Post Copyright Reform Video Marketplace

Private Interests Don’t Override the Law–in Music Publishing, Cable Boxes, or Anywhere Else

August 5, 2016 , , , ,

Two of the copyright issues Public Knowledge has been working on seem disconnected from each other, but there's a common theme. In both the performance rights organization (PRO) and set-top box issues, policymakers should be clear in their understanding that private contracts can't be used to override other provisions of law. Just as the interests of some industry participants don't override legally-binding consent decrees, neither do they provide a reason for the Federal Communications Commission to ignore its statutory mandate to promote set-top box competition.

Music Industry Preferences Do Not Override Antitrust Problems

Recently, the Second Circuit Court of Appeals rejected an argument from music publishers that they should be able to partially withdraw from ASCAP, a performance rights organization (PRO). PROs allow different music publishers to team up and offer clearinghouses of rights to music users who need licenses. But any arrangement where competitors work together to coordinate and set prices raises obvious antitrust concerns, and accordingly major PROs operate under a consent decree with the Department of Justice.

The PRO consent decrees require that the PROs offer licenses on non-discriminatory terms – they must treat similarly situated license-seekers alike. Music publishers instead wanted the right to cherry-pick which services could continue to get licenses from the PROs, and which ones would be forced negotiate directly. In practice they wanted to let traditional platforms, like AM/FM radio and restaurants, to continue using ASCAP –but block “new media” digital services. This would have meant that PROs would not be able to license music to services like Pandora. Pandora would then have to find other means to license its service (for example, directly negotiated a series of licenses with music publishers). The Second Circuit rejected the publishers’ request, since such “partial withdrawals” are not permitted by the consent decree ASCAP operates under.

But wait! The music publishers themselves are not subject to a consent decree–just the PROs they do business with. So, the publishers argued that they ought to be able to license whatever rights they choose to the PROs, and that denying them that right unjustly interfered with their copyrights. But the court disagreed. It wrote, 

This outcome does not conflict with publishers' exclusive rights under the Copyright Act. Individual copyright holders remain free to choose whether to license their works through ASCAP. They thus remain free to license — or to refuse to license — public performance rights to whomever they choose. Regardless of whether publishers choose to utilize ASCAP's services, however, ASCAP is still required to operate within the confines of the consent decree.

In other words, while it may be true that rightsholders can decide who to license to, and under what terms, that doesn't mean they can override other legal considerations. ASCAP is bound by law to operate a particular way, and if publishers don't like it, they don't have to do business with ASCAP. But their copyright interests don't override the ASCAP consent decree.

Copyright Does Not Eliminate Congressional Mandates For Set-Top Boxes

The same applies to programming carried by multichannel video programming distributors (MVPDs), like cable TV. Cable TV is a regulated industry, subject to various federal, state, and local statutory and regulatory requirements. The FCC is specifically charged by Congress with promoting “navigation device” competition. It is trying to do that right now, and is considering ways to replace its current CableCARD rules. The law the FCC wants to enforce reads in part,

The Commission shall…adopt regulations to assure the commercial availability, to consumers of multichannel video programming … converter boxes, interactive communications equipment, and other equipment used by consumers to access multichannel video programming…from manufacturers, retailers, and other vendors not affiliated with any multichannel video programming distributor.

So, you have a clear requirement on MVPDs. They must make their programming available on competitive devices, subject to regulations adopted by the FCC. It's about as clear a statutory directive as the FCC has.

Yet some programmers object–and for very similar reasons (e.g. a supposed “conflict” or “tension” with copyright law) to the arguments raised in the context of partial withdrawals from PROs. They might prefer that their programming be presented only in a particular way, or only on some kinds of devices and not others. They might want to license their programming to MVPDs only under such conditions. It is true that those conditions might not be effective if MVPDs were required to provide consumers access to their programming on devices that do not have the same restrictions that MVPD-supplied, rented devices do.

But while the FCC should take into account the desires of programmers, it also has a law to enforce. MVPD subscribers have certain rights, and those rights are a non-negotiable component of MVPD service. (Indeed, today, programmers do not have the ability to withhold their programming from competitive CableCARD devices.) Programmers remain free to distribute content themselves if they so choose–in fact, one of the great benefits of the internet is how it allows creators to bypass traditional avenues of distribution, if they so choose.

But the fact is, programmers get major benefits from MVPD carriage, just as publishers get major benefits from PROs. Both MVPDs and PROs exist in a world where public interest as well as private considerations play a role, and rightsholders cannot pick and choose just the pieces they like. They're package deals, designed to benefit all parties.

It is dangerous to suggest that copyright owners and their licensees, simply by entering into private contracts, can override and ignore consent decrees, statutes, FCC rules, or anything else that would interrupt their ability to license their works free of any outside considerations. While some parts of the government such as the Copyright Office continue to spread this misguided argument, thankfully courts and other parts of the government such as the Department of Justice have rejected it.


About John Bergmayer

John Bergmayer is Legal Director at Public Knowledge, specializing in telecommunications, media, internet, and intellectual property issues. He advocates for the public interest before courts and policymakers, and works to make sure that all stakeholders — including ordinary citizens, artists, and technological innovators — have a say in shaping emerging digital policies.