IFPI:  Musicians and Music Piracy

IFPI: Musicians and Music Piracy

Alex Jacob is the Senior Communications Executive at the International Federation of the Phonographic Industry (IFPI) in London, UK. He has worked at the IFPI for over five years as a member of the communications team. He is responsible for reaching out to stakeholders and working with the media to explain developments in the music industry and the steps required to develop a sustainable digital music sector in the future. IFPI is headquartered in London, but has offices worldwide  in cities including Miami, Hong Kong and Brussels. The organization also works with 45 affiliated groups, such as the British Recorded Music Industry (BPI) in the UK, the Australian Recording Industry Association (ARIA) and the Recording Industry Association of  America (RIAA) in the U.S.

 

Recently I got to sit down with Alex and discuss the latest developments in the worldwide anti-piracy movement, the future of recorded digital and streaming music and steps artists can take to protect their music online.

 

Musician Coaching:

Thanks so much for taking some time out to talk to me, Alex. Tell me a little bit about IFPI.

 

AJ:

IFPI is the international trade body for the record labels, both the four internationals and also many hundreds of independent labels throughout the world. We exist to try and persuade governments and policy makers of the importance of strengthening intellectual property laws in the Digital Age so that our members can continue to invest in artists and produce great new music. We also work to extend the rights of our members in areas of Public Performance Rights. For example, you might know that the U.S. is one of the few countries that doesn’t have broadcast rights for producers or artists. So that means unlike in the UK or in France, every time a radio station plays a track, it does pay the songwriter, but it doesn’t pay the producer or artist. And obviously when you have an up to $20 billion corporate radio industry, that’s potentially a lot of money that the music industry is losing out on in comparison to other countries. It also means that when American artists are played – as they very often are – on radio stations overseas, that money doesn’t float back to them because there is no reciprocal arrangement for when overseas artists are played in the U.S. Those are the kinds of campaigns we work on.

 

Musician Coaching:

Just to clarify, that would be like SoundExchange if it covered the non-digital broadcasts.

 

AJ:

That’s absolutely right. And then you have sister organizations of SoundExchange such as Phonographic Performance, Ltd. (PPL) in the UK that collect income from radio stations and TV stations that use recorded music. These  music licensing companies work very closely with IFPI and our performance rights committees to try and ensure that the best practice is copied around the world and that the rights of producers and artists are extended around the world so that everyone enjoys a level playing field.

 

Musician Coaching:

I had not heard of IFPI prior to internet piracy becoming such a household word. Would you say the primary function at this point is to protect digital copyright? Is that where a lot of your efforts are focused?

 

AJ:

Yes. IFPI has been around for a long time. It was founded back in 1933 and has always fulfilled a range of functions. But piracy has always been right up there on IFPI’s agenda. And piracy has a physical world too – the CD world. At one point, one in three CDs sold worldwide roughly was a counterfeit and had no money going back to the artists and record producers, so it was obviously a major issue. In the digital world, we estimate that 95% of music downloads online are unlicensed and illegal, with no money going back to the producers and artists. There’s a quantum leap in the level of piracy from the physical/CD world into the digital world. When you’re laboring under that burden of an industry, it has to be one of your major priorities.

 

Musician Coaching:

Do you think there is any going back at this point? Do you ever foresee a time where Pandora’s Box will close?

 

AJ:

I think we’re very keen to embrace the legitimate use of technology. Our members have licensed more than 30 million tracks through over 470 legal services worldwide. So, there’s no objection to making music available to consumers and music fans online. We’re very keen to do that. The problem is obviously the illegal downloading and streaming – the piracy problem. And as I said, 95% of music downloads are unlicensed and illegal. That’s one hell of a figure. We do think that we can actually improve on that. We’re starting to see countries worldwide introduce legislation to tackle the problem – in France, South Korea, New Zealand, the UK. Governments are starting to put laws on the books that actually require some cooperation from internet service providers (ISP)s, who are effectively the gatekeepers of the internet. In tackling online piracy – not just of music, but also of books, films, software, games – President Sarkozy has convened this huge conference in Paris in which he’s brought together the content industries and the tech industries to talk about how we can create what he calls a “civilized internet” – an internet where privacy laws are respected, that can’t be abused for criminal use and one where intellectual copyright is respected and creators can actually get  some remuneration for their work. And that doesn’t just mean in the music industry or with iTunes or other services. There are many different business models out there. There are streaming services that are free for people to use and enjoy, such as Spotify, which is available in many European countries, YouTube is of course extremely popular as a free-to-use video streaming service. And alongside that there are subscription services and download stores.

 

But it’s that help from government that we feel can help us move the needle in terms of piracy. We’re doing our bit in terms of licensing all these range of services. And now government and ISPs need to do their bit to establish the rule of law online and stop it from being, as Prime Minister John Key of New Zealand said, a “wild west.”

 

Musician Coaching:

Where do the negotiations in the U.S. and the UK – which are two of the biggest music markets on the planet – stand?

 

AJ:

In the UK, the Digital Economy Act was passed last year. It still has to be fully implemented. There as a judicial review of the Act brought by two ISPs that was rejected, although they are now considering whether or not to appeal that. But under the terms of the new Digital Economy Act, ISPs have to send noticed to individual users that are uploading copyright infringing files and say, “We know what you’re doing, please stop and start using the good legal services that are out there.” And if a system of notifications alone doesn’t work in the UK, then ISPs will be mandated to bring in sanctions.

 

Musician Coaching:

That’s for uploading only?

 

AJ:

That’s for uploading copyright infringing material to the internet. Of course as you know, with most online file sharing systems, you are uploading an downloading at the same time, with the nature of the way they work.

 

Musician Coaching:

It’s interesting that they would catch it on the one way but not both ways. What about in the U.S.? Have you made any headway with government stepping in and protecting these rights?

 

AJ:

We certainly have  a lot of political support from people like New York Governor Cuomo, Vice President Biden and from other politicians. I know the film industry as well as the music industry has been trying to reach out to ISPs. There is no response at the moment, but we’re hoping the U.S. will look and see what’s happening in other countries like France and the UK and see the success story from those countries that may move things forward.

 

Musician Coaching:

One of my favorite reports that comes out every year is the Digital Music Report that IFPI puts out every January about the volume of music being traded and sold and all sorts of different statistics. You’ve been there for a while and watched this. What is the overall trend you’re noticing in terms of users moving away from CDs and towards digital? Where is music use headed?

 

AJ:

There’s absolutely no doubt that year after year, digital is accounting for an increasing share of the market. In the U.S., which is probably the most developed music market in the world, you’re seeing a 50/50 split between the digital and physical as revenue channels. It’s not quite that in most of Western Europe, but it’s heading that way. Globally, we’re looking at about a third of record companies’ income coming through these channels. We don’t predict the death of the CD. Vinyl hasn’t even died, which you might expect it to purely on technology grounds. People still seem to enjoy having a physical collection. The gifting market particularly is very strong for CDs. You can’t really buy your mom an iTunes voucher for Mothers Day. It doesn’t have the same impact. We expect the digital share of revenues will go up, but that the CD will still be around for a long time to come.

 

Musician Coaching:

What about the ratio of purchase to piracy? Has piracy planed at this 95-percent rate?

 

AJ:

The ratio of pirated music to legally-purchased music has been pretty constant. But what we’re seeing is that as broadband networks roll out across the world, both the legal and illegal consumption of music increases in tandem with that rollout. So, the 95-percent rate has remained constant, but that percentage reflects both rising piracy and also rising legal sales. iTunes for example, earlier this year marked its 10-billionth music file sold. Legal services are popular, but at the moment they are still dwarfed by piracy. We very much hope that all the work we’re doing in terms of working with our governments to try to get a modernized set of copyright laws along the lines you see in countries like France and South Korea will help shift the needle on the 95 percent. The first graduated response systems have only started running in the last few months, so it’s still very early days. But we have to be optimistic that both the new services that are coming on stream and these kinds of actions that are backed by government will have an effect.

 

Musician Coaching:

The streaming services have come under fire because the compensation rates are not acceptable to a lot of artists. I don’t have an opinion one way or another, frankly, because I just don’t know enough about it. Have you noticed that when a popular streaming service gets introduced into a market that sales decline or increase?

 

AJ:

Funnily enough, I believe it was Glenn Peoples of Billboard that recently noted that the markets in which Spotify – which is the largest streaming service in Europe – operates have seen much stronger digital growth than the ones where it doesn’t operate. So it seems in countries such as Sweden – where Spotify was developed – that it doesn’t seem to be eroding the download store model. It seems to be complementing it. Physical sales are of course falling in all markets, so it’s hard to say whether streaming services affect that or not. We can say that the overwhelming cause of the overall revenue decline has to be the mass availability of free music to download. Study after study has shown that the net impact of illegal fire sharing is negative on music sales.

 

In terms of the streaming services, we think they’re a great complement to the download stores, and we’re excited about some of the streaming services that are being developed in Scandinavia at the moment. We’re seeing ISPs bundle music services into monthly broadband fees. They are either partnering with existing services like Spotify, or they’re selling their own. Scandinavia is the lab for these services, but you’re starting to see them come out in other markets now. It could be good for a family to make the decision put the music on their broadband, particularly in tandem with tougher online copyright systems in places like France. If you are Mom or Dad running the family computer, you might think, “Actually, I’ll pay the ten euro every month to get the subscription service and not fall afoul of the tougher online copyright laws.”

 

Musician Coaching:

I was told by Eric Garland of Big Champagne at one point that the biggest predictor of how likely your music was to be illegally traded online was how active you were on the internet; the more active you were on the internet, the more likely your music was to be stolen. Is there anything copyright /content holders can do that lessens the amount of piracy?

 

AJ:

Absolutely there is. We run an internet anti-piracy team here, and our international groups do as well. If record labels register their content with us, then we can put out content protection guys to work to try to curb the amount of illegal distribution of their work online. Last year for example, the internet anti-piracy group here in London secured the take-down of seven million infringing links worldwide. They can also help record labels talk through their whole protection procedure, ensuring that they have the best systems in place to minimize the damage from leaks. It’s very difficult to avoid all leaks, particularly once the CD has been shipped out from the factory to the stores ahead of sale. But they can help you reduce the leaks during the period before the official release. And the average leak a couple years ago used to be several weeks before an album was released; now it tends to be just several days. That is at least mitigating some of the impact. And of course subsequent to the leak are take-down notices put out against the blogs and forums that are posting links to the illegal content. That kind of action can really make a difference and can make all the difference to an artist’s initial chart position that , as you know is so important when they’re trying to market the album further and get on. The difference between getting into the Top 20 and not getting there is huge.

 

So, it certainly is worth any record label, small thought they may be, talking to their IFPI-affiliated national group and registering their content so we can help them.

 

Musician Coaching:

So, quite literally, someone would go to the IFPI  directly – or the RIAA in this country – and just register with you. Does the size of the label matter? Do you have to have a certain number of copyrights?

 

AJ:

No. The actual official IFPI statute talks about making sound recordings available in “reasonable numbers.” We have many small independent members that have a fairly limited repertoire. But our internet anti-piracy guys are out there working on the big Taylor Swift releases and also classical indie labels like Hyperion on their piano concerto series. There’s a full range of work they undertake. Definitely the advice I’d give to any record label is to go speak to your local industry association and register your repertoire.

 

Musician Coaching:

About half my readers are industry and half are DIY musicians. So, if you’re a single artist that started a record label to release your own album, and then you went to any of the direct distributors – ReverbNation, TuneCore, CDBaby – would you be eligible for the types of services IFPI and its affiliate organizations offer, or not necessarily?

 

AJ:

Off the top of my head, I think you would be. If you’re making sound recordings available, even through a partner, and at a reasonable level trying to commercially sell them, you’re certainly someone we’d be interested in talking to. The systems are here and set up and working. We recently had a conference organized by the Association of Independent Music (AIM) – which is the indie body in the UK – to try to set up small, indies. And they are often artists that are self releasing and forming their own label.

 

If you’re in the UK and interested in becoming a member and registering your repertoire with the anti-piracy team, you can email anti-piracy@ifpi.org. U.S.-based indie record labels should call RIAA about membership at 202-775-0101. To read more about Alex Jacob, the anti-piracy movement and his organization, please visit the IFPI website.