Alternative Compensation Systems only work if adopted by all sides

Een violist en een fluitist musicerend
ACS: a viable solution for creators and users?
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This post was written by Lisette Kalshoven and Katarzyna Rybicka.

Fifteen years ago, the explosive growth of the file sharing network Napster changed the music industry forever. It was a simple response to the difficulty of finding, downloading and sharing music over the web. Since then, policy makers and stakeholders have been trying to resolve the ongoing challenge of unauthorised copying, without much success. In many instances copyright enforcement turns out to be either ineffective, or is applied in such a way that violates fundamental rights such as the right to information, freedom of expression or privacy and protection of personal data.

Last Saturday in Amsterdam, the renowned institute for research on intellectual property rights, IViR (Institute for Information Law) held a symposium on Alternative Compensation Systems (ACS) for cultural goods. An ACS can be described as a legal mechanism which permits the reproduction, downloading, sharing and sometimes even modification of copyrighted works. This can be done without the need for an opt in from users (mandatory ACS) or with an opt in (voluntary ACS), but with both options giving compensation to the creators and copyright owners of those works.

The IViR researched the non-commercial use of cultural goods online for two years. The results suggest that consumers are dissatisfied with the existing legal access channels. As a consequence, different forms of ACS were supported by the majority of the Dutch population questioned.

One of the interesting results of the study was that if implemented, a monthly compensation system fee of only ca. €1.74–collected via a surcharge on existing Dutch Internet subscriptions–would raise the same amount of revenues for rights holders as the current market for recorded music, which is ca. €144 million per year. In addition, the researchers examined the amount the respondents said they would be willing to pay for participating in a compensation system covering recorded music, which is €9.25 per month for a mandatory ACS.

If this holds true, it means that a well-designed ACS for recorded music would mean bigger revenue in the recording industry (and thus more income for creators) while still within the acceptable range that consumers would be willing to pay. Interestingly, the biggest (voluntary) subscription-based music service now, Spotify, has a monthly subscription fee of €9.99, slightly higher than what users said they’d be willing to pay when asked by the IViR researchers.

“It shimmers, it’s yellow, it might be even gold,” said Dr. Christian Handke, the co-author of the report, during his presentation at the conference. But the economic panel raised important questions, such as who should be responsible for the distribution of revenues, who should bear the operating and enforcement costs, and how would a mandatory ACS be implemented without inhibiting innovation in the music industry. These are still questions without clear answers. In short, the results are promising, but it seems we are far from implementing a mandatory ACS.

The panel on user involvement in copyright policy had intriguing panelists, including MEP Julia Reda, Agustín Reyna from BEUC and Jim Killock from Open Rights Group. They discussed, among other things, how an ACS could be adopted within European policy.

There were two important take-aways from the panel on the adoption of a mandatory ACS. First, it needs to be tested on a smaller scale before it can be implemented at the national (or Europe-wide) level. IViR realises this and is designing an experiment in The Netherlands with relevant stakeholders.

Second, Reda pointed out that such a system would never come into being if rights holders and consumers are not on the same page. Past experience has shown that consumers and citizens are more likely to get involved with copyright policy if they sense a potential negative change in how they’re able to interact with copyrighted materials, as opposed to lending their voices for a positive campaign without an immediate observable threat. The recent media attention for the freedom of panorama in the EU illustrates her point. This is a challenge, and one that we should try to overcome. We need to get citizens more involved in copyright reform in a way that makes it better suited for the digital age. We welcome discussion on how to overcome this challenge.

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