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The Globe and Mail

Restrictive copyright plays into music industry myths

For more than a decade, the music industry in Canada, and globally, has been cast as being in dire straits - a portent of things to come for all media in the digital age - unless copyright laws are updated to combat illegal downloading.

The notoriety of file-sharing networks, from Napster in the late-1990s to Pirate Bay today, and the meting out of stiff punishment to Limewire is legendary. New sites emerge as swiftly as old ones are prosecuted out of business, fuelling perceptions that the music industry is under siege.

Many claim this will only get worse as broadband Internet becomes a taken-for-granted fixture of everyday life. Copyright legislation has been proposed three times since 2005 by Conservative and Liberal governments alike.

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Last year's effort, The Copyright Modernization Act ( Bill C-32), died when the election was called. It'll be back. The Conservative's election manifesto said it would be.

The Canadian Recording Industry Association (CRIA), backed by the Recording Industry Association of America (RIAA) and International Federation of Phonographic Industries (IFPI), argues that legislation delayed is justice denied. While Parliament dithers, they say, musicians and the music industry are getting slaughtered.

According to the IFPI, "overall music sales fell by around 30 per cent between 2004 and 2009" worldwide. The trend in Canada appears even worse, with "recorded music sales" plunging to a third of what they were in 2004, as the following figure shows:

But stop the music. What if this image of a beleaguered music industry is flawed?

In fact, the music business appears to be in peril only if we focus on just one element of the business, the "recorded music" segment. Doing that, however, ignores the three fastest growing segments of the business: concerts, Internet and mobile phones and publishing rights.

Include them and the portrait changes dramatically, as the figure below shows:

The music industry is not in decline. In fact, the "total" music industry has grown from roughly $1.26-billion in 1998 to just over $1.4-billion today. Worldwide, the growth has been even more impressive, especially in the fast-growing economies of Brazil, Russia, India, China and South Africa ( the BRICS).

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But the reshuffling of new and old elements in the industry has not been kind to the traditional big four global record labels, EMI, Universal, Warner Music and Sony. A few massive concert promoters - Live Nation (Ticketmaster), AEG, etc. - also threaten to usurp their place at the centre of the music universe. Bands such as Radiohead, the Arctic Monkeys and Pearl Jam now go straight to audiences with their music, while picking up whatever slack ensues through concerts.

The fixation on recorded music and specific players, however, eclipses industry-wide developments. It also advances a policy agenda being shopped around the planet by the RIAA and IFPI, with the U.S. Government riding shotgun all along the way.

So far, the push has underpinned the adoption of longer, stronger, and more punishing copyright laws in the U.S., France, the UK, Sweden, South Korea and Taiwan, among others. Canada is next in line.

The politics of copyright in each country means that each of these laws has its own distinctive characteristics, but the standard template being promoted contains four essential features: First, penalties for unauthorized copying or tampering with digital rights management (DRM) technologies are made tougher. Bill C-32 would have done that, too.

Second, "notice and take-down" rules require ISPs and search engines, once notified of a claim of copyright infringement, to block access to P2P networks, MP3 search engines and blogs that link to cyber-lockers of unauthorized music stashes. To its credit, Bill C-32 did not mandate such requirements, although every major Canadian ISP retains the right to take such steps all the same in their acceptable use policies.

The third item is the "notice and notice" rules that require ISPs to send warning letters to people accused of violating copyright laws and to store records that allow infringers to be identified. By including these rules, Bill C-32 aimed to enroll ISPs and search engines in the copyright protection racket, but without the drastic step of requiring ISPs to cut-off the Internet connections of "repeat offenders" - as is now the case in Britain and France.

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Fourth, the proposed Copyright Modernization Act proposed to make it illegal to dismantle the digital locks that lock down content and tie music and movies to specific devices. Consequently, swapping an iPad for a Playbook, or an iPhone for a Blackberry, requires our existing collection of movies, TV episodes and (some) music to be repurchased all over again.

This is a huge turn-off, and expensive. Making it illegal to liberate our stuff from such digital cages is hugely problematic.

The 'digital locks' rule also clashed with new rights set out in the bill allowing people to copy material they have already purchased, and to make parodies and 'mash-ups' for sites such as YouTube, so long as it was for non-commercial and personal use. However, this smart reply to user-created content was trumped by the digital locks rules, since prising open material locked to specific devices or swaddled in DRM technologies would be a crime.

There is no doubt that some elements of the music industry and the big four - Warner, Universal, Sony, EMI - are in disarray, with all of the latter recently spun off from their former media conglomerate parents, except Sony.

Their market share has dropped, too, as competition from legitimate online music services grows, including services backed by huge telecom and consumer electronics players such as Bell and Telus in Canada and Nokia and Apple on the world stage. Even giant concert promoters such as Live Nation and AEG are groaning under the weight of debt and fairy-tale financing that they have brought upon themselves through consolidation and financial market chicanery rather than adapting to the fast currents of cultural and technological change swirling all around us.

In a candid revelation of just how prickly the issues are, one of Canada's leading music and entertainment lawyers and an old friend of mine, Chris Taylor told me: "It's fantastic that some income streams have maintained or grown but what has happened is nothing short of an unmitigated disaster for the recording companies and musicians they have supported. Generally, the goal is to reach as many people on the planet as humanly possible and make a decent living doing it. Record labels, independent and major, historically have been the catalyst for that ethos. No one is stepping up to take their place."

I am the last person to want musicians to suffer, but fear that many in the music industry have chosen litigation and restrictive laws over meeting the challenges at hand.

A memo by a past CEO of Universal Music, Doug Morris, illustrated these points in a recent New York court case deliberating over how severely Limewire should be punished for enabling piracy. The issue was not whether Limewire was guilty of facilitating piracy - it was, said the court last year - but how much of the record companies' woes could be laid at its feet?

On that issue, Morris' memo cut Limewire a huge amount of slack by accusing the record labels of failing to innovate, despite the fact that new technologies have always added to the music economy over time - as the charts above suggest.

So, copyright reform? Absolutely.

Picking up where the last Parliament left off will deliver important advances with respect to user created content and limited liability for ISPs. However, the crackdown on users, attempts to turn ISPs into 'gatekeepers' on behalf of the music industry and permitting digital locks to trump people's rights, will lead us down a bad path.

Ultimately, only once the myth that the music industry is in peril, and that it is the canary in the coalshaft for all media, is discarded will we get copyright laws fit for these digital times.

With thanks for research assistance to Jen Laengert and Sara Bannerman.

Dwayne Winseck is a communications professor at the School of Journalism and Communication, Carleton University in Ottawa. Prof. Winseck been researching and writing about media, telecoms and the Internet in one way or another for nearly 20 years. You can read more comment on his blog, Mediamorphis . His column will appear every second Tuesday.

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