Sound recording copyright in the UK

In the early 1990s, the British Monopolies and Mergers Commission (MMC) investigated the cost of compact discs in the UK, prompted by concerns that their high price was a result of monopoly situations within music businesses (MMC 1994, s. 1.5). The Commission's findings were summarised in The Supply of Recorded Music, which has been described by Martin Cloonan as ‘the most detailed analysis yet undertaken by a government body on the ways in which parts of the music industries … work’ (Cloonan Reference Cloonan2007, p. 70). This report's main focus is on record companies. From the outset it underlines their financial core, stating that ‘Copyright is central to the operations of the record industry’ (MMC 1994, s. 1.4). It is sound recording copyright that is being referred to here: the ownership of the recording masters. This right gives the companies control of the recordings; payment will be due to them for any sale or usage throughout the duration of the copyright term. In addition, as the International Managers Forum (IMF) pointed out to the MMC, ‘the copyright catalogues of the record companies are their most valuable asset’ (MMC 1994, s. 8.35).

The British government first legislated for sound recordings in the Copyright Act 1911 (CA 1911). Section 19.1 states that the ‘first owner’ of sound recording copyright is ‘the person who was the owner of such original plate at the time when such plate was made’, adding that this ‘person’ can be a ‘body corporate’. In the early years of sound recording, the owner would therefore have been the record company. At the time of the 1911 Act, music was recorded directly to acetate discs. These ‘plates’ were commonly recorded in the record companies’ own studios and were produced and engineered by salaried employees. Few artists had record contracts; they were instead paid session fees and perhaps an annual retainer (Martland Reference Martland2013, pp. 187–91). They would have had no claim to ownership of the copyright.

In the subsequent Copyright Act 1956, the companies were again given ownership. According to section 12.4, ‘the maker of a sound recording shall be entitled to any copyright subsisting in the recording’. The Act does add a provision, however, stating that ‘where a person commissions the making of a sound recording, and pays or agrees to pay for it in money or money's worth, and the recording is made in pursuance of that commission, that person, in the absence of any agreement to the contrary, shall be entitled to any copyright subsisting in the recording’ (s. 12.4). This addition is indicative of changes in the sound recording world: some sessions were now taking place away from record company premises. It also provided several hoops that record companies had to go through to justify their ownership of copyright. They had to have commissioned the works and paid for them and ensured that this ownership was not compromised in contractual agreements.

The current legislation is the Copyright, Designs and Patents Act (CDPA) 1988. The Supply of Recorded Music states that ‘Under the 1988 Act the copyright would normally be owned by the record company’ (s. 2.139). This norm of ownership is not wholly supported by the legislation, however. The Act states that the author of a sound recording is its ‘producer’. This does not mean ‘producer’ in the studio recording sense, but is instead qualified as ‘the person by whom the arrangements necessary for the making of the sound recording are undertaken’ (s. 9.2aa). This definition is more akin to the role of a film producer, and was indeed first used to define the copyright of cinematograph films in the Copyright Act 1956 (s. 13.10). Moreover, in the original version of the CDPA, sound recording and film were combined, with authorship of copyright awarded to ‘the person by whom the arrangements necessary for the making of the recording or film are undertaken’ (CDPA 1988, s. 9.2a).Footnote ¹ The record companies have maintained that by means of this definition they are the authors of sound recording copyright. They made the following argument to the MMC:

There are three problems with this argument. The first is that it relies on a parliamentary suggestion that was not incorporated into the Act. The companies were referencing a House of Lords debate about the CDPA, which took place in November 1987. Lord Williams of Elvel felt that section 9.2a was unclear and proposed instead that the copyright owner be defined as the person ‘who commissions that recording and pays or agrees to pay for it in money or money's worth’ (HL Deb 30 November 1987). Lord Beaverbrook's response was quoted by the MMC: ‘The Bill deals with copyright in sound recordings in the same way that the present law [i.e. the 1956 Act] treats films; namely, that the first owner is the person who makes the necessary arrangements for the recording’ (MMC 1994, s. 4.15).Footnote ² Lord Williams of Elvel withdrew his amendment. Consequently, section 9.2a was published as drafted and contained no specific mention of payment for recordings.

The second problem is that the case law has not determined that financial risk is of upmost importance. In Century Communications v Mayfair Entertainment (1993), Sir Mervyn Davies stated that the copyright ownership of a production should go the party who ‘initiated its making and organised the activity necessary for its making and paid for it’ (336). In Beggars Banquet v Carlton Television (1993), Warner J put a greater stress on the control of finances than on the provision of finances (361). In Slater v Wimmer (2012), Judge Birss QC regarded Wimmer as the copyright owner because he ‘was not merely the banker, the project was his project’ (85). It should be noted, however, that each of these cases concerns film production. The economics of record and film production are different: the job of a film producer is to secure financial backing; the job of a record company is to supply it. The recent case of Henry Hadaway v Pickwick Group (2015) does concern two record companies, however. Here Judge Melissa Clark awarded authorship to the company who ‘retained absolute control of the production process’ (85) and against the company who ‘co-financed and commissioned the recordings’ (85). Nevertheless, in reviewing the previous cases she noted how they ‘make it clear that “the person by whom the arrangements necessary for the making of the film are undertaken”, is a question of fact in each case’, i.e. each case must be decided on its own merits (49).

The third problem with the argument is that record companies rarely undertake the financial risk or the organisational responsibilities on their own. Artists’ recording budgets are now commonly issued in the form of advances. The record companies claw these advances back from the artists’ royalties: these funds are ‘recoupable’. In addition, artists will regularly make their own arrangements for recording projects. They will hire independent studios and use independent record producers. If the companies’ own interpretation of the law is correct, then some recouped artists could be regarded as the rightful owners of the copyright in their sound recordings: they have made the general and financial arrangements.

There is no legal case in which an artist has challenged the record companies’ definition of the term ‘arrangements’. There is not likely to be one either, as the companies have shored up their ownership of sound recording copyright by contractual means. A standard exclusive recording contract will stipulate that the artist must assign the copyright in their sound recordings to the company, typically for the life of copyright. This could be considered contradictory: why are the companies requesting contractual assignment if they believe they are the first owners of this right? Nevertheless, given the confusion that surrounds the legislative status of sound recording copyright authorship, presiding justices have stressed ‘the vital necessity for provision of these rights in such agreements’ (Robin Ray v Classic FM 1998, 627). Contractual agreements are therefore essential, and yet the reasons for assignment are occluded. The artist does not know whether the record company is requesting these rights because: (a) they feel that the artist is the sole author by law; or (b) they think the artist and the company might be joint authors; or (c) because they believe the company is the rightful author, but they need this assignment to cement their rights. Without this knowledge, the artist is in a weaker position to negotiate their contract.

The record companies have provided one further rationale for their ownership of sound recording copyright. They have argued that only one in 10 of their artists will achieve profitability. In highlighting this imbalance, they suggest that, overall, it is record companies who shoulder the risk of financing sound recordings. As such, they deserve the copyrights of the few successes to compensate for the losses of the many failures. It is to this one in 10 statistic and its rhetorical uses that we now turn.

Success ratios

An early use of the one in 10 statistic can be found in Billboard, 21 July 1958. Bob Rolontz calculated that there were about 100 singles released in the American market each week, a figure he regarded as ‘overproduction’:

From the outset we witness two characteristics of success ratios. First, they can be measured in different ways. Rolontz begins by examining the ratio of hits to releases and then addresses the profitability of recordings. The second is that success rates can vary: the article alternates between 5%, 10% and 20%.

It is nevertheless the one in 10 statistic that the record industry has most commonly used. Rolontz employed it in relation to albums in the following week's Billboard, arguing that ‘true money making LP's are certainly no more than 10 per cent of all released’ (Rolontz Reference Rolontz1958b, p. 10). By the following decade the statistic was being used in Britain. In 1966, Melody Maker asked, ‘If, as the record companies now admit, nine out of 10 singles fail to make the Pop Fifty, what can the aspiring popper do to shorten the odds against his getting that elusive hit record?’ (Melody Maker 1966, p. 8). The statistic remained in use 30 years later. The Supply of Recorded Music reported, ‘The majors tell us that only one in 10 of the pop artists with whom they sign contracts turns out to be successful’ (MMC 1994, s. 2.102). A great deal rested upon this statement, but it remained unchallenged and unverified by the MMC. British politicians were similarly compliant. In 1997, Chris Smith, the Labour Party's Culture Secretary, echoed industry claims that ‘On average, 80–90 per cent of artists signed to record companies will not succeed’ (Smith Reference Smith1997, p. 81). Meanwhile, the ratio maintained its presence in the US: in the early 1970s it was argued that ‘only 10 percent [of records] smelled “break even”’ (Denisoff Reference Denisoff1975, p. 5); in the mid-1990s it was claimed that ‘Nine out of ten acts signed to record contracts are losers’ (Goodman Reference Goodman1997, p. 232). Writing in 2014, Simon Napier-Bell summed up the statistic's persistence:

The endurance of the statistic is remarkable. It has survived despite significant changes in record industry practice. Three factors in particular should have affected its consistency. The first is that the industry has gone through peaks and troughs. The usual reaction of record companies during leaner times is to cut the size of their artist rosters and introduce more cautious signing policies. As a result there should be a higher ratio of hits to releases during hard times, at least if measured in relation to chart entries. The second is that major record companies have moved from an industry model whereby they manufactured records, to one where there is there is less physical manufacture, most of which is undertaken by outside companies. In the 1970s, the majors’ manufacturing interests were viewed as a cause of overproduction, as these companies needed to generate sufficient product to keep their pressing plants busy (Denisoff Reference Denisoff1975, pp. 97–8). Manufacture also provided a platform from which to experiment. The majors manufactured product for smaller companies, thus gaining a steady stream of income that safeguarded them against the ‘adverse financial impact resulting from the considerable risk involved in speculative investment in new recording artists’ (Hill Reference Hill1978, p. 32). As such, some commentators believe they took greater artistic chances when they were in the manufacturing business (Harrison Reference Harrison2011, p. 171). The third factor is that record companies have become increasingly sophisticated when it comes to consumer data. From an industry which did little audience analysis, we now have one that conducts detailed market research, taking full advantage of the digitisation of consumer activity (Frith Reference Frith, Frith, Straw and Street2001, p. 34). Despite this wealth of data, the one in 10 success rate persists.

The ratio is slippery: it has been used to measure different things. As we have moved through this time period it has been employed less regularly in relation to the ratio of hits to releases, which is just about quantifiable, and instead in addressing the proportion of records that are profitable. When it comes to profitability, we have to trust the record companies’ own calculations. They do not publicise precise sales figures, nor do they detail breakeven points of releases, which can vary widely (Osborne Reference Osborne2014, pp. 164–6). There has also been variation regarding which breakeven point they use. Sometimes they employ the statistic in relation to the recoupment of an artist's personal, recording and video advances; at others it is applied to the overall expenditure on a release, adding in the costs of manufacture, distribution, marketing and promotion. What also gets obscured is the fact that artists and record companies have different breakeven points. A ‘failed’ record for an artist may be profitable for their record company. Interviewed in 1971, Warner executive Joe Smith admitted that his artists received a lower share of profits than his company did, and that therefore their debts took longer to pay off: ‘they're recovering it at a lesser rate than we are’ (Sanjek and Sanjek Reference Sanjek and Sanjek1991, p. 212). He calculated that it would take sales of 100,000 albums for an artist to recoup ‘their advance and recording costs, and from then on they're making money. But only 10 to 15 percent of the albums sell that well’ (Sanjek and Sanjek Reference Sanjek and Sanjek1991).

Some academics have questioned the veracity of success ratios. Writing in the 1990s, Keith Negus reported an industry belief that only one in eight artists recoup their advances. While arguing that this is ‘an elusive figure, hard to verify and as mythical as it is statistical’, he noted that some genres have a higher hit rate than others (Negus Reference Negus1999, pp. 47–50). In 2013, Lee Marshall listed a number of one in 10 citations. He questioned their ‘seeming truism’ and suggested ‘the failure rate may not be as high as conventionally perceived’ (Marshall Reference Marshall2013, pp. 583, 584). Other academics have tested the ratio out. In the early 1970s, Simon Frith quantified ‘A Year of Singles in Britain’, finding a success rate of ‘about one in eleven’ (Frith Reference Frith and Gillett1974, p. 40). In addition, he discovered that independent labels had a better profitability ratio than majors (Frith Reference Frith and Gillett1974, p. 39). Jones undertook a similar exercise in 1995, tracking a week's worth of single releases to monitor how many made the charts (Jones Reference Jones1997, pp. 38–48). However, his main concern was with the overall profitability of acts. Although he discovered that ‘the scale of failure is still enormous’, he conceded:

While the statistic has remained much the same, the academic accounts of it have changed. In the 1970s and 1980s it was used as evidence of a ‘mud against the wall’ approach to releasing music (Chapple and Garofalo Reference Chapple and Garofalo1977, p. 14). Paul Hirsch documented a record company belief that ‘There are no formulas for producing a hit record’ (Hirsch Reference Hirsch1971/1972, p. 655). Labels would therefore issue an array of titles, hoping some would stick. Bernard Miège (Reference Miège1989, pp. 89–90) drew pessimistic conclusions from this scenario, arguing that it resulted in job insecurity and impecuniosity for artists. In contrast, Frith (Reference Frith1978, p. 97) saw it as evidence of consumer sovereignty. For David Hesmondhalgh (Reference Hesmondhalgh2013, p. 249) the signing policies of these decades resulted in ‘a substantial degree of artistic innovation and experimentation’.

By the 1990s, the costs of recording, promoting and marketing records had increased considerably (Negus Reference Negus1992, p. 40). This was also the era in which more sophisticated methods of audience and sales analysis took hold. Negus argued that this resulted in ‘a straightforward reluctance to experiment, a reduction in risk-taking and a propensity towards a partial view of the world’ (Negus Reference Negus1999, p. 52). Jones suggested that record companies were no longer involved in ‘overproduction’; they were instead ‘over-signing’ new acts (Jones Reference Jones1997, p. 313). This policy was considered to be more cost-effective. Although record companies would ‘initiate the commodification of a number of commodities’, they would ‘choose to concentrate marketing and promotional resources on only a proportion of these on the basis of “intelligence” garnered from the market place’ (Jones Reference Jones1997, p. 149). The essential point of analysis was no longer what happened once a record was in the market, but the system of prioritisation that had taken place before it was released.

Building on these studies, some writers have suggested that record companies have a systematic approach to failure: it is the condition to which the industry constantly aspires. By 2001, Frith was viewing success ratios in a new light. He asked, ‘What if a record's failure reflects not the irrational activities of musicians and consumers but the perfectly rational activities of record companies themselves?’ (Frith Reference Frith, Frith, Straw and Street2001, p. 47). In contemplating why a record company would chose not to promote some of its artists, he outlined the following areas of policy:

More recently, Marshall (Reference Marshall2013, p. 584) has suggested that ‘the high failure rate associated with the record labels can … have some beneficial aspects for labels’, pointing out that it ‘serves important rhetorical purposes in relation to governments, policy makers, and consumers, and … in contractual negotiations with its artists’.

Although profitability is difficult to verify, the statistic should not be dismissed out of hand. The majority of recording projects do fail to break even. More importantly, Marshall is right: the success ratio has been tactically employed. It has been used in defence of a contractual system that binds artists to record companies in exclusivity for long durations, with any options regarding duration being in the company's favour. It has also justified the companies’ ownership of sound recording copyright. The Supply of Recorded Music is illustrative of industry thinking. The record companies argued that ‘exclusivity and other provisions on copyright and length of contract are essential to enable the industry to function at all’ (MMC 1994, s. 2.41). Having heard evidence from each of the major record companies, the MMC decided:

Yet why have so few artists achieved profitability? One reason is because they are given high advances, which are therefore difficult to recoup. Giving evidence to the MMC, the record companies maintained that ‘in general new artists currently preferred to secure larger advances and royalties rather than ownership of copyright’ (MMC 1994, s. 2.136). This statement warranted closer inspection. In this instance, the companies were suggesting that ownership of recording copyright rested on contractual negotiation rather than being determined by the 1988 Act. This allowed them to infer that artists were responsible for the scale of advance fees, although they had elsewhere admitted at least partial responsibility for their scope: one of the major labels argued that advances were set ‘between that level of advance necessary to persuade the artist to accept the offer in preference to a rival record company, and a prudent maximum, given the unpredictability of an artist's reception in the market’ (MMC 1994, s. 11.5). The record companies were also suggesting that, for artists, high advances and copyright ownership should be considered mutually exclusive, but this argument rested on the failure of most artists to recoup. We therefore need to ask whose interests have best been served by the system of high advances.

Another reason why so many records fail to achieve profitability is because of the high costs of marketing and promotion, but these costs are high because there are so many records. Broadcasters and journalists are faced with a plethora of releases. One way to filter them is to assess marketing expenditure. Marshall has noted that ‘failing to spend substantial amounts on independent promoters makes it look like the label is not serious about a record, thus dooming it to failure’ (Marshall Reference Marshall2013, p. 583). This expenditure has enabled major record companies to exercise their power. In America, for example, there have been times when promotion has become so expensive that only the largest labels can afford it, thus providing ‘a means to keep small companies off the charts’ (Dannen Reference Dannen2003, p. 264).

It is the major record companies, ultimately, who have set the bar for the success ratio high, and yet they have argued that they deserve compensation for its effects. In doing so, they have received ample rewards. Their contractual policies have received official approval and their ownership of copyright has not been probed. To achieve this, however, they have had to cast their failure in a positive light. This is where the rhetoric of new music comes in.

New music

The tactical employment of new music is a recent trend when compared with the rhetoric of success ratios. The two phenomena have nevertheless long been considered in tandem. They are, for example, brought together in the 21 July 1958 Billboard article cited above. Rolontz believed that overproduction had a negative effect on new acts, arguing that record companies provided them with little ‘staying power’ as they were constantly looking for acts that were newer still (Rolontz Reference Rolontz1958a, p. 4).

The Supply of Recorded Music provides a more sanguine view of overproduction. Here the record companies portrayed their contracts and copyrights benevolently, arguing that they facilitated the sponsorship of new British performers. They maintained:

In the 1990s, British record companies began to enter into closer dialogue with governments. Cloonan (Reference Cloonan2007, p. 21) notes that ‘key people in the popular music industries came to realize that politicians needed to be lobbied’. In part, this was because their industries were being scrutinised: The Supply of Recorded Music was one of a number of official investigations. It was also because governments were keen to open dialogue. This interest was reflective of an era in which the profits of heavy industry had declined while those of the cultural industries had grown (Cloonan Reference Cloonan2007, p. 39).

Cloonan argues that the record companies were in need of ‘an image-building exercise’, adding ‘Clearly at a time when cultural policy was increasingly becoming part of economic policy and when the music industries seemingly felt some unease about stressing pop's cultural value, the pragmatic response was to make the economic case’ (Cloonan Reference Cloonan2007, p. 75). The argument they made was nevertheless balanced between the two. While the record companies promoted their economic worth, they also sought protection. In doing so, their promotion of new music leant more towards its aesthetic and cultural qualities than it did to financial policy. There was no mention of portfolio management or budget calculations; instead there was an emphasis on the risk-taking nature of supporting the new. There was less talk about the search for the next blockbuster acts than there was about supporting the marginal, the challenging and the forward-looking. The companies stressed they were signing ‘creative’ artists and issuing ‘innovative music’; they were prepared to sponsor acts with ‘minority appeal’ (MMC 1994, s. 11.29, 12.79, 12.105). They were also patriotic, providing investment for ‘new UK artists’ (MMC 1994, s. 12.103).

In making their case to the MMC, the record companies drew upon an earlier instance of successful lobbying. In support of proposals for the EC Rental Directive, the European Commission claimed the ‘large-scale investments’ of record companies ‘have to be protected’, as this would enable the companies ‘to contribute to the protection of authors and performing artists’:

Cloonan has depicted the manner in which the ‘music industries’ commonsense view of the world’ began to permeate British governments (Cloonan Reference Cloonan2007, p. 41). Although Negus's contemporary research had revealed a system of tight financial control and restricted musical innovation, the record companies stressed that they were risk taking. This tactic was employed in one of the first investigations into the record business undertaken in this period, the National Heritage Committee's 1993 Inquiry into CD Prices. The major companies suggested that they were involved in ‘a high risk business’. The Committee only noted that they ‘can be’, however (Cloonan Reference Cloonan2007, p. 70). The Supply of Recorded Music, published the following year, evidences a new level of accord with the record industry. There was now agreement that it was a ‘high-risk business’, driven by the search for new artists (MMC 1994, s. 1.13).

The record companies had much to gain by highlighting their risk-taking deeds. They were used in defence of their ownership of sound recording copyright: the MMC conceded that ‘since the record companies take the risk of investing in artists when they are unknown, they should not have the rewards taken away on those occasions when their investment turns out to be successful’ (MMC 1994, s. 2.140). They supported the system of exclusive, long-term contracts: the companies argued that these provided the platform from which ‘to take the very significant risks in investing in new artists’ (MMC 1994, s. 12.99). They also justified the high price of CDs: the labels maintained that by controlling these costs they could ‘generate sufficient funds to invest in … new music and artists’ (MMC 1994, s. 11.29).

Although the MMC endorsed each of the record companies’ claims, their suggestions did not go uncontested. Giving evidence to the Commission, the IMF questioned the companies’ quantification of success. They argued that the one in 10 success ratio was based on a short-term analysis of an artist's profitability, pointing to the fact that record companies would retain copyright in the sound recordings for 50 years, regardless of whether an artist was signed to them. Consequently, it could accrue income long after an artist had been dropped on account of non-profitability. They noted that, whereas the losses from ‘unsuccessful’ artists would be detailed in company balance sheets, the value of their copyright catalogues would not appear there (MMC 1994, s. 8.35). The IMF proposed instead a shorter term of sound recording copyright, suggesting a period of 10 years, after which the rights would ‘revert’ to the artist. This, they believed, would give artists greater bargaining power in their negotiations with the industry, as the value of these copyrights would reduce the need to ‘obtain capital … on disadvantageous terms’ (MMC 1994, s. 10.50). The IMF maintained that the ‘more genuinely competitive environment that would follow from these changes would … also lead to lower prices to the consumer, due to the greater efficiency that would ensue from this heightened level of competition (MMC 1994, s. 10.52).

Others, too, have queried the record companies’ benevolent self-portrayal. Miles Copeland, who has had a successful career as both a manager and as a head of record labels, has stated that ‘If you're trying to build a record company, and you're trying to build an asset, what you really try to do is you try to find a young artist that you can sign and develop’ (Stahl Reference Stahl2013, p. 155). While he stresses these are ‘the riskiest ones’, he admits they are ‘where you're going to get the most return. When I go to the marketplace to try to borrow additional money, or get investment in my company, they're going to look at what are the potential returns of [my] company’ (Stahl Reference Stahl2013).

New artists offer good returns because they are contractually weak. In a competitive business, in which only a small proportion of artists are successful and an even smaller proportion is signed, a prospective artist has little bargaining power. Those who do manage to secure record company interest will generally be on lower royalty rates than established artists and their contracts will contain a greater number of restrictive clauses (Dannen, Reference Dannen2003, p. 79; Jones Reference Jones2012, p. 52; Negus Reference Negus1992, pp. 149–50). Anita Elberse (Reference Elberse2014, p. 199) has argued that ‘Locking acts in when they do not yet have any bargaining power ensures that the labels can benefit longer from their investments in talent development’. Leslie F. Hill (Reference Hill1978, p. 35), while a director at EMI, conceded that new artists have ‘the greatest profit potential for the company’.

In their dialogue with governments, record companies have claimed that their ownership of copyright and restrictive contractual system support the creation of new music. The reverse is also true: it is new music that supports the record companies’ system of ownership and control. Given that the sponsorship of new artists makes record companies look good as well as helping to ensure their profitability, it is little wonder that has been emphasised in further industry campaigns.

New uses for new music

In the early 21st century, the British record industry sought governmental backing in two key areas: the need to combat the digital piracy of sound recording copyright and their desire to increase the duration of its term. In both cases new music was utilised.

Consumers Call the Tune, issued in 2000, was the first British governmental report to consider the effects of the ‘on-line revolution’ on the music industries (DCMS 2000, p. 3). It contains a call for ministers to take action against the digital theft of the record companies’ copyrights; in his foreword to the document, Chris Smith noted this as ‘a message we hear loud and clear’ (DCMS 2000, p. 3). The record companies argued that failure to bolster intellectual property laws would reduce the supply of new music. Martin Mills, head of Beggars Banquet, maintained, ‘if today's music isn't paid for, tomorrow's music won't be made’ (DCMS 2000, p. 5). Geoff Taylor, Chief Executive of the British Phonograph Industry, evidenced similar logic in Digital Music Nation 2010, a campaigning report issued by his institution. He claimed that, via a more tightly policed internet,

The lobbying for an increased term of sound recording copyright began in 2002, when Phonographic Performance Ltd (PPL), the record company-owned collecting society that licenses the use of recorded music in public, first raised the issue with the DCMS (Music Week 2011, p. 5). Further impetus came in 2004, when the trade journal Music Week launched a support campaign (Music Week 2004, pp. 6–7). By 2006, the record companies’ case was being heard as part of the Gowers Review of Intellectual Property, commissioned by Gordon Brown when Chancellor of the Exchequer (Gowers, Reference Gowers2006, s. 4.22). Indeed, according to Nicholas Cook, the campaign was ‘one of the specific reasons why the Gowers Review was set up’ (Cook Reference Cook2012, p. 608). In making their case, the British record companies argued that ‘extension of term would increase the incentives to invest in new music … as there would be longer to recoup any initial outlay (Gowers Reference Gowers2006, s. 4.22). Music Week maintained that, if the 50-year term remained in place, record companies would take fewer risks: ‘labels will invest in safer options, they will stop backing the challenging artists for which the UK is renowned’ (Music Week 2006, p. 9).

Making the case for extension was to prove harder than enlisting support for copyright infringement, however. In seeking evidence that a longer term ‘would increase the incentives for record companies to invest in new acts’, Andrew Gowers was informed by 17 economists, ‘including five Nobel Prize winners’, that any extra money generated would be ‘negligible’ (Gowers Reference Gowers2006, s. 4.31). The economists argued that ‘most sound recordings sell in the ten years after release, and only a very small percentage continue to generate income, both from sales and royalty payments, for the entire duration of copyright’ (Gowers Reference Gowers2006, s. 4.33). The Gowers Review pours scorn on the idea that a longer life of copyright will provide younger musicians with ‘incentives to make music’ (Gowers Reference Gowers2006, s. 4.32). Giving evidence, Dave Rowntree commented, ‘I have never heard of a single one [band] deciding not to record a song because it will fall out of copyright in “only” fifty years. The idea is laughable’ (Gowers Reference Gowers2006). More generally, the report argues that extension will benefit established stars rather than nascent artists (Gowers Reference Gowers2006, s. 4.29).

It was suggested elsewhere that new artists might actually suffer a decline in public performance royalties. John Smith, general secretary of the Musicians’ Union, pointed out that ‘under blanket licence arrangements all an extension of term would do is dilute the existing pot by adding more repertoire’ (Smith Reference Smith2006, p. 8). Each performance would receive a smaller distribution royalty, as the total money generated by broadcasting and public premises licences would not be raised. Daniel Byrne believed that the remaining income would be skewed towards established artists, as an extension of copyright term would reward ‘unproductive performers’ while distributing less money to ‘younger acts’ (Stanley Reference Stanley2011). The balance could be skewed further still, as record companies would consequently focus greater attention on these unproductive artists. According to Jason Toynbee a longer term would encourage the music industry ‘to promote stars and “classic” songs and recordings’, as they could ‘create economic value from them with very little extra investment’ (Toynbee Reference Toynbee, Frith and Marshall2004, p. 133).

There was a sense that the record companies had stretched themselves too far. Earlier claims that only one in 10 artists succeed could not be squared with a belief that copyright extension would benefit new acts. The Gowers Review instead reminds us that:

Gowers rejected the record companies’ logic, arguing that term extension ‘would not increase the incentives to invest, would not increase the number of works created or made available, and would negatively impact upon consumers and industry’ (Gowers Reference Gowers2006, s. 4.40).

In coming to his conclusions, he reached back to early debates about copyright. Britain's first copyright law, the 1709 Statute of Anne, makes its intentions clear in its title. It is ‘An act for the encouragement of learning, by vesting the copies of printed books in the authors or publishers of such copies, during the times therein mentioned’. The Act strikes a balance: as an incentive to produce, there should be copyright in artistic works; to ensure these works enter the public domain, and can therefore best inspire future authors, the term of copyright should be limited. Gowers alluded to this trade-off in his report, noting that a properly functioning copyright system is one where ‘incentive to innovate is balanced against the ability of follow-on innovators to access knowledge’ (Gowers Reference Gowers2006, s. 4.1). He also quoted Lord Macaulay, who argued in 1841 that ‘it is good that authors should be remunerated; and the least exceptionable way of remunerating them is by a monopoly. Yet monopoly is an evil. For the sake of the good we must submit to the evil; but the evil ought not to last a day longer than is necessary for the purpose of securing the good’ (Gowers Reference Gowers2006, s. 4.26). According to this belief, it is a limited duration of copyright that encourages new work.Footnote ³

This was nevertheless not the end of the campaign for copyright extension and nor was it the end of record companies’ enlistment of political support. The pro-extension campaigners turned their focus upon the European parliament. To this end, John Kennedy of IFPI and John Smith of the Musicians’ Union met with Charlie McCreevy, European Commissioner for Internal Market and Services. In February 2008, McCreevy launched a proposal, seeking a sound recording copyright term for the EU of 95 years. After three more years of debating and redrafting, during which Britain's Labour government eventually came out in favour of term extension, the European Parliament agreed on a period of 70 years (Harkins Reference Harkins2012, p. 642).

In celebrating this outcome, Geoff Taylor could not resist mentioning new music: ‘A longer copyright term is also good news for music fans, as it will ensure that UK record labels can continue to reinvest income from sales of early recordings in supporting new British talent’ (Ashton Reference Ashton2011). Fran Nevrkla, chairman of PPL, stated similarly, ‘The enhanced copyright framework will … enable the record companies, big and small, to continue investing in new recordings and new talent’ (Ashton Reference Ashton2011).

The rhetoric of risk-taking investment has been employed to safeguard the record companies’ ownership of sound recording copyright, to defend this copyright from piracy and to extend its term. A measure of the companies’ faith in this rhetoric is that it has been adopted by IFPI, their global trade body. Moreover, investment in new music is now being used for an all-encompassing cause: to explain the need for record companies.

Investing in music

The profitability of record companies has fallen. IFPI has charted a decline in global income from US$27.3 billion in 1999 to US$14.9 billion in 2014 (IFPI 2012b, p. 7, 2015, p. 6). Biennially since 2010, this organisation has issued Investing in Music reports, arguing that, despite this decline, record companies offer prospective artists their best chance of success. Ann Harrison (Reference Harrison2011, p. 64) believes that the aim of the reports is to ‘debunk suggestions that an artist can develop careers in the business without needing a label’. The reports suggest as much, maintaining ‘There has been a mistaken belief among some that the role of labels would be diminished in the digital age’ (IFPI 2014, p. 6).

In making their case, IFPI have stressed that new artists are at the heart of record companies’ concerns: each report claims they are the ‘lifeblood’ of the industry (IFPI 2010, pp. 6–7, 2012a, pp. 7, 9, 2014, p. 6). The reports offer daunting figures regarding the amount of money it costs to break a new act. A spend of ‘between US$200,000 and US$500,000’ in 2012 had risen to ‘US$500,000–2,000,000’ by 2014 (IFPI 2012a, p. 11, 2014, p. 7). What they do not admit is that these costs are partly attributable to the companies’ escalating promotional wars, which are in turn derived from the fact that more artists are signed than will succeed.

There is one concession to previous practice, however. The one in 10 ratio is revised. Left as it was, it could have been taken as evidence that record companies are not viable: why sign with them if there is only a slim chance you will succeed? Consequently, the 2012 report tells us ‘the most common estimate cited by senior music company management is a success ratio of one in five. This is more than the commonly estimated one in ten ratio of a decade ago, reflecting a generally higher success rate than was previously the norm’ (IFPI 2012a, p. 11).Footnote ⁴ However, just as record companies provided little evidence for their earlier statistic, this revision is offered without any proof.

The ratio is balanced with the idea that record labels support a ‘wide community of artists, many of whom will not be commercially successful’ (IFPI 2010, p. 5). Failure is employed as a means of demonstrating altruistic ways. IFPI claim that, while ‘Continually investing in new talent is a hugely risky business’, it is record companies who ‘shoulder the financial risk inherent in trying to break a new act’ (IFPI 2010, p. 6, 2014, p. 5). According to Nick Raphael, president of Capitol Records UK:

There is no mention of the strategic prioritisation of acts. The reports claim instead that ‘longterm’ contractual involvement is of benefit to artists. It allows them ‘to develop their own brand identity and earn a living from different sources’ (IFPI 2010, p. 7).

It is not just prospective artists who are expected to read these reports, but also policy makers within governments. To this end, IFPI claim that investment in new music benefits ‘the economy as a whole’ and that record companies have ‘sustained their investment in artists despite the significant fall-off in overall sales revenue’ (IFPI 2010, pp. 5, 7). The reports provide a reminder that ‘A&R spending today … is under greater pressure than ever from the impact of illegal file-sharing and other forms of piracy’ (IFPI 2010, p. 9) and they boast that record companies invest more money in ‘research and development’ than the pharmaceutical and biotechnology sector (IFPI 2012a, p. 9, 2014, p. 9). In order to continue this practice, however, the record companies’ ownership of copyright needs to be maintained:

The 2014 Investing in Music report comes closest to declaring the record companies’ self-interest. Plácido Domingo, Chairman of IFPI, states that ‘instead of calling this report Investing in Music, it could also be titled Investing in Copyright’ (IFPI 2014, p. 4). For the most part, however, this investment is not discussed as resulting in something that the record companies will profit from or own. The suggestion, instead, is that any income derived from this right will be ploughed back into the future: IFPI claim that the majority of record companies’ copyright income is spent on new music, as labels ‘reinvest the proceeds of successful campaigns in the discovery and nurturing of the next generation of talent’ (IFPI 2012a, p. 7). In reaching this formulation, they provide a phrase that the record companies have been grasping for in each of their campaigns and reports: what they are peddling is a ‘virtuous cycle of investment’ (IFPI 2010, p. 5). This honourable inflection has been implied whenever they have combined the rhetoric of their success rate with their rhetoric of newness.