Don't worry about a thing, 'Cause every little thing gonna be all right.
-Bob Marley, Three Little Birds
February 6 is Bob Marley Day, and 2020 marks what would have been his 75th birthday. In Bob Marley’s time, and for generations of prior musicians, the business model was simpler: make records, sell records, tour. The main hazards were a lousy record contract or a bad trip. Many artists did not get paid well, but at least there was some certainty and simplicity in the business model. Like many industries, this changed drastically with the internet. This articled provides a brief overview of how technology and law have shaped the music industry the past couple of decades.
Technology enabled rampant copyright infringement starting around the turn of the new millennium. File sharing services, such as Napster, allowed users to share MP3 music files with others. File sharing also allowed small album leaks to turn into a flood of online distribution.
Laws were passed, such as the US Digital Millennium Copyright Act of 1998. The DMCA increased the penalties for copyright infringement as well as creating certain safe harbors against infringement. The safe harbours prevent online service providers for being liable for infringement if they promptly block or remove access to alleged infringing material after they receive notification of an infringement claim from a copyright owner. Canada currently has its own takedown Notice and Notice regime, from a copyright modernization in 2012, which also creates limits on internet service provider liability for copyright infringement.
Napster operated from 1999 to 2001, and its infringing service was eventually shut down by a US court injunction. Other file sharing services carried on, as well as more powerful technologies such as BitTorrent. The issues were amplified as internet bandwidth increased, hard drive capacities expanded and computer processing sped up. Sales of CD’s and other recordings plummeted. In 2004, I attended a seminar where Graham Henderson of Universal Music Canada addressed the Toronto IP Group about the intersection of music and IP. For the music industry at that time, it was all about the dire state of copyright enforcement. Henderson explained that careers of up-and-coming Canadian music artists suffered in this environment.
The most popular artists always made a lot of money, and continued to do so. For financially-borderline artists, the challenges posed by technology were a severe financial blow. Musicians tried to make up the difference with touring ticket sales and merchandise. This is partly why concert tickets have become more expensive.
In late 2019, I attended another Graham Henderson (now President and CEO of Music Canada) seminar (hosted by Music Canada at Cassels Brock) to get an update from him since the time that I attended his 2004 snapshot, where it was all about curtailing infringement. For similar information from Henderson, here is a 2016 article that he wrote about the current state of affairs. There is still a copyright infringement problem, and ongoing conventional enforcement. The extent of infringement has been somewhat alleviated by the popularity of streaming services, which draw users into technology that allow musicians to get paid. However, now a major challenge for the music industry is the value gap caused by the relatively small payments that artists and labels receive from streaming services. While legitimate streaming services reduce infringement, many artists are questioning the fairness of their cut of this fast growing business. Artists have little bargaining leverage in this system, and some are becoming advocates against what they see as subsidizing ‘big tech’. Compounding the complexity of the situation in Canada, there is also a particular radio exemption against royalty payment (ie. another safe harbour against infringement), which arguably amounts to artists and labels subsidizing radio stations.
Most areas of law seem to adapt too slowly to the impact of technology. In Canada, further reforms to the Copyright Act were recommended in 2019 by the Standing Committee on Industry, Science and Technology. Committee Recommendations recognized some of the current issues, for example, by recommending reviewing safe harbour provisions and the radio royalty exemption and considering extending the term of copyright for musical works.
It seems that the music industry has actually had to worry about a lot of things the past couple of decades. Every little thing may eventually be alright, as Bob Marley said, but it will take continued enforcement against copyright infringement, new business deals with streaming services, and a lot of lobbying and law reform.
This article was first published in The Lawyer's Daily on February 6, 2020.