Is Format Shifting a Big Giveaway?

Yesterday I wrote about the BPI's reaction to the UK Government's response to the Hargreaves Report. Not surprisingly, the Musicians' Union (MU) also has a view here, specifically about proposals to allow format shifting:

In response to today’s government announcement of a consultation on a new exception to UK copyright law which would legalise the act of making a private copy of a CD, the MU has called for a fair compensation scheme to be introduced.

So why might that be? The MU has an interesting analogy:

“The device manufacturers readily pay for patents and the like on each device sold and yet the act of copying onto these devices the very content that the consumer is most concerned with – music, is not currently generating any income for the creative individuals who compose and perform and entertain the public.”

It's fascinating to see one intellectual monopoly being used to justify another. But what this overlooks is that manufacturers do not "readily" pay for patents: they are forced to do so by the government - which, of course, is precisely what the MU wants for its "fair compensation scheme".

Except that it's not fair. The MU says the music-playing device "is not currently generating any income for the creative individuals who compose and perform and entertain the public": why on earth should it? The musicians had nothing whatsoever to do with that device; they didn't design it and they didn't make it. It might never play any music, but be used for playing back recordings made in the home or outdoors, for example.

And if it does play back format-shifted music, the point is that by definition it will come from another a medium like a CD that the customers have already paid for - that's why it's called "format shifting". That means that the musicians will also have already been paid. So why should they be paid again for doing precisely nothing?

The MU's statement here is a real giveaway in the sense that it reveals the abiding and ingrained sense of entitlement that pervades all the creative industries. They are not content to be paid once like most people, but want to be paid again and again.

That is also evident in the concluding paragraph:

The Union has been robust in its opposition to this proposal and UK Music has adopted the MU position and is making the case for fair compensation to be made in return for the introduction of an exception. As part of this UK Music is examining the economic tool of ‘choice modelling’ to determine the value that the ability of being able to store music adds to devices such as the iPhone in order to present a robust argument to Government.

Again, even assuming that such a value exists, there is no reason that musicians should receive any more payments for it. That value has already been factored into the price of the music when it was bought, in whatever form, and into the compensation paid to the musicians who made it - that's how markets work.

Arguing the contrary makes as much sense as arguing that the existence of devices like music players and smartphones increases the value of the music played on them, because people are willing to pay more to have this useful extra capability. By the MU's logic, musicians should therefore pay a levy to device manufacturers for this added value the latter create for artists.

Of course that's absurd - as absurd as the MU's proposals that musicians should be paid again for the fact that you might actually play digital music on a digital device. The point is that all these kinds of "value" are already factored into the prices we pay.

Trying to argue that musicians deserves a cut of some of this nominal value is yet another example of the fantasy-based economics the creative industries regularly apply to the digital world. Maybe it's time they "shifted" away....

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