Posts Tagged ‘PwC’

Analysing the PwC Report for the BPI on the Impact of the Copyright Extension for Sound Recordings. Part.1

25/02/2009

In European Commission’s Impact Assessment on the extension of the sound copyright published last year, there was extensive references to the 2006 Price Waterhouse Coopers’ report for the BPI to support it proposal to extend the term.
There was one glaring problem, the report was never publicly available to enable analysis of it. Recently it has been published on UK Intellectual Property Office website and it makes very interesting reading.
When you read the EC Impact Assessment you would assume PwC’s report will give overwhelming evidence to support the extension, but after reading the report you realise that the EC has cherry picked certain comments and taken them out of context. The evidence to report was mainly provided by the BPI, the PPL and a few record companies.

On page two of the report, it has an important notice stating that

“…this report contains information obtained or derived from a variety of sources as indicated within the report. PwC has not sought to establish the reliability of those sources or verified the information so provided…PwC accepts no liability of any kind and disclaims all responsibility for the consequences of any person … acting or refraining to act in reliance on the report or for any decisions made or not made which are based upon such report”.

This is an interesting statement for PwC to make, when you go through the report, there was various information it required, that the BPI and record companies was unable or unwilling to provide them.
Data about the income and costs of the sales broken down by year of release was requested by PwC, but BPI/ record companies were unable to supply it(page 22). Although the BPI did provide Dr. Stan J. Liebowitz with 2004 sales data broken down by release year for his flawed report for the IFPI (these were grouped into decades), which he published two months prior to the publication date of the PwC report.

Therefore PwC had to assume that the distribution of sales would be the same as radio play, although this is known not to be correct.

PwC also assumed that when a recording enters the public domain in the UK (and also the EU) that no licence fees will be earned on the recording. This assumption is wrong, if you study the closing credits of a feature film, when it uses recordings that are in the public domain in the UK & EU they are often still licenced from the original copyright holder. (e.g. In Woody Allen’s Match Point, the Enrico Caruso recordings were licenced from Sony BMG, the original copyright holder)
This is because the film was to be shown in countries where the copyright is longer, therefore they still pay a licence fee to the original copyright holder to enable smooth worldwide distribution of the film. The same is true for television programmes that are sold worldwide.

It does not consider the performers ability to sell their own music after 50 years, with the associated large share of the income on each title.

It only considered the effect on performers and copyright holders of the recordings due to enter the public domain. It did not consider the effect of an extended copyright on the performers and new smaller companies making new recordings.

Although, there was a very damaging statement for the BPI and the major record companies on page 8.

“The differential in copyright term is likely to affect most seriously smaller record companies with little international presence”.

In layman’s terms, an extension in the copyright will increase the barriers to entry for the small independent labels and reduction in the availability of new music from them.
You may think that with the internet distribution there would be no barriers to entry, you would be wrong. The majority of legal downloads come from a few retailers e.g. iTunes and Amazon. Often the retailers arranges their deals with the majors first, paying them large advances. When they start discussions with the independents, there is no money left for advances and there is the suspicion that the independents are also being paid lower rates.

In part 2, I will discuss PwC findings on price and availability