Media industries – John Shiga

January 18-26 was a very busy week (well, eight days) for those of us following copyright reforms around the world. In just eight days, there were at least three widely-publicized conflicts between copyright owners, Internet firms and copyright reform activities. Here are three piracy stores that caught the attention of most major news outlets around the world:

January 18: Large copyright owners were disappointed when a pair of proposed anti-piracy laws in the U.S. became the target of an online “blackout” protest by Google, Wikipedia and other websites. The House of Representatives’ Stop Online Piracy Act (SOPA) and the Senate’s Protect Intellectual Property Act (PIPA) were hailed by copyright owners as effective tools for, among other things, eliminating the threat of “rogue” websites based in foreign countries, which are allegedly responsible for flooding the web with pirated material. Google and other opponents of the legislation largely succeeded in framing the proposed legislation in terms of censorship, and U.S. politicians were soon clamoring for a chance to show the media and the public how opposed they are to the legislation. The protest was remarkably successful, leading the Senate and Congress to postpone debate and discussion until the bills are amended to address the concerns raised by critics.

January 23: Copyright owners won a minor victory when New Zealand authorities arrested Kim Dotcom, the founder of cyber-locker MegaUpload. The arrest demonstrates that U.S. copyright owners appear to be able to mobilize police forces far beyond the United States. The arrest also seems designed to “send a message” that cyber-lockers or cloud storage sites are not immune to anti-piracy policing. This is also a test case for New Zealand’s new copyright legislation, which provides stronger protection for copyright by treating infringement as criminal activity. But it is a minor victory in the sense that there are many other similar sites which are still in operation and which will quickly fill the gap left by MegaUpload.

January 26: The Anti-Counterfeiting Trade Agreement (ACTA) — a proposed international agreement designed to clamp down on the global circulation of pirated and counterfeited goods — was met with opposition in Poland, where thousands took to the streets in protest. As Michael Geist notes, ACTA’s provisions for digital locks and its criminal sanctions for non-commercial infringement suggest that ACTA extends elements of the notorious U.S. Digital Millennium Copyright Act (DMCA) to the international level.

What does this series of events suggest about the ongoing struggle over copyright reform?

For many years, copyright owners have lobbied governments around the world for national legislation and international agreements which suit the interest of owners, and these efforts were extremely productive in the 1990s. Key 1990s international agreements such as the WTO Trade-Related Aspects of Intellectual Property Rights agreement, the WIPO Copyright Treaty, as well as national legislation such as the DMCA, all catered to the interests of copyright owners in “stronger” protection of intellectual property.

The online and offline protests, as well as the considerable news coverage devoted to them, suggests that copyright owners are finding it difficult to dominate lobbying and public debate about copyright. Scholars, activists and journalists can take some of the credit for raising public awareness of what is actually at stake in this formerly obscure area of law. But the “game-changer” appears to be the rapid expansion of Internet firms like Google, and their ability and willingness to use the many means at their disposal to shift public opinion on copyright reform.

In my view, the delay of SOPA and PIPA is largely the result of Internet firms’ recognition of their shared economic interests in distancing themselves from overly-protective copyright regimes. In this context, copyright owners needed a small fish to fry, and MegaUpload (for which there are many legitimate uses and users) appeared to fit the bill.

John Shiga

Yesterday, Universal Music Group won one of the largest items ever to be auctioned in the music business: EMI’s recorded music assets, including works by the Beatles, the Beach Boys, Cold Play, Pink Floyd, Radiohead, and most of the Motown catalogue. The price tag: $1.9 billion USD.

Meanwhile, a Sony-led consortium purchased EMI’s music publishing division for $2.2 billion USD.

Regulatory approval of the two deals may take another year, and could lead to significant changes in the way that EMI is being split up and sold off.

But Universal is already busy managing public perceptions of its latest acquisition. Mick Jagger was glad that Universal, which he described as “people who really do have music in their blood,” now controls much of the Rolling Stones’ catalogue. And according to Cold Play manager, Dave Holmes, “This can only be positive for the artists and executives at EMI.” These comments suggest that, compared with EMI’s previous owners (Terra Firma, a private equity group, and Citigroup), Universal will provide a more musician-friendly environment.

So far, news reports aren’t giving a very clear picture of possible negative consequences of these deals. The only criticism appearing in the coverage at this point – that the deals are “sad” for British music and culture – seems to miss the broader implications. According to former EMI director, Brian Southall, “It is very sad that the whole of EMI’s recorded music division has gone to Universal. There are no British record companies left to buy EMI.”

Notably absent in the news coverage thus far is any sense of how the deal sets the stage for an unprecedented concentration of ownership in the music industry.

Scholars, music critics, musicians and fans have long decried concentrated ownership in the music business. Until the 1990s, the music industry was largely controlled by the Big Six: BMG, EMI, PolyGram, Sony, Universal and WEA. In the 1990s, Seagram (the Canada-based liquor company) purchased Universal and PolyGram and the Big Six became the Big Five. In 2004, Sony Music merged with BMG to become Sony BMG, leaving control of the music industry in the hands of the Big Four.

This week, we’ve seen another step towards what might be described as a virtual monopoly. EMI’s absorption into Universal and Sony puts much of the global music industry in the control of the Big Three. If approved by regulators, three corporations – Sony, Universal and Warner – will control approximately 80% of the music industry worldwide. (The numbers vary from country to country. In Canada, the combined market share of Universal, Sony, Warner and EMI in 2010 was 80.38%, according to a Nielsen/Billboard report.)

Perhaps in times of recession, consolidations on this scale seem unremarkable. Perhaps extremely concentrated economic power in media and culture has come to seem normal. It will be interesting to see how this story is covered in the next few days, but so far, nothing about this situation appears to be particularly worrying for commentators and reporters.

John Shiga

John Shiga

Category: Media industries

Goodbye Big Four, Hello Big Three