Overview of the copyright law in the United States
It’s an important time for copyright law in the United States as the U.S. government is conducting a comprehensive analysis of the entire U.S. Copyright Act for the first time in over 40 years. Dramatic changes in technologies and music consumption methods, along with the heavy regulation faced by music creators, have made it essential to revise these laws. Our Copyright Act was enacted in 1976, and the last major amendment to the Act, attempting to update it after the proliferation of the Internet, was the Digital Millennium Copyright Act (DMCA), enacted in 1998. Back then, the Internet was still in its early stages. Meanwhile, the United States’ two main performance rights organizations (PROs), the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI), are forced to operate under consent decrees that they entered into in 1941. Needless to say, these laws could not possibly contemplate the issues that the ever-expanding Internet and new technologies such as digital streaming services would create for the music industry.In the U.S., the music industry is highly regulated by the federal government. For example, about 75% of songwriters’ income is regulated by the government through consent decrees, rate courts, and mechanical license ratesetting th rough the Copyright Royalty Board (CRB). This has caused serious problems for music creators, who are struggling to make a living in the modern era. Remarkably, review of these laws is in full effect by four different sections of the U.S. government, with each of them conducting their reviews simultaneously and independently of one another.
The four sections of the government reviewing the U.S. Copyright Act are:
1. The U.S. Copyright Office;
2. The House of Representatives Judiciary Committee and the House Judiciary Subcommittee on Courts, Intellectual Property and the Internet;
3. The U.S. Department of Justice; and
4. The Department of Commerce Internet Policy Task Force, spearheaded by the U.S. Patent and Trademark Office.
Here’s a look at the specific roles played by each entity.
THE U. S. COPYRIGHT OFFICE
In 2013, the legislative reform process was largely jump-started by Register of Copyrights, Maria Pallante, who delivered a speech at Columbia University, followed by testimony before the House Judiciary Subcommittee on Courts, Intellectual Property and the Internet and a Columbia Journal of Law & the Arts article entitled “The New Great Copyright Act”, calling for extensive copyright reform. The speech, testimony, and article were all forward-thinking and inspiring. From the onset, Register Pallante spoke about the importance of keeping creators’ interests at the forefront of the discussions:
“Congress has a duty to keep authors in its mind’s eye, including songwriters, book authors, filmmakers, photographers, and visual artists. Indeed, ‘[a] rich culture demands contributions from authors and artists who devote thousands of hours to a work and a lifetime to their craft.’ A law that does not provide for authors would be illogical — hardly a copyright law at all. And it would not deserve the respect of the public.”
Although the Copyright Office is currently part of the Library of Congress, many lawmakers and stakeholders are advocating for it to become a separate, independent government body. The Copyright Office, probably the most qualified government body to speak on copyright-related issues, advises Congress—the only branch of government that has the power to amend the Copyright Act—on these matters.
In February, the Copyright Office released its “Copyright and the Music Marketplace” report with suggestions for music licensing reform after two years of reviewing comment papers from stakeholders and facilitating roundtable discussions all over the country. This report is largely seen by the creative community and music industry trade organizations such as the Recording Industry Association of America (RIAA) and National Music Publishers’ Association (NMPA) as a practical and pragmatic approach to collaborating on solutions to help our business move forward.
THE HOUSE JUDICIARY COMMITTEE — CONGRESS
The House Judiciary Committee is the group of Congress members in the U.S. House of Representatives with “jurisdiction over matters relating to the administration of justice in federal courts, administrative bodies, and law enforcement agencies”. Within this, the House Judiciary Subcommittee on Courts, Intellectual Property and the Internet has jurisdiction over copyright matters. However, in December 2014, Committee Chairman Bob Goodlatte (Republican-VA) announced that going forward, copyright-related issues would be handled by the full Committee, which he will personally oversee. The Committee and Subcommittee are made up of Republican and Democratic Congress members, with the majority currently in the Republican Party. In addition to introducing legislation, they solicit comment papers and testimony from stakeholders. They advise the rest of Congress, lobbying its members on their individual positions.
THE U. S. DEPARTMENT OF JUSTICE (DOJ)
The DOJ enacted consent decrees in 1941 that govern the operation of the American performance rights organizations, ASCAP and BMI. These consent decrees, which have not been updatedsince before the iPod debuted, regulate how ASCAP and BMI can license the public performance of compositions, and prohibit ASCAP and BMI from licensing these rights in a free market and obtaining fair market value. Publishers and songwriters are consistently paid significantly less than master recording owners on the exact same uses because of these decrees. For example, publishers are paid one twelfth of what record labels are paid for streaming uses. Hearing songwriters’ and publishers’ concerns, the DOJ began conducting an extensive review of the two consent decrees in 2014.
THE U. S. PATENT AND TRADEMARK OFFICE (PTO)
The PTO, which falls under the Department of Commerce, advises the President of the U.S. directly on copyright-related matters. Many creators and music industry trade groups are upset by this, believing that the PTO should stay out of copyright issues, leaving this area solely to the Copyright Office. Attorneys from the PTO, National Telecommunications and Information Administration (the NTIA), the National Institute of Standards and Technology (the NIST), and the International Trade Administration (the ITA) make up the Department of Commerce Internet Policy Task Force (the Task Force). The Task Force issued a “green paper” in 2013 which was widely perceived by the creative community and their applicable trade organizations as hostile, aggressive, and nonsensical.
LEGISLATIVE DEVELOPMENTS IN 2015
2015 has already seen several major developments in the legislative arena: First, as stated above, the Copyright Office released the “Copyright and the Music Marketplace” report in early February after studying these issues for years. Second, at the time of this publication, the Department of Justice is attempting to conclude its study on the modification of the ASCAP and BMI consent decrees, and news of their expected recommendations has been recently reported in the press. Finally, the House of Representatives has begun unveiling copyright reform legislation, re-introducing the Songwriter Equity Act in February, introducing the Allocation for Music Producers (AMP) Act in March, and announcing the Fair Play Fair Pay Act in April.
THE SONGWRITER EQUITY ACT
The Songwriter Equity Act was first introduced in the House by Representative Doug Collins (Republican-GA) in 2014 and re-introduced by Rep. Collins in February 2015. The Act removes certain restrictions on the evidence that the rate courts can consider in rate-setting proceedings (such as the ongoing rate dispute between Pandora and BMI), and requiring the Copyright Royalty Board to set rates that reflect a willing buyer, willing seller standard for mechanical rate-setting proceedings.
THE AMP ACT
In the United States, SoundExchange collects digital sound recording performance royalties. The Allocation for Music Producers (AMP) Act would codify SoundExchange’s current, voluntary practice of paying royalties directly to music producers upon receipt of a letter of direction from a recording artist.
THE FAIR PLAY FAIR PAY ACT
Fair Play Fair Pay Act, introduced on April 13th by Representatives Jerrold Nadler (Democrat-NY), Marsha Blackburn (Republican-TN), John Conyers Jr. (Democrat-MI), and Ted Deutch (Democrat-FL), is a groundbreaking bill that tackles several huge issues for recording artists in one fell swoop. One of the biggest issues addressed by the Fair Play Fair Pay Act is the introduction of a sound recording public performance royalty for AM/FM radio broadcasts. In the U.S. (which makes up approximately 33% of the global music market), artists and producers do not receive public performance royalties when their recordings are played on terrestrial radio. There are only a few other countries that do not pay a sound recording public performance royalty, including China, North Korea, Rwanda, and Iran. Besides the domestic royalties denied to our recording artists, this costs the U.S. up to $100 million in foreign revenues each year as well; because the US doesn’t pay sound recording public performance royalties for terrestrial radio play to foreign artists, foreign countries do not pay these royalties to our artists.
The Fair Play Fair Pay Act would finally implement this right for American recording artists, bringing us up to speed with nearly every other country and opening up this important revenue stream. Radio broadcasters are opposed to this aspect of the bill because they do not want to pay these royalties. One argument they raise is that a new royalty will cripple smaller broadcasters; however, the Act addresses this by requiring radio stations with under $1 million in annual revenues to pay a maximum of $500 per year, and capping the amount for non-commercial stations at $100 per year. Broadcasters also decry this bill as a “tax” on broadcasters, but that is a gross mischaracterization; taxes go to the government, whereas this is a well-deserved royalty that would go to the people making the music that allows radio stations to thrive.
The Fair Play Fair Pay Act also addresses a big disparity in the payment practices of digital streaming services, an issue first raised in the Respecting Senior Performers as Essential Cultural Treasures (RESPECT) Act, introduced in the House by Representative George Holding (Republican-NC) in May 2014. In the U.S., digital streaming services (but not traditional AM/FM broadcasters, as discussed above) are required to pay performance royalties for the use of sound recordings. But because pre-1972 sound recordings do not enjoy federal copyright protection in the U.S., digital streaming services such as SiriusXM claim that they do not owe sound recording performance royalties for their use of these works. This is despite the fact that, for example, SiriusXM has entire stations dedicated to the 1920s, 1940s, 1950s, and 1960s.
The Fair Play Fair Pay Act would require these services to pay performance royalties for their use of pre-1972 recordings. The Act would also bring digital streaming services’ royalty rates under a “willing buyer/willing seller” standard and ensure that more payments from SoundExchange go directly to recording artists rather than through intermediaries such as record companies.
ABOUT THE AUTHOR
Dina LaPolt, Esq. is an attorney at LaPolt Law, P.C., a boutique transactional entertainment law firm in West Hollywood, California that specializes in representing creators, including recording artists, songwriters, producers, musicians, authors, writers, photographers, actors, and others. She is an expert at strategizing and solving complex and sophisticated legal and business issues relating to contracts, copyrights, trademarks, rights of publicity, and litigation.
In addition to practicing law, Dina serves as an activist for creators and celebrities in the areas of privacy, copyright, and fairness in radio, often becoming involved in legislative matters that affect the rights of her clients and advocating on their behalf. Dina has taught a course entitled “Legal and Practical Aspects of the Music Business” at the UCLA Extension Program since 2001 and served as the editor of Building Your Artist’s Brand as a Business, published by the International Association of Entertainment Lawyers (IAEL) in 2012. For more information visit www.lapoltlaw.com and follow LaPolt on Twitter at @dinalapolt or her firm @lapoltlaw.
Source: MIDEM
