As previously reported, Register of Copyrights Marybeth Peters testified before the House Subcommittee on Courts, the Internet and Intellectual Property and set forth a proposal to revoke the statutory compulsory license for making and distributing phonorecords of non-dramatic musical works.
The statutory compulsory license is a boon for recording artists, because it allows artists to record new versions of any previously recorded song for a set rate. Recording artists have the benefit of access to non-dramatic musical compositions and do not have to deal with a hold-out problem. Songwriters can not choose not to license their works and are precluded from attempting to extract a higher price.
The Register’s proposal appears to still effectively eliminate the hold-out problem, but may allow a Music Rights Organization (MRO) to extract a price premium for licensing covers of especially popular songs.
Section 115(a)(2) of the Register’s proposed statute reads:
A music rights organization that offers a license to perform one or more nondramatic musical works publicly by means of digital audio transmissions shall offer licensees use of all musical works in its repertoire, but the music rights organization and a licensee may agree to a license for less than all of the works in the music rights organization’s repertoire.
So, the MRO can offer rights to cover all musical works in its repetoire for a set rate, but exclude certain “premium songs” from that rate and set a higher rate for those works. A recording artist might be able to cover “Octupus’s Garden” or “More than a Feeling” at the “standard rate,” but be forced to pay a premium rate for “Yesterday” or “Since U Been Gone.”
Is such price discrimination necessarily a bad thing? Not necessarily. After all, this is allowing a regulated market to develop. The statutory compulsory rate requirement prevents songwriters from capturing all the value in the copyright. Why shouldn’t the writer of a popular song be able to charge a higher price?
The Register’s proposal limits some of the harshest potential effects for recording artists. By requiring that a license is made available to any one artist on the same terms available to all others, this proposal should be sufficient to prevent a MRO from creating discriminatory access to songs.
Perhaps this proposal does not go far enough. It replaces a compulsory license with a highly-regulated market. But there is no quid for the recording artists’ quo. Recording artists still have legislatively granted access to non-dramatic musical compositions, but there is no corresponding right to access to sound recordings for samplers and other artists who create music based on other recorded works. The recording artists have the benefit of the statutory scheme providing access, but have no corresponding requirement to grant access.
Other reactions and cross-blog discussions:
Cathy Kirkman, Silicon Valley Media Law Blog: More on proposed 21st Century Music Licensing Reform Act: “The legislation could be called the ‘MRO Empowerment Act of 2005’, as it benefits the music rights organizations (MROs) by legislatively entrenching them in the role of collective licensing bodies and eliminating their antitrust constraints. Licensees of music rights would benefit from one-stop shopping for licenses of digital audio transmissions, but they are severely disadvantaged by the elimination of the compulsory license and statutory rate ceiling.”
Ernest Miller, The Importance Of: Forget Grokster? A Recording Industry Bombshell from the Copyright Office: “Wow. My jaw dropped when I read the announcement. Essentially eliminate 17 USC 115. Did I already say, ‘Wow’? This would be a radical and, in my view, welcome change in copyright law. I have long been a critic of the mechanical reproduction compulsory.”
The 463: Bigger than Grokster? “This is big because regardless of what comes out of all the sound and fury in the post-Grokster world, we’re eventually going to need to come back down to earth and find ways for users to enjoy content and fairly pay for it. The Copyright Office may have started leaving bread crumbs for us to find this end goal.”
Lawrence Lessig: The Register wants reform: “Apparently the Register believes performers no longer “need unhampered access to musical material on nondiscriminatory terms.” What progress.”
Ernest Miller: Lessig on the Proposed 17 USC 115 Reform: “And, maybe, more musicians (and record labels) might favor less copyright if they didn’t have such easy access to making covers. They might be a bit more sympathetic to other artists who don’t have similar privileges and might want to clear rights for snippets of audio in a documentary, for example. I mean, why should record labels care about copyright reform? They’ve got their mandatory license and complete copyright control over the rest. They’ve got the best of both worlds. They get to copy what they want and stop people from copying their stuff.”
Joe Gratz: Lessig Gets It Wrong On Register’s 115 Reform Proposal: “The practical effect of the Register’s proposal is to force ASCAP, BMI, and SESAC (now referred to as “Music Licensing Organizations” or MROs) to offer blanket licenses for reproduction and distribution along with the blanket licenses they already offer for public performance. Access to all works licensed by the three MROs remains unhampered, and even becomes easier.”
Lessig: Wow — I said that? “My criticism was about the potential for discrimination. The Register is almost exactly right to say ‘But in determining public policy and legislative change, it is the author – and not the middlemen – whose interests should be protected.’ Almost exactly right, because in my view, we should be determining not just ‘the author’ but ‘the authors’ — the ecology of creativity enabled by copyright’s rules. The wonderful and powerful claim in the 1967 testimony is that granting fewer derivative rights to composers than we grant to, say, book authors, produces a wider range of music creativity. I find this argument to be compelling.”
Miller: “Non-Discrimination in 17 USC 115 Reform: “One of the problems with 115 is that it creates a mandatory license for the composition, but no corresponding requirement for the sound recording to be similarly licensed. As I noted, the recording companies get the best of both worlds. Complete access to any composition and the ability to exclude similar use of their sound recordings. I would probably have a much different take on 115 reform if the record labels had a “share-alike” requirement to take advantage of the compulsory.”
(Also posted at the Induce Blog)
