The U.S. copyright chief today spoke out against the way the music publishing industry is set up to license digital music services. Testifying before members of a House Subcommittee, Register of Copyrights Marybeth Peters called it "archaic, inefficient and unfair" in the age of digital transmissions for publishers to license performance rights through a performing rights organization and to license reproduction and distribution rights separately for the same recording.

"As the lines between performance and distribution have become blurred, the
opportunities for confusion and even abuse have become intolerable," she said. "It is noteworthy that music publishing is the only industry in which this has become a problem, and the reason clearly is that music publishing is the only copyright industry in which such a division of licensing authority has predominated."

The hearing, held before the House Judiciary Subcommittee on Courts, the
Internet and Intellectual Property, kicked off renewed efforts before the new Congress to reform the compulsory license under section 115 of the Copyright Act. This section requires publishers to license compositions that were previously recorded and released (i.e., reproduced and distributed) in the United States. These rights are typically licensed directly from publishers or through the Harry Fox Agency.

Peters was the only witness to testify today before the Subcommittee, attended by 19 Judiciary Committee members including Subcommittee chairman Rep. Howard Berman, D-Calif., and ranking member Howard Coble, R-N.C.

Peters testified that one of the major frustrations facing online music services today -- and what she believes to be the most important policy issue that Congress must address -- is the lack of clarity regarding which licenses are required for the digital transmission of music.

For example, she said, streams of music can be viewed primarily as a public
performance, but it is necessary to make server, cache and other intermediate reproductions of the recorded composition to deliver that performance. Similarly, a download can be viewed primarily as a delivery (i.e., a distribution) of a copy for private use, but this is not settled law. In fact, many publishers maintain that any transmission involves a public performance.

"As we have seen, licensors have rarely turned down the opportunity in the
digital age to seek royalties, even when the basis for their requests is weak at best," Peters said. "Online music companies rightly complain that they need certainty over what rights are implicated and what royalties are payable so that they can operate without fear of being sued for copyright infringement."

The hearing ended without a clear indication of what the next step may be
regarding any legislation or change in the licensing structure.