US Copyright Royalty Board Significantly Raises Rates on Streaming: Is it Enough?

The Copyright Royalty Board in the United States has issued an initial determination and accompanying regulations that raise the amount of royalty available to songwriters for streaming, which will impact services such as Pandora, Spotify, Apple and YouTube.  Variety has an excellent article on the impact of the decision, which seems substantial—almost boosting royalties by 50%.  Paula Parisi of Variety explains:

The ruling effects only the mechanical license, a term that literally references the rolls mechanically cranked through player pianos – arguably the first mass distribution media for recorded music. Albums, CDs and downloads also fall under the mechanical license (the thought being that like piano rolls, these are “physical copies,” although the idea that a digital stream is concrete by virtue of being stored at various points (on a server, in a buffer) is somewhat specious; analog broadcast signals also collect at various points, and digital radio and TV in practical terms is distributed in the manner of a stream.

But broadcasts – digital or analog – are considered a public performance, and garner what is currently a higher  “performance license” rate. Songwriter Rodney Jerkins illustrated the discrepancy in September at the Recording Academy’s District Advocacy Day in Los Angeles by sharing an accounting statement for “As Long As You Love Me,” a top 10 hit for Justin Bieber in 2012. By 2013, Jerkins’ stake in the song generated $146,000 in performance royalties, while streaming revenue from the same period garnered $278 for 38 million Pandora plays and $218 for 34 million YouTube streams. “If I owned 100 of the song I would have made $1,100 from YouTube,” Jerkins said, proclaiming, “Those numbers are criminal.”

The article explains how arguments for the lower rate were justified because of the need to allow the industry to grow.  Of course, once the industry grows there are public choice issues associated with an industry’s attempt to maintain benefits or lack of regulation to allow the industry to flourish.  Even at a 50% increase, the songwriter will still only receive around $560 for 38 million Pandora plays under Jerkins' example.  It looks like we’re still trying to give the streaming business more time to mature. 

IP management and IP strategy in small and medium-sized enterprises – perspectives from the EPO

OxFirst will be presenting a free webinar on one of the most challenging IP issues-- how small and medium-sized enterprises (SME’s) can effectively engage in IP management and strategy. The webinar will take place on January 26th between 3:00 PM- 4:00 PM British Standard Time.

The focus of the program will be on the results of a series of case studies carried out on the subject by the EPO. Twelve SMEs from different countries, operating in different industries and technology sectors and applying different business models, were interviewed about their IP strategies. The resulting case studies illustrate the various ways in which patents can be leveraged to support the development of SMEs in domestic and foreign markets. They also provide detailed information and recommendations on best practices in IP strategy and IP management. The case studies can be downloaded here.

About the Speakers

Professor Yann Ménière joined the European Patent Office as Chief Economist in February 2016. He was previously a Professor of Economics at MINES ParisTech, where he led the Chair on "IP and Markets for Technology". Besides his academic publications, he has prepared policy studies for the European Commission and other public organizations relating to patents. He previously taught at Imperial College, Université Catholique de Louvain and CEIPI.

Pia Björk is Programme Manager at the European Patent Academy. She joined the European Patent Office (EPO) in 1989 as an examiner in the fields of metallurgy and general mechanics. Between 2007 and 2017, she was operational director in the cluster of Pure and Applied Organic Chemistry in directorates dealing with cosmetics and then later pharma (galenics, medical use and biopharmacy). Pia Björk has passed the European Qualifying Examination (EQE), worked in the EQE Committee for the opposition paper and has been involved in basic and advanced training of examiners in search and examination. In January 2018, she joined the European Patent Academy.

To register, follow the instructions here. Oxfirst advises that private email addresses are not recognized.

KODAK BACK: Plugging Leaks in the Marketplace for Digital Photos

Kodak recently announced the release of KODAKOne and KODAKCoin.  KOKDAKOne is essentially a licensing and tracking platform for digital photographs.  Kodak states:  

Utilizing blockchain technology, the KODAKOne platform provides continual web crawling to monitor and protect the IP of the images registered in the KODAKOne system. Where unlicensed usage of images is detected, the KODAKOne platform can efficiently manage the post-licensing process to reward photographers.

Kodak also states that “KODAKCoin allows participating photographers to take part in a new economy for photography, receive payment for licensing their work immediately upon sale, and sell their work confidently on a secure blockchain platform.”  We may be moving closer to a system of “pay first use later” instead of a “use first pay later” system with changes in technology and regulation.  Additionally, the prospect of less “leakage” in the system of intellectual property that may actually benefit innovation and other values such as free speech may be at risk.  It will be interesting to see if less leakage and perhaps more payment to some creators will lead to more creativity and innovation.  That's the goal, right?  Kodak’s stock tripled on the announcement of the programs. 

Upcoming Neil Wilkof Presentations in London

The members of the IP Finance blog team from time to time venture out to the speaking arena to share their thoughts. A little bird has told me that fellow IP Finance blogger, Neil Wilkof, will soon be making an (increasingly) rare visit to London, where he will be giving two public lectures. For those readers who are in the London area, the subjects to be discussed might be of interest.

The first presentation, "Changing Commercial Circumstances, IP and the Revenge of the Common Law", will take place on January 23^rd  at 18:00 at King's College (details here).

The second presentation,  "Branding and Co-Branding: How Much Do They Really Contribute to Innovation,"  will take place on January 25^th at 16:30 at UCL (details here).

Whitney Houston's Tax Settlement on IP and Royalties

Accounting Today reports that Whitney Houston has settled with the tax authority in the United States, the Internal Revenue Service (IRS), concerning mostly the value of her intellectual property, particularly the right of publicity, and royalties.  The IRS's valuation was around $22 million.  The parties settled for $2 million.  Michael Jackson's estate has been embroiled in a similar problem with the IRS, here. For more on valuation of the right of publicity for estate tax purposes, see Sara Zherhi's article on the subject in Harvard's Journal of Sports and Entertainment Law (be sure to check the new tax law in the United States).