Rise of Web Video Means Closer Monitoring by Music Rights Owners

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As the popularity and profitability of web video rise, rights owners and others are closely monitoring the integration of copyrighted music in online programming and advertising.  Don’t let your productions get caught in the crossfire; Affix offers solutions. The promise of the Internet becoming a home’s video hub is close to being realized. 60% of people between the ages of 18 and 29 are either leaning towards or are seriously considering giving up paid television.  Video is slated to exceed 91% of global IP traffic by 2014.  With high connection speeds, seemingly unlimited bandwidth, and higher resolution computer screens than TVs, the Internet is at the helm of programming, and its quality gets better everyday. Sites like Hulu, Vevo, and Netflix bring the high-quality programming of paid television w are used to, and networks are now developing original online programming, in addition to nascent offerings of simultaneous online streams of their TV broadcast wares.

It’s not just major corporations who are raising the online programming video bar; small business and individuals are contributing content, as well.  Small businesses are harnessing the Web to get their messages out from Vblogs to video tutorials. In other instances, small business publishes the content while individuals create it.  The online video portal Funny or Die launched with five employees in 2007 with both original and user-generated content (“UGC”).  In a testament to the power and profitability of online video, their first video received over 70 million views, leading to venture funding from Sequoia Capital later that year and an HBO partnership in 2008.  (cite) UGC is the most pervasive new media trend; there are over 170 million blogs on the Internet, and as of May 2011, YouTube claims over 48 hours of video is uploaded to its site every 60 seconds, a 37% increase over the prior 6 months.

With increased quantity of online programming comes viewers, and with viewers comes advertising.  Revenue from online advertising spiked to a new high in the first quarter of 2011, a gain of 23% over 2010’s first quarter numbers and a trend that spotlights the shift of advertising dollars away from traditional media and toward the Internet.  Today’s technology allows advertisers today to better employ video and rich media online.  As a result, interactive marketing agencies have begun to grab a larger slice of corporate advertising budgets, and traditional agencies are striving to boost their digital marketing capabilities.  Small businesses are taking advantage of online video advertising, too, with over 25% now using video on their homepage.  Production companies have sprung up just to service the web video needs of small companies- from more formal corporate identity pieces to external/internal marketing pieces.

Music has always been a major component in good TV programming and advertising.  Online video is no different.  Engaging video requires quality music in its soundtrack. Today, viewers don’t give online video a pass on quality just because it is “online”; they now demand similar quality as broadcast.

Original online video content faces some unique challenges in its use of music.  Though additional resources are now being allocated to online content, production budgets are still typically a small fraction of their TV counterparts.  Record labels and music publishers licensing their music for the Web have yet to fully reconcile with the reality of the significantly lower music budgets and tight deadlines of online content producers. Licensing directly from independent artists can offer the quality that the content demands, as well as cost savings in terms licensing fees, but identifying and finding the owners and negotiating with all the rights holders can easily negate the savings. Additionally, smaller content producers may not have the resources, personnel or expertise to perform the nuanced rights clearances necessary to license commercial music for their online productions. Some producers have instead turned to one-stop stock music offerings for their affordability and ease of licensing, but with quality music an increasingly important component, these are not an attractive alternative for serious content.  Given the challenges, content producers as licensees and music owners as licensors often find that the time, effort and money necessary to properly license quality music for online productions can be prohibitive for both sides.

Music licensing has never been the most intuitive business, and the legalities of using music in online video can be particularly tricky, especially for those unfamiliar with the process. The complicated nature of the process can itself contribute to infringement.  Potential licensees may lack the knowledge to even know where to start. Other times, infringement occurs because of an incorrect belief that a license is not necessary (e.g. using only small samples of the music, using for non-commercial uses, etc).  And, of course, plenty of people knowingly infringe, willing to roll the dice of not paying under the assumption they simply won’t be caught (e.g. personal use, internal business use).

Copyright infringement of music on the Web is, however, becoming easier to discover, track and trace.  The viral nature of web video means that human identification is more likely as more people see the infringing use, and today’s automated monitoring technology is highly effective and likely to get even better.  Declining overall revenues in the music industry have placed an increased importance on the development of tools to monitor and monetize performances of music across all platforms.  The music identification business is estimated to grow to $500M in 2012, and digital fingerprinting and watermarking companies, backed by heavy weights such as Phillips Electronics (Civolution), BMI (Landmark Digital) and ASCAP (Mediaguide), are being contracted by copyright owners to find and identify unlicensed uses in Internet broadcasts.  YouTube uses its own audio identification technology called “ContentID” to help identify songs on behalf of copyright owners. When ContentID finds an upload video has elements of copyright content in it, YouTube performs one of three actions dictated in advance by the copyright owner: block it, leave it up or monetize it.  If blocking has been selected, it is automatic, difficult to contest and certainly more than a simple inconvenience for video producers.  However, copyright owners can also file a separate copyright claim with YouTube that adds a “strike” to the video creator’s account.  Three infringement strikes will terminate a user’s account, and users “with terminated accounts are prohibited from creating new accounts or accessing the site’s community features.”

The law provides for much stiffer penalties for infringement should copyright owners wish to pursue them.  Infringement can lead to the threat of, or an actual, lawsuit against all parties involved.  Such parties can include everyone from the brand or video owner to the advertising or marketing agency to the production house that created the video and more.  In Grant Crowell’s excellent ReelSEO.com episode on using music in online video, IP attorney Daliah Saper paints a fairly bleak picture for those found guilty of infringement.  Properly registered copyright owners have the right to pursue not only lost profits and other regular damages, but also statutory damages.  Statutory damages can range from a minimum of $750 per infringement up to $150,000 per infringement depending on the judge’s discretion.  Winning litigants may even collect attorney’s fees.

Even more alarming are newly proposed criminal penalties for infringement.  Senate Bill 978 seeks to make illegal streaming of copyrighted works a felony.  The bill seeks to add “illegal public performance by electronic means” to the current No Electronic Theft Act felony offenses of unauthorized copying and distribution, even when infringers do not necessarily profit financially from the infringement.  Regardless of whether or not it becomes law, the bill emphasizes the seriousness by which copyright owners and their advocates are now approaching online infringement.  The bottom line is that the Internet, once the Wild Wild West of intellectual property enforcement, is becoming more tamed with real civil and criminal consequences for those who don’t pay attention.

Legally and affordably licensing quality music for online video use does not have to be hard.  Affix Music offers solutions designed to make licensing music for the Web easier and more profitable for everyone involved.  As specialists in the field, we understand new media, its music needs and its concerns.  We offer premium, independent commercial music at affordable, published rates for the most common types of web usages and can create custom licenses for clients with more complex rights requirements.  Our licensing platform allows a fast moving media marketplace  to license quickly with confidence 24 hours a day.  Price any of our music online at www.affixmusic.com or contact us at (404) 460-8562 x100 or licensing@affixmusic.com.

* Special thanks to Samantha Parvin for co-authoring this post.