Friday’s Endnotes – 06/22/12

June 22, 2012 · · 2 comments

How Can We Get Artists Paid On The Internet? A Chat With David Lowery — Perhaps you’ve seen David Lowery’s letter to Emily White, which lit up the internet this week. (My favorite headline in a response: Our Digital Innocence Just Died. And David Lowery Killed It…) Maria Bustillos of The Awl talked with Lowery about the piece and other issues relating to building a sustainable creative ecosystem in a digital age.

Changing copyright laws won’t solve everything — Helienne Lindvall reports on the “copyleft math” put to use by the UK’s Vince Cable regarding implementing that country’s Hargreaves Report. For example, according to the IPO, the proposed parody exemption would result in a £600m growth per year; quite astonishing in a country where the total value of the music industry is estimated “to be around £1.33bn.”

NMPA Inks Deal With Universal Music Group Over VEVO, YouTube Videos — Songwriters and music publishers will now get a cut of ad revenues from online music videos. According to Billboard: “The NMPA termed the agreement, which covers North America, a groundbreaking model licensing deal because it will allow  songwriters and music publishers to share in revenue from music videos. Up until now, while Youtube and VEVO were making money on their ad-supported services, indie music publishers had not shared in that revenue because the major labels long considered videos as promotional tools and never paid for licensing the songs used in the videos.”

Google moves to snuff sites that rip music from YouTube videos — PaidContent reports: “The company’s move against YouTube-Mp3 comes at the same time that it is spending hundreds of millions of dollars on partnerships to create new YouTube channels that will offer original programming. Google may thus be seeking to protect its investment and reassure its partners that it can control the new distribution environment. Or the dispute may signal a more permanent shift in which Google begins to adopt the outlook of a copyright owner.” Chris Castle has another take: “Always be wary of anything from the tech press that begins ‘the free ride may be ending’ because that is never true.”

Stats And Figures On 30 Years Of Sampling [INFOGRAPHIC] — Hypebot presents this look at sampling from Whosampled, a site that catalogs the pedigree of samples since their introduction in music decades ago. Most surprising: the prevalance of samples is at an all-time high, a stat at odds with much IP scholarship.

German Court’s Verdict in Kino.to Case Supports an Internet that Works for Everyone  — The MPAA offers its take on the recent conviction of the ringleader of a major German streaming portal. Said the Association, the decision “paves the way for an internet that works for everyone by clearly recognizing that those who illegally distribute content are not in business for the greater good. The Kino.tv business model worked for its operators who made millions from ads but not for viewers whose privacy was compromised and not for the many thousands of creators and makers whose content was made available for free, denying them the value of their hard work and of the economic incentive to keep creating and making it.”

Why Can’t We Be Friends? — Sandra Aistars reflects on the future of conversation in a post-SOPA world. “We all want the internet to mirror the kind of society we profess to be. One that allows us to gather and exchange thoughts online, one that supports democracy and does not threaten others with exploitation, whether they be the unwary misled by scams, children and women exploited for the pleasure of others, or artists and creators who we neglect to compensate for their work. Just as a vibrant, open and free society cannot exist without empathy for our fellow travelers and mutual respect for basic rights and privileges, so too a healthy internet society must accept basic rules of the road.”

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Friday’s Endnotes – 01/27/12

January 27, 2012 · · 10 comments

The Truth Behind Google’s Copyright-Bills Hysteria — Great piece on the hyperbole that became the norm over recent legislation. “The tech industry has demonstrated great political clout through the mobilization of its users and fan base; and the industry lobby, led by Google, will say and do pretty much anything to advance its commercial interests.”

The MTP Interview: Indie Film Maker David Newhoff — Chris Castle sits down with the creator of Gone Elvis and talks about indie filmmaking and the challenges and opportunities provided by the internet.

Wright & Diveley on Expert Agencies & Generalist Judges — When Senator Wyden announced the OPEN Act, he announced that one of its advantages was putting the adjudication of sites dedicated to piracy “in the hands of the International Trade Commission – versus a diversity of magistrate judges not versed in Internet and trade policy.” But is this an advantage? This new paper examines the general claim that administrative judges produce better decisions than generalist judges. The conclusion: “there is little empirical basis” for these claims.

Academic publishing is full of problems; lets get them right — The Copyright Librarian (Nancy Sims of the Univ of Minnesota) gives a comprehensive overview of how academic database JSTOR works, along with a look at some of the challenges facing academic publishing. Great read.

Creative Commons for Music: What’s the Point? — “Without a real enforcement mechanism, CC licenses are all little more than labels, like the garment care hieroglyphics mandated by the Federal Trade Commission in the United States … The practical value of CC seems to be concentrated in business-to-business content licensing agreements, where corporations need to take more responsibility for observing licensing terms and CC’s ready-made licenses make it easy for them to do so.”

The Summers’ Tale — Nicholas Carr rebuts recent statements by former Harvard president Lawrence Summers concerning 21st century learning. “This idea that knowledge can be separated from facts – that we can know without knowing – really needs to be challenged before it gains any further currency.”

Who is the A$%#hole? — Music information researcher Paul Lamere, who has long done exciting work in the field, remarks on yet another “enlightened” blog post in the wake of SOPA called Can we kill the music business too? Says Lamere, “James is certainly right – you can’t have a great music startup without great music, but he goes off the rails if he thinks that companies protecting themselves from theft infringement are assholes. A music startup, or any business should not be able to build a business on top of  someone else’s IP without compensating them for the use. It is easy to build a company that makes money by giving away someone else’s property. But it is not legal.”

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Friday’s Endnotes – 09/30/11

September 30, 2011 · · Comments Off

Make money online by selling pirated content? These sites do — File lockers and linking sites on their own are difficult to hold liable for the rampant infringement they facilitate. But together? “The combination of these two types of sites is like a one-two punch resulting in a knockout. They are both essential for one another to function in such a profitable manner, and man, oh, man, do they ever make a lot of money doing what they do.”

Gone Elvis Production Diary, Part 2 — The Copyright Alliance has been following indie filmmaker David Newhoff as he works on his latest project. In this part, they talk primarily about funding and costs. “So, without paying any fees for labor, equipment, or locations, my 30-minute short cost a little more than $8,000 to get in the can. And that was a four-day shoot with a very small cast and crew. If gone Elvis makes money and I want to repay those who worked on it, I’ll have about a $30,000 check to write. So, the next time you hear ‘feature film made for $5,000,’ take it with a healthy dollop of salt — and tequila!”

Why 2011 Is the Year Digital Music Broke, by the Numbers — Billboard’s Glen Peoples notes several reasons: digital sales are up substantially from last year, streaming services like Pandora and Spotify have had good years, music startups like Turntable.fm have shown early promise.

The Sims Social Facebook game promotes questionable blogging ethics — You can get 5 points if you “Steal pictures from other websites to make your blog look professional.” Wait, what?

Students shouldn’t download music illegally— Another great article from the younger generation. Like previous articles from the Harvard Crimson and the Arbiter Online, The Rocky Mountain Collegian, the student newspaper of Colorado State University, points out that there’s nothing hip about stealing music. “Now you might think you are taking money from powerful record companies, which take advantage of artists –– and this is kind of true. “Think about a young band that just got signed by a record label. If all of the band’s fans steal the album and its record sales tank, what incentive does the company have to keep a contract with the band? Do yourself a favor, support bands (especially local ones). Support the failing music industry. Support our failing economy, and don’t steal music.”

A2IM Call To Action:  Write Congress, Help Get PROTECT IP Passed — The American Association of Independent Music calls on independent musicians and labels to add their voices of support for rogue sites legislation.

7 Things I Wish I Knew about Content Theft 10 Years Ago — PlagiarismToday’s Jonathan Bailey shares the lessons he’s learned over the past decade from blogging and consulting with others to detect and stop online content theft. Very good info.

Copyright Office Rulemaking on Designation of DMCA Agents — The US Copyright Office is seeking comments to upgrade its system for keeping track of registered DMCA agents. It is specifically looking to migrate from its current paper system to an online system; it is also looking for input on how to make the system more up-to-date and efficient.

Will Google Submit “The Power of Google Adsense” to Voluntary Oversight? — Probably not, but they should, writes Chris Castle. “Not because of the moral hazard—because of the criminal hazard.  This is the group that failed seven different sting operations by the Department of Justice.  This is the group that does business with rogue sites and suckles pirates around the world.”

This Week in Law — Every Friday at 2pm, host Denise Howell talks with special guests on news and developments in the world of law and tech (the shows are archived for later viewing as well). I will be one of those guests next week, October 7th. Tune in to see why I have the perfect voice for blogging.

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Free Ride: How Digital Parasites are Destroying the Culture Business, and How the Culture Business can Fight Back

August 17, 2011 · · 12 comments

A conventional narrative has emerged of  the media and creative industries’ response to the internet and digital technology. Beginning around the mid-1990s, this story has been one of old against new: stodgy, corporate executives holding on to the past versus hip digital natives embracing the future. These technologies have rendered copyright law broken according to this story; existing media industries have failed to take advantage of these innovations, relying instead on using the law to prop up their dying business models. They have failed to adapt and sued those who have.

Casting a journalist’s eye on the past decade and a half, Robert Levine debunks this narrative in his new book Free Ride: How Digital Parasites are Destroying the Culture Business, and How the Culture Business Can Fight Back.

For example, in his chapter on the music industry, he notes that contrary to the party line, record labels had privately been in negotiations with Napster prior to their lawsuit against it. Even if the two sides had reached an agreement, it’s unlikely the industry’s fortunes would have changed much: piracy would move to second-generation file-sharing services like Limewire and Kazaa and any revenues generated from a subscription Napster would have been a fraction of what labels were getting from traditional retail channels. As Levine points out, “The labels wasted time they should have spent setting up legal online services, and they made plenty of other mistakes. But why would any company rush to turn $15 transactions into 99-cent sales, let alone ones worth nothing at all?”

The reframing of the narrative goes deeper. In his book Moral Panics and the Copyright Wars, William Patry notes that the history of copyright law has been punctuated by “copyright wars”, one of which we are in the midst of today. Patry implies that the current “copyright war” is different — previous ones had been inter-industry struggles, this one pits the interests of traditional copyright holders with the public at large.1

Levine shows, however, that this is incorrect. The ideology of copyright critics masks nothing more than a simple economic struggle between existing content producers and emerging content distributors. As Levine points out in an interview at last June’s World Copyright Summit, despite all the high-minded academic arguments of the copyleft, no one has so far acted contrary to their economic self-interest. To be fair, even those who have argued against copyright have admitted as much. At this past April’s Rethink Music conference, Lawrence Lessig said, “Ideas have nothing to do with this fight. This is a fight between the people who make money under the old system and the people who might make money in the new system.”

Free Ride is currently available in the UK and hits the shelves in the US October 25th — the companion blog is found at freeridethebook.wordpress.com. The book is a must read for creators, copyright enthusiasts, and anyone else interested in these issues. Levine is a former executive editor for Billboard, former features editor for Wired, has written for Rolling Stone and Vanity Fair, and is an all around good guy. Disclaimer: I assisted Rob with some legal research for the book.

Along with the music industry, Levine devotes chapters to newspapers, books, television, and film. Although each of these industries rely on copyright and each have faced challenges in the digital age, the similarities end there. The business models of each sector have substantial differences, and the reasons for their struggles vary — newspapers, for example, lost significant ad revenues to web sites like Craigslist. The stories of these industries are breezily told but thoroughly researched, peppered with quotes from the many people who played a role in them that Levine interviewed for this book.

But it’s those parts of Free Ride that take a critical look at the role of tech companies in pushing the previously-mentioned narrative — shaping the law, policy, and public discourse at the same time — which seem to be getting the most attention. Google’s role in particular is scrutinized — Levine details the money and people that flows from the search giant to various academic think tanks and public interest groups which push for a version of copyright law more favorable to the googles of the world. As the book points out, there’s nothing wrong with this — every business looks out for its own interests. But this side of the debate often escapes attention.

Free Ride ends with some recommendations for how the culture business can address the challenges of commerce in the face of ubiquitous copying. Levine’s greatest contribution to these challenges, however, is the book itself. By bringing together all the pieces of the post-DMCA story of copyright and reframing the conventional narrative to one closer to reality, Free Ride lends an air of hope to the idea that creative industries can thrive online.

Footnotes

  1. Pp. xix, 1 (Oxford Univ. Press 2009). [↩]
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Fall of File-Sharing

October 05, 2010 · · 7 comments

Update: the title of this post refers to the season (as in “the summer of savings!”). I inexplicably hadn’t thought of the more common meaning of ‘fall’ when I wrote it (d’oh!), and this post is not meant to imply that I think file-sharing is going away anytime soon.

This is the fall of file-sharing. With negotiations on the ACTA wrapping up and legislation like the Combating Online Infringement and Counterfeits Act making their way through Congress, I thought it would be a good time to take stock of “the state of online piracy”, as it were. Call it what you will – file-sharing, digital theft, copyright infringement – the ease and speed that unauthorized reproduction and distribution of creative works over the internet has caused content industries and creators much consternation over the past decade or so.

The recording industry, by way of example, has seen its sales cut in half in ten years:

Nearly every other creative industry has felt the pinch, from book publishers to film studios, television producers, photographers, and newspapers. But music file-sharing is often thought of as the “canary in the coal mine” of online piracy because of small file sizes and the nature of consumption habits. It’s not surprising then that the recording industry has been one of the first to respond to online piracy, and its actions have garnered the bulk of the attention in the copyright debates.

From 2003-2008, record labels engaged in a campaign to sue individuals for downloading and uploading music online. Although they filed around 35,000 lawsuits, only two of those cases went to trial. Those cases are still not completely settled.

Today, I want to take a look at where these cases stand. What do industry groups think about this strategy? Recent interviews shed some light on this question. Finally, what role does online piracy play in the dive in sales illustrated by the graph above? I sum up the research to date.

File-sharing Litigation Developments

Last year, the only two defendants to make it to trial in the record labels campaign against individual file-sharers were found liable for copyright infringement and faced considerable damages. In both cases, the damages were subsequently reduced on different grounds and the outcomes challenged. A separate defendant never made it to trial but is seeking Supreme Court review of her verdict.

The third trial for Jammie Thomas-Rasset is set for November 1. Thomas-Rasset was first sued in 2006 by several record labels for downloading and uploading music using the P2P software KaZaa. A jury found her liable for copyright infringement and awarded damages of $222,000. The judge sua sponte ordered a new trial after he determined there had been an error in the jury instructions.1 In 2009, Thomas-Rasset was found liable again by the jury, this time awarding damages of $1,920,000. A few months later, the judge reduced the award to $54,000 using the common-law doctrine of remittitur. After Thomas-Rasset rejected a settlement offer of $25,000, the record labels rejected the remittitur and opted for a new trial – one concerning only damages.

Also making its way through the courts is an appeal in the Tenenbaum file-sharing case. Last year a jury found Joel Tenenbaum liable for downloading and uploading music and awarded damages of $675,000. Tenenbaum subsequently moved for a reduction in damages. This past July, the court granted his motion and reduced damages to $67,500 – on constitutional grounds rather than under the doctrine of remittitur as in the Thomas-Rasset case. The record labels appealed the reduction; briefing and oral arguments will likely begin in the next couple months.

There are hints that the Supreme Court may take up an issue raised in a third file-sharing lawsuit, albeit one that did not make it to trial. A district court ruled on cross-motions for summary judgment that Whitney Harper was liable for copyright infringement but, as an “innocent infringer“, qualified for mitigated statutory damages of $200 per infringed work.2 In February, the Fifth Circuit reversed the court’s ruling on innocent infringement. Harper subsequently petitioned for Supreme Court review of the Fifth Circuit’s ruling, a petition the Court is currently considering.

The RIAA and MPAA Speak Out

As industry groups that represent the bulk of companies that produce and distribute movies and music, the RIAA and MPAA are on center stage of the copyright debates. Perhaps more than any other event, the RIAA member label’s litigation campaign against individual downloaders has pushed copyright law into the public conscious.

Recently, representatives of both industry groups have talked online about internet piracy, shedding some light on their reactions and approaches. In August, RIAA President Cary Sherman spoke with Vice Magazine. While it’s clear the interviewer doesn’t side with the RIAA,3 Sherman provides insights into the enormity of the problems online piracy poses to the recording industry and its response to it:

A few years ago the RIAA switched tactics. Instead of high-profile prosecutions of people who pirated music, you decided to put the onus on the ISPs. How successful was that transition?
The time had come to shift over to a strategy that would be more effective. The lawsuits were obviously controversial in the media, but the reality was that most people had no idea that what they were doing was illegal at the time of those lawsuits. We did all sorts of surveys. We tried PR firms. We did everything to look at how to begin to change the culture of using illegal P2P. We realized that 1) none of the messages resonated, and 2) most people had no idea that what they were doing was illegal, let alone thought it was wrong. That completely flipped overnight when we started the lawsuits. It made an enormous impression and we were constantly generating dinner conversations about what you may or may not do with your computer. We think it would be very good if there were more such conversations about all the other things that can be done inappropriately with a computer. So we think it had a tremendous impact by very clearly searing in the minds of the public that maybe getting all of this stuff for free isn’t legal after all.

Just yesterday, Copygrounds posted an interview with MPAA representatives Fritz Attaway and Craig Hoffman. Like the interview with Sherman, the piece covers many topics relating to the state of online piracy today. In particular, Attaway compares the MPAA’s response to online piracy with the RIAA’s:

We have used slightly different tactics than RIAA in part because of the nature of our respective works. There are certainly other reasons as well but MPAA has filed end user lawsuits like RIAA has. However, they are very expensive and we have determined that there are other routes that provide a better return; among them education, working with intermediaries like ISPs to discourage infringing activity, and one, that is probably the most important, is encouraging the development of new business models that provide legitimate alternatives. All of these avenues we are pursuing very aggressively. Because for a number of reasons RIAA has focused on end-user suits and that makes sense for them. It is absolutely necessary we would agree that there be consequences to infringing behavior. If bad behavior does not result in consequences pretty soon no one thinks it’s wrong. And that is not a good thing. So we agree that it is helpful to establish that there are consequences for infringing behavior but there are also a number of other things that can be done to discourage bad behavior and we are pursuing those as well.

Effects of Online Piracy

Surprisingly, there are some who oppose the industry’s response to online piracy, but the idea that online piracy harms sales itself. These beliefs are bolstered by a 2004 paper by researchers Olberholzer-Gee and Strumpf which concluded that the net effect of online piracy on sales is “statistically indistinguishable from zero.” The paper was widely hailed among the file-sharing crowd as conclusive proof that online piracy is justified.

However, this crowd missed the news that this past June, Olberholzer-Gee and Strumpf announced a new paper that found up to 20% of the recording industry’s decrease in sales is attributed to file-sharing. This conclusion is more consistent with industry estimates and other independent research. Other researchers, most notably Stan Liebowitz, had previously noted deficiencies in the original paper.

The reality is that a number of independent scholars have researched the effect of online piracy on recorded music sales. The consensus hovers around a 15% reduction in music sales directly attributable to file-sharing. I’ve included a summary of as many studies as I’ve come across below.

Conclusion Author Date Report
2.1% reduction of music sales Wu & Sukoco 2007 The Influence of Internet on Music Market – Revisited
13% reduction in CD purchases Michel, Norbert 2006 The Impact of Digital File Sharing on the Music Industry: An Empirical Analysis
“Lost sales amount to a 131% of the legal market” Montoro-Pons & Cuadrado-Garcia 2006 Digital Goods and the Effects of Copying: An Empirical Study of the Music Market
9-10% reduction in reduction in album sales Rob & Waldfogel 2006 Piracy on the High C’s: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students, Journal of Law and Economics
14-23% reduction in CD sales Zentner, Alejandro 2005 File Sharing and International Sales of Copyrighted Music: An Empirical Analysis with a Panel of Countries
33% of the total reduction in recorded music sales Hong, Seung-Hyun 2004 The Effect of Internet Piracy on CD Sales: Cross-section EvidenceThe Effect of Napster on Recorded Music Sales: Evidence from the Consumer Expenditure Survey
10% reduction in CD sales Paetz & Waelbroeck 2004 The Effect of Internet Piracy on CD Sales: Cross-section Evidence
20-25% reduction in music revenues Liebowitz, Stan 2003 Will MP3 Downloads Annihilate the Record Industry? The Evidence so Far
7.8-14.5% reduction in music sales Zentner, Alejandro 2003 Measuring the Effect of Online Music Piracy on Music Sales

Along the same lines as the question “does online piracy hurt sales” is the question “does managing piracy help sales.” Research suggests that it does. A study by David Blackburn concluded that a 30% reduction in file-sharing across the board would increase music sales by 10%. Analysis of the litigation campaign by RIAA record labels also show a positive benefit:

The RIAA’s litigation efforts against direct infringers have led to an initial decrease infile-sharing on P2P networks, have prompted universities to adopt copyright policies and initiate negotiations with legitimate sites, and have increased the appeal of legitimate sites. In addition,album sales increased for the first time in several years by 4.7 percent in the last quarter of 2003. In January 2004, sales showed a 10.4 percent increase since January of the previous year. Total sales in 2004 are predicted to exceed those in the last two years, although the rate of increase has slowed.

The Fall of File-sharing

The upcoming weeks and month will no doubt show a lot of movement within the law on issues relating to online piracy. Expect the copyright debates to continue at a fevered pitch. In the meantime, if you have any stories or topics you’d like to see covered here, drop a message or comment.

Footnotes

  1. Ben Sheffner, The Jammie Thomas Re-trial: Frequently Asked Questions, June 10, 2009. [↩]
  2. It is a common misconception that “innocent infringement” is a defense to copyright infringement, but that is not the case. A plaintiff in a copyright suit may seek statutory damages in lieu of actual damages. If a defendant is found liable of copyright infringement, a court may award between $750 and $30,000 per infringed work. If statutory damages are sought, a defendant can make a showing that he was as not aware and had no reason to believe that his or her acts constituted an infringement of copyright” – if successful, the court has discretion to reduce the minimum statutory damages to $200 per infringed work. [↩]
  3. The article begins, “Many, many people believe that the Recording Industry Association of America is a giant hairy tumor on the neck of the music business. Many people further feel that this disgusting malignancy has slowly spread its cancerous wrath across the public domain in recent years.” [↩]
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On top of Spaghetti: Copyright’s Complexity

September 01, 2010 · · Comments Off

Earlier this month, this picture1 made the rounds online:

The response to this diagram was typically something like, “Look at how complex the music industry is!” – and nothing more. I suppose the conclusion to be drawn is that complexity, in and of itself, is bad.

But if you diagrammed any industry, you’d likely end up with a picture just as complex. How bout the food industry? You have your farms and raw material suppliers, processors and plants, grocery stores and restaurants, institutional food service providers, plus distributors, shipping providers, warehouses, etc. All industries have some degree of complexity to them, especially if you show each link in every chain. Most participants in an industry, however, do not have to concern themselves with keeping track of the larger picture; even in the graphic above, you’ll notice that most hubs have only one or two connections to other hubs.

The world is complex, and the idea that complexity by itself is bad is a silly one. There are problems which arise in complex systems, but scratching your head at a diagram of the system is not one of them. Clarity is certainly a goal for participants within an industry, but that does not mean that one unfamiliar with a particular industry can pick up a working understanding of the entire system by glancing at a diagram like the one above. Simple systems carry risks as well. We have antitrust laws to ensure that industries do not become controlled by too few participants.

Instead of leaving things at that, I thought we could take a closer look at some specific characteristics of the music industry that make it complex.

Double Your Pleasure

Copyrights form the foundation of the music industry. Copyright law itself is complex, and the music industry has the added bonus of dealing with not one, but two separate and independent copyrights. Songs (musical works) are protected by copyright, as are recordings of songs (sound recordings, or phonorecords). In my experience, understanding this distinction is one of the steepest parts of the music industry’s learning curve. Traditionally, songs are represented by notes and lyrics on paper. A sound recording incorporates a song but is independently protected by copyright itself, though that copyright doesn’t incorporate the copyright of the underlying song. So, think about the song “Twist and Shout” and how it was recorded by the Isley Brothers and the Beatles. In this example, there are three copyrights: the song, the Isley Brothers recording of it, and the Beatles recording of it.2 The owner of the copyright on a sound recording and the underlying song may or may not be the same. In the music industry, record labels generally own the copyrights to the sound recordings while music publishers generally own the copyrights to the songs.

Once you grasp the concept of the two copyrights involved, you’re faced with another twist. A copyright is not a single right, it is a set of several rights: the right to reproduce, distribute, and prepare derivative works (I’ll get to public performance rights in a moment). And wouldn’t you know, each one of these rights can be licensed, transferred, or sold individually. Not too bad? Let’s throw in the right to public performance. The copyright in musical works includes a right to public performance. The copyright in sound recordings does not; however, it does include a public performance right by digital audio transmission.

In other words, each track on a CD has two separate copyrights involved, with two slightly different sets of rights attached to each copyright. Now that we know that we are starting with an inherently complex foundation, let’s take a brief look at how additional complexity in the music industry has evolved.

Adapting to Changes

With the introduction of every new technology, Congress, courts, and the music industry struggled at times to figure out what role copyright law played. It’s important to keep in mind that the words used to describe the exclusive rights in copyright – “reproduce”, “distribute”, “public performance” – are legal terms of art. Their meanings do not necessarily follow logic, and one can’t necessarily deduce whether a particular use is a reproduction, a distribution, a public performance, or some combination by opening up a dictionary. Instead, the meanings of the terms evolve constantly through statute and common law, guided as much by practical considerations as by legal formalism.3 The result is that the relationships between different parties in the music industry as represented in the image above are not always intuitive.

The rise of the administrative state over the past century increased government regulation in many areas, including copyright law. Specific exceptions to each right have been added over the decades. And, since the early 1900′s, Congress has increasingly regulated content industries directly through compulsory licenses – government set rates for certain specified uses. The administration of these compulsory licenses was often delegated to new or existing parties either by law or through industry practices. Several lines on the image above exist solely because of this regulation.

As with any industry, the music industry has grown more compartmentalized, with intermediaries specializing in individual roles within the complex system. One example of this division of labor is the formation of performing rights organizations (PROs) – groups which grant the right to publicly perform the songs of thousands of songwriters and music publishers to radio stations, tv networks, bars and restaurants. In a way, while intermediaries like PROs add another hub in the music industry, they reduce complexity overall; without them, each individual songwriter/publisher would need to form a relationship with each individual performance outlet.

Lessons to Learn

Certainly, the music industry and copyright law are complex – a result stemming from numerous factors. But mere complexity is not a defect. Looking at this image and saying, “Ha ha, it looks like spaghetti,” provides no insight. Comparing the current Copyright Act to the Tax Code4 begs the question: the less words, the better the law. Instead, we should look at the music industry and copyright law independent of their complexity. Is the current music industry sustainable? Is copyright law effective in fulfilling its purpose? These are far better questions then, “At what point do people say it’s time to scrap this mess and start from scratch?”

The complexity of the music industry does raise a valid point, though. Does a complex system like this create barriers to new players to join the game? The chart above was originally created by a company named Pure to announce its launch of a new streaming music service. It was used to illustrate the challenges the company faced in creating the service. The company’s CEO claimed it took three hours for someone to explain the chart to him, lamenting that “There were times along the way I almost gave up.” The conclusion often reached is that if companies like Pure – who “start from a fundamental position that we respect copyright” – give up when faced with untangling the web of copyright law, then services that don’t respect copyright will take their place. The law is firmly on content industy’s side, and enforcement efforts are increasing, but at the same time, lawmakers and the music industry must continue to look at ways to reduce the negative impacts of copyright’s complexity.5

Footnotes

  1. Note: the image is meant to illustrate the UK music industry, which is largely similar to the US industry but does have some differences. [↩]
  2. Hypothetically speaking. The reality may be different since US federal copyright law did not recognize sound recordings as copyrightable subject matter until 1972, though some states and the UK did before then. [↩]
  3. Nimmer on Copyright discusses this issue in its introduction: “An even more fundamental problem, with ramifications for both judge-made rules and legislation, is that words are often used in the copyright context with special meaning, at variance from their more typical usages, and may even be used in disparate contexts in the copyright realm itself with different meanings.” [↩]
  4. Joseph P. Liu, Regulatory Copyright, 83 North Carolina Law Review 87, 88 (2004). [↩]
  5. Shameless plug: I propose one such way in my recent paper, Copyright Reform Step Zero. [↩]
Posted in: Copyright Criticism · Comments Off

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