Australian Copyright Agency Paid Itself More Than It Distributed To Content Creators

from the ah,-bureaucracy dept

One of the key problems we have with any sort of collection agency/performance rights organization/collective licensing scheme is that they introduce an unnecessary bureaucracy into the equation and, as a result, money gets redirected from the actual creators to the bureaucracy itself. It's a giant economic inefficiency that harms content creators. Case in point: Michael Geist points us to the news that the Australian copyright collection group, The Copyright Agency Limited, spent more on its own staff than it gave out directly to content creators. In 2009, it paid its staff $9.4 million, and it disbursed... $9.1 million directly to content creators.

Now, to be fair, the article buries the fact that CAL also gave $76 million to publishers "on the assumption that a proportion of this money will be returned to authors," but it also notes that it has no checks to see if that money is ever distributed. In other words, CAL doesn't actually do anything concerning that $76 million other than pass it on to other bureaucracies (not content creators) -- who might just be keeping it, rather than disbursing it. As the report notes, CAL collected $114 million last year, and can only say, for certain, that $9.1 million got distributed to actual content creators. Now that's efficient! Certainly, some of that $76 million may have reached content creators, but no one knows for sure.

So, again, we're left wondering why such a setup makes sense at all? All that's happening is that money that could go directly from fans/consumers to content creators gets filtered through inefficient bureaucracies that take huge cuts. That harms content creators.


Reader Comments (rss)

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    The Infamous Joe (profile), Feb 18th, 2010 @ 9:53am

    Clarification

    That harms content creators.

    You are obviously confused. Any harm that may come to content creators, either directly or indirectly, from this arrangement is *more* than made up by the boon to the corn farmers¡

     

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    Anonymous Coward, Feb 18th, 2010 @ 10:08am

    All I can say is, what are the content creators thinking? If anyone has the power to change this, it's them.

     

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    deadzone (profile), Feb 18th, 2010 @ 10:08am

    Heh

    Although I find it sort of hard to get as outraged as I typically do about stuff like this I still want to point out that once again, it favors those who continuously whine about the need for more and more protections because they claim that their business is dying.

     

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    Anonymous Coward, Feb 18th, 2010 @ 10:20am

    While we are on the subject of copyright, I wanted to address another argument that I think I remember seeing once.

    Someone argued something to the extent, "there is plenty of free music on the Internet, if you don't like copyright music then get free music. Allow artists of free music/works to give away their works for free and allow those who want their material copyright to copyright their material. That way we get the best of both worlds."

    I have addressed this before, but I want to add an additional problem to this theory.

    It adds burden to the rest of society. At the very LEAST it requires everyone to ensure that works are not copyright before re - distributing them in any way. This adds cost to anyone who wants redistribute works which adds cost to society as a whole and is economically inefficient, even for those who do not intend to infringe on copyright.

    Secondly, infringement lawsuits add cost to our court system.

    Thirdly (and I said this before), for those who insist that their work should be copyright, I prefer them not have that privilege and instead of creating copyright work they can do something else, hence finding another way to serve the market and contributing to economic efficiency.

    All three of these combined are enough to convince me to eliminate copyright.

    Another thing is that it may put an expensive bureaucracy, that taxpayers pay for, in place to enforce copyright laws and perhaps even invade our privacy and restrict our behavior just to enforce copyright. We may not be allowed to create efficient peer to peer networks, or cheap/free and efficient music, file, and information distribution networks (like Napster was before the RIAA destroyed it with their selfishness), because such networks maybe used to infringe. Or we may have our communications monitored and our privacy invaded just to enforce copyright. Companies, like Google/Youtube, may restrict user content or block user content on copyright suspicion just to avoid lawsuits (or they may not offer certain services in fear that others will use such services to provide infringing material and Google will be blamed) and this may make the process of distributing non copyright material more expensive and burdensome and less efficient. This hinders innovation in fear that such innovation may get someone in trouble for providing a useful platform that can incidentally be used to infringe, even though there is so much utility from such platforms without copyright laws.

     

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      Anonymous Coward, Feb 18th, 2010 @ 11:30am

      Re:

      I prefer them not have that privilege and instead of creating copyright work they can do something else
      Privilege? Since when did having the ability to do what you want with your creation become a privilege? It is the right of the content creator to publish it in the manner that they see fit. It is not your right to have free access to any content you desire. This generation of entitled babies is exactly what is wrong with the system. This makes no claim about the economic sense of any business model. The free market will eventually be the decision maker in that fight.

       

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        Anonymous Coward, Feb 18th, 2010 @ 11:38am

        Re: Re:

        "Since when did having the ability to do what you want with your creation become a privilege?"

        They have a right NOT to create, whether they want to create or not is their right. Once they distribute their work to the public it is not their right to control what others do with it, that's a privilege, and UNOWED privilege, one that others, including taxpayers, are not morally obligated to grant or to fund the enforcement of such privileges.

        "It is the right of the content creator to publish it in the manner that they see fit."

        It is their right to decide if they want to publicly publish it or not. It is NOT their right to tell others what they can and can't do with it once published. It is NOT their right for them to create expensive government bureaucracies that taxpayers must pay for to enforce unowed privileges.

        "This generation of entitled babies is exactly what is wrong with the system."

        This is a generation of entitled babies, they feel entitled to an UNOWED monopoly.

        "It is not your right to have free access to any content you desire."

        No, what it is not is it is not their right to restrict my rights to such access.

         

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          Anonymous Coward, Feb 18th, 2010 @ 12:13pm

          Re: Re: Re:

          so what you are saying is that if I don't distribute my music in a way that you see fit, then I no longer have the right to distribute my music?

          Nice logic, comrade.

          I don't agree with the system anymore than anyone else does, but I don't agree with dictating what others can do with their creation.

           

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            Chargone (profile), Feb 18th, 2010 @ 1:25pm

            Re: Re: Re: Re:

            actually, no. he's saying that if you don't distribute your music in the way people want, you have no right to stop Anyone Else from distributing it, so far as i can tell.

            you can still distribute it all you like.

             

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            Anonymous Coward, Feb 18th, 2010 @ 9:51pm

            Re: Re: Re: Re:

            "I don't agree with the system anymore than anyone else does, but I don't agree with dictating what others can do with their creation. "

            They can do whatever they want with their creation, but if they choose to release it to the public then they have no RIGHT to tell OTHERS what to do once they decide to release their creation to the public. If we grant such things, it's a PRIVILEGE, not a right.

             

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            Marcel de Jong (profile), Feb 19th, 2010 @ 1:01am

            Re: Re: Re: Re:

            If you write a book, and I wipe my ass with its pages... am I in any way doing anything illegal?

             

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              Marcel de Jong (profile), Feb 19th, 2010 @ 1:04am

              Re: Re: Re: Re: Re:

              I know it's a crude argument, but still, you have no right to tell me what I can and cannot do with stuff that I legally bought. That's what I'm saying with that.

              Now if I just picked the book in the store and wiped my ass with it right there, you could say that I did something illegal. :)

               

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        Anonymous Coward, Feb 18th, 2010 @ 11:40am

        Re: Re:

        "The free market will eventually be the decision maker in that fight. "

        Intellectual property is a distortion of the free market and it makes the free markets less efficient and hinders innovation.

         

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        deadzone (profile), Feb 18th, 2010 @ 12:07pm

        Re: Re:

        You appear to be the entitled baby.

        People create stuff all the time so what makes your creation so much more important? Anyone can create, it's how you market your creation and if people think it's worth buying that is the important part.

        I fail to see at all how your "right to publish in a manner you see fit" has been somehow taken away.

        By all means, create away and invoke your right to publish in the manner you see fit. Or, based on your thinking, keep those precious creations to yourself and never publish it because you don't have any right to do it in the manner you see fit for some reason.

         

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        Anonymous Coward, Feb 18th, 2010 @ 9:59pm

        Re: Re:

        "Since when did having the ability to do what you want with your creation become a privilege?"

        Oh? Unfortunately your keyboard manufacturer was unable to stop you from typing silly things.

         

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      Blierso (profile), Mar 24th, 2010 @ 1:50pm

      Re: copyright vs. patent

      I agree with your comments and being an inventor with several patents I have no idea why the copyright holders receive more protection than the patent holder. In the copyright case, the copyright holder receives protection for 50-100 years after they pass away. To me this is crazy. Who allowed them to pass such a law giving them such a long protection. It must have been lobbying by the copyright agency people to protect their income for 100+ years. What a Hypocrisy.
      LB.

       

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    ethorad (profile), Feb 18th, 2010 @ 11:12am

    charitable comparison?

    Perhaps one way of thinking of the collections agencies is as a charity. After all they claim to be a way of channelling money from the public to the needy (artists).

    Using the figures above, they incurred expenses of 9.4m and distributed 9.1m to creators. Their distribution rate is therefore 49%. If a charity approached you for a donation, and told you that they would actually keep just over half of your donation, I don't think you'd be too impressed!

    I've had a quick scout around the internet to see what charity comparison sites have to say about efficiency ratings:

    Charity Navigator
    - 90% of charities spend more than 65% on their purpose, compared to CAL's 49%
    - Fundraising organisations, which seem to be close to CAL, spend an average of 6.6% on admin, much less than CAL's 51%
    - Even museums, who have property to maintain, get away with only 15.5% on admin

    Charities Aid Foundation
    - Average admin spend over the last 25 years has been pretty stable at around 13-14% (although it does acknowledge that there is noticeable individual variation)

    Intelligent Giving
    - Shows average admin spends are higher than the 13-14% on CAF above, however the highest is around 25.7% which is still around half that of CAL

    Note: I've ignored the 76m that was passed on to another collection agency (albeit an internal department of publishers) as in order to distribute that there will be more expenses, so by ignoring both I shouldn't be distorting things. If you argue that the publisher's expenses will be lower than CAL's (and can they really be higher?) then you'll have to explain why CAL doesn't step out of the picture and let the publishers deal with the whole thing. And try to keep a straight face!

     

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      Anonymous Coward, Feb 18th, 2010 @ 11:48am

      Re: charitable comparison?

      now that is wonderful use of fuzzy math. The article states that it also gave $76m to publishers (for better or worse). Not being sure if the $9.1m was included in the $76m, we can recalculate both ways:

      If the $76 million did not include the $9.1 to artists:
      ($76 + $9.1 + $9.4) $94.5million total income: That would mean that their operating costs were at 10%

      If the $76 million did include the $9.1 to artists:
      ($76 + $9.4) $85.4million total income: That would put their operating costs at 11%


      Please explain to me one more time how this is worse than your examples?

       

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        Dementia (profile), Feb 18th, 2010 @ 12:22pm

        Re: Re: charitable comparison?

        Well, I think you missed something "As the report notes, CAL collected $114 million last year, and can only say, for certain, that $9.1 million got distributed to actual content creators. Now that's efficient! Certainly, some of that $76 million may have reached content creators, but no one knows for sure.

        Now, it appears to me the $million is in addition to the $9.1 million that it knows went to creators and the $9.4 it paid its staff. So tell me, where's the rest of $114 million they collected? By my calculations $9.1 million + $9.5 million + $76 million = $94.5 million. They collected $114 million. Where is the other $19.5 million?

         

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        Killer_Tofu (profile), Feb 18th, 2010 @ 1:28pm

        Re: Re: charitable comparison?

        If you factor in the rates that other agencies like the RIAA and their ilk actually pay out to the content creators, then the percents actually get worse. Those collection agencies normally pay way less than 49% to the artists. So, if you want to include that 79 mil chances are you are going to make the numbers look much less favorable for your cause. Just stick with what ethorad shows, he is trying to help you.

         

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        ethorad (profile), Feb 19th, 2010 @ 6:08am

        Re: Re: charitable comparison?

        I assumed that the 76m did not include the 9.1m they know was distributed (the article suggest that anyway, and as Dementia comments).

        To get a ratio of how efficient they are I was looking at what proportion of the amount CAL themselves spent was given to creators. In other words
        Amount distributed to creators / Total distributed + amount spent doing so

        Ignoring the 76m gives a ratio of 9.1 / (9.1+9.4) = 49%

        If we include the 76m, we need to know how much of this was distributed to artists, and how much was spent by the publishers in doing so: (9.1 + some of the 76) / (9.1+9.4+76) = ??
        Unfortunately we don't have that information. Also, if we include the unexplained amount of 19.5m (114-9.1-9.4-76) which is presumably held in CAL's bank account, we would need to know how it was ultimately spent.

        To give an example of why I'm not including the 76m, lets assume we do your calc which assumes that none of the 76m was spent on admin and it all went to creators. How about if, after receiving the 76m, the publishers gave 50m back to CAL .. who promptly returned it to the publishers. Now, CAL has still only spent 9.4m on admin, but it has given a total of 126m to the publishers and 9.1m to creators. Pass the 50m back and forth several more times and your formula makes their efficiency boost up to 100%, all without another penny being paid to creators.

        My point is there are either two cases:

        - the publishers are more efficient than CAL. In this case, more than 49% of the 76m is distributed to creators and including the 76m in the above calculation will improve the overall efficiency. However, in this case what has CAL added to the picture? The efficiency could be improved even more by passing all of the funds direct to the publisher

        - the publishers are less efficient than CAL. In this case, less than 49% of the 76m is distributed and including them would lower the 49% overall. In this case, I'd wonder why the publishers are finding it harder and more expensive to distribute to their own creators than CAL - so arguably CAL should be distributing (some of) the 76m. Plus even though CAL is doing better than the publishers here they're still not doing well compared to other fundraising organisations.

        Either way CAL on its own needs to improve efficiency, either by shutting down or upping their game. There shouldn't be a place in the modern world for extra layers of management that can be made more efficient.

        (Also I'm with Killer_Tofu in that I'm suspicious that the publishers' efficiency is going to be worse than 49% ... would be nice to see some stats to verify this if anyone has them?)

         

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    icepick314, Feb 18th, 2010 @ 11:31am

    gee...

    why am I not surprised by this?

    all those agencies "protecting" artists are just legal mafia hellbent on collecting every penny they can get...

    I have yet to see any report on RIAA/MPAA's collection going back to artists and copywrite owners...

     

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    arsebums (profile), Feb 18th, 2010 @ 3:54pm

    This is clearly a huge beat up by a junr hack who is poorly paid. If he looked in detail at CAL salaries he would find they are well below levels paid for the same skill set elsewhere.

    At around 15% of expenses to revenue CAL seems pretty efficient to moi considering what charities operate at...and a lot of their labour cost are free. As for the big dig at publishers they would be entitled to some of the revenues paid to them as book sales have been foregone as a result of the copying, but yes a proportion of the monies paid to them may be payable to the creators and may well be passed on.

    This hack has had his momentary glimpse of the sun, he clearly does not understand the publishing industry despite working in it. He would only have to check his pay slip and compare with the revenue of his publisher employer to get a glimpse of real life.

     

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    jackie aldridge, Feb 19th, 2010 @ 3:02pm

    Wait! 76 million to publishers, 9M to self, 9M to authors

    This is a scam run by the publishers. It doesn't have anything to do with transferring money to the authors.
    You may think the people running the agency aren't associated with the publishers but I'd bet otherwise.

     

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    arsebums (profile), Feb 21st, 2010 @ 4:14pm

    Listen up folks.

    1. If publishers were to collect the copying royalties they would all have to have their own assesment and collection bureaucracy or pool their resources and have one do it all for them. The first would be grossly inefficient and beyond the capabilities of most publishers....and the second is what CAL is....i.e. CAL is the most efficient option.

    2. How much of a books selling you price do you reckon an author gets ....a couple of bucks maybe or 10% of the selling price. All authors are on differing deals with their publisher - many/most get paid an amount upfront and then no royalty until sales pass 'X' amount and then a percentage of the remainder. Ergo the authors/creators are not entitled to 100% of the revenues from a foregone book sale.

    A collection agency (CAL or any other) cannot have control of all those individual contracts so much of the money collected is paid to the publishers for allocation on a case by case basis. Remember a lot of the authors are overseas based and so are the publishers which adds to the complexity.

    As I have said before I do not work in the publishing industry - I do have an author friend and am aware of the contractual arrangements in the industry.

     

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    john walker, Feb 21st, 2010 @ 7:06pm

    The report from the Australian newspaper, of the actual reality of CAL’s behaviour is at stark variance with CAL’s Annual report. In CALS annual report CAL claimed to have paid 40 million to publishers , $25 million to journalists , $20 million to academics and about 7 million to “other authors”.

    In truth it paid $80 million +, to publishers.

    CAL is paid a lot of money to do bugger all.

     

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    john walker, Feb 21st, 2010 @ 7:39pm

    CAL is an 'agency' whose 'services' are a mandated by law; it is a compulsory monopoly.
    No rightholder in australia , if they are unhappy with CALS management style, can make alternative arrangements with a more competitive service provider.
    Cals annual gross is of the order of 150 million. It 'distributes' aprox 100-1010 million.
    CALS effective 'cost' is higher than stated. CALS fixed transaction cost is $50, thus the many royalties of less than about $150 that it collects can not be delivered. And CAL can only pay to its members; aprox 13,800, Money owed to the 20 million Australian non members can never be paid out.

     

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    john walker, Feb 21st, 2010 @ 7:55pm

    CAL operates under a statutory license granted to it by the commonwealth of australia. The management practices and general behavior of Statutory License holders must be like Caesars wife ; above all suspicion. CALs devolving of its key duty : delivering the royalty to individual right holders, to third party(s) that are not subject to the strict rules applying to Statutory license holders ,is a very serious matter.

     

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    john walker, Mar 29th, 2010 @ 4:45pm

    Blierso
    "It must have been lobbying by the copyright agency people to protect their income for 100+ years"
    Spot on , 'the Money'.
    It is often overlooked that the biggest single payment in these systems is to the wages of the management of these organisations. Because these managements don't have to do real work, are protected from market forces,and have been for decades poorly supervised by governments , they have spent most of their time lobbying for increased areas to claim management fees on.

    When lobbying in 08-09 for the imposition of a mandated new 'royalty' (transaction levy) on the re-sale of artworks, CAL actually openly advocated to the government that artists like my self who did not want anything to do with the scheme , should be force to pay them a fee for.. non -service

    Copyright is an individual right of control of usage.
    When the right of collection is compulsorily transfered by Government mandate to a power of groups it ceases to be a copyright, it becomes a form of tax.

     

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