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Collective Management of Copyright: Solution or Sacrifice?

Panel I:The Challenges of Enforcement in the

Digital Environment

Kernochan Center for Law, Media &

the ArtsColumbia Law

SchoolJanuary 28, 2011

Joan M. McGivernThe American Society of Composers, Authors &

Publishers

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An ASCAP License: Unappreciated &

Undervalued?

A license application frees music users to - - -

Perform publicly all the 8.5+ m. works in ASCAP’s repertory of its 400,000+ members and members of foreign PROs, affiliated w/ASCAP

Be immunized from infringement actions

Be freed from pre-clearance, transaction costs before use

No Money Down - - negotiate & pay a fee later

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What Is The Source of This Freedom ?

Answer: ASCAP’s Consent Decree (Art. IV) The Second Amended Final Judgment or “AFJ2”*

“ASCAP is hereby ordered and directed to grant to any music user making a written request therefore a non-exclusive license to perform all of the works in the ASCAP repertory.”

*Resolution of 1941 antitrust case, US v. ASCAP, amended 1950 & 2001 (and there was a 1960 Order); available at http://www.ascap.com/members/governingDocuments/pdf/ascapafj2.pdf

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What is the License Request Process?

The User (or “Applicant”) applies in writing

ASCAP must quote a license fee or ask for data If the Applicant fails to provide data,

or negotiations fail,

ASCAP may apply to the Rate Court (S.D.N.Y) to set a “reasonable fee” or for such other relief as needed

Note: AFJ2 sets forth time periods for quoting a fee, obtaining data, etc.

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General Challenges posed by Applicants

Have been acerbated by digital users who - Treat applications as an insurance policy and then

- Do not cooperate, do not provide data, etc.

Request a license “only to the extent necessary” but then

- Fail to specify the scope, even when pressed

Apply, but then claim some performances are: - Promotional - Fair Use - UGC - Require DMCA Notices

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Challenge #1: The Similarly Situated User (or “Applicant”)

ASCAP must quote a license fee or rate that

Must be similar to “similarly situated users”

Accordingly, ASCAP seeks to rely on “form” licenses

Even in the digital space, “form” licenses can often be used (E.g., http://www.ascap.com/weblicense/)

But where the goal in the digital space is to have differentiated business models,

“Form licenses” don’t always “fit”

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ASCAP must grant a TTTA license to any music user “that transmits content to other music users with whom it has an economic relationship relating to the content.” (USA)

“The fee for a [TTTA] license shall take into account the value of all performances made pursuant to the license.”

In a broadcast linear world, the economic relationships between music users were – well – linear

Therefore understanding the value and setting a license fee was a bit more straightforward.

Challenge #2: The Through-to- the-Audience (TTTA) Request

(§V)

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Cable Cable Network Network

ProgrammingProgrammingCable Cable

SubscribersSubscribers

Cable System Cable System OperatorOperator

CONTENT TRAVELSCONTENT TRAVELS

(Comcast, Time

Warner)

(A&E, Discovery, SyFy, FX,

Viacom/MTV)

STRUCTURE OF ASCAP TTTA LICENSESTRUCTURE OF ASCAP TTTA LICENSE

1) CABLE NETWORK PROGRAMMING

2) CABLE SYSTEM OPERATOR

Cable Cable SubscribersSubscribers

(License covers its programming)

(License covers its locally originatedprogramming and ads)

Cable Television Model

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Challenge #2: Scope of TTTA Requests by “Old

Broadcasters”

Request of the Radio Industry -12/11/09:

“As for scope, the RMLC hereby requests a ‘through-to-the-listener’ license from ASCAP covering whatever public performances of ASCAP-repertoire music occur in either (i) the Stations’ (including any translators’) transmissions to users for which an ASCAP license is required, however and whenever distributed, including, without limitation, all broadcast transmissions, digital transmissions, high-definition transmissions, and transmissions over Internet and wireless platforms or via any other platform capable of displaying or disseminating a Stations’ transmissions or (ii), as applicable, the Station owners’ radio division online or wireless transmissions.”

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Challenge #2: TTTA Requests by Digital Space Users

Another example – 2006 Request from YouTube:

“YouTube, Inc. hereby requests a blanket license fee quotation for a two-year period effective with the launch of the beta version of the site in May 200[5], to cover any public performances of ASCAP music in YouTube, Inc. programming for which a license is required. ASCAP's fee quotations should be ‘through-to-the-listener,’ encompassing any public performances for which a license is required as rendered by YouTube, Inc. on youtube.com or any location through which YouTube, Inc. may distribute its services.”

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UsersUsers

Content Content Sources:Sources:- users - users uploading uploading professional professional contentcontent-content content providers providers supplying supplying professional professional contentcontent--and--and-

- “- “UGC” ?UGC” ?

YouTube.comYouTube.com

Partner Partner WebsitesWebsites

Non-Non-Partner Partner

WebsitesWebsites

BlogsBlogs

WirelessWireless

Consumer Consumer ElectronicsElectronics

embedsembeds

YouTubeYouTube

Challenge #2 – TTTA Requests (cont’d)So what did YouTube want to cover?

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Challenge #2: Scope of TTTA Requests

Question - Was UGC in or out?

YouTube Counsel explaining the scope of its request before the Court on 9/16/09:

“I mean, to be candid. It's [ie, the request is] meant to be circular in that way because we don't want to apply for more than we need and we knew ASCAP would take the position that you do require a license for it, so to avoid not getting the benefit of the full protection of the consent decree we applied for what we require a license [for] and if we have a disagreement whether we require a license on this we will have to bring it before you one way or the other.”

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Content Content Providers:Providers:

- cable cable networksnetworks

- broadcast broadcast networksnetworks

- websiteswebsites

- mobile-only mobile-only providersproviders

- background background music music

providersproviders

- record record labelslabels

MobiTVMobiTV

SprintSprint

AT&TAT&T

T-MobileT-Mobile

Sprint Sprint customerscustomers

VerizonVerizon

AT&T AT&T customerscustomers

Verizon Verizon customerscustomers

T-Mobile T-Mobile customerscustomers

Challenge #2 – TTTA Requests (cont’d)So what did MobiTV want to cover?

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For ex., YouTube is an intensive user of music

Google bought it for $1.65 b, profiting its founders

And YouTube was “revenue poor,” but still it

Has tremendously benefited Google as a “product”

E.g.,Google had $8.44 b in revenues in the 4th Q of 2010, gave 10% salary raises 1/11 & $20m in Dec bonuses

In short, for such a “valuable entity” – why aren’t creators sharing in more of this “value”

Challenge #3: Valuing All Performances in “Non-Revenue”

Models

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In the linear broadcast world, revenue served as an indicator of “value” for setting a fee

In the digital space, value and revenue are disconnected

And that value is not being shared with the creators of content, including music, which is used so intensively

Instead, the “value” is flowing to suppliers of

technology, the builders of networks and sellers of hardware

The balance that the Copyright Act should afford now seems tipped against creators

Challenge #3: The Value-Revenue Disconnect

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Prof. John M. Kernochan (1986)

“Over the years, ASCAP, and later BMI, did battle with each developing user industry: with the movies (particularly the exhibitors) in both silent and ‘talkie’ eras; with radio; with television; with jukebox owners, cable operators and public broadcasters. The adversaries keep coming. Old ones find new grounds for resistance; new industries raise new problems.”

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Any questions?Please feel free to contact

me.

Joan M. McGivernGeneral Counsel & SVP

Tel 212-621-6204Fax 212-787-1381

<JMcGivern@ascap.com>

ASCAPOne Lincoln Center

New York, NY 10023