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'A Lot to Digest': The Industry Reacts to Proposed Music Copyright Changes

Industry reaction poured in after the U.S. Copyright Office issued a report Thursday with its recommendations on how to fix and update music licensing. Although the report contains only recommendations for Congress to consider, and any recommendations wouldn't be implemented for a number of years, even slight changes to how music is licensed will have far-reaching and long-lasting effects on the industry.

"They have given all of us in the music community a lot to digest and reflect upon," said Cary Sherman, RIAA chairman and CEO, in his statement. Indeed, the 254-page report is nearly all text and covers a range of complicated topics. Easy summer reading this is not.

The battle to update music licensing is much like a political fight: there are two major parties and issues tend to have partisan support. On one side are creators and licensors. On the other side are licensees and digital service providers. Roughly speaking. For its study, the Office solicited written comments from industry stakeholders and held forums in New York, Los Angeles and Nashville.

How best to sum up the lengthy, densely worded report? Labels and publishers, and the creators they represent, fared well. Licensees, the services that utilize creators' works, fared less well.

The Office's report suggested much of what creators and licensors much of what they wanted: a performance right for terrestrial radio, full federalization of pre-1972 recordings, more market-based rate-setting standards, and partial withdrawal from performing rights organizations, among others.

One of the more significant components of the Office's report is the guiding principle that different types of music be treated equally. Or, as the report stated, "sound recordings and the underlying musical works should stand on more equal footing."

This received praise from NMPA President and CEO David Israelite. "We applaud the recognition that music creators should be fairly compensated," Israelite wrote, before offering a note of caution. "While there is much to like in this report, we hope that Congress rejects any further regulation of songwriters." ASCAP President Paul Williams applauded the "recommendations intended to make the system more equitable for songwriters" and called the report "an important step towards meaningful reform."

Nods were given to issues that would result in new royalties. The RIAA, The Recording Academy and SAG-AFTRA singled out the Office's recommendation for the establishment of a terrestrial performance right for sound recordings, and the RIAA and Recording Academy noted the CO's suggestion that pre-1972 recordings be placed under federal copyright law.

"The establishment of a terrestrial performance right and the guiding principle of fair market pay for songwriters, artists and producers are important foundations of this new report," stated Neil Portnow, president and CEO of The Recording Academy.

The other side of the aisle also had much to say. The Computer & Communications Industry Association commended the Office's call for transparency but criticized the report's recommendation for changes to the statutory provisions that helped give rise to webcasters like Pandora. "Policies that would unfairly discriminate against digital technologies and further consolidate market power among a few dominant rightsholder corporations will injure innovation, artists, and listeners alike," said Matt Schruers, vp for Law & Policy at CCIA.

Pandora also applauded the Office's call for transparency while defending the value of statutory licenses to a "music ecosystem" that includes "artists, listeners, and the tens of thousands of American businesses that legally play music every day for millions of consumer," said Dave Grimaldi, Director of Public Affairs, in a statement.

The company also had an interesting spin on the potential bad news for labels. Grimaldi reiterated Pandora's openness to the full federalization of pre-1972 recordings, which would require webcasters to pay royalties on these older recordings. But perhaps this requirement would allow Pandora to negotiate with artists directly. As Grimaldi noted, such a change "would also guarantee that the full rights granted to these deserving recording artists, including termination rights under Chapter 3 of the Copyright Act."

Along with the statements of approval came many requests to implement the Office's recommendations." "We now call on Congress to implement common sense, pro-creator reforms in a comprehensive legislative approach," wrote Portnow.