The analogy I used in my prior post deserves deeper exploration, as it addresses the elephant in the room that is the expansion of licensing revenue for the photo licensing community. There is an analogy to performing rights organizations.
In the mid-nineteenth century, a Parisian composer stopping in to a café heard a tune he wrote performed live by the house band. He refused to pay for his drink, stating that he himself didn’t receive compensation from the café owner for the use of his music, which drew clientele. There was a suit in the French courts, and the government’s decision fell to the composer—a triumph for copyright. Equally if not more important, the government instituted an office that administered royalties for all performances to copyright holders.
Fast forward almost one hundred years and you have royalty societies ASCAP, BMI and SESAC in the US, all distributing royalties to copyright owners and publishers from revenue derived by issuing licenses to public venues. By holding a license, businesses are protected from being sued by content owners, can attract clientele/traffic, and put money into the pockets of content creators who are incentivized to produce.
Today, this ecosystem is going strong. Last year ASCAP alone generated almost $1B in royalties for its members. Let’s draw a parallel.
Content on sites like Pinterest is (largely) passive. It absolutely draws traffic and engages users, but these users are not going to license an image and do not view their interaction as infringing use. It’s a lot like visual radio, but without the distribution of royalties to content owners and publishers. Where are the advertisers that theoretically provide the funds that pay the royalties?
There is a mass audience to communicate to, but no way for the aggregator to allocate advertising without being the recipient of copyright-infringement lawsuits. Hiding behind the DMCA’s safe harbor only works when you’re not knowledgeable over what you’re hosting—once you start applying ads to content, you forfeit safe harbor.
The size of the potential market for passive use is huge: just look at the number of images on the web, the growth of content, the available domains that users can interact with content, etc. If you couple that with more effective means for aggregators to monetize through advertising, it’s an incremental market to what we know is commercial and editorial licensing (or ‘active’ use, to pair with the idea of ‘passive’ use.)
The problem persists for domains like Pinterest to aggregate and monetize, and for content-rights holders to get paid. The solution might not be that far off from the royalty-society model: build a way to offer domains a general use license in exchange for a fee. The monies received from the license are then distributed as royalties to the rights holders. It’s a simple solution.
Most importantly, this is a solution based on how users behave; in fact, it’s transparent to users. It creates a common economy and bond between two often-acrimonious industries: content and technology. Additionally, it doesn’t impede on existing infringement models within the commercial space, nor traditional B2B commercial and editorial licensing.
While we watch carefully how companies like Pinterest react to safe harbor issues, it’s equally important to train our eyes on the horizon. Facebook acquired Instagram for $1B; that alone is an enormous validation for the value and power of the image, but more so how social users are engaging in content, and how imperative it is for those who monetize content and those who own content to find ways to effectively collaborate.