Commission Proposal on a Directive for Term Extension. The recording industry.

The EU Commission has recently proposed an extension of the copyright protection of sound recordings from 50 to 95 years. The complete documents can be found at
 
http://ec.europa.eu/internal_market/copyright/term-protection/term-protection_en.htm
 
If the proposal is accepted, recordings first published in 2010 will stay protected until the year 2106, almost a century. Until then, the record company would have the exclusive right to control (most) uses of the recording, including copying, broadcasting and public performance.
 
The Commission motivates the proposal with declining record sales and the need to support creativity in the music industry. The Commission writes: “The EU recorded music industry has suffered a decline in record sales: sales of music CDs peaked in 2000 and have been falling at an average rate of 6 % ever since”. The loss of CD sales has not (yet) been replaced by sufficient income from online sales.
 
“In these circumstances”, says the Commission, “the European record industry faces the challenge of keeping up the steady revenue stream necessary to invest in new talent (…) a longer term of protection would generate additional income to help finance new talent and would allow record companies to better spread the risk in developing new talent.”
 
On first sight, the argument seems convincing. Record sales have declined somewhat, and record companies need income to finance new talent. But would the proposed extension work this way?
 
Sound recordings are already protected for 50 years, so will record companies invest more money in new productions on the expectation of (uncertain) additional revenue 51 years from today? This is not unlikely; the beneficiaries would be record companies which already own a back catalogue of recordings made 40 – 50 years ago.
 
Of the approximately 1,000 million records which are sold in Europe annually, about 80 % are produced by the four largest record companies, says the Commission. However, these companies are only responsible for a small fraction of all new records produced. There are more than a thousand small and medium-sized record companies in Europe. There are no European statistics on the number of new records issued, but in Finland alone, nearly two thousand new records appear every year. Only about ten per cent of these are produced by the majors. It is the small companies which create cultural diversity, but they do not have back catalogues.
 
If you go to a record shop, you will soon notice that most of the records displayed are recent productions. There are very few record companies which are more than 20 years old. As record companies grow older and their owners retire, their back catalogues are typically acquired by the larger companies, if they still have any commercial value.
 
How valuable is a back catalogue of 50-year old records? Curiously, the Commission does not present any studies on this. It is well known that record sales (as well as books and other media products) follow an “S” curve. Sales are focused on new product, and most records are withdrawn from the market when they are a few years old. A smaller number of best sellers stay in the catalogue longer, but as decades go by, their sales also decline. If the proposed 95-year term had been introduced a century ago, recordings made in the 1920s would still be protected today. How much are they sold today? I suggest that 90 years from now, the demand for recordings made in 2008 will be approximately as large as the demand for recordings made in 1918 is today.
 
In the Explanatory Memorandum, the Commission claims that “the large scale production of phonograms is essentially a phenomenon that commenced in the 1950s”. Nothing could be farther from the truth. The record business is already 110 years old, and it had its first crisis in 1907. By the Second World War, about a million of titles had already been recorded globally. According to Peter Martland, ten million records were sold annually in Britain in the 1910s. The present slump in record sales is nothing compared with the drop which occurred in 1930-33. The first documented global million-sellers were made in the 1920s. In their days, these artists were as popular as the Beatles were in the 1960s.
 
Do you remember Winifred Atwell, Max Bygraves and Laurie London? They were the best-selling European artists in the UK in 1958. These records are still protected within present the 50-year term and should be bringing income to their owners. You may say that the Beatles were bigger than Laurie London, they will be remembered longer, but in ten years’ time, many Beatles fans will also have passed away. If you are not British, who were the most popular recording artists in your country in 1958? Do their records still sell today?

Keeping this in mind, it is astonishing that the Commision quotes an unpublished (!) study which suggests that "a 45 year extension of the term of protection would create between £ 8.4 million and £ 163 million in additional revenues" in the UK alone.

It is important to note that these old recordings already exist. If there is such a demand for 51 to 95 year old records, someone should already be collecting this revenue, either the original companies or other companies specialising in public domain reissues. We all know that this is not happening. It should have been easy for the Commission to compile figures on the actual sales of records which are now approaching the end of the 50-year term from all European countries . It is very unlikely that they will be selling MORE in the coming years, if the term is extended. (Incidentally, there is nothing to prevent the original record companies to continue selling them in the future, even if the term is NOT extended. There is not that much competition on the reissue market, and the original record company should have the benefit of original master tapes, additional unissued takes, and better documentation).
 
It has been suggested that in the future, web music stores will have a wider selection of recordings than record shops – the “long tail” effect. This is possible, but at the moment there is little evidence of this. You can test this yourself by trying to buy European records from 1958 on the web. Record companies also derive income from secondary sources such as broadcasting and private copying. In broadcasting, the “S” curve is probably not as steep as in retail sales, but forty-year old records are not that much heard on the radio, not to speak of 80-year old ones. Such information should also have been available to the Commission.
 
The inevitable conclusion is that the only beneficiaries of the proposed extension are the four largest record companies, the only ones with significant catalogues of recordings which would otherwise soon fall into public domain. The additional income from the extension will be so small that it will not encourage investment in new production. The benefits of the proposed extension will be much smaller than the social and cultural costs, which I shall discuss later.
 
Additional comments can be found in my previous blogs
 
http://blogit.yle.fi/node/2230
http://blogit.yle.fi/node/2234
Next blog: reissues
 
Pekka Gronow is sound archivist and adjunct professor of ethnomusicology at the University of Helsinki. He is the author of numerous books and articles on the recording industry, including “An International History of the Recording Industry” (2000).
 
Suomalaisille lukijoille: tämä ja seuraavat blogikirjoitukset on poikkeuksellisesti julkaistu englanniksi aiheen kansainvälisen merkityksen vuoksi.