usan Abramovitch (Gowling WLG (Canada) LLP / Lawyer/Partner, Canada) was a speaker at Reeperbahn Festival 2017 for the session “That’s Entertainment Law – Legal Developments in Music and Entertainment”.
Reeperbahn Festival: What has been the most important issue for the music (and/or entertainment) world in 2017 and what has been the best strategy to deal with it?
Susan Abramovitch: The music industry shares some but not necessarily all of its challenges with the other entertainment industries. In the case of the music industry, by far in 2017 (and before that) the key issue has been that of the so-called value gap. People use and consume music now at least as much and perhaps more than ever, and music is fuelling business, big time. However, there is a discrepancy between the financial rewards reaped by the businesses that music is driving to the greatest degree – the ISPs and online platforms – and the limited trickle-down of money to artists, songwriters, labels and music publishers.Facing this challenge is increasingly becoming a “David and Goliath” battle as the online platforms get richer and therefore more powerful both individually and as an industry. It will probably take government and legislative solutions to bridge the value gap. However, we in the music industry need to better recognise and harness our collective strength, which is that without us, there is no music fuelling the success of these online giants.
Reeperbahn Festival: What development/s will shape the music (and/or entertainment) business in 2018 and how do you think this will influence our world?
Susan Abramovitch: Unfortunately I think the issue of the value gap is not one that will be resolved quickly and so probably will continue to be the key theme in 2018. Beyond that, I expect that the pace of developments in, and everyday application of, artificial intelligence and virtual intelligence in the music industry will gain prominence not merely in terms of a buzz topic, but also as a practical reality morphing the basic ways we consume live and recorded music.
Reeperbahn Festival: Which problem within the music (and/or entertainment) world should be solved by the time we convene again at the next Reeperbahn Festival Conference?
Susan Abramovitch: “Should be” in terms of what I would hope to be solved? Or “should be” in terms of what I expect will actually be solved? On the latter, I really don’t see any of the significant problems being resolved by next year. But I would like to see more focus paid to the problem of artists being shut out of their fair share of “indirectly attributable income”. Streaming services and other online music providers compensate rights holders in many different ways beyond direct royalty payments in order to get the right to offer their catalogues online – equity stakes in the companies, marketing advantages, advances and so on. This compensation is very valuable but is often not directly linked to a particular master or composition. Pursuant to the common wording of many recording and publishing agreements, income that is not directly attributable to a particular master or composition is not split with the artist or writer. This is not fair as it is the value of these rights that attracts this compensation to the label/publisher.
Reeperbahn Festival: Which is a greater legal challenge for current entertainment law deals: adapting to new technologies or adapting to the various national/regional laws when looking at the global market?
Susan Abramovitch: I would say the latter. Anticipating and adapting contractual language, laws and business models to new technologies has been a reality of the entertainment industries – and particularly the music industry – since their respective origins. To be sure, in the last couple of decades, the speed of technological change has accelerated and so we as entertainment/music lawyers have had to be even more agile than in the past. But that’s actually part of the fun of our job – foreseeing future events and addressing them in contractual and other contexts is an important facet of what a good lawyer does. Addressing – and ideally streamlining – the various, often conflicting or overlapping national/regional laws is a much higher hurdle for us in the legal profession. Our training, qualifications and ethical obligations are by definition very provincially proscribed. Lawyers are not professionally insured on their advice with respect to the laws of other jurisdictions and so are naturally hesitant to offer same. But clients usually can’t afford the time and money to consult lawyers in all applicable jurisdictions throughout a global deal and typically want big picture advice, not geographically fragmented pieces thereof.
Reeperbahn Festival: The requirements for understanding the legal framework of the music (or entertainment) market have seemingly become more complex in our fully digital global market, not least concerning deals involving artists/their work versus the various organisations that can exploit the respective rights. In your experience, has this led to a power shift towards the bigger institutions (labels, publishers, platforms, agencies, etc.) whose legal departments can manage the situation better, or has a new breed of artist learned to cope with the situation via the transparency and self-help possibilities of tutorials etc. that the internet offers?
Susan Abramovitch: I think we have seen both of those trends at the same time. The power of collective licensing and management of rights is more important than ever in the new economy of micro-transactions in the music streaming market. Individual rights holders need to tap into the economies of scale of these collectives given this micro-transaction economy. The PROs (performing rights organisations), mechanical and neighbouring rights collectives are growing and acquiring new businesses themselves. However, at the same time, artists and independent labels have been empowered due to the necessity occasioned by the decline in the old music industry models. As a result, we now see more consolidation of power in their hands through the mechanism of banding together into their own independent associations.