Julie Owens (Parramatta, Australian Labor Party, Shadow Assistant Minister for Citizenship and Multicultural Australia) Share this | Hansard source

I'm pleased to rise to speak on this Copyright Amendment (Online Infringement) Bill 2018, which is actually quite a small but sensible change to our copyright law, which seeks to protect rights-holders in a time of incredible transition.

I wasn't originally going to speak on this today, but I heard my colleague the member for Chifley speaking earlier, and I felt the need to add a little bit of nuance to the debate. I worked for the Association of Independent Record Labels, which was the trade association for small record labels. We represented about 95 per cent of the independent sector during the time of Napster. We knew Napster was coming because, some seven years earlier, a man called Jeff Paterson, who was about 19, started a business called the Internet Underground Music Archive at the University of California, Santa Cruz. That was 1992. It was a music download site that was so popular that it crashed the servers at the university, and they had to ban music downloads for quite a few years while they caught up with it. And then Napster was there from 1999 to 2001.

I wanted to say that these changes are not just about the consumer and the rights-holder. In fact, in many ways, they're not about that at all. If Napster had charged the consumer and the artists had been paid for all those transactions, it's the distributor who would have been the loser. The major owners in the music industry back then was actually the people in the middle—the distributors. As the music industry went towards economies of scale, where you made more and more money the more you produced, large distributors that were capable of shifting large amounts of products moved into the middle, and they took 60 per cent of retail—they were actually the big owners. And they happened to also be the big record companies—all the major record companies have major distribution arms, and it was the distribution side of it that was actually under threat by online trading. Even if the artist was paid, the distributor was the one that would lose.

In some ways we're in a similar situation now. We have seen a move in the music industry—and all the copyright owners, industries, and all the IP industries, for that matter—from economies of scale, backwards, to economies of scope. Economies of scale is where you reduce your cost of production by creating many more: so if you make 100,000, your cost of production goes down, compared to making one. We all know what that is, and in the industrial age economies of scale was the source of competitive advantage. The bigger you are, the cheaper you make your unit cost of production, the more you make. But, particularly with IP, we’re now moving into a world where economies of scope is the determinant of competitive advantage, and it's quite different. The old theory of economies of scope—when we were giving lectures about it in the arts industry some 30 years ago—is that if you made two or more types of goods, you could do that for less cost than making two separate goods. That's called economies of scope, and you see it in advanced manufacturing.

But, in the arts industry, you always knew that it wasn't about the goods that were made; it was about the selling of them, because in the arts industry we hadn't been industrialised. We didn't just create a product, which is a piece of art; we actually created a relationship with our consumer. We called it our fan base. What we needed to do—because we put on concerts, where you put on one night and thousands of people had to turn up—was build relationships with our market, and our market relationship was as valuable as anything. In fact, it was the thing that helped us survive.

Economies of scope, we knew, would be when you could sell two or more products to the same market, rather than have to develop different markets for each product. So economies of scope, we knew 30 years ago, would make our market the product, as the world moved out of the industrial age into what we then called the information age. We knew that the market—the people who bought your product and your relationship with them—was going to be the source of your competitive advantage.

What we have now in the online world is a whole range of new organisations slipping into the middle between the consumer and the artist and actually starting to own the relationship. They're moving into that middle space because they know—the Amazons and even, in restaurants, the Deliveroos; all of those, they all know—that, if they can collect the appropriate relationship and the data about that relationship, they can sell more products to that one market than by providing different markets for each product. It's economies of scope. It's a major change in where the economic advantage is, and we can see it happening every day.

It's not going to stop. It's actually a really interesting change. It's on its way; it's not going to stop. But, as we transition from the old model where the artist owned their relationship with their market to a world where someone else inserts themselves in the middle and owns the market, we're actually losing a significant part of the assets of the artist. We have a very difficult transition if an artist cannot actually own the information and the data on their own market, because we have someone else inserting themselves in the middle. It is really interesting, and we're already hearing stories out of countries where Amazon, for example, is much more powerful about the increasing inability of artists to launch their new product, because they no longer have their fan base.

I want to tell you how important that is. When I was working for the Lyric Opera of Queensland back in the mid-eighties, the internet was kind of not there. We had a database then that I built where we knew the names and addresses of everybody who had bought a ticket to see an opera company for the last 10 years and when they bought it relative to our marketing spend. We knew, if we mailed them, how long it took them to buy. We knew exactly. We knew that, if we put up television advertising, these people were most likely to buy, so we didn't do direct mail to them. We had worked out when they bought relative to what we spent over about 10 years, and that was in the mid-eighties. We knew that our capacity to reach our market made us viable, and our capacity to reach our market was our source of competitive advantage.

So I would just say to my colleague the member for Chifley: this is a much more nuanced argument. This isn't just an argument about the copyright as we know it now; it's an argument about the value of the data, who owns it, how it's created and how it's managed. The whole structure of the viability of artists is now changing. Some of the change will be for the good; some of it won't.

Even back in the days when the internet was very early, we brought out Jeff Patterson. I brought him out. I ran a national conference on music in the internet in the early nineties, and we brought two people. One was Jeff Patterson, who'd started the Internet Underground Music Archive. He looked like a child. He was 19 years old, and he created this thing that crashed the entire US internet. And we brought out Bill Kreutzmann, who was the drummer for the Grateful Dead. I did that for a really simple reason: The Grateful Dead allowed you to copyright it—to steal anything. You could take a video camera into their concert, videotape it and sell it. You could bootleg. You could take in a recorder, record it and sell it online. You could bootleg; you could do whatever you wanted. They were the biggest-grossing live band in the world because they actually used online as a way of promoting their next gig.

But what they were doing was using their online pirate network to build their fan base, which they were then able to own. So they used it in a different way. We had another young man at that time, whose name I can't recall, who had been seriously pirated in Japan and a few countries that he had been to before that. But it worked in his favour because it actually built his fan base. That's not the case for most. We need to protect copyright for artists because, for every exemption to the rule, there are many others who need that protection—and this legislation is a part of that.

This is a much more nuanced issue than we think. When the economic model does fully change and we have a completely different world where economies of scale are not it—where economies of scope and your relationship with your market and your ability to know and reach that market is the entire source of competitive advantage—we want our creative industry to still be there. We don't want it to be knocked out on the way because we failed to adjust our laws to provide them protection through the transition. At some point in the future—and it won't be far away—we're going to have a very serious discussion about the nature of copyright and the nature of protection and the nature of things of value. What is of value in a post-industrial world? We're going to have a very serious conversation about it. For the moment, this amendment, which seeks to protect the rights of copyright owners now as this transition continues, is incredibly important because, at the end of the day, we still want them to be there when the transition is complete. Thank you.

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