Music Rights and the Inflight Entertainment Industry

Iain Kemplay – Head of International Licensing, PRS for Music, UK

Mark Isherwood – Rightscom Limited, UK

Frankfurt – Wednesday 12th May 2010

Presentation outline• General principles of copyright

• Copyright in music

• Administration of music rights

• Music rights organisations

• What does this all mean for IFE

• So, what’s changing?

• Why is the topic important today?

• The value of music

General principles of copyright• Copyright one of a range of concepts that

are protected under IP legislation

• Others include patents, trade marks, trade secrets, designs

• Two main treaties which govern copyright: - Berne Convention of 1886- Rome Convention of 1961

General principles of copyright• World Intellectual Property Organisation

focused on internet and new technologies

• 1996 treaties

– Copyright Treaty

– Performers and Phonograms Treaty

• Spawned

– Digital Millennium Copyright Act (US)

– European Copyright Directive

Copyright in musicWhat is protected? For how long?

Musical works

Sound recordings (separate from themusical work(s) on them)

Performers

Published editions

From creation to 70 years from the death of the last creator

50 years – USA 90 –after year of release

50 years after year of performance

25 years after year of publication

What are the restricted acts?

The owner of the copyright in a work has the exclusive right….

• To copy the work• To issue copies of the work to the public • To rent or lend the work to the public• To perform, show or play the work in public• To communicate the work to the public (includesbroadcasting and electronic transmission)• To make an adaptation of a work or do any of the above in relation to an adaptation

Copyright in a work is infringed by a person who without the licence of the copyright owner does, or authorises another to do, any of the acts restricted by copyright

These apply to musical works and sound recordings:

What does this mean to IFE?• Almost always all movies, videos, TV

programmes and games will come to IFE producers “all rights cleared”

• Means all contributors (including performers) have given permission for inclusion of their “contribution” and its playback by passengers

• This usually includes copying of musical works and sound recordings into the movie, video, TV programme or games

What does this mean to IFE?• IT DOES NOT cover the public

performance of copyright musical works and sound recordings included in the movie, video, TV programme or game!!!

• The permission of the owner(s) of the musical work(s) and sound recording(s) is required for this public performance

What does this mean to IFE?• All audio-only programming including CD

selections need the permission of the copyright owners for

• The copying of the musical work and sound recording AND

• The public performance of the musical work and sound recording

Administration of musical works• In droite d’auteurs territories composers

assign performing and reproduction rights to– Musical work rights societies who carry out

performing and reproduction right licensing

• Prevalent in Continental Europe, Japan and Latin America

• Rights society actually owns the rights

Administration of musical works• In copyright territories composers assign

performing rights to – Musical work rights societies who carry out

performing right licensing• And reproduction rights to music

publishers who (as far as IFE is concerned)– Authorise a music rights society to licence

reproduction of the musical works• Broadly applies to Anglo-American works

Administration of musical works• Music rights societies enter into reciprocal

agreements with other such societies around the world in respect of each set of rights

• This creates a network of rights flowing from around the world into each territory

• So a performing rights society based in Europe can– Issue a performing right licence for its territory in

respect of the worldwide repertoire

Administration of musical works• Not all copying rights are passed to

societies

• IFE usage is generally included in most society authorisations– So a society can issue copying licence for

worldwide repertoire for its territory

• Not in the US, Canada, most of Asia and some others– Licences have to be obtained from publishers

Musical Work Performing Right: Europe

PRS GEMA SACEM

John HillFranz Schmit

Francois Dupont

Assignment AssignmentAssignment

Reciprocal Agreements

Membership Membership Membership

EMI Music Publishing Ltd.

EMI Music Publishing Gmbh

EMI Music Publishing SA

Representation Representation Representation

Sub-publishing Agreements

PRS

GEMA

SACEM

Worldwide Repertoire

From Worldwide Societies

Musical Work Copying Rights: Europe

MCPSPRS GEMA SACEM

Franz Schmit

Francois Dupont

SDRM

Assignment Assignment

John Hill

EMI Music Publishing Ltd.

Assignment

Reciprocal Agreements

Representation

Membership Membership

EMI Music Publishing Gmbh

EMI Music Publishing SA

Representation Representation

Sub-publishing Agreements

GEMA

MCPS

EMI Music Publishing Ltd.

Anglo-AmericanRepertoire

Repertoire of Droit D’Auteurs

Societies

Anglo-AmericanRepertoire

EMI Music Publishing SA

Administration of sound recording and performers performing rights

PPL GRAMEX

Simply RedAcqua Smurfs

Universal Music Group Ltd

SENA

Assignment Assignment

Representation

Reciprocal Agreements

Membership Membership

Representation Representation

Universal Music Group ApS

Universal Music Group N.V.

Distributions Agreements

Membership

The exceptions• In Australasia, Japan and some other parts of

Asia and in parts of Latin America it generally works the same way as in Europe

• In the US and Canada licences may be direct with individual publishers or through a society representing some publishers

• In the rest of Asia, the rest of Latin America and Africa licences will generally be direct from individual publishers or a collective trade association (e.g. Hong Kong, Singapore)

The exceptions• In the US no performance right for sound

recordings or performers except when the performance is digital (e.g. internet radio)

• The sound recording society network of reciprocal agreements is not as advanced as for musical works

• In some territories no societies exist even though copyright legislation does– Middle East, parts of Africa

• Means all licensing done direct!!!

The exceptions• This means there may be repertoire gaps

in licences– Generally not a problem with any Anglo-

American repertoire– Nor the local repertoire of operation– But some problems with some Asian, Latin

American and African repertoire

Music rights organisations

• PRS for Music– PRS and MCPS – 1914

and 1911– 65,000 publisher,

composer and author members

– Access to over 10m works– International affiliates in

170 territories– 2009 processed over 1bn

bits of data

• PPL– Created in 1934 by EMI

and Decca– Now 3,000 record

companies– Stephen Carwardine & Co.

case– 2006 saw merger of

PAMRA and AURA – 42,000 performer member

In the UK, there are separate organisations to represent the interests of the owners of the musical works and the sound recordings

Benefits & challenges• So, collectively we represent and can

provide licences for the use of the vast majority of music available

• There are similar organisations in most other territories in the world and of comparable size

• Via representation agreements with each other, any of us can provide access to the worlds favourite music

Benefits & challenges• Benefits

– To our members – in a world where their music is used in various ways by many businesses

– To licensees – the time, cost and resource needed to individually licence

– We can provide blanket access on standard terms via one trusted party on a multi-service, multi-territory basis

– BBC – premium value to collective licensing of rights

• Challenges– But this is not quite true –

situation in USA– Interests of major members– Challenges of technology– Uneven copyright

legislation– RTL vs. GEMA

Copyright Tribunals• These exist in some form in most

legislations

• Designed to resolve disputes on terms and fees between licensors and licensees

• So if any licensee is being “unreasonable” you have CT to fall back on

• However– Frequently expensive– Slow!

Approaches to licensing• Not surprisingly, different societies in

different territories take different approaches and put different values on licensing

• For example– PRS: pence rate per passenger– BUMA: square metres– STIM: rate per aircraft– GEMA: annual rate

So what’s changing?• This is compounded by the development

in technology and the application and interpretation of rights

• Which rights apply, what restricted acts are being undertaken, in what territory and who is liable

• These are challenged both in acceptance and interpretation by licensees

So what’s changing?• This could be a cost issue, a liability issue

or even a lack of awareness issue

• But in an age when production of in flight content has broadened to reflect the territorial capability of the marketplace, this makes music rights licensing even more complex and challenging

Let’s use other music• The thought which must pass through

many content producers’ minds is– If it is this difficult, why don’t we use some

other music?• There is some validity to this argument;

let’s look briefly at the options:– Specially commissioned– Out of copyright music– Unsigned artists/bands– Buy-out music – Creative Commons

Let’s use other music• These are increasingly used as an

alternative source of music– Cheaper and fully rights cleared

• But if you want to enjoy the use of the worlds best loved music……….

Why are music rights important to you today?

• ‘…the increasingly relevant world of music licensing for airlines’

• This is a really interesting topic – the value of music to airlines and the value of music itself

• We are discussing this today, not just because it is complex but principally because it is highly relevant and important to the IFEC content provision airlines are increasingly providing

Why are music rights important to you today?

• There is no obvious side step around music rights if airlines want to use the worlds best music – and you do!

• Thought it would be interesting to explore this further

Growth of inflight entertainment• 1921 Aeromarine Airways - ‘Howdy

Chicago’

• 1936 Hindenberg – provision of a piano

• 1962 PAN AM – first airline to use tv monitors

• 1975 Braniff International Airways – first Atari video games– and now the acronym has moved to IFEC

Growth of inflight entertainment• Emirates – ICE system provides

– Access to plane’s external cameras– Live business, news and sport headlines– Phone, SMS and email– 1200 channels of premium entertainment

• And the importance of music to these services– It is a key part of or can be integrated into all

of them • Example – US Airways Airbus A320 trial

Airline investment• I had not appreciated the investment that

airlines make in their inflight entertainment provision

• The following are thought provoking– Systems safety and regulation – ‘The vast majority of airlines that we talk to

look at IFEC as an investment rather than a cost’ Neil James, Executive Director at Panasonic Avionics

Airline investment• Installing IFEC systems ranks second in cost

behind aircraft engines

• Recognised as an ancillary revenue stream but most importantly of building customer loyalty

• ‘Today (2005) Emirates’ typical investment in inflight entertainment systems equates to nearly US$10m per aircraft’ Patrick Brannelly, Emirates

• British Airways invested £80m in 30,000 seatbacks in September 2009

Value of music to airlines• No empirical evidence to qualify but the

message appears to be: – Music helps relax people and make them

more comfortable – It’s a key part of keeping them entertained

and of communicating with them – This is important to a customer service

business – aerophobia is believed to effect 1 in 5 people

• ‘A happy passenger is a repeat passenger’ (Avionics magazine 02/10)

Value of music in itself• Music production and consumption makes

up a significant part of the World’s creative economy– In the UK alone this figure is £6bn (2008)

• Research by Will Page, Chief Economist for PRS for Music, shows that – In 2009 the UK bucked the perceived

downward and fatal trend in music royalties– Value from traditional retail sales was

collapsing but music in business was growing by a far greater degree

Value of music in itself• The substantial development of IFEC systems

and their capacity for content is reflective of this

• Alfred Hitchcock – ‘If the music and the visuals say the same thing, then the music is not working’

• Let’s remember the extraordinary lengths that performers, songwriters and musicians can go to record their songs and the powerful effect music has on each of us

Myths!• If you only use 30” of a work you don’t

need a licence– Not true

• Using music helps promote it– Maybe, but not relevant to licensing

• If a record label sends me a CD I can use it without licence– Not true a licence will still be required

Summary• Music rights are complex and particularly

so in today’s worldwide businesses

• The complexities reflect – The structure of copyright– It’s provision under law– The continually developing technological

environment and changing basis under which rights owners want to be represented

• But – it is clearly necessary and worth it.

One take away

Performing Right Society

(e.g. PRS, GEMA, ASCAP, CASH, APRA

etc.)

Phonographic/Performer Society

(e.g. PPL, GVL, PPCA, CPRA, ABRAMUS etc.)

Mechanical Right Society

(e.g. MCPS, SDRM, AMCOS, HFA etc.)

ORMusic Publishers

Phonographic/Performer Society

(e.g. PPL, GVL, PPCA, CPRA, ABRAMUS etc.)

ORRecord Companies

PublicPerformance

Copying

Musical Works

Sound Recordings/Performers

Final observations• Along with many businesses, airlines play

an increasingly important role to provide access to an audience– To be seen to support and respect intellectual

property – Participate in providing new revenues for

creators to create• Aircraft provide a captured audience of

millions per day• There is an interesting dialogue to

continue….

Questions!!!!

Music Rights and the Inflight Entertainment Industry

Iain Kemplay – Head of International Licensing, PRS for Music, UK

Mark Isherwood – Rightscom Limited, UK

Frankfurt – Wednesday 12th May 2010