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Hargreaves' Digital Copyright Exchange will never happen

Here's why...

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Governments have a long tradition of commissioning copyright overhauls and then throwing them in the bin. Will Ian Hargreaves' IP review suffer the same fate? I suspect most of it will, and here's why.

IP is a layer cake of complex international treaties that limit the scope of what national governments may actually do. Europe adds further treaties. This is the wrapping around a bunch of disparate issues, which are barely related to each other.

What the international treaties do is oblige governments to protect you, as the creator. With copyright you are opted in by default, before you've created anything – unlike with trademarks, you don't have to register anything or keep asserting the mark. Thanks to copyright you can then choose to put your creative work in the public domain, or license it as you wish, but the work (and this is a recognised human right) is yours by default. It's your stuff. And as I wrote the other day, the treaties are there to protect you from governments, as much as pirates.

I can already hear copyright-holders grumbling in response that governments do bugger all to protect them, and anti-copyright campaigners pointing to stronger penalties and ever-longer copyright terms, as evidence that rights-holders are overprotected. The point is, though, that there are major consequences and huge risks for any government that attempts to remove itself from the system. So compulsion is always an option, but one that would rebound on the businesses and the Exchequer.

Licensing needs to be improved for digital music services, almost everyone agrees. There are two copyrights to be obtained, one for the sound recording, which belongs to the labels (although more and more artists are owning their own), and one for the composition. The large number of digital music services in the UK suggests it isn't as bad as it's made out to be, although majors may take equity, and artists and managers are left in the dark about terms, which are typically a closely guarded secret. Right on cue, heavy metal veterans Whitesnake are suing the world's biggest label, Universal, over digital accounting. And a digital service needs to do this for each territory.

But you need a Nobel Prize to understand the publishing side. It could, and maybe should be as easy as starting a radio station: where the collecting societies PPL and the PRS make it simple. But in practice, it's completely fragmented, with majors withdrawing from collective management. As Google itself pointed out in its submission, "it could be a requirement that a licensing entity enter into a pan-European deal with CELAS, PEDL, PAECOL, DEAL, a domestic deal with PRS, and local repertoire deals with GEMA, SACEM, SGAE etc for the UK – just to get the withdrawn Anglo-US rights and each major European country's local repertoire licensed directly in the UK."

Hargreaves floats a digital copyright exchange (DCE), with a dispute resolution body to go with it. The IP review approvingly quotes News International's submission that "one click" licensing is needed. Photographers group Stop43 proposed a digital exchange that would allow this for visual works, mandating that publishers accurately tag data and take part. It appreciated that the copyright holders couldn't be mandated, but that newspapers (for example) hold large libraries of other people's stuff.

But the eternal problem remains – rights-holders can't be compelled to play nicely, and will only take part if it benefits them. The Hargreaves team suggests a quid pro quo: if you don't voluntarily opt in, then you don't get the protection of the Digital Economy Act's anti-piracy sanctions.

So try this as a thought experiment. Imagine that you're a small electronic music label with a modest catalogue. You love the internet, more people listen to your music than ever before. You're happy to license stuff to Spotify, via an intermediary, or directly to another promising startup. But don't want FabWidget Inc of Hoxton to use it, because you suspect they'll never pay you. You retain control over such decisions.

But for one-stop licensing to work, you need to relinquish that flexibility in order for it to become an automated process. You must set the same terms for everybody. According to the recommendations of the Hargreaves report: if you insist on retaining control, you may have to give up protection the Digital Economy Act promises to give you – whatever that might be, and whenever that might be.

So you may as well pack up shop and move to France, where they look after you a bit better and don't ask for any kind of quid pro quo in return. It's a single market, after all. Who would blame anybody who did that?

What's most likely to happen is that music suppliers "participate" by leaving their phone number on the exchange, rather than rights to the material they represent. That's an exchange of sorts, but perhaps not one Hargreaves envisaged.

There is some enthusiasm among digital services for Hargreaves' digital exchange. I spoke to Steve Purdham, founder of We7, who was very optimistic. Even if it doesn't happen as envisaged, he told me, it's going to act a catalyst for the music industries to speed up their work on a global repertoire database. A lot of the work has already been done, with millions spent, by the PPL (for sound recordings) and the PRS (for publishing) on a national level. Then there's DDEX, a set of XML standards to make all the databases talk nicely. The big collecting societies have pledged to make that work.

Do we need to reinvent the wheel, with "a highly respected figure" to lead the new body?

Obviously, much more needs to be happen for radical new services to be introduced – I wrote about that earlier this week. But that would be a start. ®

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