Copyright Office seeks more input in proceeding as it considers possible overhaul of the music licensing system.
As readers should know by now, the long-stable music licensing system may soon be in flux. Nearly every aspect of the licensing process is under scrutiny – even attack – on several fronts, and the possibility of change looms large.
Of course, you’ve got your Congressional hearings, which could lead to changes in the Copyright Act. Then you’ve got the Department of Justice review of the decades-old consent decrees governing ASCAP and BMI (remember, SESAC isn’t subject to a consent decree). And the Copyright Office (CO) is looking not only at those same consent decrees, but also at a much wider range of licensing-related questions.
With so many governmental fingers in the pie, what’s likely to get done?
A CO Notice of Inquiry requesting more comments in its “Music Licensing Study” may shed some light on that question.
I wrote about the CO’s Study back in March. Looking to “evaluate the effectiveness of current methods for licensing musical works and sound recordings”, the CO solicited public input. In response, it received 85 comments. (Click here to read any or all of the comments submitted. For a taste of eloquent passion not often found in stuff submitted to government agencies, you may want to check out the comments of songwriter Michelle Shocked.) The CO also held roundtables in Nashville, New York and Los Angeles.
Those preliminary opportunities for input identified “a number of significant issues” that the CO now believes “merit additional consideration.”
First up: the ASCAP/BMI Consent Decrees. Two federal courts have recently held that, under the terms of the decrees as they now stand, music publishing companies (like SONY/ATV) representing individual songwriters cannot withdraw “selected rights” of their copyrighted works from ASCAP and BMI representation. In other words, SONY/ATV and others can’t pick and choose which rights they’ll manage themselves and which they’ll delegate to ASCAP or BMI. So, for example, publishing companies cannot tell ASCAP or BMI that “we’ll use you as the clearinghouse for public performance rights via radio and television, but we’ll deal directly with anyone who wants to perform our songwriters’ content digitally or use their songs in movies”. When it comes to copyrights and ASCAP/BMI, it’s all in or all out.
I identify SONY/ATV here because they’re one of the companies that have recently announced that, given the “all in or all out” dictate, they’re considering the “all out” option. That would mean withdrawing their entire catalogs from ASCAP/BMI and, instead, taking care of all copyright licensing in-house. Such a move could send shock waves through the music industry and change the way everyone using music does business.
Many CO roundtable participants expressed concern about that possibility and questioned its implications. How would such “direct” licensing between the publishing companies and the users work? If large publisher withdraw from ASCAP and BMI, which effect would it have on smaller publishers and individual content creators. How would such a withdrawal affect the royalty distribution practices of all performance rights organizations (PROs, i.e., ASCAP, BMI and SESAC)?
The second big ticket item: the future of the mechanical reproduction license. That’s the license, found in Section 115 of the Copyright Act, which requires payment to songwriters for any mechanical reproductions of their works. (“Mechanical reproductions” can range from production of a cover song to creation of a digital download or utilization of a song in a podcast.) This conversation seems headed in one of two directions, both involving elimination of the Section 115 license. Under the first possibility, the current system would be replaced with direct negotiation between the user and the copyright owner (as is currently the case when someone wants to “synchronize” a musical work to audio in a radio commercial or video in a film or TV show). The second possibility: creation of an industry-wide sharing system that would allocate, pursuant to a certain formula, the royalties for any use of a song between both the owner of the musical work and the owner of the sound recording.
A third issue of likely interest to many of our readers: the Section 112 and 114 license applicable to the digital transmission of sound recordings, a/k/a “streaming” or “webcasting”. While most roundtable participants seemed to think these licenses work well, many suggested tweaks to the ratesetting system.
Finally, many commenters expressed a need for standardization of the data relating to the ownership and identity of musical works and sound recordings, the International Standard Recording Code (ISRC) and/or International Standard Musical Work Code (ISWC). Such standardization would ideally make it easier to distribute royalties to songwriters and recording artists.
Faced with all this input, the CO is now seeking even more. In general, it’s looking for information on whether and how existing music licensing methods serve the music marketplace, including new and emerging digital distribution platforms. The Notice of Inquiry poses nine specific questions (summarized below) relative to the following four general subject areas:
Data and Transparency: How can the collection of information about musical works and sound recordings be improved? Are there ways to incentivize private actors to gather, assimilate and share reliable data? What identifiers are the most widely used now, and could they be more universally adopted? How can the transparency of this process be enhanced?
Musical Works: What would be the logistics, complications and implications of publisher withdrawal from ASCAP and BMI? Are there ways to improve the administration of PRO distribution now, particularly in view of that fact that songwriter income appears to be decreasing at a time when the PROs are claiming record high revenues and distribution? If the Section 115 mechanical license were to be eliminated, how would the transition work?
Section 112 and 114 license: Can Section 112 and 114 (or other) ratesetting proceedings before the Copyright Royalty Board be streamlined or otherwise improved?
International Music Licensing Models: Given the fact that various international music licensing models for the “reproduction, distribution, and public performance of musical works” differ from the U.S. approach, should the CO consider any of those other models as it continues to review the U.S. system?
(The Notice of Inquiry also includes the inevitable “catch all” question allowing for submission of any other relevant or thoughts.)
This question posed under the “International Music Licensing Models” heading seems innocuous. But is it? Could the CO be previewing changes to the Section 115 mechanical reproduction license? Or, by specifically including “public performance” (emphasized by me, above), could the CO signaling an interest in pushing hard for the implementation of a “Performance Right” applicable to over the air broadcasting?
We’ll know soon enough. All comments are due by August 22, 2014. [See update, below,] Remember, there is no real formality to this process. You have thoughts on the issue, send them electronically via the Comment Page found at http://www.copyright.gov/docs/musiclicensingstudy (where you can also see the comments filed in the first go-round).
[UPDATE: On August 1, the Copyright Office announced that the deadline for comments has been extended to September 12, 2014.]