From: Hermit (hidden@lucifer.com)
Date: Thu Jul 24 2003 - 17:53:24 MDT
[Hermit 1] 6) The Library of Congress shall establish a “fair” categorization system allowing different classes of material to be rewarded at different rates. e.g. A book sized work of fiction may receive a higher royalty payment per access than a newspaper article. A cinematographic item may receive a higher payment than a musical composition.
[Lucifer 2] Is that necessary? Maybe they only have to classify the available content as a text or a binary object and then calculate a royalty based on size.
[Hermit 3] Reasoning: I have seen e.g. very large newspaper articles (lots of images, lame encoding to PDF) and very small, useful, information-dense thesis (ascii text) and somehow doubt that the two should be of comprable value (although the newspapers might disagree). The same applies to music. A long work and a short work should be paid the same rate per performance (i.e. an industry determined flat rate per licenced "performance") as is currently the case, so it has the advantage of familiarity, and does not seem to me to pose any major implementation difficulties, cost-inefficiencies or inequities.
[Hermit 3] While there are alternatives, the one I particularly like being a "gift scheme" (which this system doesn't preclude on a one-on-one basis), the fact that the system is dividing up a common pie of unknown (but estimated) size makes alternatives a great deal more challenging, and would probably result in the requirement for a significant delay before payouts can be made (periodic income accounts would have to be closed before disbursements could be made) and increase the probability of abuse (of the "my commercial jingle is valued above your film play, so I grab more of the pot" variety). While a time lag is a "feature" of the existing royalty distribution works (artists typically see first income some year-and-a-half after it has been generated), most artists (including such doyens as Paul McCartney and John Clees), have said that they, and the artists they know, would far rather see their income arriving ASAP. This approach permits rapid reconciliation and I anticipate monthly settlements, one mon
th in arrears.
[Hermit 3] Proposed Implementation:
[Hermit 3] I anticipate that the LOC will set a relative "rate share factor" for an "object of some well defined type". The LOC already has an entry in their catalog of items defining the type of object for existing catalog entries, and of course, new ascensions made by submitters will be labelled by the submitter, so the process will be automatic.
[Hermit 3] A user noticing the reception of a miscategorized item will simply notify the LOC (web page/mail/RPC) and the LOC would then investigate and, if necessary, update the appropriate record (logging the error against the uploader in order to detect attempted fraud).
[Lucifer 2] How much would you expect a content creator to earn per access under this system?
[Hermit 3] The actual revenues here will depend on the number of classes, the share of pool per class and the number of accesses made, all unknowns but unknowns that can be fairly well estimated. The average US purchaser spends approximately $180/year on media and this can be divided between CD purchases (six per year at an average retail price of around $12) and video and DVD purchases and rentals (the balance). Video rentals generate a relatively small residual flow back to the copyright holder (usually the studios), tape and DVD sales a little more. Actual sales typically leave a profit at both the retailer and distributor levels (a large part of the "product costing" despite the labels usually owning at least a slice of the distribution network). As these "costs" (and manufacturing costs) would be eliminated by the proposed system, this sytem is designed to approximate the value that would be received by the copyright assignee (which, for most material today, is the label) and which, on a CD, tape or DVD
will approximate 30% of the sticker price.
[Hermit 3] Access to the current sales channel is completely controlled by the media distribution industry, which has allowed them to force originators to assign all rights (including rights on future sales) to themselves (see "A History Lesson" previously on this thread). As the Constitutional basis for Copyright (US Constitution, Article I, Section 8) was actually intended to benefit the producer (" The Congress" to have the power " To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;"), clause 21 is intended to correct this situation.
[Hermit 3] At the end of the day, an artist who has assigned copyright to a label will receive approximately 50% of one third of the current average retail price of $12 or around $2/CD, while one who uses the new system (retaining copyright to the content producer) should see an income of $4/CD. Individual tracks would be prorated. As this is a yield significantly in excess of the current system, it will instigate, presuming that the original constitutional theory that financial incentive drives production is correct, a greater incentive to produce new works.
[Hermit 3] Film production companies would expect to see a slightly higher per unit amount than CD producers, due to the fact that DVDs sell at slightly higher prices. I suspect that they will also a slightly higher income under the proposed regime, as this system will probably capture a share of the existing rental business, and any fall-off there would increase producer/copyright holder income, due to the higher share of profits this model will yield them.
[Hermit 3] As for "other media", this would be a new sales channel for artists, sculptors, authors, newspapers, universities (and here I see the University as the copyright asignee and the author as the producer), etc. I envisage an income ranging from the low cents per unique access for a newspaper article (perhaps an effective 4c in royalties) to a few dollars per unique access for a book (perhaps an effective $2 for a work of fiction and $4 for a text book) or painting/sculpture (and the production of "physical clones" of artworks will create a new business opportunity too).
[Hermit 3] Notice that the system as described would be, to a large extent, self adjusting. The various categories would receive a share of the pie, and the producers within it would be allocated a share of the resulting revenue based on popularity. Users, not being billed per access, would have no incentive to attempt to bypass the system. Also, as athe nonrex pointed out, the existing system frequently results in a negative cash flow for the artist. This system should minimize this risk, again providing an incentive to try new and unusual approaches so meeting the constitutional intent of copyright.
[Hermit 3] Being a new channel rather than a replacement channel, and indeed, a great deal more cost effective than the existing channels, the entire amount generated by the proposed system will tend to increase the income received by content producers rather than decrease it, and any errors in value calculation can be addressed by the adjustment of the bandwidth levy from time to time. In other words, the LOC could "borrow from" or "contribute to" to a stabilization fund in order to ensure that the amounts received by content producers remained equitable.
Kind Regards
Hermit
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