Copyright Collectives in Search of Strategy

The rights management business is undergoing radical changes that most copyright collectives are struggling to handle, either because they do not (yet) feel the local impact of those changes, they do not know what to do about them, or they have some ideas that they are not able to transform into a viable plan.

Rightsholders Can’t be Taken for Granted Anymore

More specifically, music publishers increasingly want to manage their rights directly to increase their revenues, gather more data intelligence and, hopefully, lower their costs. Historically, this has rarely led them to bypass traditional Collective Management Organizations (“CMOs”). However, a striking impact has been the withdrawal of rights with respect to online uses from the traditional CMO network in most territories and the emergence of various special vehicles where publishers and some collectives work in ways that would have been unimaginable 20 years ago.

For their part, creators are no longer hesitant to sell their writer shares to investors or publishers, which will reduce the traditional reliance and “stickiness” to their CMOs. Justifiably, established creators are more tempted to “cash out” and newer ones are also expecting better service through technology that will improve the CMO experience to bring it more into line with all their other consumer/financial service experiences.

Relentless Regulatory Pressure

With the advent of online music, regulatory pressure such as competition law was used to force multi-territorial licensing in the European Union (EU) for digital uses. It could be just a matter of time for it to be extended to broadcasting or live performances. Whatever happens in a territory as large as the EU impacts the whole world. With few exceptions, the model for licensing digital services is now multi-territorial, and not just in the EU. Furthermore, there is ongoing user pressure and political interest in reducing the number of collectives in any given country/territory.

A Perfect Storm

Because the type of expertise CMOs built and relied on to face challenges in the past are no longer relevant for dealing with the challenges of today, most are unable to effectively handle new technologies, standards, data challenges and opportunities. With very few exceptions, their current corporate culture is not conducive to acquiring or retaining staff with the relevant knowledge and state of mind that is required to address current issues.

Attracting talent via an engaging work environment and corporate culture is proving difficult as many CMOs still look and feel more like sleepy government offices managing paper documents than attractive entities in the entertainment or cutting-edge technology worlds.

For all these reasons, CMOs are facing a “perfect storm” of major upheavals for which they are unprepared and ill-equipped to overcome. The stakes are whether CMOs, individually and as an industry, can remain relevant in the medium to long term (5 to 10 years). Even if they do not face complete elimination, the loss of repertoire is bound to leave many of them struggling to avoid being limited to economically impossible tasks such as general licensing, with all licensing tasks that offer much better returns taken away from them by more efficient players or the rightsholders directly. To make matters more challenging, successful creators and publishers could altogether abandon what could soon amount to “legacy” CMOs in favor of more modern and effective ones, or even alternative licensing schemes such as profit-seeking enterprises, further darkening traditional collectives’ prospects.

Strategic Solutions to Strategic Challenges

The CMO business, via the trade associations (e.g., CISAC, IFPI, GESAC, SAA, EVA, SCAPR) should have a strategy. Similarly, each CMO needs a 5-year strategic plan guiding them through these times of transformation so they can reinvent themselves as relevant intermediaries in support of the 21st century creative industry or face increasing disintermediation.

Unlike other consultancies, big or small, the QRS multidisciplinary, multicultural team has decades of hands-on experience dealing with these issues in the CMO world and is acutely aware of this industry’s very specific traditions and culture.

QRS’s experience comes from the real world of rights management and is not reliant on trendy management books or business school theories that prove hard to transpose in the CMOs’ specific culture and the unique traits of the rights management businesses.

At QRS, our Insight Consulting Service stands ready to provide independent, informed, and confidential support to CMOs (or their trade associations) wishing to transform themselves, adopt or adapt to a strategy, recruit, retain and repatriate their rightsholders, change their corporate culture, consolidate locally or internationally, or deal with any given business challenge that they may face.

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