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UK Music research attempts to put value on private copies of CD tracks

By | Published on Monday 21 May 2012

UK Music

Cross-industry trade body UK Music last week published research conducted on its behalf by Oliver & Ohlbaum, which attempted to identify how much value was added to an MP3 player, smartphone, tablet computer or cloud locker service by the fact it is possible to transfer music that originates on CD onto these devices or platforms.

The survey was conducted in response to the government’s recent copyright consultation which, amongst other things, is considering introducing a private copy right into the British copyright system. As previously reported, at the moment it is technically illegal in the UK to make personal back-up copies of CDs, or to transfer CD tracks to a digital music device.

Under most other systems, copyright law allows such personal private copies to be made by default, though in many European and some other jurisdictions the music industry is compensated via a levy system, where a levy is charged on devices onto which such copies are made. Though quite what devices the levy applies to varies from country to country, and has not been without controversy in the digital era (pre-web levies were charged on blank cassettes and CD-Rs, though in the digital age should levies be applied to iPods, phones, any PC with a CD player, and what about new cloud lockers?)

Both the copyright reviews undertaken by UK governments in the last decade – so Gowers in 2006 and Hargreaves last year – have advocated the introduction of a private copy right without levy. But, while the UK music industry generally supports the introduction of the private copy right in principle, as the current government looks to make Hargreaves’ proposals law, it will lobby that the right only be introduced alongside some sort of levy or opt-in licence system to compensate rights owners, putting Britain on a level playing field with other European copyright systems.

With digial device and cloud locker operators likely to lobby against those proposals, the UK Music research presumably hopes to show that such companies have been benefiting for years by providing the tools that enable private copies of CDs to be made, even though technically such copies have been illegal to date. Once such copies are legal, some rights owners will argue, labels and publishers should be rewarded for the added-value their content brings to MP3 players, smart-phones and cloud-lockers, through some sort of Europe-style levy or licence system.

Though the device makers might argue that if they didn’t make and sell their gadgets consumers wouldn’t be able to listen to the music industry’s content at all, so wouldn’t buy any songs or recordings in the first place, so perhaps the device manufacturers should be paid for the value they bring to the record industry’s music. Actually the device makers’ PR folk are more likely to go for the much more emotive if not entirely accurate “we’ll have to add this levy onto the top of our existing unit prices, and this is just another example of the money grabbing music industry screwing over the customer”. Which will be fun.

Though whatever your viewpoint on the private copy and levy debates, the Oliver & Ohlbaum research, which was peer reviewed by Professor Ken Willis from the University of Newcastle, makes for interesting reading. The report reckons 44% of the value of a basic MP3 player device can be attributed to the ability to play music copied from CDs, which would work out in cash terms at about £21 (with the average basic device costing £47.45). It was calculated 53% of a mid-range player’s value was linked to CD tracks (so £65.17), and 32% for a top-end device (£80.00).

For smart-phones, the report says 2.5-4.1% of value can be attributed to music copied from CDs (making the cash value anything from £6.67 to £23.60), while for tablets it was worked out 6.7% of the value could be linked to CD music, resulting in a value of £33.50. As for cloud-locker services, even with those digital storage services that are not specifically focused on music, the storage of tracks copied from CDs was the second most important facility to consumers, according to the study.

For more info and lots of colourful bar charts, you can check a summary of the UK Music research here.