This week on the show the third installment of my series on piracy and anti-piracy that started in Episode 53 with Ben Rush, the CEO of Audiolock.net and continued in Episode 54 with Alex Jacob, Communications Manager at the International federation of the Phonographic industry. Guests on the show are two representatives of the BPI which stands for the British Phonographic Industry. Helen Saunders is the Head of Internet Investigations at the Anti-Piracy Unit of the BPI and Adam Liversage is the PR and Communications director for the organization. In the interview we tackle the latest piracy figures, cloud services, the Digital Economy Act and physical versus digital piracy.
Also this week in the news: Songkick announced a new partnership with Youtube, Pure radio launched a cloud-based music service, Spotify’s SVP of strategic partnerships Paul Brown is leaving the company, Arcade Fire got a digital push from the Amazon MP3 store to reach the top spot in the US charts and RjDj launched the new Moovz mode that will appeal to hip-hop fans.
But as usual let’s start with this week’s interview!
AL = Andrea Leonelli
HS = Helen Saunders
ADL = Adam Liversage
AL: I’m really happy to welcome to the show Helen Saunders and Adam Liversage: she’s the head of Internet Investigations at the BPI and he’s communications director at the BPI. It’s great to have you on the show. We’re going to talk a little bit about piracy and about the state of the UK music industry. But first of all would you like to introduce yourselves and explain what your role at the BPI is?
HS: My role as the head of Internet Investigations is to look after the Internet part of the anti-piracy unit. Our function is to crawl to find unlicensed music that is available for download or indeed anyone who is file-sharing.
ADL: I’m director of communications so a large part of what I do is convincing the media, the public and politicians at large that action is needed against file-sharing and other forms of piracy and at the same time to promote the growing range of excellent legal music services that are out there in the UK.
AL: So let’s start with the figures. Many talk about piracy but they don’t have figures in mind. What is, according to your figures, the size of music piracy in the UK?
ADL: There’s a number of metrics that we use. We know, because there have been several studies and surveys around this, that around 7 million people in the UK are file-sharing on a reasonably regular basis. This menas that approximately about 18 to 20% of the population is file-sharing and it’s a problem which is losing the industry about 200 million pounds every year.
AL: So what are the main tasks of the BPI’s anti-piracy unit, are there many divisions to it and how is it organized?
HS: Well, basically we have a team here based in London, that looks after the Internet side of things, but we also have a number of investigators based around the UK who take on more the physical side looking at car boot sales, markets, shops, but they also take on the online cases that we generate from the London office and work closely with law enforcement in order to help us take those cases forward.
AL: I’m really interested in the technology and the methodology involved in tracking down piracy online. Have you developed your own technology in order to detect file-sharing or do you rely on third party companies, and if so what kind of third party companies do you use?
HS: Well we use a range of techniques in order to uncover piracy online. The technology is so complex that we can’t use one technique for everything. So we do use third party vendors but we also do our own scans both across the web and on P2P networks.
AL: This week Carphone Warehouse has introduced a new cloud service for music that has been endorsed by yourselves as well as by PRS for Music. So what do you think about cloud services as a possible source of secondary revenues for the industry?
ADL: I think that when they are correctly licensed they are something that we would encourage. At the same time it’s important to point out what this service is and what it’s not. It replicates songs that you may have on your computer and transforms them into a legal stream which either goes to your computer or to a mobile device, and in a small number of cases it will upload songs which you have on your computer into a locker. You have to bear in mind that the industry is keen to see a wide variety of services develop and we’ve gone quite some way in taking leaps of faith with various services just to see how the market develops and to encourage consumer into the legal market. You will inevitably see more cloud services launch in the future which are entirely legal and licensed.
AL: The interesting thing about cloud services is that there’s still a debate on-going. For example there’s a service called MP3Tunes that has been operating for about five years now out of the States. They maintain that if the user uploads his own music onto their locked service and only that user can access the music then they should not have to pay licensing fees for that. Do you consider this sort of service legitimate in the UK or does it not comply with your requirements?
ADL: Not all services are alike. There are some record labels that don’t believe that the way in which Mp3Tunes operates should be licensed. The service that Spotify and Music anywhere provide is different. It creates a playlist based on what is on your computer but then moves everything into an entirely legal and licensed world where consumers are paying to have that service and where the artist is receiving payment for it.
AL: We’re talking about Spotify, Music Anywhere and We7 here in the UK, services that have or are developing a fairly widespread audience, so the UK is in a better position than other countries in that respect, but piracy is still very much present, so what are the ways the BPI think are feasible to try and convert the people that are still pirating to the huge amount of services that are out there and available in this country.
ADL: Well there are a few things that we are doing. I think that the main thing as an industry is to try and make as many services available as possible. We have over 70 digital music stores in this country, that’s more than any other country in the world and the revenue they generate is twice as much a country like France or Germany so we are the most progressive country in the world when in comes to this. That’s a reflection in many ways of the fact that we are the biggest consumers of music pro-capita in the world. Almost anybody in this country buys at least two music products per year so making these services available is important. The other aspect of it is ensuring that people know about them and also explaining that they have moved on considerably in the past few years. It’s no longer the case that there are one or two dominant services and nothing else, there’s a massive range of choice. Record companies have digitized all the catalogue you could ever want, there’s something like 11 million songs that are available to be licensed. We’ve tackled issues like DRM which put consumers off the services so we’ve made it easier and better for people and now there’s a price competition as well – there isn’t ade -facto 79 or 99p per track price point, you can get tracks for 29p and in some cases you can enjoy services for free if you are willing to listen to adverts. So having the services is one things, educating people on how these services have changed is another, but also it’s unfortunate that these services still have to compete with the free, illegal services. That’s why we lobbied hard for the introduction of the Digital Economy Act which introduces a form of graduated response which we hope will encourage people to move to legal services.
AL: Talking about the Digital Economy Act – since we’re there – what do you think about its implementation considering that quite a few of the measures still need to be tweaked and finalized? Do you think that because many of the measures have yet to be finalized it might get altered or watered down in the coming months?
ADL: One thing is sure: the Government is completely committed to the Digital Economy Act. All rights-holder groups in Britain are committed to it and we only have a couple of exception in Britain’s ISPs who are resenting these measures. The rest of Britain’s ISP community has taken a sensible view and realized that something needs to be done about copyright infringement on the Internet. There’s consultations going on about how it’s going to be paid for and how it’s going to work – there is every indication from those consultations that everyone is taking it seriously and what we will have is a workable graduated response with a meaningful deterrent at the end of it and that will we expect move millions of people from illegal services to legal services in this country.
AL: The relationship of the BPI with ISPs – like for the IFPI – has been full of ups and downs over the years. But a few of them are now introducing legal services like SkySongs. Do relationships with ISPs from the BPI’s part vary considerably between different companies or are they presenting a more united front and being more collaborative with you guys?
ADL: It varies, there are a number of things which come into play here. Some ISPs are owned and operated by companies which are also content providers. So if you look at a company like Skype, their holding company produces movies and owns sports rights so they can see both sides of the argument. At the same time lots of the ISPs are trying to sell services to their customers but are competing with the free illegal services so it’s in their interest to do something about it. I’m convinced that the ISPs that oppose the measures are doing so purely because they are convinced that it’s a cheaper and more effective measure to try and avoid accepting their responsibilities under the act. Most People in this country feel that something should be done about file-sharing when they are asked about it, it’s only a minority of people who do it and their days are numbered.
AL : How does it technically work from the moment you detect that there has been an alleged illegal exchange of copyrighted files to actually identifying the person that has been allegedly responsible for this exchange?
HS: We would scan a Peer to Peer network and effectively download from the user a title that is actually one of our member’s titles. from that point we basically have the evidence and we have their IP address. We don’t know anything else about that user, that’s purely something for the ISP to resolve back to one of their subscribers. In the framework of the act it talks about the concept of CIR, so we would log a “Copyright Infringement Report” with an ISP and then under the act it would be their duty to send a note on to their subscriber once they’ve matched the IP address that we’ve given them to someone that was using that service at that time, so that’s essentially how it works.
AL: One of the uses of this technology and the fact that you can ask ISPs for the identity of people who have been sharing tracks once you have the evidence that this has happened has been is that in the last few weeks Ministry of Sound started a controversial campaign by sending letters from a law firms from people that have allegedly shared their music asking for compensation, basically saying give us 300-400 pounds and we’ll get over it and won’t take legal action. Many legal experts maintain that these charges would be almost impossible to enforce in a court of law and some people think that it’s counter-productive – a bit like the campaign by the RIAA is the US where it started suing the fans which turned out to be not such a great idea. So what do you think about it? Do you think that there’s still a reason to unilaterally ask people who have file-shared for X amount of money or do you think that the approach should be more gradual like in the Digital Economy Act?
PB: Well, I’m going to be very precise in my answer as I have been every time I’m asked about this. As things currently stand it is our preferred way of tackling the file-sharing problem through the measures that are outlined in the Digital Economy Act. Graduated response means that people have an opportunity to curtail and amend their behavior before there are serious consequences and we think that as things stand is the right way forwards.
AL: So let’s talk about piracy as a whole, not just Internet piracy but commercial piracy as well. When people think about physical piracy they tend to think more about eastern European countries, about China, but it’s actually a big problem in the UK as well. So what is the volume of physical piracy, is it something you are still concerned about and is it as damaging as digital piracy?
HS: I think there has been a shift over the years from commercial piracy to online piracy and that’s just the same as any other business or crime for that matter. In terms of commercial piracy, yes, it’s still a concern. I mentioned earlier things like markets and car boot sales, that where we see the biggest part of our problem. You mentioned China, yes we have bits coming in from overseas that have been pirated there but because it’s so cheap and easy to burn your own disc effectively they can be burnt to order at markets and car boots sales and effectively sold for a fraction of the real retail price. We’ve seen an increase in the sale of DVDs for example that carry 40 to 50 MP3 Albums each and that’s an interesting point because the new piracy is both physical and digital in that most of the music is obtained via file sharing networks, forums or cyber-lockers in the first place and then sold on. Pre-loaded hard drives are also a trend. It’s certainly not something that will go away – some people will still prefer to obtain their unlicensed music via those sorts of methods if they are not downloading online.
AL: And Internationally you work quite closely with the IFPI as well, so how do these two massive entities collaborate in trying to tackle the piracy problem?
HS: In terms of online the IFPI looks after the International problem. They are the co-ordinating body to make sure that the BPI and their equivalents around the world are doing what they can in their own countries. They also look after big international releases whilst we focus primarily on UK record labels and UK releases. We talk very closely about how we co-ordinate ourselves online and in the physical world if we identify pirated discs that are pressed overseas we work with them to identify the origin of those discs and make use of – for example – the IFPI’s forsenic facilities in order to trace those discs. So we do work and collaborate very closely and try to cover all bases.
AL: Talking about the future: the Digital Economy Act will probably start being implemented next year and even though many countries have talked about three strike laws and implementations there aren’t actually any figures as to how many people these new measures would actually stop. Do you have any projections, any numbers that you hope to achieve via the Digital Economy Act in the next couple of years?
PB: There is in fact a target of reducing copyright infringement by 70% within three years. There is not absolute clarity as to when that three years clock started ticking, but let’s assume that it started ticking about a year ago so the objective is to try to reduce it by 70 % by the end of 2012.
AL: And do you think this is feasible given that none of the measures of the Digital Economy Act have been implemented yet or do you think you may need a little more time to get there?
ADL: We have always said that legal services and education will help. We have strongly argued that effective deterrent measures which can be communicated as part of the notifications – including things like temporary account suspension and throttling – are required in order to meet those targets and we remain convinced that that’s the case.
Billboard Business this week reported that Songkick – a London based start-up focused on gathering concert information – has inked a deal with YouTube and Vevo. The company will provide up-to-date location-based services that will advertise concerts in the vicinity of the user, creating a compelling new way for people to find out about acts playing nearby. This is already being deployed for Lady Gaga and JustBieber videos, where the Tour banners lead you straight to a Songkick page. Songkick is fast becoming the place to find out about gigs happening in your area, since it aggregates information provided by over one hundred ticket sites around the world as well as the information added by its own users. The company has already inked many deals with the likes of the Hype Machine,Nokia, the BBC and others and its user base is growing every day. I featured Songkick in Episode 10 of the show so if you want to delve in the Digital Music Trends vaults then go and listen to my interview with Ian Hogarth. From my part I’m always happy to report good news on London-based start-ups.
Paidcontent amongst others reported this week that DAB radio manufacturer Pure has launched a new service called FlowSongs that allows people to buy music directly from the radio. This new service is the result of a partnership between the manufacturer,Shazam – the music recognition company – and digital a-la-carte retailer 7Digital. Users will be able to track down a song they liked via Shazam on the radio and then buy it with just a couple of clicks on the radio’s own screen. The song will then be available to stream from 7Digital’s server or users will be able to download from a normal browser browser as a DRM-free mp3 to use on any device. Users will only have to pay a £2,99 yearly fee to use the Shazam service. This seems like a rather nifty solution – you can find out more on Pure.com – and from the looks of it it will work with all ofPure’s DAB radios that connect to the web.
– Spotify: Paul Brown SVP of Strategic Partnerships leaves the company
Spotify this week lost its SVP of strategic partnerships Paul Brown. Brown told Music Week that an opportunity presented itself that he had to take and he will be working for a start-up outside the music industry.Spotify will therefore need to start looking for a new person to fill that all-important role. As TechCrunch points out the company still needs to do a lot of work in terms of partnerships – especially on the mobile carrier front – and Brown’s departure could on one side delay those partnerships and on the other allow someone else to start the negotiations with a clean slate and get things moving more quickly.
A couple of real interesting stories surrounding the release of Arcade Fire’s album “The Suburbs”. First of All it looks like Amazon MP3’s decision to sell the album at a loss for $3,99 really helped it reach the top spot in the US charts. Amazon still has to pay labels the wholesale price of about $7 when it decides to sell new albums for $3.99 so it was losing about three dollars per album. At the same time – whilst many blogs and publications point to the Amazon’s promotion as something that really propelled the album to the top spot – the co-founder of Arcade Fire’s label Merge Records – LauraBallance – said that Amazon’s promotions devalue the music. This is an interesting take on the promotion that allowed Merge Records to have its first-ever number one album…
And finally I wanted to point out to a major update announced by RjDj to its application – they have introduced a new feature called Moovz that makes the music groove to your moves! At the moment it’s aimed in particular at hip-hop fans as it’s a great new free-styling tool and since it’s a new category for the scenes it has its own specific user interface.
Well, that’s all for this week, I really hope you enjoyed the show. Next week on Digital Music Trends a feature on the Music Industry Conference Future Music Forum, taking place on the 29th and 30th of September in Barcelona. Please write in with any feedback, the email is email@example.com and you can also follow me on twitter, the handle is digimusictrends. On www.digitalmusictrends.com you’ll find all you need to know about the show including links to the iTunes store and to the RSS feeds. Digital Music Trends is distributed via iTunes, Podbean, Soundcloud, The Music Void and Mixcloud.
Have a great week and ’till next time! This has been Andrea Leonelli for Digital Music Trends.