[by Derek Slater] Of the many issues discussed here at FMC, licensing musical compositions and related reform of the Copyright Act are among the most important. The implications of legislative change are enormous for the nascent online music industry as well as development of emerging and future tools and services. The day’s skinny: potentially revolutionary reforms proposed by Register of Copyrights Marybeth Peters are essentially on ice, and, despite numerous legislative hearings, a solution is still not in sight.
Register Peters put forth a proposal in June that would consolidate the licensing structure, so that the current performing rights organizations (PROs) like ASCAP/BMI/SESAC would transform into Music Rights Organizations (MRO) and become a “one-stop shop” for performance, reproduction, and distribution licenses. The current statute-set compulsory mechanical license would go away, but she suggested that her changes would provide the necessary incentives for collective blanket licensing of all three rights for all musical compositions in a given MRO’s catalog.
At the morning panel, Peters said this proposal basically was rejected by all involved parties. (That reflects yesterday’s response from BMI’s Fred Cannon, who seemed lukewarm on the idea of the PROs taking on this additional responsibility.) Both rate and scope of the reforms continue to be stumbling blocks, and she does not see a solution in sight.
At a later panel, both the online services’ and publishers’ grievances were laid out. DiMA’s Jon Potter scoffed at publishers’ request for excessive rates for online licensing and balked at attempts to get Congress to set the rates, rather than simply define the rights. As a matter of common sense he fails to comprehend why webcasting rates shouldn’t be benchmarked against traditional radio, or why an on-demand stream should require a mechanical license as well as a performance license.
Meanwhile, attorney Josh Wattles (not from the publishers, but speaking ably on their side for the purpose of the panel) pointed out that publishers should get to set their rates in the market; the compulsory license can frustrate market evolution, and publishers have been proficient at getting their works into differentiated markets simultaneously.
Hearings have been held over the years on this issue – you can see some of the latest proposals here. David Jones from the Senate Judiciary Subcommitttee noted benefits and flaws with all of them, but there’s no consensus, except, as Potter noted, that the current system is “screwed up.”
The panel ended with a debate between Potter and an audience member about the minutiae of what the subscription on-demand rate should include and be set at. Focusing on those details seems to miss the bigger picture: creating a licensing structure that will enable future innovation in services, as EFF’s Fred von Lohmann suggested from the audience. Even if a proposal like Peters’ will create short term problems (or at least that’s the fear), it may save us from future licensing deadlocks. As I’ll talk about in the next post, composition licensing is already controversial with respect to podcasting.
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