On MidemNet Blog, Peter Jenner [link broken, 2016-03-10] shares his “Thoughts on the deal between DSPs, Content Industries, and Government for Next Generation Access”. Actually, his thoughts might have their origin in a news flash from last year.

Sorting it out…

The story’s beginning has to be set in March 2008 when Warner Music Group hired business veteran Jim Griffin to develop a new business model to build upon. In early December, the result hit the public. Selected universities were approached to prove if the business model would work: Students would pay a small fee, and in return they were allowed to access and download all music available via internet for free – legally. According to Eliot Van Buskirk on wired.com [link broken, 2016-03-10] all major record labels apart from Universal agreed to be involved.

However, in a real world environment (outside the campus) the intention is to establish a (nonprofit) company to collect the fee in cooperation with the ISPs. With Warner’s and Griffin’s business model, this company (‘Choruss’) apparently turns out be registered by Griffin’s OneHouse Digital.

Cure to everything?

Another well-known media strategist, Gerd Leonhard, announced [link broken, 2016-03-10] on MidemNet Blog that at Midem 2009 he was about to show “[..] why we urgently need a new blanket license for Internet music (on-demand streaming, and downloading) that is similar to what we already have for radio & broadcasting (i.e. a collective or a compulsory license that is made available to anyone), why all the efforts of controlling music content online have failed to generate relevant future revenue streams for the creators (rather than just the lawyers), and what the alternatives will be.”

Peter Jenner hails this idea as the one solution which fits the situation.

Of course, this new business model has its charms. Though it is not that “new” as Leonhard pointed out: Broadcast gets its share from fees. Also, both models have in common they receive revenue streams from advertising, licensing and the like.

… or rather another ill solution

Set aside the usual comparison for its tax-like similarity, there are quite a few issues coming to mind.

  • What about those users who really do not intend to make use of media downloads? This includes companies to which the simple connectivity of the internet is the main concern. Any fee means additional cost.
  • Where is the transparency in what is paid for music – and for which music? You might argue neither it is familiar to the masses which share of a CD’s price the artist does receive. That is right. But at least we know the label, the artist… and we are fully aware we are paying a certain amount for a CD. A fee would have to be included in the providers’ costs.
  • Peter Jenner points out that in the UK “the payment of £2 per month per customer with a broadband connection would generate £1.2 Billion, if there were 50 million broadband enabled customers in the UK. This sum is as big as the highest gross value of the UK Record Industry at its height [..]”. An amount that low (£2 per month) would obviously lead to early increases in price – given the fact most people would easily shell out more than that. It is promising to the customer: Pay a fractal amount of the cost of a CD and get any music for free. Legally, that is.
  • The most complex task is collecting the data: Which music is downloaded and used (charts most probably will be based on this data)? I can only presume collecting the data is to be provided by the ISPs. While this meticulous work previously done by the media industry would be shifted, ‘Choruss’ is about to receive the data and to pay artists, labels etc. Again, remember: it is a fixed fee which has to be shared according to varying access to the music. So which party is getting how much?
  • As Mike Masnick at techdirt shows it works for other media too: Ebooks, newspapers, maybe software. That’s where the whole idea makes sense on one hand, but – hold on. It is based on data collections. These result in identity profiles. Data privacy anyone? Moreover, with ISPs collecting the data, there is an direct option to link profiles, IP numbers, and accounts.
  • Finally, given the fact that worldwide media access and globalisation plays a major role the business model has to be highly coordinated. This does not leave much room for individual approaches and initiatives.
  • What about country specific media and intellectual property law?

Instead of establishing a (one) massive business model including each and every media handling I would vote for a variety of strategies and business models. Progress in technology opens up for a broad range of options. Each artist and company is free to develop his and her very own model of distribution and marketing. My take on this is that Griffin’s business model does not allow for cultural variety.

If you have any comments on the WMG/Griffin model please post it.

This text has been published under a Creative Commons BY-NC-SA 3.0 Unported licence. If you would like to make use of the text or parts of it in a way that goes beyond the scope please get in touch with me.