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.

Filed Under: australia, collections, copyright
Companies: copyright agency limited

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  1. icon
    ethorad (profile), 19 Feb 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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