Will People Pay For Licenses To Share Content Via Apps?

Physicians are wearing lab coats with iPad pouches, and college students are doing coursework quizzes on their mobile phones. For a royalty collection agency, these are not just examples of cool technology but also a chance for publishers to take new bites of the licensing apple.

For publishers beset by digital anxieties, Copyright Clearance Center (CCC) has been a source of some good news in recent years. This week, the copyright broker disclosed that it collected $239 million in fiscal 2011 and that its payout to authors and publishers will be $171 million, a 10 percent increase over last year.

CCC’s efforts account for only fraction of overall publisher royalties– most of the biggest and farther-reaching licensing deals are struck between content owners, whether it’s Fox (NSDQ: NWS) or Disney (NYSE: DIS) or the NFL. But CCC, a non-profit established in 1978 by authors and publishers, is one of the largest brokers when it comes to helping institutions get occasional-use licenses to digital content.

In practice, this means that CCC clears rights for companies and universities who want to license material from academic, news or financial publishers such as Reed Elsevier (NYSE: RUK) or the New York Times Company (NYSE: NYT). In the past, this meant granting permission for colleges to photocopy an article or for a company to hand out copies of a scientific study at a training workshop. Today, it also means convincing these users to purchase additional sharing licenses for now-ubiquitous digital platforms. Of course, it is ultimately up to the users to decide whether they want to heed or ignore the copyright in question, though piracy is less of an issue with these kinds of institutions than it is with consumers on the web.

In the case of iPod-toting doctors, for instance, CCC is offering a new in-app licensing button for CHEST, a journal read by chest physicians. The button appears as a “get permissions” link at the bottom of the app. Tapping the permissions link calls to rights-licensing options and allows the user to obtain copyright clearance without leaving the app.

“We’re finding new and more valuable types of rights as we went from analog to digital,” said Miles McNamee, the VP of Licensing and Business Development at CCC. “The next step is from static to mobile.”

In the academic context, he says, this means that a college could use CCC’s website to buy rights for students in a given department to have tablet access to a Malcolm Gladwell text. McNamee sees the addition of “obtain permission” buttons to mobile devices as a breakthrough for content owners to monetize their content, especially in the high value publishing niches of science, medicine, finance and news.

The quest to squeeze institutions for additional digital licensing revenue comes with risks, however. This fall, universities north of the border revolted en masse after Canadian rights-broker Access Copyright more than doubled the royalty levy on each student. The move came as the final straw for the universities, which have long complained about being gouged when they obtain primary licenses to essential research journals. The Canadian schools have now effectively walked away from the clearing house and decided to either seek licenses directly from the publisher simply declare they are allowed to use the material under copyright law’s fair dealing exception.

The issue of how much universities should pay for digital access is also coming to a boil in U.S. schools. Scholarly publishers along with CCC are currently suing Georgia State University over its decision to make digital versions of coursepack material available to its students — essentially putting articles on the web for a limited period of time. The plaintiffs think schools should pay more to do this because more people are having access to the work than the publishers originally intended. The school, however, is arguing that, since it has bought the material already, the digital loans are a fair use.

In the bigger picture, CCC believes that new forms of electronic permissions will become a regular feature of the copyright landscape and that institutions will recognize that buying new forms of sharing licenses are a moral obligation that is also needed to pay for the creation of new content. It remains to be seen whether customers will play along or decide instead that the publishers are over-reaching.