that digital downloading was the new model and that the  industry really had to get started with making the most of that. To sell  digital downloads, parties had and have to get in touch with all cbo´s  in  Europe to be granted a licence for each territory. And some societies  grant licences more easily than others, for which reason Spotify is  available in the Netherlands but not in Germany.
After getting a  deal with them parties must get an agreement with all record companies  to exploit the relevant recording and performance rights. Do you know  how many record companies and publishers there are in the world?  Experience shows that it takes a long time to even make an appointment  with anyone in the music industry in the first place, let alone reach an  agreement. And then the business faces prohibitive financial  requirements.
Let  me illustrate this with an example. It’s a bit of a complicated one  since it contains figures and maths. So I try keep it simple. We all  know that thanks to iTunes, the selling price of a download is 1 euro or  a dollar worldwide. In other words, you cannot ask more than 1 euro for  a download, because otherwise you do not sell anything.  That  includes VAT; in other words, your net selling price is 83 cents. Make a  mental note of this figure, your maximum net selling price is 83 cents.
Now  let’s do some figuring. Collecting societies demand 10% of your selling  price, with a minimum of 10 cents per track (be it somewhat lowered  these days in some countries), the record companies demand at least 70%  of your selling price with a minimum of 70 cents per track. We then  arrive at 80 cents and then only the music industry is paid. Remember  your maximum selling price of 83 cents? So you bought something for 80  cts and you can not sell it for more than 83 cts. You now have 3 cts per  track to work with. You have to pay the operating costs of the entire  organization. The software, the office organization, the web  application, maintenance, distribution (bandwidth costs) and then you  have to make a profit, too.  In this example, you are absolutely certain to suffer a loss on each and every track you sell.  And that is even before you have paid your staff and yourself. This is exactly why even iTunes is not profitable.
And  if all these parties have granted permission, which will be even more  time-consuming than your whole business plan, you are often supposed to  pay in advance, too, so you will be bankrupt even before you have  properly started. It used to work like this. Anyone at the gate of the  music industry had to pay advances, so having a deal with the majors  would mean to pay 200.000 euro up front. These advances were not  returnable and only recoupable within the first year. So if you would  not sell enough tracks, your money would be gone. Don’t think I’m only  talking about the majors here. Some Indies behaved even worse. They  would charge you a fixed fee up front for any right to a download  whether sold or not.
For  anyone familiar with normal figures in the music industry, these  figures are ridiculous. A normal album that would cost 18 euro in the  store is sold to retailers for about 10 Euros. So retail has a healthy  margin to work with. And amongst themselves the prices are even lower.  If a record company wants to clear the right of a track for a  compilation album it would be charged 5 cents per track, for a number  one hit, max 15 cents. So  one record company charging another one for max 15 cents per track.  Remember the figures. If a retailer wants to sell a physical compilation  cd, he would have to pay 10 Euros and with a normal price of 18 Euros  would have enough margins to work with, to even lower the net selling  price. If however a retailer in the example above would want to sell a  digital download, he would be charged 80 cts at least with a maximum  selling price of 83 cents. And that is, I repeat, why even iTunes isn’t a  viable business model in itself.
So  what happened here? By invoking copyright, these parties have succeeded  in obstructing developments in digital music exploitation in this way  for years now. For this reason, music consumption has gone its own way.  People thought: if we cannot do it legal, let’s do it illegal. And this  is how Napster, Kazaa, Mininova, and Piratebay were created and  apparently, this exploitation satisfied a need that the music industry  failed to respond to. And as a result, the big wigs in the record  industry and the societies of this world sit with their fat asses on a  big pile of content while this content is creeping outward under their  own weight, becomes fluid and is dispersed  all over the place beneath them. But it is to no avail to the industry itself.
Imagine  all the music in the world as one large iceberg. This iceberg is  guarded by the music industry. If you want a chunk out of it, you must  buy it. But they made a big mistake; they are desperately trying to  store this iceberg in the Sahara and refuse to tow it to a safer place.  They might even think that it’s too expensive to tow the iceberg all the  way up to the poles. The tragedy is that the industry is not even aware  that the iceberg melts, so what they are trying to sell is slipping  away and is freely admissible as plain and simple water. So on the Internet music is available like water, entirely free, but, unfortunately, illegal.
And  here the execution of copyright kicks in. Has copyright been an  exclusive property right until now? I propose that we replace it with  the right to a creative income.  The creative who  communicates his work to the public or reproduces it must be paid for  it, but there will be a different point of departure. Let’s not longer  require from all parties to ask for prior permission, but make it  possible to just exploit music and pay a fee for that afterwards.
What should we agree about?
·        From now on, we will prohibit the industry from charging minimum fees.
·        Copyrights will only be paid as long as revenues allow it and always afterwards.
·        Allow new initiatives a starting-up period.
·        Use a royalty or a subscription model.
·        Award initiatives like Spotify the Nobel Prize.
If we reach agreement on this, we will be able to enjoy music legally at last.
Let’s  wrap it up. The current copyright system is ok in most cases, but the  underlying idea does not work for digital music. Remember that copyright  is not there to protect the creative but to earn a creative income. It  turns out that a copyright system based on exclusive rights and prior  permission is not effective at all on the Internet.
Let  me finish.. Let us make sure that in the future music copyright will no  longer be a right to intellectual property but a right to creative  income. You always have permission, provided that you pay a reasonable  fee afterwards. What we need is play now and pay later.And please industry, remove this iceberg from the Sahara”.
So, what do you think? I loved it and hope you did too! Oh and of course, Hans Bousie may sue me now for copyright infringement, but somehow I have a feeling he won’t …