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Copyright/Licensing Reform Debate Heats

WASHINGTON, DC—With the release by the U.S. Copyright Office of its 245-page study, Copyright and the Music Marketplace, the lines are being drawn in the battle over compensation for music rightsholders in the digital age.

WASHINGTON, DC—With the release by the U.S. Copyright Office of its 245-page study, Copyright and the Music Marketplace, the lines are being drawn in the battle over compensation for music rightsholders in the digital age. The report, which follows two rounds of public comments, recommends sweeping changes to the current, outdated regulations.

The U.S. Copyright Office’s study examines the aging music licensing framework and makes a number of recommendations that “would bring both clarity and relief to songwriters, artists, publishers, record labels and digital delivery services,” according to a statement. “Few would dispute that music is culturally essential and economically important to the world we live in,” said Maria A. Pallante, Register of Copyrights, “but the reality is that both music creators and the innovators who support them are increasingly doing business in legal quicksand. As this report makes clear, this state of affairs neither furthers the copyright law nor befits a nation as creative as the United States.”

According to the statement, there is broad consensus across the music industry on four key points: creators should be fairly compensated; the licensing process should be more efficient; market participants should have access to authoritative data to identify and license sound recordings and musical works; and payment and usage information should be transparently available to rightsholders. But, it also notes, there is less agreement as to how best to move forward.

Two days before the report’s release, during Grammy Week celebrations in Los Angeles, Daryl Friedman, chief advocacy and industry relations officer for The Recording Academy, announced that the organization is working with independent digital performing rights organization SoundExchange to advocate for legislation to enable the direct payment of performance royalties to record producers. The Recording Academy is encouraging its members to help lobby for the producer legislation on Capitol Hill.

The Copyright Office’s recommendations address almost every aspect of the music landscape, including the existing statutory licenses, the role of performing rights organizations, terrestrial performance rights for sound recordings, federal protection for pre-1972 sound recordings, access to music ownership data, and the concerns of songwriters and recording artists. These recommendations present a series of balanced tradeoffs designed to create a more rational music licensing system for all, it states.

The report brought immediate responses from all quarters. Dennis Wharton, NAB executive vice president of communications, released the following statement: “As it has for decades, the Copyright Office proposes music licensing recommendations looking only through the lens of copyright owners. What cannot be denied is that the U.S. music industry is the envy of the world, aided by a legal framework that enables 244 million listeners to enjoy free and local radio every week. We’re pleased that Congress recognizes the unparalleled promotional value of broadcast radio, and has rejected a punitive new fee on local stations. NAB will review this sweeping report and engage both Congress and the Copyright Office as they consider policies that recognize the interests of consumers and innovators.”

Michael Huppe, president and CEO of SoundExchange, the independent agency that collects performance royalties on behalf of rightsholders, also issued a response. “We’re grateful for the diligent and thoughtful work which the Copyright Office put into this report. The report contains a wealth of ideas and proposals, all of which will surely help spur discussion and hopefully inspire movement towards a better path forward for the entire industry.”

His statement continues, “First, the [Copyright] Office is standing firm on its long-held position, consistent with that of six presidential administrations, that there is no good policy reason for the most egregious injustice in our music licensing system—that artists and labels are not compensated for the use of their work by the $17 billion AM/FM radio industry. There is simply no remaining question about this fundamental injustice. The conclusion is inescapable that there should be an AM/FM radio performance right for sound recordings in this country.

“Second, the Office reaffirms that all users of music should play by the same rules and compensate creators at fair market rates. The current system of disjointed rate standards is tantamount to picking winners and losers based upon the accident of their technology, rather than the merit of their business model.

“Third, the Office recognizes that recording artists who pioneered every genre of American music deserve to be paid fairly, even if they recorded before 1972.”

Paul Williams, president of performing rights organization ASCAP, also issued a response: “With its report today, the US Copyright Office was clear: The current music licensing system needs reform and fast. The report emphasizes how the current system undervalues musical works—something many of our members experience daily. The many proposed updates—particularly recommendations intended to make the system more equitable for songwriters— underscore yet again the inefficiency of the current system for music fans and creators alike.

“As outlined in the report, the current marketplace is strained by the 70-year-old consent decree regime and is not appropriately responsive to the free market, particularly in our new digital world. As we continue to advocate for our members in Washington, today’s report is an important step towards meaningful reform.”
U.S. Copyright Office, full report and executive summary