Finance Models for WIPO IMR
The investigation of financing models of the IMR requested by the Consultative Committee at the Cannes meeting in January is underway. While the modeling is not yet complete, we can report back with some information on the processes and assumptions being used to base the modeling exercise on.
IMR Financing Models Assumptions
- Financing models must be congruent with the Basic Principles
- Revenue from the IMR must cover:
- The operation costs of the IMR (staff, G&A, maintenance of the existing system); plus
- An amount budgeted each year, in consultation with the sectors, for enhancements to the system based upon stakeholders’ needs; and
- An additional 10% of the sum of the amounts in (a) and (b) to be employed to assist developing countries and least developed countries’ stakeholders in connecting to the IMR so they can build consumer-facing services (in the case of licensees) and share information on their rights with the rest of the world (in the case of licensors).
Potential Scenarios under Consideration
We are currently “crunching numbers” based upon the following scenarios:
- Those who contribute rights metadata and those who access the system both pay fees to do so, it being assumed that there is no ‘double charging’ in such a case. The basic concept is that those who benefit most pay more than those who benefit less;
- Those who access data (searchers) pay for doing so, while those who contribute data do not.
Additional possibilities and assumptions to consider with respect to either model:
The best way to encourage contributions of metadata is not to charge for them.
- Fees could be based upon “net searches” – meaning, if you search more records than you contribute, you pay based upon that excess number of searches, while if you search less than you contribute, you carry a credit forward.
- Financing could be based on a subscription model (a fee for an unlimited number of registrations or searches in a given period of time) or on a pay per intervention (registration/search) model, or a combination thereof.
- Non- commercial searches should in principle be free of cost. “Non-commercial” would best be identified as a single person using a web form for lookup of their favorite song, to see what recorded versions of that composition were known by the system – for example.
- Would any automated search, or search via machine-language “calls’ to the system be considered “commercial” or would an element to consider be the nature of the entity doing the search?
- The Director-General of WIPO, Francis Gurry, has on several occasions stated “WIPO is prepared to set up the IMR through a public/private partnership.” As a result, our main emphasis has been on finding financial models for the running costs and not to worry about the costs of development.
Consultative Committee members are invited to propose additional questions or assumptions they would like to have considered during the modeling exercise.
Additional Background Work Underway
While it is not directly a part of the work requested in this phase of investigation of financing options, the IMR project team is looking into a number of different possible business models for the running costs of the system once operational.
What is outlined in the following is therefore a very short recapitulation of our endeavors and thinking and does not reflect any decisive or definitive approach to the complex subject matter of finance.
Within WIPO there are several rights-management and registration systems in place, including the PCT database for patents and the Madrid trademark system, as well as WIPOCOS, for collective management in copyright. Although insight into these databases gives us confidence about WIPO’s capabilities in handling the technological and administrative processes of large numbers of registrations in an efficient way, they are not completely analogous to the business model for the IMR.
In order for the IMR to be attractive for stakeholders to contribute their data, we have to aim at making sure that connecting to the IMR is a net benefit over remaining disconnected. There is a possible fee that can be drawn from this, the question is at present open as to whether the fee should be collected per entry (as for example some of CIS-NETs nodes do) or whether there should be a subscription fee in the other end, collected on the basis of the degree of access to the database.
Those who license music should find the IMR attractive since it will make it easier for them to find the repertoire that they want and find out where to go for licenses. At this point it may also be timely to consider whether the financing of the database could seamlessly migrate from the monetary contributions of rights holders over to the users of music.
Thirdly, permitted that the database turns out to be successful and widely in use and that the IMR is opened up to contain wider metadata on other collaborators in a piece of music (management, agents, promoters, engineers, photographers etc, etc.), semantics and related data of a more social and cultural type, a possible income from those who would find this contextual information valuable is also worth considering though this is not something that we will look into for the time being.