Multiple-rights Deals: Live with Piracy

By Yuan Zhenfu,Deputy Director of Shanghai Intellectual Property Academy,[Copyright]

Lady Gaga is perhaps the world’s most talked female star over the past year.
She might be finally proved as a transient figure. However, Gaga represents to a certain degree the direction of the disc industry. She is the creation of the new 360 deal, or multiple-rights deal. On top of disc sales, the contract covers periphery products, even cosmetics worn by her. It seems that the disc industry needs more Lady Gagas as its traditional existence of sales generated by discs is under grave threat from rampant illegal downloads of digital music. Disc sales in the US saw a loss of more than 50% in 2009 compared to a decade ago and is suffering a continuous decline. Forrester Research statistics showed that in 2009 US music sales dropped to USD 6.3 billion against the once buoyant USD 14.6 billion in 1999.
The sharp decline is primarily a result of digital music, especially online piracy. Pirated music has always kept an upper hand over licensed versions due to its much lower price and wider sales channels.
Many companies surviving on copyrights have accepted piracy as a cruel reality. However, there is also an art in spotting opportunities in piracy. How do rights holders transform piracy into opportunities?
Oxford economist Karen Croxson pointed out that bogus products also boost sales through circulation-generated influence. Her theoretical system, “promotion-oriented piracy” has become a substitution of discount. For companies, both methods are advertising and expanding customer group. In her article “piracy economics,” Professor Jerry Kirkpatrick from Polytechnic University elaborated on the role of piracy in boosting sales. He believes that free trial use is the most efficient way to promote a new product in the marketing field. Users who receive free products will decide to purchase, perhaps repeatedly, if they find it to be well suited.
Piracy might not enhance disc sales in the Croxson way, but it does help with a singer’s popularity and brings sales through advertisements and concerts. Therefore, more disc companies have attempted to jump out of traditional disc sales and operate all the affiliated income sources they can imagine—artist’s tours, corporate sponsorship, product sales, websites, and fan clubs to suggest only a few. Andy Taylor said, “We can sign contracts with a singer on disc, sales, commercial promotion and concert agency, and provide all services. For me, this is what a 360 deal company should be like.”
Through tapping these new sources, disc companies hope to obtain a share from a singers’ income of non-traditional businesses to make up for their shrinking profits from discs. In fact, copyright money is almost negligible in some big stars’ income. Among the income of most profitable Taiwan singers in 2008, disc sales and copyright fees were very insignificant.
Apparently, under the 360 deal mode disc sale is no longer a key factor, and has been replaced by the popularity of a singer, which is directly related with financial interests in concerts, advertisements and related products. Piracy also contributes to that popularity. As Kirkpatrick summed up, a free product-wherever it is from-can always help with sales. In that sense piracy can also be counted as an excellent circulation channel.
Gaga was leading the 2009 digital music rankings with sales of 15.30 million single pieces, but actually, most of her audience obtained the music free of charge. Big Champagne, a survey company, said that people are listening to free music flows-hundreds of millions in number-offered by YouTube and other online service suppliers. Amazingly, Gaga’s music played on MySpace has reached 321.5 million times which, though not a source of direct profit for Gaga, brings value in other fields. Of course, there are also critics saying the 360 deal mode only belongs to a small number of wealthy people and big stars.
Nonetheless, the 360 deal mode indicates a necessity of more flexible profit modes against piracy pressure. We have to brace for piracy since it has become part of life. If we cannot kill it, let us just reap popularity and fame from it. IP

Member Message

  • Only our members can leave a message,so please register or login.

International IP Firms
Inquiry and Assessment

Latest comments

Article Search


People watch

Online Survey

In your opinion, which is the most important factor that influences IP pledge loan evaluation?

Control over several core technologies for one product by different right owners
Stability of ownership of the pledge
Ownership and effectiveness of the pledge