Despite the RIAA/NAB Unholy Alliance to Force FM Radios Into All Cell Phones, Performance Royalties

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There’s an absolutely ridiculous story making the rounds—apparently the NAB and the RIAA have come to an agreement whereby the NAB will support broadcasters paying performance royalties, in exchange for the RIAA supporting a legal requirement that cell phones, mp3 players, and the like have FM receivers built in.

This idea is so bad that it practically debunks itself—see discussion here, here, and here—but it should suffice to say that it would probably be cheaper to buy every man, woman and child in these United States a portable transistor radio, than to wastefully redesign every high-tech gadget so that it supports an obsolete technology nobody wants. Better yet, let’s auction off the FM spectrum and use the proceeds to buy everyone a pony.

So instead of focusing on the NAB/RIAA unholy alliance, I thought I’d briefly discuss the dispute at the heart of this: performance royalties. We’ve talked about it before, and there isn’t much new to say, but it continues to amaze me how reluctant people are to take the same side as the RIAA, even when it’s right.

Contrary to what ASCAP might want you to think, groups like Public Knowledge aren’t “against” copyright law. We think it should be more balanced and fair. Most of the time, increasing “balance” means recognizing users’ fair use rights, the right to create transformative works without having to get permission, and so forth. But a “balanced” copyright law needs to be fair to all parties, and it is simply unfair to performers that broadcasters commercially exploit their copyrighted works without paying.

But this position isn’t universally accepted among people who are generally correct about copyright law. For example, Mike Masnick asked,

In what world does the government make someone pay to promote someone else?

Well, in this world. In the world where we have copyright law. You don't do a cost/benefit analysis to see if legal rights apply in a specific case. You could frame many commercial uses of music as “promotional.” If you use some band’s music in a car commercial, there’s no doubt that you’d increase their exposure. You might even increase sales of their new album. But this is totally irrelevant: at the very least, the sole right to commercially exploit a copyrighted work should belong to the copyright holder. If you’re making a movie or a commercial, you don’t get to use someone’s music for free just because you can tell a story about how “promotional” it is. Yes, in some circumstances, the copyright owner of a sound recording might even pay to have its music played on the air. Who cares? In some circumstances a band might want to pay Apple to use its music in an iPod commercial. That doesn’t mean that Apple thereby gets to use anyone’s music for free. If a band wants to let radio stations use its music for free, it can; but there’s no reason to apply that to everyone.

We can argue all day about the details of what copyright reform should be. Not everyone agrees that “commercial use” should be treated differently than other uses. Even if you accept that framework, does making a mix CD for your friends count as a “commercial” use if it might theoretically displace a sale? Should there be robust safe harbors for online service providers? These are contentious issues. But I can’t imagine that there’s serious debate about whether playing someone else’s copyrighted works in their entirely, and running commercials against them, counts as a fair use.

I’ll say it again: Unless your use fits into a limitation or exception to copyright law (fair use applies to money-making activities as well), you shouldn’t get to use other people’s music for free in your for-profit endeavors.

Moreover, it has always been unfair that performing artists get nothing when broadcasters make money off their works. The only reason they don’t is politics: the broadcast industry is very powerful and tends to get what it wants. (Internet radio stations are not as politically influential, of course, which is why they pay performance royalties when their spectrum-wasting colleagues don’t.)

In general, the owner of a copyrighted work has the sole right to control its public performance. But it used to be that there was no copyright at all in sound recordings—only in musical “compositions.” This wasn’t deliberate—it’s just that the copyright law was old and inflexibly drafted. So, radio stations would pay songwriters performance royalties, but the people who actually recorded a unique take on a song got nothing.

Anyone who knows music knows that a particular performance might be very original—there’s a big difference between Johnny Cash’s version of “Personal Jesus” and Depeche Mode’s. The originality that goes into making a sound recording deserves copyright protection just as much as the originality that goes into a composition. But in the 1970s, when lawmakers set about fixing this hole in the copyright law, the broadcast lobby used its might to keep from having to pay royalties to performers. They got a loophole written into the law, making the copyright in sound recordings less robust and incomplete compared with the copyright in other things. The story the broadcasters was the same one they tell today: their use is “promotional.” That argument was never valid, and today, as the sale of physical copies of media becomes increasingly quaint, it barely holds water.

(Semantic aside. Very smart people have argued that there’s no “loophole” for sound recordings. After all, there used to be no performance rights for sound recordings, and there still aren’t any. I disagree with this reading—17 U.S.C. § 106 very carefully grants performance or display rights to the creators of every kind of copyrighted work except for architectural works and sound recordings. I can see sound policy reasons for not granting the full scope of copyright protection to the creators of architectural works—building owners should be free to “display” their buildings publicly and not drape them Christo-style—but I’d say this is as much an exception as the exception for sound recordings. For example, all copyright holders of any kind of work have the sole right to “prepare derivative works.” The law doesn’t have to spell out which categories of work get that protection. If everyone but you gets a pony, it doesn’t really matter if I list out everyone except you or just say “You don’t get one,” either way it’s an “exception” designed to keep you from getting a pony.)

The NAB isn’t exactly known for its consistent policy positions (see, for example, its fierce opposition to the XM/Sirius merger (non-NAB members, coincidentally), and its support for every other media merger ever), but blackmailing the RIAA into supporting such a laughably stupid idea as requiring that cell phones include FM tuners is a new low.

So, you can call performance royalties a “tax” if you want to—of course, by that logic, all copyright royalties are taxes. And the RIAA and SoundExchange have so far been very stupid in the rates they charge Internet broadcasters. But the basic question at the heart of the dispute is whether the owners of copyrights in sound recordings deserve to be treated differently than the owners of copyrights in other kinds of work. They never should have been, and they shouldn’t be today.

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