BERLIN, GERMANY: It doesn’t seem to matter if I’m in Las Vegas (CES), Los Angeles (Digital Hollywood), Cannes (Midem) or Berlin — the big mystery before both creative industries and technologists is how on Earth to make money in the digital space. That was a recurring theme at the sessions I attended at the Popkomm Music Conference here today, it was a recurring theme at the exhibition booths here, it will be a recurring theme at the panel on which I am speaking Friday, and it is a recurring theme here in this blog.

Of interest was the fact that Popkomm has gathered a wide variety of speakers from both the music industry writ large — artists, artist reps, music publishers and labels, to name some — and tech company representatives providing both B-to-B and B-to-C services. Yet many of the audience questions suggested a desire to adopt an approach to distribution of creative works online in which, essentially, no one makes money. Sure, that’s great for consumers, if you can even call them consumers when in the sense of economics there is usually a monetary transaction of some sort involved, but it hardly incentivizes either the creation of musical works or the creation of companies to distribute them.

After Oliver Schwenzer of EMI Music Publishing in Germany said that while music publishers are showing flexibility in working with new distributors, artists still have rights and shouldn’t be asked to sell their work for pennies, one audience member said it didn’t matter how low the CPM (consumer price per thousand) of digital music was in new models. He said everyone in the creative industries including artists and songwriters should just accept the fact that music has lost its value, just like he’s accepting the fact that his house has lost value. Schwenzer replied that the questioner probably didn’t have “a bunch of squatters” in his house because they didn’t view it as his property alone, and that it would be very difficult for him to live in his house or sell it with all those squatters there.

Martin Schaefer, an artists’ attorney in Germany, said this notion that piracy dictates business models is “market-driven blackmail.” He fully acknowledged piracy has changed the outlook of business models, but rejected the notion that anything that costs more than pennies will drive consumers to piracy, so no real revenues can be generated online. He said that thinking has prices set “counting from zero,” when really the thinking should be one of “discounting” from current models.

Another questioner insisted most artists wanted their work out there free. Putting aside the fact that there is little stopping an independent artist from doing so, Canadian artists’ and songwriters’ attorney Susan Abramovitch said that’s simply not the case. They want consumers to get their works but they also want to be paid. Abramovitch rejected the “throw up your hands” idea of creating a licensing regime funded by a $5 tax on ISPs. “There’s a lot of holes in that,” she noted, which include how the money is distributed (there was a lot of talk here about how processes for existing compulsory licenses can be a twisted mess), but she said there probably is a role to play for ISPs.

Schwenzer hit on a key problem with “new business models” today — too often tech companies will develop a business plan that relies ENTIRELY on creative works, will get venture capital, and then will either launch using creative works or start talking to copyright owners while preparing to launch. Either way, the copyright owners were not permitted to be involved in the development of the business — which can’t legally exist without them — and he said property owners “should have some say” in the business’ development.

There were a number of tech companies on panels and on the trade show floor, and I’ll talk about them a bit in the next blog entry. But suffice it to say it should be clear to these companies that while copyright owners are willing to work with new models and are showing far more flexibility than some audience members here give them credit for, these creative works do not suddenly lose most of their value merely because they come in the form of ones and zeroes. As Schwenzer said: “We want to encourage legitimate products, but music has a price.”

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This entry was posted on Wednesday, October 8th, 2008 at 12:16 pm by Patrick Ross and is filed under copyright opponents, drm, events, internet, licensing, market forces, piracy, property rights. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.