Music Industry Players Near Reform Consensus
The U.S. Registrar of Copyrights told lawmakers Tues. it’s too early to declare victory in the war on copyright infringement after the Supreme Court’s Grokster ruling. The music industry simply can’t rely on the high court decision and strong copyright laws in the 21st century marketplace, Marybeth Peters said. Digital music firms need to be able to offer consumers what they want via one- stop shopping, a goal blocked by an outdated music licensing system, she told the Senate subcommittee charged with intellectual property (IP) on Tues. Peters reprised reform suggestions to Chmn. Hatch (R-Utah) and Ranking Member Leahy (D-Vt.) she premiered at last month’s House IP subcommittee hearing. Peters and a growing contingent of allies want to amend Sec. 115 of the Copyright Act to erase compulsory licenses in favor of collective administration techniques (WID June 22 p1).
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Industry frustrations expressed to the Copyright Office include trouble locating copyright owners to get licenses to reproduce and distribute works, procedural requirements for obtaining a compulsory license and vagueness as to what the compulsory license covers. Difficulties in licensing use of works for sound recordings in new configurations and problems created by Sec. 115’s per-unit penny-rate royalty also plague the industry, she said. Today, when online music services want to offer works that involve both reproduction and public performance, they must pay 2 middlemen for the same copyright owner, Peters said. While the 3 performing rights societies -- the American Society of Composers, Authors & Publishers (ASCAP), Broadcast Music Inc. (BMI) and SESAC -- collectively can license public performances of virtually all nondramatic musical works, the main licensing agent for reproduction and distribution rights -- the Harry Fox Agency (HFA) -- can license only a limited percentage of works, she said. That’s only a fraction of what ASCAP, BMI and SESAC can license, she added.
Following on Grokster and tougher anti-piracy efforts by law enforcement and the private sector, Congress should focus on one last burning issue for the evolving music industry -- modernizing outdated and ineffective music licensing statutes, RealNetworks CEO Rob Glaser told lawmakers: “It is time to move our 1909-era licensing system into the digital age to help legal services compete effectively with illegal services.”
There are 4 measures Glaser said lawmakers can take to “supercharge the online music industry": (1) Replace the Copyright Act’s longstanding Sec. 115 compulsory song- by-song license with a simple, comprehensive statutory blanket license administered digitally and triggered on one notice, like the performance rights licenses administered by ASCAP and BMI, and like blanket sound recording rights licenses administered by SoundExchange. (2) Declare that songwriters and music publishers deserve full-value payment for online service use of their creative works, but that the payment due when a composition is streamed be entirely in the form of performance royalties, and the payment due when a composition is distributed as a download be entirely in the form of mechanical royalties. “Double dip royalty isn’t fair,” he argued. (3) End confusion and litigation by clarifying that under the definition in Sec. 114 of “interactive service,” with regard to sound recording performance rights, Internet radio falls within the statutory license if the service hews to generally applicable programming restrictions and users are not permitted to control how much a particular artist is heard or when a particular song is played. (4) Equalize sound recording performance royalty standards so all radio competitors broadcast, cable, satellite and Internet pay the same royalty to artists and recording companies.
Meanwhile, songwriters and music publishers are in a “deep, deep depression,” Songwriters Guild of America Pres. Rick Carnes told the subcommittee. His community backs a “uni-license” proposal it believes would achieve reform while simultaneously providing greater essential marketplace protections for creators, Carnes said. The proposal seeks a rate of 16-2/3% of gross Internet subscription service revenues, with a minimum flat fee as the floor. In the end, songwriters would get roughly 50% of this percentage- based income, with publishers sharing in the other half. “Give us a raise,” Carnes pleaded to Hatch and Leahy, adding that if the industry starves songwriters, the process fails. The best way to guarantee great music is to pay songwriters a “livable wage,” he added. National Music Publishers’ Assn. Pres. David Israelite, who backs the “uni-license,” said his members would oppose proposals to impose more govt. control, be less respectful of private property rights or create a less level playing field for songwriters and publishers.
Hatch said the hearing is likely the first in a series on whether to change copyright law to speed deployment of legal online music. There’s a near consensus that Sec. 115 is outdated and, especially online, inadequately serves its intended purposes, Hatch said, cautioning that disputes still exist over what can or ought to be done. Leahy added that “digital music is here -- and it is exciting” for companies, musicians and consumers alike, but licensing roadblocks trouble him. He said the core question is whether laws intended to address player pianos decades ago can “go digital” today.