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Now the Fun Starts: Music Licensing, Orphan Works and The Copyright Modernization Act of 2006

September 11, 2006 , , , ,

This massive copyright bill just landed on my desk, and rumor has it that it may get “marked up” by the full House Judiciary Committee this week. Titled the “Copyright Modernization Act of 2006,” the bill has two of the pieces that I discussed in my last blog post, online music licensing reform and orphan works. I call a proposed law like this a “take your medicine” bill, because it attempts to give different parties something to like and something to dislike. But it fails in that regard, since it gives the music publishers everything they want, and gives digital satellite and digital broadcast radio nothing. The public is left in the middle, unhappy with some of the music licensing provisions, yet excited about the prospect of orphan works relief.

The online music licensing reform section (which for the most part is the bill formerly known as the Section 115 Reform Act, or S1RA), takes up 86 pages of a 100 page bill, and is extremely complex. The purpose behind the bill is laudable – to fix the problems that webcasters and other online music services have in licensing music from music publishers. These licensing difficulties are perhaps the main reason that these music services have limited catalogues. Since we think that the only way that online music services can “compete with free” is for them to sell as much music as possible, we obviously favor a mechanism that makes such licensing easier.

So the former S1RA replaces the current music licensing system, which requires licensing on a song-by-song and owner-by-owner basis with a blanket license for all musical compositions. Licenses would be obtained, and payments would be distributed by a “designated agent” representing music publishing entities.

Not a bad idea, but there are several provisions that are guaranteed to raise prices for all radio listeners, be they broadcast, satellite radio or Internet radio fans. First, the bill would require “interactive services,” like personalized Internet radio services to license “incidental” copies like cache copies and buffer copies, which are created as a technical matter in the course of webcasting or broadcasting music. These are copies that the Copyright Office, in a report issued pursuant to Section 104 Report of the DMCA, declared to be “fair use.” Requiring a license for a fair use sets a dangerous precedent for all fair uses of information, be they radio, TV or print.

Second, while the bill exempts non-interactive services like terrestrial and satellite radio, from this licensing requirement, that exemption is not available to any

digital music provider or transmitting entity that takes affirmative steps to intentionally induce, cause or promote the making of reproductions of musical works by or for end users that are accessible by those end users for future listening….

For those of you not into legislative jargon, this translates into: radio stations that permit you to record music for future listening would have to pay music publishers more than other music services, and could be denied access to the music altogether. Again, who loses? The radio listener, who may either have to pay for the extra fees radio services pay to publishers, may not have access to certain music, or who may be denied the right, guaranteed by the Audio Home Recording Act, to record music off the radio.

Third, the music licensing provisions would give music publishers a chance to require two licenses (and therefore two payments) for interactive performances like on-demand Internet streaming. Under those provisions, interactive performances are considered “digital phonorecord deliveries” (DPDs) that require a license. But the bill does not resolve the question as to whether such interactive services are also “performances” which require yet another license. Failing to resolve this ambiguity permits music publishers to double-dip, the cost of which will likely be borne by your and me.

We'll be asking our members and friends later today to write to members of the House Judiciary Committee asking them not to proceed with the music licensing provisions until those sections licensing temporary copies and limiting home recording are removed. We think that the problems of online music licensing can be fixed without punishing digital radio services and consumers.

As for the orphan works provisions of this new bill – they are no different than those in HR. 5349, the Orphan Works Act of 2006 While we have some small gripes with that bill, we generally like it, and would like to see it passed this year. But coupling the very troublesome online music licensing provisions with orphan works is too strong medicine that we are not willing to swallow.

I'll have more analysis of this bill in subsequent posts.