From the Field and into the Maze

I have spent the first six months of 2015 travelling to London and conducting my fieldwork

London Calling...  I came, I interviewed, I left.  Image available by Karen Roe under CC BY 2.0

London Calling…
I came,
I interviewed,
I left.
Image available by Karen Roe under CC BY 2.0

which involved an exciting mixture of interviews and observations of the work of some creators’ organisations (COs). I conducted my first set of interviews with representatives from COs in the publishing industry: the Society of Authors, the Authors’ Licensing and Collecting Society and the Writers’ Guild of Great Britain. In April I then shifted my attention to the music industry and went on to interview representatives from PRS for Music, the British Academy of Songwriters, Composers and Authors, the PRS for Music Foundation (an independent charity committed to supporting new music talents) and the Musicians’ Union. I have conducted a total of 24 interviews amounting to nearly 30 hours of recorded conversation, which I am currently in the process of transcribing. I have also spent a couple of days with ALCS, PRS for Music and the Musicians’ Union which has enabled me to observe some of their day-to-day activities.

At the heart of my interviews were themes and questions aimed at understanding the work of creators’ organisations. I was interested in their role in applying the law -be it through the negotiation and application of collective bargaining agreements, through contract vetting, or through the establishment and maintenance of various licensing schemes as well as through copyright enforcement activities. I also wanted to understand their involvement in policy making and prompting change – through lobbying, campaigning and an active participation across various fora.

Beyond simply mapping the wide range of roles that these organisations assume and the services that they provide, I also explored how creators’ organisations have reacted to the way their industries have been and are continuously being transformed by the advancements in digital technologies. How has digital media challenged what creators’ organisations do? Has it made it easier or more difficult to represent creators’ interests? What have new business models meant for the balance of power in the music and publishing industries? How have these models changed contractual and industry practices, the value of copyright works and the way rights are being transacted?

Last but not least, it was my objective to not only explore the law in action but to also grasp and record the process behind the law in the making. To do this, I studied the various actors and their relationships to other industry bodies and to UK and EU policy makers. I took a closer look at the different fora in which they convene, the umbrella organisations through which they sometimes act and the considerations that underpin some of their actions.

@Edinburgh: not a field...but it will do for scenery Lovely image of Arthur's Seat available by David Monniaux under CC BY-SA 3.0

@Edinburgh: not a field…but it will do for scenery
Lovely image of Arthur’s Seat available by David Monniaux under CC BY-SA 3.0

Over the summer, I will complete the transcription of all my interview recordings with a contingency plan in place in case I need to follow-up with some interviewees to clarify any aspects of their accounts. At the same time, I am continuing to monitor relevant industry news updates, blogs, the organisations’ websites as well as social media for additional publicly available documents that may feed into, enrich or challenge my interview data.

Once I have completed these stages, I will finally leave the field behind and delve into the maze of coding and data analysis….

It is time... to take on the data! Image available by magnifulouschicken under CC BY-NC-ND 3.0

It is time…
to take on the data!
Image available by magnifulouschicken under CC BY-NC-ND 3.0

Do check back on the Copyright and Creators Blog as I will be offering updates and more substantive glimpses into some of my thematic findings as my work progresses. I will also dedicate a post on the lessons learned from the field which will almost certainly have a sequel looking at the lessons learned from data analysis.

The Role of the Publisher in New Business Models

One might think that the ongoing commercial warfare between Amazon and the publisher Hachette is just about the value of ebooks (and implicitly, the value of rights under copyright in the digital marketplace). That is indeed an important component of it. But it appears to me that the implications of this dispute extend even further. They may well affect the role of publishers in the production and dissemination of books more generally.

For those readers, who are unfamiliar with the Amazon/Hachette conflict, here is a brief summary of the facts. In negotiations over new terms and conditions for the online sale of books and the pricing of ebooks, the multinational conglomerate Hachette and the retail giant Amazon were unable to reach an agreement. The matters in dispute (summarised and analysed in a highly recommendable article by the Society of Authors’ (SoA) Autumn issue of The Author) include Amazon’s requirement of higher discounts, publisher-paid services, format parity as well as the online retailer’s print-on-demand service and lowest price control.

As a result of their falling-out in May this year, Amazon employed what in turn became widely criticised tactics, such as removing the pre-order button for Hachette titles, reducing the discounts that it offered on the publisher’s books and significantly delaying delivery times for some Hachette titles. On the 27th of May Amazon even suggested in an announcement covering the Hachette/Amazon Business Interruption that its customers should turn to its competitors if they needed any of the affected titles.

Many people still prefer the experience of browsing through physical books Image available under CC BY-NC-SA 2.0 by Peta Andersen

This dispute has shaken the publishing world and polarised both authors and readers, which is why I was particularly interested in the more sober analysis of the issues at hand, which the Society of Authors undertook in their article. Taking each of the contested points into consideration, the piece begins by questioning Amazon’s request for higher discounts from publishers. Unlike traditional brick and mortar bookstores, who take on a commercial risk in holding and displaying only a limited number of titles at any given time, online retailers do not face this problem. On the other hand, they too incur costs related to the storage and distribution of print books. Still, they are not exposed to the burden of paying high-street rents. In the case of Amazon, the retailer also has additional revenue streams by acting as a middleman for numerous second-hand booksellers. The SoA therefore concludes that Amazon’s request for higher discounts from publishers is unjustified.

The next substantive point of contention is the pricing of ebooks. Amazon asserts that it is acting in the interests of consumers by driving down the prices for such books. Under the controversial URL http://readersunited.com/ their Books Team posted a message arguing that Hachette is resisting the changing times. The message makes a case for lowering the prices of ebooks because their production costs are significantly lower compared to those of print books. Taken at face value, this, of course, is true. It costs almost nothing to produce and distribute an ebook. But is that all that publishers do? And, perhaps more importantly, is that all that readers and authors want publishers to do?

Publishers strive to produce a variety of formats, including hardcovers, paperbacks, large print, audio- and ebooks in order to meet different needs. In his response to readers’ e-mails, Hachette’s CEO Michael Pietsch explained in a letter that Hachette recoups production costs for these various formats, along with associated costs of editing, design, marketing, warehousing, piracy protection, etc, from the sale of all book formats, including ebooks. To me this seems like a fair arrangement – publishers need to factor into their pricing the effect that ebook sales will have on other book formats – after all, at least at present the idea that all readers will decide to give up on the physical book seems rather far-fetched.

If publishers rely on ebook sales to recuperate costs necessary for the production and dissemination of print books, then the question cannot just be about the pricing of these ebooks – it should be a more general question about whether or not the book industry needs publishers at all.

The_Caxton_Celebration_-_William_Caxton_showing_specimens_of_his_printing_to_King_Edward_IV_and_his_Queen

Publishing has certainly come a long way… Image in the public domain via Wikimedia Commons

Publishers invest in individual authors and their works, they make advance payments to authors and bear the risk of insufficient returns from sales. There are many people who believe that Amazon is doing the world a favour by crushing book publishers. Yet, for a significant number of consumers, a publisher’s name on a book cover serves as a seal of approval for the quality of the work, like a well-known trademark speaks for the quality of the good or service that it designates. In a world where the number and variety of books ‘out there’ exceeds the limits of our imagination, many readers also rely on a publisher’s name as a way of navigating through the myriad of books on offer. Whether or not they should do so, is a different question.

Still, this doesn’t mean that the general public and, in particular, authors should not hold their publishers accountable for what they do – or don’t do. This brings me to what I consider one of the most controversial issues around Amazon’s business ideas. The SoA article reports that one of the online retailer’s terms is that if a book is out of stock from the publisher, Amazon should be entitled to supply copies to its customers through its own print-on-demand (POD) service. It is suggested that because the commercial risk for a publisher to keep a book fully in print would be too high, a publisher may well decide to allow Amazon to produce such POD copies. However, as the article explains, this would mean that publishers continue to hold on to the authors’ rights, when in return they would simply be allowing Amazon to run its POD service. But why should that be the case if POD is a service that authors themselves could directly make use of, excluding publishers from the process and holding on to their share of the profits?

How might contractual terms between authors and their publishers need to change in order to prevent such cases where publishers would be doing less to support authors’ works while still holding on to the larger share of the profits? Could the answer lie in carefully drafted rights reversion clauses? This is hardly a matter which individual authors could bargain for with their publishers. But that is what their organisations are for. That and to remind us of the often neglected ‘production’ costs incurred by authors – in terms of the time and energy, the research and creativity which all go into the creation of a book…

Stack Them High, Sell Them Low: Can Creators ‘Get Lucky’ By Selling Merchandise?

Spotify has recently announced the ability for artists to offer merchandise to fans through their platform without taking any commission. Is this a valuable opportunity for creators or, as some have claimed, simply a cynical attempt by Spotify to improve its sometimes shaky relationship with artists? Is merchandising actually useful as a source of revenue?

All sorts of goods have been offered for sale by creators over the years. The American band Kiss has sold coffins; Boy band One Direction have their own line of toothpaste and toothbrushes; and recent Grammy award-winning band Daft Punk last year released a range of condoms packaged with the distinctive art of their hit record “Get Lucky” (although, as one commentator noted, they missed the golden opportunity to brand after their song “Harder Better Faster” instead ). The opportunities are endless.

When done well these offerings can make huge sums for their original creators. Pixar, for example, produced a follow up to their animated film Cars on the back of an estimated US $10 billion in revenue generated from merchandise associated with the first instalment. Even smaller movies such as the Australian work Beached Whale have been able to raise over US $2 million through such channels despite being made on a budget of only fifteen Australian dollars and being freely distributed on YouTube. With the decline of traditional revenue streams, such as licensing, merchandising is only likely to continue to be an important part of monetising works such as animation. Indeed capitalising on the market for merchandise will arguably be critical to long term success: it can even make money from beyond the grave!

This is not a new concept. For generations musicians have sold t-shirts and other goods at gigs while many museums over the years have found that free access to their collection can be offset by revenues gained from selling merchandise in the gift shop. Merchandising has long played a part in the business models of creators from across the spectrum of pursuits.

Old Money

Available under CC BY-NC-ND 2.0 by Christopher S. Penn

It has however become an increasing topic of discussion in recent years as the traditionally dominant revenue streams in some industries have dwindled. The recorded music industry in particular has seen increased attention paid to merchandise as falling record sales have been met with an increase in record labels signing artists to so called ‘360 degree deals’: deals in which the label takes a share of a several of their artist’s revenue streams rather than solely record sales. Merchandising is often included.

These kinds of deals leave the signed musician in an uncomfortable position. While the record labels see ‘360 degree’ contracts as a partnership with artists for mutual benefit it can be argued that for many artists they are not a good idea. Merchandising is one way in which a band can compensate for the fact that record contracts rarely provide the band with much revenue. Giving the labels a slice of merchandising revenue on top of the traditional record sales can therefore erode musicians’ earnings.

This is only compounded by the fact that the sums raised from merchandise do not appear to be large to begin with for most artists. Some studies have found that as few as five percent of musicians are able to earn more than a tenth of their income from the sale of merchandise and it seems clear that merchandise, while a nice bonus, simply doesn’t earn enough to play the bills for the majority. To lose a portion of this already meagre income may be painful.

One Direction Merchandise

Not all merchandising is this successful … Available under CC BY-SA 2.0 by Eva Rinaldi

In other sectors creators may even need to think carefully about whether some types of merchandise can be useful at all. For traditional visual artists, for example, the sale of merchandise may harm more than it helps. If merchandise bearing an image of an artwork is sold in close proximity to the original work sales may be cannibalised: Replicas can be a substitute for the original for some. If not carefully thought through therefore some types of merchandise may actually lose a creator money.

Even where selling merchandise doesn’t make an artist rich however it can still be worth doing. Merchandise can play a significant role in the building of a brand around a creator and their works and thus can benefit their career overall even if it contributes little financial return in the short term. A creators’ brand can have a big impact on their chances of success and some industry players have even gone so far as to argue that it is an essential consideration.

Overall therefore it appears that merchandising has many upsides and few downsides. While for most it may not prove to be a huge earner it can help to grow a brand and, if carefully thought through, will likely contribute at least a small increase to net revenue. While it is possible to assign cynical motives to recent efforts by Spotify to allow the sale of merchandise it therefore nonetheless offers a valuable avenue for creators to exploit.