The complex issue of copyright reform took center stage during the Grammy Awards telecast on Feb. 8 when Recording Academy chief Neil Portnow urged Congress to ensure that “new technology [pays] artists fairly.” His comments echoed some of the contents of a 250-page music-licensing report issued just three days earlier by the U.S. Copyright Office. Congress may or may not enact some of those recommendations into law — but if it does, the ramifications are enormous.
1. Recommendation: “More equal footing” for master and musical work rates. Record labels currently earn up to 12 times more digital performance royalties than publishers.
Winner/loser: Digital services will be hard pressed to pay much more, so greater parity between rates means publishers’ gains will be labels’ losses.
2. Recommendation: Bundled rights: That is, the creation of music rights organizations, basically enhanced versions of performing rights organizations like ASCAP and BMI, to which publishers would license their mechanical and performance rights. In turn, interactive digital services would receive blanket bundled licenses, making licensing simpler.
Winner/loser: All parties win, especially if this change is accompanied by another Copyright Office recommendation: a comprehensive, unified song database.
3. Recommendation: Extend public performance right in sound recordings to terrestrial radio – meaning record labels and performers would, for the first time, receive royalties for AM/FM airplay.
Winner/loser: Labels and artists win, getting a new revenue stream. Broadcasters lose because they would have to pay new royalties.
4. Recommendation: Federalized copyright for pre-1972 recordings. While songs recorded before Feb. 15, 1972 are covered under copyright by state law, services like SiriusXM and Pandora do not recognize it or pay royalties on those recordings.
Winner/loser: Recording artists and record labels win; digital services lose, paying additional royalties. But labels also lose because full federalization would give artists the right to terminate copyright and claim pre-1972 recordings.