I’d like to propose a new music theory. But first, to set things up, see if any of the equations below look familiar from past school days.
E = mc²
Einstein’s famous equation says that energy (E), is equal to mass (m) multiplied with the square of the speed of light (c). Einstein came up with this in 1905. He wasn’t the first to propose a mass-energy relationship (Sir Isaac Newton did in 1717), but Einstein was the first to publish it in this equation.
π = c/d
This is the definition of Pi, calculated to be the ratio of the circumference of a circle (c) divided by its diameter (d), which is always 3.14159….. This is a mathematical constant, and was first “published” in a similar geometrical statement on a clay tablet in Babylon dating back to 1900-1600 B.C. The Greek letter “π” was added around the mid-18th century.
a² + b² = c²
This is called the Pythagorean Theorem, and states that, in a triangle with a right angle, the square of the length of the side opposite the right angle is equal to the sum of the squares of the other two sides. This formula is about 2,350 years old, and is used all over mathematics.
Each of these famous formulas existed and were practiced before they were formalized in the written form in which they now exist. They were complex theories, argued over a period of time, but ultimately accepted as simple calculations which show a mathematical constant.
Okay, here’s a formula that has been practiced for decades, but I can’t find where it has yet been published, nor has it reached its total acceptance in the music industry. At least…not yet.
© = ℗
This simply says the song copyright © (Songwriters/Publishers), is of equal value to the sound recording℗ (Artists/Record Companies). In other words, the “idea” has equal value to the “expression” of that idea.
Song copyright rates were initially set under the 1909 Copyright Act, when congress defined the “compulsory license” at the rate of 2 cents. Prices for products to play music, which at that time were piano rolls, record cylinders and record discs, were left up to “fair market”. The United States tax law defines fair market as “…the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” (United States v. Cartwright). There were no restrictions on the pricing of these recorded products.
Fast forward over 100 years, and the song copyright rates are still restricted (although they have been increased to 9.1 cents), yet recorded products continue to enjoy fair market, or “willing buyer/willing seller”, price freedom. However, in certain areas that fall outside of the compulsory license restrictions, song copyrights have been negotiated for decades at the same value as the sound recording, such as synchronized uses in film, television, and commercials. For decades, where there was no physical product involved, the industry seemed okay with the idea of © = ℗.
Then came digital. iTunes, and other digital downloads, continued along the physical product balance of 8 to 1 (99 cents, with record companies receiving approximately 70 cents, and paying 9.1 cents for the song copyright). However, when Apple and record companies raised prices on many single downloads to $1.29 (their right in the fair market), the song copyright remained restricted at 9.1 cents, and the resulting ratio is more like 10 to 1. Other widely publicized digital providers have any greater out of balance ratios, such as Pandora, at 14 to 1. Even though the song copyright is not restricted in the same way for streaming (Pandora) as it is in downloads, there are still restrictions with the license entities (PROs), not to mention the licenses for song copyrights and recordings were negotiated separately, and without any consideration as to a proper “ratio” between the two. The historic anomaly of imbalance between the two continues, even though there is no physical product involved.
To be fair, a more accurate way to state the formula should probably take into account that no physical product exists. Looking back at references, the symbol ∄ means “there does not exist”, and the symbol (m) means mass, or physical matter. Adding those to the end of the new formula, it now reads:
© = ℗ (∄m) – Song Copyright equals Sound Recording if there does not exist physical Matter (or product).
I like it. This is a new paradigm, or new way of thinking, for the future of music licensing. Now, I realize there are arguments that can be made against this, such as terrestrial radio currently paying 100% to song owners, and 0% to artists and record companies. And there is the statement made by various record people that they would be willing to negotiate a different balance if songwriters and publishers would be willing to take a more equal risk in getting the recordings to the marketplace. Good points. I plan to address those arguments in the coming blogs.
Bottom line, it is clear that no one knows all the right answers at this moment in time. But, until we change our paradigm related to the value of each part, we may never see a correction occur.
Let’s prove this formula correct.
© = ℗ (∄m)
“Almost every significant breakthrough in the field of scientific endeavor is first a break with tradition; with old ways of thinking, with old paradigms.” – Thomas Kuhn
© 2013 John Barker. All rights reserved. Information contained in this Blog is of a general nature and should not be considered or relied on as legal advice. Any reader of this Blog who has legal matters related to information addressed in this Blog should consult with an experienced attorney. This Blog contains no warranties or representations that the information contained in it is true or accurate in all respects or that it is the most current or complete information on the subject matter covered. John Barker is President and CEO of ClearBox Rights, LLC.