by : August 2015, Business

GRD’s Failure

GRD’s Failure

In the era of the Internet, it is still difficult to obtain information about the ownership and control of musical rights and works. This can make the licensing process of such works time consuming for the licensee, and expensive. It would seem that the availability of a multinational music rights database would reduce transactional costs and generate much more business for the industry. But the challenge remains and delays bringing the music trade fully into the modern digital age.

Several music rights databases exist on a national level, such as the databases maintained by the U.S. Copyright Office and the PROs. Yet, at the very best, they provide information about a small fragment of the works that exist in the music industry, and can suffer from a number of other issues, including inaccuracy and inaccessibility. Creating an alternative and more comprehensive database was the goal of a group of music industry entities, including a number of PROs, which coalesced around the Global Repertoire Database (GRD) effort.

Earlier attempts were certainly made. Among these was the International Music Joint Venture, which was formed in 2000 by a group of collection societies. The push was started by Dutch PRO Buma/Stemra, which was joined by American society ASCAP, PRS for music (formerly MCPS-PRS Alliance) in the UK, and Canadian SOCAN. According to the IMJV chairman, who also served as CEO of Burma/Stemra, the intent was to use the database to create an efficient and lower cost music copyright administration organization for the digital age. Unfortunately the IMJV initiative ended in failure. Even the World Intellectual Property Organization, recognizing the tremendous value of a rights database, took a stab at creating one with their International Music Registry (IMR) project. The IMR effort, which was launched in 2011, began with great promise, but ultimately the enthusiasm petered and little has been heard of the IMR in the last couple years.

GRD

In that context, EU Commissioner Neelie Kroes started the Global Database Repertoire Working Group (GRD WG) in September of 2008. Kroes hosted several roundtable discussions in which he assembled a group of cross-sector entities to discuss legal, administrative, and technological barriers for the more efficient licensing and distribution of music online. The main objective of the group that resulted from these roundtables was to create a singular, comprehensive, and authoritative ledger of the ownership and control of musical works around the world. A couple of years later, in April 2010, the group issued a request for information to more than eighty organizations to solicit their engagement in the project. The group subsequently issued a request for proposals from the entities involved in July 2010, and, in December of 2010, it issued a set of recommendations. In its recommendations, the group suggested that the GRD should provide access to authoritative, comprehensive, multi-territory information about the ownership and control of the global repertoire of musical works, and that it should be openly available to songwriters, publishers, Collective Rights Management (CRM) organizations, and other potential users.1

The GRD WG was initially comprised of a diverse set of organizations that included Universal and EMI Music Publishing, tech companies like Apple, Nokia, and Amazon, and collections societies like PRS for Music, STIM (Sweden) and SACEM (France). Later they were joined by the International Confederation of Societies of Composers and Authors (CISAC), the European Composer and Songwriter Alliance (ECSA), the International Confederation of Music Publishers (ICMP), Omnifone, and Google. The GRD WG recommended the International Copyright Enterprise (“ICE”) as a solution provider, and business-consulting firm Deloitte to manage the effort to build the GRD. Over 80 organizations and more than 450 individuals across 6 continents participated in the Deloitte study, all representing publishers, authors, societies, music service providers, consumers, recording artists, managers, record companies, legislative bodies, and information management companies.2

Potential Benefits of the GRD

Transparency within the music industry in terms of royalty collection and distribution, as well as lowering the administrative costs associated with that business, are two of the most important reasons for the creation of the GRD WG. Successful creation of the GRD would have enabled the tracking of royalties and guarantee that they are paid to the appropriate parties promptly and fairly. An authoritative, comprehensive, and open multi-territory database would benefit the entire music industry, particularly societies, publishers, authors, and licensees. Societies would have proper and accurate databases to administer, which would facilitate tracking the flow of royalties. Consequently, they would be able to issue invoices and collect and distribute royalties to their constituent publishers and authors promptly. Furthermore, all works owners would be able to register their works only once, with GRD, rather than numerous times in different territories, which can be both time consuming and cause inconsistencies in information. Additionally, the GRD would facilitate licensing processes by allowing licensees to easily identify licensors. This GRD-aided licensing process would be particularly useful to lesser known, but nonetheless commercially appealing, songs, the ownership information for which would have otherwise been difficult or impossible to find. Finally, the GRD would allow organizations to maintain their current systems by giving collection societies and others access to GRD data through their own portal.

Funding of the GRD

According to Deloitte, the funding for the GRD would be comprised of two parts—funds needed for the initial set-up of GRD, and funds needed to cover the annual operating budget. The funding for initial set-up would be supported mostly by collection societies, who were the most significant initiators of the GRD project. Initial costs were anticipated to be approximately €23-32 million,3 which would be divided amongst the societies according to their size. In addition to initial costs, GRD anticipated additional yearly operating costs of €6.4-11.6 million.4 The savings that GRD expected to attain were estimated at 0.7-1%5 of annual global royalty revenue.

GRD failure

In July of 2014, the attempt to create the GRD was shelved, leaving behind a debt of more than $13.7 million. It was reported that collection societies had begun pulling out, with ASCAP allegedly being the first one to retract from the project and stop funding it. The combined loss of significant funding and information left the GRD unable to move forward. Some sources suggested that the collection societies feared losing revenue from operational costs under a more efficient GRD system. Another reason could be a dispute over control of the global database. If, potentially, there would be a way to fully realize this project, the question would be who would have control over the data and who would have been administering the catalog. The third potential reason for the GRD’s failure might be that the presence of collection societies would become redundant if publishers would start to license songs directly, with no intermediaries in between.

There were other factors that could have contributed to the failure of the GRD. Data would be coming into the GRD from a number of different sources, each of which used its own data standards, making it difficult to provide consistent information. Also the technological and legal barriers the group encountered in the EU could be a reason for the GRD’s failure. While the American technological system is well developed, Europe is still facing some challenges to set appropriate databases and legal solutions. Moreover, the European revenue collecting system is far more complex than the U.S’s. There are only three performance rights organizations present in the USA market, while each European country has its own performance rights organization–28 collection societies within 28 territories. Also, collection societies in European countries have a slightly different role than U.S. collection societies. The latter only manage public performance rights, whereas European collection societies manage both public performance rights as well as mechanical rights.

Next steps

While the GRD was ultimately a failure, there remains a fairly wide consensus in the music business that a better system of rights ownership information management is crucial to the developing digital music industry, and, despite the failures of previous attempts, a global database still seems like the best system to pursue. There are a number of groups that have already taken up the torch of this cause, many of which are focusing on ways to bring together existing databases through uniform data standards, but few have made any significant impact at this point. With this in mind, it seems that it may be time for a substantial reevaluation of how a global database could be created, and whom to involve in the effort.

By Klementina Milosic

Editor’s Note: The author was involved in the production of Fair Music: Transparency and Payment Flows in the Music Industry, a Rethink Music project at Berklee College of Music that addresses some of the issues in this article. The report was published as we went to press; we will cover the report in full in our next edition.


1. Recommendations For: “The Way Forward For the Development of a Global Repertoire Database”. 2010. 4. Print.

2.  Global Repertoire Database Scoping & Stakeholder Consultation Phase Draft Recommendations. 2012. 8. Print.

3. Ibid.

4. Ibid.

5. Ibid.

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