Dave Teh on 5 Aug 2000 06:55:56 -0000

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<nettime> Re: IP protection

mark wrote:

> On Sat, 29 Jul 2000, David Teh wrote:
> > [what about a company incorporated for the specific purpose of
> responsible
> > IP management. producers have equity and directive control over how
> > individual IP units get used, but the group creates a bulk economy
> for the
> > day to day management costs, marketing/promos etc.???]
> I'm curious to know more about what you have in mind here...
> - mark


david wrote:


i can't really give you a fleshed out answer here.  it's really still a
Nebulous Premonition that found sketchy expression in my rantings.  it's
neither complete nor polished, so excuse my repetitions and oversights.
but here's a start:

much of the Napster fall-out debate has been centred on the issue of the
artist's control of the licencing and appropriation of their works.  the
problem, put very simply, is that in order to take your IP to market in
such a way as to reach your intended audience (either by distributive
craft or by saturation) it has generally been necessary to enlist the
support of the Majors (like Big Record Companies), and in so doing
relinquish most of your rights to decide how that IP gets used (as well
as most of your return).  it is still the case that the production of an
album for the global music market, and the homework required to ensure
that it doesn't get ripped off by everyone else and to pursue those who
try, come at a cost that is simply prohibitive for any artist not called

so it would seem clear from this situation that corporate muscle is
necessary for the responsible management of IP assets.  the rise of
digital exchange in these products will certainly unsettle this
landscape, but i think we'd be kidding ourselves to think that somehow,
the Record Companies are going to wither in the white, hyperspatial
glare of the internet.  rather, those that spend too much time and money
fighting the old battles (like Napster vs RIAA) will lose their edge,
while those committed to renovating the actual nature of the products
they distribute - through greater specificity, perhaps point-of-sale
individuation, and certainly collaborative or interactive
development/enhancement of the product - will get the upper hand as the
pace-setters in the 'new' entertainment marketplace.  given the clout of
the incumbents' brand recognition, their scale, and their virtual
exclusive mini-monopolies with regard to each artist they represent, we
can assume that though their form may change, these companies are here
to stay.

now if you can accept all that, is it not clear that the answer - the
way to support and promote artistic production whilst allowing artists
to retain stronger rights over how their stuff gets used - is also a
necessarily corporate one?  it must be big enough to deal with the Big
Record Companies, and to secure through them access to mass markets; it
must be rich enough to underwrite further production by the artists it
represents as well as up-and-comers, and to absorb the odd flop; and it
must be skilful enough to manage and protect their IP, where necessary
in the old-fashioned, litigious ways.  All these things point to a
biggish company, made up of technocrats:  some legal talent, some
management gurus, some accountants, some marketing people, etc etc.  in
short, a management and consulting firm that is able to create an
economy of scale in providing these diverse services because it
represents a healthy stable with lots of IP assets to protect and

ok, so it's sounding more and more like a Big Record Company; but here's
the difference: it also has to be flexible or supple or artist-friendly
enough to want to promote the artists' rights to decide where and how
their material is appropriated and 'used' out in the world.  [the
<nettime> Napster discourse often reiterated the concern that artistic
products could be used to endorse products and causes to which the
original artist was directly ideologically opposed.]  sure, the company
has to have an interest in keeping its artists satisfied that their
works aren't being used to flog sweat-shop sneakers, addictive narcotic
soft-drinks or user-friendly handguns.  now the Record Companies do have
an interest in keeping their artists happy, which they endeavour to do
to a certain extent.  but what about a company that doesn't just have an
'interest' in keeping them happy, but instead has an OBLIGATION to do

and it is this very question that prompted my throw-away reference,
which you queried, to an 'IP management company'.  incorporate a private
company (ie, not listed, not subject to the vagaries of wider market
valuation) that employs all the technocrats needed to do these jobs for
artists.  but instead of these people acting in the interests of
financiers and big shareholders, what if they acted in the interests of
the artists?  if the artists hold significant amounts of equity in the
private company, then the managers are very practically obliged to
consult with the artist-shareholders on how to use their stuff
responsibly.  you let every artist (or their 'manager') retain the final
say in how their works are licenced, but you handle all the
distribution, revenue-gathering and patrolling work en masse.  i suppose
it's like a hybrid between the Big Record Company , the Tiny Label and
the Artist's Agent.

two major objections are usually raised when i discuss this with people:

1) that's all good and well for the Big Acts, the megastars of the Arts
industries, but what about the little fish who are trying to get a run,
need the support to make and sell an album, but don't have any valuable
IP yet as collateral?

- this is a perplexing challenge indeed.  my answer is that it will be
up to the established and influential artists (and their management) to
nurture new talent.  they will have a financial interest in adding to
the company's pool of IP assets, so they will be compelled to identify
and invest in those up-and-comers in which they see potential.  it's
much better in my view to have a group of artistic producers fostering
(and farming) new talent by reinvesting their own capital than to have
this done by Big Bad Guys who can demand virtual ownership of the
product (not just revenue streams) in exchange for giving someone a

this sort of plan is obviously contingent upon securing a set of Big
Names, conspicuous, respectable and influential artists that younger
artists will want to be associated with, and to whose fortunes they will
want to tie their own.  although the Big Name's management team is most
likely to do most of this work, i think the more you encourage artists
themselves to participate in the identification of newcomers, the better
it will work as an exercise in selective and strategic association.
after all, they know as well as anyone how the industry affects the
production of the artworks.

2) such a scheme requires a hefty round of capital expenditure to get
started.  where exactly could this money come from?

well obviously there would be a need to attract corporate and financial
sponsors from the outset.  banks or big corporations might be encouraged
to take a non-controling equity stake, but it's more likely that you'd
have to get Record Industry involvement to make the distribution issues
easier to conquer, probably in exchange for some sort of distributive
priority .  but only as minority shareholders.

but really, the bulk of the equity in the company would eventually be
founded upon the IP assets already held by the artists who agree to sign
on, and on the immediate income that can be gleaned from their names
through endorsements, licencing and the like.  it means convincing some
Big Acts that this deal is going to give them the control they want over
their products.  the copyright, publishing rights etc, and future
earnings of their products is what ends up securing the common equity
that's issued amongst the stable.  it's also what pays for the
development of new talent. each act's portion of this only has to be
worth more than the piss-weak dividends the Record Company was formerly
shelling out.

yet this is obviously a big hurdle, since it involves convincing the
Acts AND the marketplace that they need to place mercantile valuations
on their cherished IP assets, and reinvest some of that capital in
potentially risky upstarts.

anyway, that's the basic idea i had in mind.  it's kind of like moving
from a high-corporate model where the company operates in the business
of arm's-length (but total) representation and holds IP rights itself,
to a more mediated corporate structure where the company actually does
'represent' the artist, because the artist owns a chunk of the company.
[almost like going from a modern-day advertising agency back to
Rembrandt's studio - i'll put you up and help you make paintings, and
eventually YOU will be the master . . .] i also think that given the
opportunities for more direct and efficient marketing yielded by
internet technologies, a fair portion of the burden of distribution
could eventually be shouldered by the company itself at low cost,
whether the stuff is shipped or just piped through to the EndUser.

it's an outsider's solution, though.  i have no idea how the economic
mechanics, or even the legal strictures, of the recording industry would
interfere with this plan, but i think it warrants consideration
nonetheless.  so many solutions to these problems revert (or regress) to
a sort of faux-champagne-Marxist notion of collectivity and labour
unification but so few try to take the corporate bull by the horns.  i
think that if the recent morphing of the culture industry, in the wake
of an upheaval in the communications landscape, has shown us anything,
it is that the way out is to corporatise and ask questions later, or
else risk being swallowed by the Rich Convergents.  the premium these
days attaches to content, and we're always being told how IP is becoming
a new currency that has to be protected and meted out like bullion used
to be.  who better to administer this protection than a group of clever
suits who answer directly to artists?

if you can give form to any of these clouds, or wish to raise any
objections to my hasty reasoning, i would sincerely welcome your input.


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