Music Industry Moves to Shape Copyright Reform

Posted by: Angelica J. Simpson

April 17, 2015


197px-Copyright.svgWith the onset of Internet and streaming radio programs emerging on the scene, stakeholders in the entertainment industry have demanded change to longstanding Copyright laws of the United States. As the digital age changes faster than the laws that regulate the way we access music, those involved in producing and broadcasting the music millions of people globally listen to are demanding change to meet the needs of today. From royalties that are paid, how music is accessed, and recorded, to broadcasting licensing and digital sampling by other artists, there is a strong cry for help to address the issues that are developing. The one thing that is certain is change needs to happen, how to get there is fiercely debated.

A simple history to the background of the copyright act and its relationship to the music industry sets the stage for how the modern issues have come to light. The debate of the ability to protect authors and those who spent time using their genius to produce work has been seen since the forming of the nation. In 1787 both James Madison and Charles Pinckney submitted proposals at the Philadelphia Convention that provided for Congress to grant a copyright and patent for a limited amount of time. The reasoning for this was “to promote the progress of science and useful arts”. The first federal copyright act was developed in 1790. In this Act a copyright was granted a term of 14 years from the time of recording, with an option to renew for another 14 years if the author was still alive at the end of the first term. This copyright act covered book, maps, and charts. With addition to federal legislation on copyrights, the courts also decided the way these laws would be shaped. For example in 1834, the Supreme Court in Wheaton v. Peters ruled that the author of an unpublished work maintained a common law right to control the first publication of that work, however they did not have a right to control the reproduction that would follow. The next major revision to the copyright act would come in 1909. President Roosevelt spoke about the need for reform stating, “Our copyright laws urgently need revision. They are imperfect in definition, confused and inconsistent in expression; they omit provision for many articles which, under modern reproductive processes, are entitled to protection; they impose hardships upon the copyright proprietor which are not essential to the fair protection of the public; they are difficult for the courts to interpret and impossible for the Copyright Office to administer with satisfaction to the public” to Congress in 1905. The next major revision came in 1976, which sought additional reform to prior laws is the primary basis for copyright law in the Unites States today.

The Copyright Act of 1976 has been amended with additional provisions as the years have progressed to attempt to shape the law to the best way possible. The act contains provisions for the rights or copyright holders, as well as exemptions to their right such as the “fair use doctrine. Under section 102 of the Act, musical works, is included. The Act proves that “original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device” (and further defines musical works as a work of authorship). The Act provides 6 exclusive rights to those who own the copyright including, the right to reproduce, to create derivative works, to distribute copies, to perform the work publically, and the right to display the work publicly. In 1995 the act was amended to include the sixth right to perform a sound recording by means of digital audio as well. The Act also provided for the duration of the copyright, which was extended to the life of the author plus 50 years.

It is also important to take note of the different stakeholders in this battle. Songwriters/publishers, musicians, major record labels, satellite radio, digital music streaming services, and terrestrial radio stations all have skin in this fight and want reform to come (albeit in different forms). With Congress looking to completely overhaul the U.S. Copyright Act, the one thing they all agree on is reform is needed. Due to fact that laws and legalities are outdated and complicated, the stage is set to see major changes coming to the industry.

Songwriters and publishers are generally thought of as the individuals that write songs and/or the companies that publish them to be shopped around to artists and labels. These two groups have joined forces joining one of three performing rights organizations ASCAP, BMI, and SESAC. These organizations take on the task of colleting the royalties that are paid and then distributing them to the members. Their main goal is to maintain their ability to collect royalties with the changing format in which music is played and streamed.

Musicians, the seemingly obvious player in this game, are fighting for different aspects of change. First they are seeking a way to have terrestrial radio pay royalties to the musicians directly, not to the publisher’s organizations. Further with the change in the way music is purchased and available, many musicians are seeking for a way to make up for the lost revenue of traditional album sales. Taylor Swift in a bold move pulled all her music from the streaming service Spotify, claiming she feels there is an inherent value in art, and streaming music services devalue that art. This is the main focus of their goal in changing the copyright laws. In addition they are seeking to extend federal copyright protections to music that was recorded prior to 1972. In a $100 million dollar suit, the band the Turtles are seeking to have their music covered under the copyright act. The challenge here is if music recorded prior to the February 15, 1972 addition of sound recordings to the act, is covered and entitled to the same protections. Musicians argue that their music naturally would be entitled to protections while streaming sites such as YouTube claim the music is in the free domain and they are not required to pay royalties to songs recorded prior to this date. As one SPIN article notes, this isn’t the only battle to grant royalties rights to musicians, however it is one making its way through the court system now, and should be followed. A ruling in this case could mean major changes to the industry.

The big three record labels, SonyMusic Entertainment, Universal Music Group, and Warner Music Group are closest involved in this fight as well. While it may come as a shock to many, the musicians are not the ones who own the copyright to most of the music they produce. The record companies are those that hold the rights. Because of this they are seeking reform that would mean more money directed at them. From royalties paid from AM/FM radio and streaming sites, to an extension on the length of the currently held copyrights.

Pandora, satellite radio, and Spotify as well as other streaming services are the newest members of the fight. It is 17 USC 801(b)(1)(D) of the Copyright Act that set the first battle for streaming music services. Advocates here calling for the Act to be reformed feel section 106 of the Act was designed giving to much protection of the copyright holder and weaken fair use. Other believe that change is necessary for reasons of allowing the emerging technologies to profit and develop. “Services like Pandora already pay over 60 percent of their revenue in licensing fees while others pay far less for delivering the same service. As a result, services like Pandora have been unable to see profitability and sustainability is already in question”. In addition it is reported that Spotify pays 70 percent of its revenue sales to record labels. That amount was reported at $1 billion this past year alone. With the music industry rapidly changing, these services are held to laws that regulated the old way music was distributed, and for this reason players are seeking reform to address the way things are today. Further complicating the Internet radio debate is the different categories and business models. From non-interactive to interactive and educational radio, temporary services, bundles services and even more. And each of these categories pays a different licensing fee, and conducts their business a different way. With traditional radio royalties were paid each time the song is played, or “performed”, with Internet radio, that model doesn’t work as well.

At the 57th Grammy Awards Recording Academy president Neil Portnow announced the creation of the Creators Alliance, a group designed to bring together all of the players in the music industry to lobby for copyright reform. The idea behind this collation is two fold, to advise policymakers on how to establish fair rates and to educate those in the industry how to lobby for their rights and what they need. The collation is mixing famous performers such as Alicia Keys, songwriters like “BabyFace”, and produces like Dr. Luke to show that this group can work together to bring about change in their industry. The United States Copyright Office is listening. They issued a report in 2015 claiming, “There is a widespread perception that our licensing system is broken. Songwriters and recording artists are concerned that they cannot make a living under the existing structure, which raises serious and systemic concerns for the future. Music publishers and performance rights organizations are frustrated that so much of their licensing activity is subject to government control, so they are constrained in the marketplace. Record labels and digital services complain that the licensing process is burdensome and inefficient, making it difficult to innovate.”

Perhaps working together is the answer to bring change to this industry. While the debate on how to divide royalties, create licensing, and pay the individuals involved continues to be a point of contention, the agreement on a need to reform the laws is evident. In the forthcoming years the shape and direction of the copyright laws in the United States can drastically change the music industry. Whether it will be for the benefit of those creating the music we all listen is yet to be known.


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