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Copyright Tutorial for Musicians

October 24, 2007

Funded by The New York State Music Fund, established by the New York State Attorney General at Rockefeller Philanthropy Advisors

Have you composed a song? Are you wondering if you
should cover it yourself or sign up with a record
label?

Do you want to use a small piece from another
musician’s record in your song?

Do you wonder how to get your music out
there?

Here’s what you need to know about how to protect your
interests.

Slides to accompany this tutorial can be found here.

Introduction: Why Should You Care?

Musicians are creators and copyright law says that creators have a
right to gain economic value from their creation. For example, if
you write a song, you can charge money to let a movie studio or a TV
station use your song in their sound track. The law gives these
rights as an incentive for creation. It is thought that when
creativity is encouraged, the public will be benefited because more
art will be available to the public.

Copyright law places very minimal
conditions
on protection of creativity:

  • The creative work has to be fixed in a tangible medium. For
    example, if you compose music, the musical notations should be
    put down on paper or the music should be recorded on a cassette
    tape or CD.

  • The work has to be original i.e. it should be created by the
    author and should contain at least a small amount of creativity.
    If a work is copied, it is not original.

  • Protection is for a fixed duration.

Copyright law allows you to gain economic value by giving you a
bundle of rights in your music.
These rights are not absolute and are subject to the rights of other
creators and the public. However, if somebody uses your music without your permission
and their use does not come within the scope of the limitations provided by law, you are
entitled to significant relief for violation of your rights.

Understanding your rights and their limitations is even more
significant in the digital era. Digital
technology is challenging established principles of copyright law.
It has tremendously increased avenues of distribution open to
musicians. It has also given rise to fears of greater infringement.

Copyright law protects a vast array of creative productions, in
addition to music — books, movies, paintings, photographs etc.
All these creative productions are called “works”.

Copyright Ownership

If you own a copyright, you will be entitled to the bundle of rights
granted by copyright law. Therefore, it is important to understand
how ownership is defined and how you can use your rights.

A few general propositions about ownership:

The Author is the Initial Owner

If you composed a song, you own the copyright. If you recorded your
song, you own the copyright in the sound recording. For sound
recordings it is important to remember that ownership can belong not
just to the performer but also to others involved in the creation of
the sound recording. However, the performer always has a copyright
in the sound recording unless he/she assigns this right away by
contract.

Ownership Can Be Assigned or Transferred

Giving away the bundle of rights that constitute copyright is often
called a grant. If the transfer is exclusive it has to be in
writing. For example, if Alice composes music, she can give
Bob an exclusive right to cover her composition for
distribution in the United States and Carol the exclusive
right to cover her composition for distribution in Europe. These are
exclusive grants and have to be in writing.

Works Can Be Made Available Under Terms More Favorable
Than Copyright Allows

The Creative Commons, an organization founded by a number of legal
scholars, has developed a series of licenses that allows copyright
holders to retain control over their works, but still make them
available under terms more favorable than copyright allows. The
copyright holder can choose to make the work available under a
single license or a combination of licenses. For example, a
copyright holder can permit use of the work only if it is used for
noncommercial purposes and if the work is attributed to him, while
retaining the right to make derivative works. Or he could make it
available for derivative works, but require that the derivative
works be made available under the same terms as the original.

Creative commons has recently introduced a new sampling license
under which artists are allowed to use portions of other
artists’ works in sampling. Various artists are expected to
offer their work to be used for sampling through the creative
commons website. More information about the creative commons license
is available on their website at www.creativecommons.org.

Work for Hire

Copyrights of works created by employees belong to the employer in
the first instance. Also, specific categories of works created on
commission can be works for hire, and therefore owned by the
commissioning party, if the parties agreed to it in writing. These
categories are:

  1. A contribution to a collective work.

  2. A part of a motion picture or other audiovisual work.

  3. A translation.

  4. A supplementary work, such as forewords, afterwords, pictorial
    illustration, map, chart, table, musical arrangements, or index.

  5. A compilation.

  6. An instructional text.

  7. A test.

  8. Answer material for a test or.

  9. An atlas.

Works that do not fall under these categories cannot be considered
works for hire even if the contract between the parties states that
it is a work for hire.

Joint Ownership of a Copyrighted Work

When a group of musicians together create a composition or when a
band creates an album, a joint work is created. A work is considered
joint if it meets these conditions:

  • both or all the authors intend that their contributions be
    merged into a single work;

  • this intention exists at the time of creation of the work.

No written contract is necessary to create a joint work. Each author
owns an undivided portion of the entire work. While each joint
author may exploit the work without other joint authors’
permission, any profits must be shared with the other joint authors.
No single author can grant exclusive rights without consent of the
other authors.

For example, if Gertrude writes lyrics and Harry writes the music to
a popular song, both of them own copyright in the lyrics and music.
Harry can give permission for someone to reprint the lyrics even
though Gertrude wrote them. Gertrude can give permission for a
filmmaker to use only the song’s melody as soundtrack music
even though Harry wrote the music.

It is likely, that in the absence of a contract to the contrary,
performers will own copyright to sound recordings jointly with
record companies.

Ownership of Copyright in Sound Recordings

US copyright law requires that, in order to be eligible for
protection, a creative work be fixed in a tangible medium.
Therefore, a performer cannot have a copyright in his performance.
However, if the performer records the performance he may have
copyright in the sound recording.

The creativity in the process of creating a sound recording involves
not only the performance of the singer but also the input of the
instrumentalists, musical director and engineers. Because so many
people collaborate in the creation of a sound recording, the issue
of ownership is difficult to resolve. This issue is mostly resolved
by contracts. It is important for performers of music to remember
that they are likely to have a copyright in the sound recording,
unless they sign those rights away.

Copyright in sound recordings was introduced in 1972. Copyright law
is a federal law. It was enacted by the Congress of the United
States and is applicable uniformly through out the United States.
However, the state of New York protects rights in sound recordings
created before 1972. This protection will continue to exist until
2067.

Beneficial Ownership

An author who has assigned his/her copyright in return for a
continuing royalty interest is a “beneficial” owner of
the copyright. As long as he/she has a continuing financial interest
in the copyright, a beneficial owner is entitled to sue for
infringement. A beneficial owner has only two rights in the work
— the right to receive royalty payments and the right to sue.

For example, Alice, a songwriter, assigns her copyright in
her composition to Bob, a music publisher in exchange for
royalty payments. Despite this assignment, Alice can sue anyone who
uses her composition without Bob’s authorization and
obtain royalties.

Copyright Formalities

Copyright protection is automatic upon fixation of a work. This
means that as soon as you write your song on paper or record your
tune on a CD, the work is protected by copyright without any further
formalities. But, the copyright formalities of registration and notice
confer important advantages. Therefore, it is very important that
you are familiar with copyright formalities.

Registration

Registration can be made at any time during the copyright term by
depositing one or two copies of the work, an application and fees
with the copyright office. More information about registration is
available at the copyright office website at www.copyright.gov.

Registration confers valuable benefits on the copyright owner,
including:

  • A copyright owner cannot sue for infringement unless he has
    registered his work.

  • If a work is registered within 5 years of its publication, the
    certificate of registration is considered proof of ownership of
    copyright.

  • If a work is registered within 3 months of its publication,
    remedies for infringement available to the owner increase a
    great deal.

  • Registration allows the public to identify the copyright owner.
    This allows people interested in using the work to approach the
    owner and obtain a license.

Notice

A copyright notice consists of the symbol ©, the name of the
copyright owner and the year of first publication. For sound
recordings instead of the symbol © the symbol ℗ is used.
Notice has to be placed on a conspicuous place of the copy of the
work.

Use of notice ceased to be mandatory as of March 1, 1989. Before
this date, if a work was published without proper notice, and the
mistake was not corrected within 5 years of publication, the
copyright on the work would be lost.

Although not mandatory, a copyright notice is still very useful in
letting people know about the copyright status of a work and the
identity of the owner. This allows a person interested in using the
work to contact the owner.

Copyright Duration

Copyright in a work does not last forever. A limited duration
ensures that others can use the work in creating new works. For
example, a limitation on duration allows an interested person to
republish old songs that have practically disappeared because the
song’s publisher will not publish it or its author is unknown.
The Constitution mandates a limitation on duration of copyright to
ensure progress and public good.

Although copyright law has always recognized the principle of
limited duration, the law governing duration has undergone drastic
change over a period of time. Present copyright law created a new
duration for works created after January 1, 1978. However, works
created earlier are governed by different rules. The following table
gives a breakdown of copyright durations for works created at
different points in time.

Date of Copyright When Renewal Due Duration of Copyright
Pre-1923 N/A Copyright has expired
1923-1963 During the 28th year of copyright, otherwise copyright has
expired
95 years from the date of copyright, if renewed in the 28th
year
1964-1977 Renewal during the 28th year of copyright optional; if no
renewal filed, automatic renewal
95 years from the date of copyright
Created before 1978 but not registered or published N/A Author’s life + 70 years or December 31, 2002 whichever
is longer
Anonymous, pseudonymous, and corporate-owned works created
after 1977 or created but not published or registered before
1978
N/A 95 years from publication or 120 years from creation,
whichever is sooner
1978 onward N/A Author’s life + 70 years

The Public Domain

The public domain is the realm of information and culture where
intellectual property protection does not apply. When copyrights and
patents expire, innovations and creative works enter the public
domain. Some works such as facts and government documents are not
eligible for copyright and automatically enter the public domain.
Anything in the public domain may be used by anyone without
permission and without the payment of a license fee. The public
domain is a treasure trove of information, resources, and
inspiration that artists and creators constantly use to make new
works.

Rights of Musicians

The “bundle of rights” which constitute copyright as far
as musicians are concerned are:

Only the copyright owner may exercise these rights or authorize
others to do so. The rights mentioned above can be separated. The
rights of musicians can vary depending on whether they are composers
or performers. A composer is a person who creates the music —
i.e. the melody, rhythm and lyrics. A performer is one who performs
music. As explained in the ownership section, the performer’s
copyright exists in the sound recording. We will mention differences
between rights of composers and performers wherever relevant.

The Reproduction Right

The reproduction right gives the copyright owner the exclusive right
to make copies of his work. For example, if you own a copyright in a
sound recording, you have the exclusive right to make copies of the
sound recording through CDs, cassette tapes or by any other means.

For composers of music, the reproduction right is limited by the
right of others to make a sound recording once a composer has
recorded and distributed copies of his composition. We will talk
more about this limitation under the mechanical license section.

For performers who own a copyright in the sound recording, the
reproduction right gives the exclusive right to prevent duplication
of the sound recording. However, the copyright owner cannot prevent
an imitation. The owner of the copyright cannot prevent somebody
from gathering their own artists, equipment and engineers and
recording the same song to sound exactly like the earlier recording.
This might be the reason many record contracts have provisions
requiring performers to agree to work for that label exclusively for
a specified number of years.

The Adaptation Right

The adaptation right gives the copyright owner the exclusive right
to create derivative works. A derivative work or an adaptation is a
new work based on an existing work. For example, if someone uses
melodies from one composition in another composition, the adaptation
right is implicated. The person using the piece from the existing
composition needs permission from the original composer.

Sampling

Music sampling is an example of a derivative use of older works.
However, sampling is a controversial practice. Many samplers may
argue that they do not need licenses to sample especially when they
are sampling a very small portion of a recording and the original
music cannot be recognized in the sampled work.

The few courts that have dealt with the issue have treated sampling
of musical compositions different from sampling of sound recordings.
While sampling very small portions of a composition has been held to
be permissible, sampling of even small portions of sound recordings
has not. However, the law in this area is far from settled. Samplers
unable to obtain license are faced with three options: do not
sample, assert fair use or claim that the use is de minimis
use i.e. that the use is so small that it is permissible under the
law. The test for de minimis use is whether the audience
can identify the original work in the sampled work.

The Distribution Right

Only the copyright owner or a person authorized by him has a right
to distribute copies of the work. For example, only the owner of the
copyright in a sound recording can sell or authorize others to sell
CDs containing the sound recording.

The Public Performance Right

The copyright owner has the exclusive right to perform or authorize
the public performance of his work. A performance is public when it
is made in front of a large or undefined number of people or is
broadcast to members of the public. For example, when a singer sings
a song in a concert hall, a TV station broadcasts a song, there is a
public performance. Private performances, i.e. performances in front
of family and friends, do not need consent from copyright owners.

The public performance rights of composers and owners of copyright
in sound recordings vary a great deal. Composers have to be
compensated whenever their composition is publicly performed whether
through radio or TV or in a concert hall. The right encompasses what
has come to be known as synchronization rights. A synchronization
right is the right to authorize use of music as a background or as
part of a movie or a television show.

In contrast, copyright owners of sound recordings have no general
public performance right. This means that when an over-the-air radio
station plays a record, the composer is entitled to compensation but
the owner of copyright in the sound recording is not. In 1995,
Congress passed the Digital Performance Right in Sound Recordings
Act. This law grants to owners of copyright in sound recordings a
public performance right in digital transmissions of their music.
This right is subject to a number of limitations which we will talk
about in the limitations section.

Administration of the
Public Performance Right

Administration of the performance right varies between composers and
owners of copyright in sound recordings. While composers administer
this right through voluntary organizations, owners of copyright in
sound recordings administer the right under a compulsory license
scheme provided by the law. We will discuss the administration of
the right for composers in this section. We will discuss
administration of the right for owners of copyright in sound
recordings under the limitations section.

Although the law gives exclusive performance rights to composers, it
is almost impossible for individual composers to enforce this right.
How is a composer to know when and where his works are being
performed? Therefore, performance rights are enforced by
“performance rights societies” formed by authors and
composers.

The performance right is administered by three organizations —
the American Society of Composers, Authors and Publishers (ASCAP),
Broadcast Music, Inc. (BMI) and SESAC (formerly known as the Society
of European Stage Authors and Composers). These organizations are
also known as the performance rights organizations (PROs). They
license compositions for public performance on behalf of composers
who are members of these organizations and distribute royalties
collected to the composers.

These PROs charge a single blanket license for unlimited access to
their entire repertories of musical works for a contractual period.
The license is charged as a percentage of the music user’s
revenue. The percentage is negotiated based on use and the
importance of the music in the user’s operation. Generally
wealthier users such as the major television networks are charged
more than small users.

The PROs also offer a per-program license fee for users who require
minimal access to their repertories. For example all talk and all
news radio stations are offered per program licenses. The revenue
generated from the licenses is distributed to members based on the
number of times their compositions were used and the prominence
given by users to their compositions. More information about
ASCAP, BMI and SESAC is available on their websites at
www.ascap.com, www.bmi.com and www.sesac.com.

Rights Against Bootlegging

Unauthorized audio and video recording of live musical performances
is referred to as “bootlegging.” This right is not part
of the “bundle of rights” provided by copyright law
because performers do not have a copyright in their performances.
However, bootlegging is a civil offence. The law prohibits
unauthorized recording of performances, distribution of copies of
unauthorized recordings and transmissions of unauthorized
recordings.

A copyright is not an absolute right. The law places limitations on
copyrights in the interest of creativity and free flow of
information. Some limitations on exclusive rights are common to all
works, while others are specific to musical works and sound
recordings. Limitations on copyright in musical compositions and
sound recordings can be placed under three broad categories:
exemptions from exclusive rights, compulsory licenses and fair use. Before talking about the limitations on
copyrights in musical works and sound recordings, we should mention
one limitation applicable to all kinds of works.

The First Sale Doctrine

This doctrine embodies a limitation on the distribution right. Under
this doctrine, a person who purchases a copy of a copyrighted work
can sell, lend or lease that copy without the permission of the
copyright owner. This provision does not apply to the rental or
leasing of sound recordings. However, sound recordings can be rented
or leased for non-profit purposes by a non-profit library or
educational institution. This provision responds to concerns that
the first sale doctrine would enable people to rent a record and
copy it on to a blank tape thereby displacing record sales.

Exemptions

An exemption to an exclusive right means that the user does not need
permission from the copyright owner to use the work. Exemptions to
copyrights in music and sound recordings apply to the public
performance right. Certain performances like those that happen in
the course of teaching in a classroom, instructional and religious
broadcasts, and non-profit performances are exempted from the scope
of the performance right.

The law also permits restaurants, offices, malls and other
establishments to play music in the background without the
permission of the copyright owner. In order to qualify for this
exemption establishments have to meet three conditions:

  • They have to come within specified square footage.

  • They should not use more than six speakers or four monitors to
    enhance the transmission.

  • The performance should originate from an FCC licensed radio
    station or television station.

Compulsory Licenses

Normally, to use a copyrighted work, the user has to seek permission
of the copyright owner. In many instances such permission is given
in exchange for a license fee paid to the owner. However, in some
situations the law permits the user to use the work without the
owner’s permission provided the user pays a statutory fee or a
“compulsory license” to the copyright owner. Composers
and performers are affected by different types of compulsory
licenses.

The Mechanical
License

The mechanical license affects composers’ exclusive right to
reproduce and distribute their musical works. Once a composer has
recorded and distributed his composition in America, the law permits
others to make and distribute a recording of the same composition,
subject to payment of prescribed fees to the copyright owner. In
order to receive the benefit of the license the person making the
recording has to serve a notice of intention on the copyright owner
within 30 days of making the recording and before distributing it.
If the owner’s name and address cannot be found in copyright
office records, the notice can be filed in the copyright office. A
copyright owner is entitled only to royalties collected after the
copyright owner is identified in the copyright office records. This
is another good reason to register your copyrights.

The mechanical license was introduced in 1909 because Congress
feared that record companies could monopolize songs. It applies only
to non-dramatic musical works. Thus it excludes the score of an
opera or a musical ballet.

It is important to remember that a person who wants to record a
musical composition cannot simply copy an earlier recording. That
would violate the rights of the owner of copyright in the sound
recordings. Also, he cannot “change the basic melody or the
fundamental character of the song”.

Royalty rates for the license can be negotiated between the
copyright owner and the record company. If the parties fail to come
to an agreement, the rates will be determined by the Copyright
Royalty Board. In practice, resort to arbitration proceedings is
rare.

In 1995, an amendment to the law called the Digital Performance
Right in Sound Recordings Act clarified that the mechanical license
also extended to digital deliveries of sound recordings.

Many composers license their mechanical rights through an
organization called the Harry Fox Agency. As a condition for
granting membership to composers or music publishers, the Harry Fox
Agency requires that the musician have at least one song
commercially released through another party during the preceding 12
months

The Broadcast
License

Non commercial or public broadcasting entities can transmit
copyrighted musical works if they negotiate a license agreement with
the copyright owners. If they fail to reach such agreement, the law
provides that the license will be set by the Copyright Royalty
Board.

The Compulsory License
for Digital Performance

Performers are affected by compulsory licenses governing the use of
sound recording. Sound recordings do not have general performance
rights. So when an over-the-air radio station plays a song,
performers cannot expect any compensation much less prevent the
station from playing it.

In 1995, the Digital Performance Right in Sound Recordings Act
(DPRSRA) introduced a performance right for sound recordings
transmitted digitally. The concern behind this legislation was that
digital technologies would enable consumers to substitute digital
subscriptions for record purchases and this would deplete the stream
of revenue for copyright owners of sound recordings. Purchase of
records would further go down because of increased home taping.

The DPRSRA creates three classes of users. The first class of users,
mainly terrestrial broadcasters of free radio and television
programming, are completely exempt from the right. The second class,
consisting of non-interactive subscription services such as XM and
Sirius radio and Internet radio are subjected to a compulsory
license. The third class, consisting of interactive services such as
limited downloads, does not get the benefit of the license. They
have to negotiate directly with the copyright owners.

The compulsory license discriminates between non-interactive
subscriptions services established before July 31, 1998 and those
established later. It requires all services to satisfy the following
conditions to qualify for the license:

  • Services will not play more than two consecutive selections from
    single album in a 3 hour period.

  • Services will not give advance notice to consumers about
    selection that will be played.

New services have to meet following additional conditions:

  • Avoid giving advance notice of names of featured artists.

  • Limitations on retransmitting archived programs.

  • Do not abet consumer copying.

  • Take reasonable steps to assure that technological protection
    measures will function.

Administration
of the Compulsory License for Digital Performance

SoundExchange is the designated entity that collects royalties on
behalf of labels and artists when their music is transmitted
digitally i.e through digital cable and satellite television,
digital radio such as satellite radio and Internet radio. Royalty is
collected on a per performance basis and is distributed evenly
between the artist and the label.

The royalty rate can be determined either by negotiations between
the parties or by a rate setting proceeding before a statutory body
called the Copyright Royalty Board. The Copyright Royalty Board
periodically convenes to determine royalty rates.

Fair Use

Fair use is another limitation on your rights in your music. But it
is not as well defined as the limitations and exemptions discussed
in earlier sections. Its purpose is to ensure that a copyright
owner’s exclusive bundle of rights will not hinder the very
creativity that the law was designed to foster. The doctrine
recognizes that new works draw inspiration from older works and that
productive use of older works promotes the progress of science, the
arts, and literature. Fair use permits use of copyrighted material
without permission where use is in the public interest. The law
specifically mentions criticism, comment, news reporting, teaching,
scholarship and research as exemplary fair uses, but there is no
clear-cut-rule. Fair use is determined on a case-by-case basis. An
activity may qualify in one instance as fair use, while it would be
an infringing activity in another context.

The law sets out four factors to be used in determining whether a
particular use is fair.

First Factor — The Purpose
and Character of Use

Under this factor, non-profit or educational uses and uses that
transform the underlying material are more likely to be considered
fair. Transformative uses might be considered fair even if they are
commercial.

A good example of a transformative use is parody. A parody uses the
original work in order to make fun of it. From court cases decided
to date, several elements emerge. For a parody to be considered fair
use:

  • It must comment on the original.

  • It should use only as much of the original material as is needed
    and not so much that the consumer will be confused or the
    commercial value of the original will be diluted.

  • It should not seek to replace the original in the market place.

In Campbell v. Acuff Rose Music, the owners of the
copyright in Roy Orbison’s song, “Oh, Pretty
Woman”, sued the rap group 2 Live Crew, claiming that the
group’s parody song infringed their copyright by using the
first line of the lyrics and the song’s opening bass riff. The
Supreme Court found that because 2 Live Crew’s song added
significant amounts of new material and criticized the underlying
work, the use was transformative and qualified for fair use. The
court reached this conclusion even though 2 Live Crew’s use
was for commercial purposes.

Second Factor — Nature of the
Copyrighted Work

Generally, creative works are given greater protection than factual
works. For example, a song would receive more protection than
software code. Also, if a work is unpublished, the author’s
right of first publication is recognized. Yet a work’s
unpublished nature does not necessarily preclude finding of fair
use.

Third Factor — Amount and
Substantiality Used

Under this factor, a court would examine what portion of the work
was used and the significance of the used portion.

Fourth Factor — Effect
on the Market for the Copyrighted Work

Adverse effect of the use or potential adverse effect tends to go
against a finding of fair use.

Your copyright is “infringed” when some one uses your
music without your permission and the use is not a fair use, does
not come within the scope of another exemption or a compulsory
license. The law allows you to recover an amount equal to the sales
you lost on account of infringement. If you are not able to
calculate lost sales, you might be able to elect to take an amount
fixed by the law. However, to be able to do this, you must register
your work within 3 months of publication. In addition, you might
also be entitled to a court order prohibiting the infringer from
using your work.

Copyright in the Era of Digital Technology

Digital technology has brought about tremendous changes in the way
music is distributed and enjoyed. It has made possible methods of
distribution such as peer-to-peer (P2P) file sharing, online music
sales, podcasting and webcasting. Musicians no longer have to rely
solely on physical record sales or radio stations to have their
music heard by the public. Musicians who cannot or do not want to
sign a contract with a record label can record their own music and
reach their audience through the Internet. These changes have led to
new business models and created exciting new possibilities both for
musicians and their audience.

At the same time, major copyright owners, like the major record
labels are becoming increasingly nervous about how digital
technologies limit their control over the music production and
distribution process. They fear that digital technology will
increase home taping, spawn illegal file sharing networks, reduce
sales of CDs, and free artists to produce and distribute their music
themselves. These fears have led them to sue file sharing networks, support
legislation like the DMCA which is designed to
lock digital content, and seek to reduce consumer rights. Although a
law called the Audio Home Recording Act was
passed in 1992 to protect consumer home recording rights, record
labels are demanding further changes
to the law
that would render AHRA’s protections of little
significance to consumers.

Lawsuits Against File Sharing Networks

Peer-to-peer file sharing networks like Napster and Grokster became
tremendously popular and were widely used to share music. While
record companies and some artists saw these networks as tools for
copyright infringement, others used them to sell their songs. These
networks worked by allowing individuals who downloaded peer-to-peer
software to connect their computers directly to others who had done
the same. As a result, these individuals could share none, some or
all of the files on each others’ computer hard drives. The
technology used by the two networks — Napster and Grokster was
slightly different. Napster maintained servers containing an index
of music files available on the system. Grokster maintained no such
centralized index.

The major record labels filed separate lawsuits against Napster and
Grokster accusing these networks of allowing their consumers to
illegally share copyrighted music. Both lawsuits tested the
well-established principle of copyright law that an equipment
manufacturer is not liable for copyright infringements of its
consumers if the technology it provides is “merely capable of
substantial non-infringing uses”. The Supreme Court enunciated
this principle in its landmark fair use decision, in Sony Corp.
of America v. Universal City Studios
. In that case the court
held that using a VCR to record television programs to watch them
later was fair use.

Yet in both the Napster and Grokster cases, courts held the
equipment manufacturers, i.e. the suppliers of the software liable
for their customer’s infringements. In the Napster case, the
court said that Napster had actual knowledge of infringement and had
a duty to police its servers. In the Grokster case, the court found
that Grokster had taken “active steps to encourage
infringement”. The court saw Grokster’s advertisements
targeted at former Napster users, newsletters discussing uses of the
Grokster software, and Grokster’s response to customer queries
about how to use the software as evidence of these “active
steps to encourage infringement”.

In both cases, the courts side stepped the issue of the technology
being capable of substantial non-infringing uses. As a result of
these decisions, both the Napster and Grokster services went out of
business. However, even in the wake of these decisions, other P2P
services continue to flourish.

AHRA: The Audio Home Recording Act

The Audio Home Recording Act (AHRA) was enacted in 1992. Although
the legislation was a response to fears of record labels that
digital technology would make near perfect copying possible, it was
beneficial to consumers because it affirmed the consumers right to
make a recording of music for personal use.

The AHRA requires digital audio recording devices, such as the XM
inno, made or imported into the US to be designed to prevent serial
copying. Manufacturers and importers of digital audio recording
devices and media such as blank CDs are required to pay royalties to
a fund. Fees collected in the fund will be distributed among record
companies, performers and owners of copyright in the music.
Royalties are based on a percentage of the transfer price of the
device. Copyright owners are required to appoint agents to collect
royalties and distribute them among their members. In exchange for
these payments, the Act exempts consumers and device manufacturers
from copyright infringement liability.

The AHRA might not cover all kinds of home recordings of music. The
Act seems to target only those recording devices whose primary
purpose is to record music. Thus copying from computers is outside
the ambit of the Act.

The Digital Millennium Copyright Act

The Digital Millennium Copyright Act (DMCA) seeks to prevent copying
by 1) prohibiting individuals from breaking digital locks used to
protect copyrighted works; and 2) prohibiting anybody from
manufacturing or selling any device or service that would permit the
breaking of digital locks. These sections of the DMCA are called the
“anti-circumvention” provisions. It also contains
provisions that exempt Internet Service Providers (ISPs) from being
held liable for their customers’ infringement if they satisfy
certain conditions.

The Anti-circumvention
Provisions

These provisions prohibit circumvention of technological protection
measures (TPM’s) such as encryption technology used by
copyright owners to control access to their digital works. Only
devices authorized to read these TPMs will be able to access the
content. For example, I will not be able to play a DVD designed to
work on a Windows platform on a Linux platform. Although the law
allows circumvention of TPMs that prevent copying of digital works,
it prohibits trafficking in technology that can circumvent any TPMs
whether employed to control access or to prevent copying.

The anti-circumvention provisions make no distinction based on
whether the use is lawful or not. Therefore, one cannot break a TPM
for fair use or to access a work in the public domain. The DMCA
contains very narrow exceptions to its anti-circumvention
provisions. These include exemptions for law enforcement, browsing
by libraries, archives and schools to make purchasing decisions, and
reverse engineering for achieving interoperability.

The ISP Liability
Provisions

The DMCA eliminates ISP liability for infringement by customers if
the ISP removes the allegedly infringing material. The ISP must
provide the copyright owner with contact information of the alleged
infringers. The Act sets forth a relatively simple way for copyright
owners to notify the ISP that it is hosting a site containing
infringing content. The ISP has five days to remove the infringed
material and may replace it if the accused infringer claims it does
not infringe and provides its address and other information, so the
accuser can deal directly with the accused.

Proposed Legislative Changes

Major record labels are urging Congress to pass legislation that
would protect their interests over artists interests and limit the
way consumers enjoy your music. Often, these attempts come in the
form of provisions inserted into bills that are otherwise beneficial
to the music industry and seek to reform various practices in the
music industry. Two such bills are the Section 115 Reform Act or the
SIRA and the Perform Act.

SIRA was introduced in the September 2006. While most of
SIRA’s provisions were aimed at improving the process by which
online music providers obtain mechanical licenses, it also contained
provisions that were bad for consumers and small artists. The bill,
if enacted, would have:

  • prevented consumers from recording music transmitted digitally;

  • increased royalties for many Internet radio services;

  • allowed record companies to divert publishing royalties from the
    musicians to the record companies in order to repay the
    advances.

SIRA did not pass into law in the last Congress. But a similar bill
is likely to be introduced in future.

The Perform Act was introduced in the Senate in January 2007. The
purpose of the bill is to eliminate discrimination between existing
subscription and satellite radio services and new services in
setting rates for the digital performance license. But the bill also
contains provisions that would prevent consumers from enjoying music
the way they want to. For example, provisions in the bill would only
allow consumers to record music from digital radio broadcasts in the
sequence in which the program was transmitted. They could not record
digital transmissions based on the artist, or album or sound
recording. They could not burn the recording to a CD or other
portable device. They could not change the sequence of the
recording.

The one positive attempt at change in this environment is to require
over- the-air broadcasters to pay performance royalties. As we
discussed in the sections above, free over-the-air broadcaster are
exempted from paying royalties to performers while satellite radio
services and Internet radio services have to pay such a royalty.
Although many believe that this disparity should be eliminated and
over-the-air broadcasters should be required to pay such a royalty,
there is considerable opposition from the broadcasters. No concrete
legislative proposal has emerged to solve this issue.

Conclusion

We hope this tutorial helped you gain a better understanding of
copyright law. While it is important to understand the law, it is
also important to understand how, as a matter of policy, copyright
law affects you.

Copyright law gives you valuable rights. It creates a legal
framework which ensures that you get compensated when your music is
used. And you should do everything in your power to secure and
safeguard these rights. However, we believe that the current
copyright regime has lost sight of the balance between the rights of
the musicians and the rights of the public. Copyright law has been
and continues to be amended to accommodate the interest of large
corporate copyright owners like the major record labels. These
developments are not good for the public and neither are they good
for all but perhaps the wealthiest musicians.

Technological Locks Give Copyright Owners Greater Rights
Than Copyright Law Permits and Anger and Frustrate Music
Fans

Technological locks assume that all consumers are pirates and will
steal music if they could. As a result they create restrictions on
access greater than what copyright law permits. For example some CDs
can only be played on CD players and not on computers. Copyright law
does not tell audiences how many times they can listen to a song.
But technological locks make this restriction possible. To the
extent that artists often need to study certain works over and over
again, excerpt, modify and transform pieces of work, and play them
on different devices, technological locks make this not only harder,
but also in some cases illegal.

In addition, as the Sony BMG CD copy protection scandal illustrates,
technological locks can actually harm consumers. Sony BMG included
copy protection technology on several albums sold on CDs. The
software used in this technology interfered with the normal working
of certain computers and allowed viruses to break in. Sony had to
eventually recall its CDs.

Peer To Peer Technology is Not Evil

It is true that the Napster and Grokster networks were used to share
music and often the artists and the record labels were not
compensated. But it is also true that some copyright holders use P2P
networks to sell their works. Peer-to-peer technologies might enable
smaller users to reach their audiences in ways they could not
otherwise reach them. They do not have to overcome hurdles created
by gatekeepers such as record labels or major broadcasters. Besides,
studies suggest that P2P users actually buy more music than the
average consumer. For many of these users, P2P allows them to decide
what music they want to buy. So, destroying the technology is not
the answer to problems faced by copyright owners. A more sensible
approach would be to work to find a way to compensate artists rather
than to destroy the technology.

Digital Delivery and Transmission of Music Gives All

Musicians a Greater Audience

Digital technology enables musicians whose music is not considered
“main stream”, or those who do not want to sign on to
major record labels to sell their music online . Internet radio,
unlike traditional mass radio stations, is known to transmit all
kinds of music. But current laws and practices discriminate between
digital music and analog music. Digital deliveries and transmissions
are charged higher royalty rates. Bills like the SIRA and Perform
Act would require technological protection measures to limit what
consumers can do with music transmitted digitally. Services that do
not want to install these measures will have to pay very high
royalties for the music they transmit or may be completely denied
permission to transmit. This only makes these services expensive and
unpopular. Charging more for digital music cannot be good for
artists because this is the medium that gives you maximum exposure.