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COPYRIGHT IN THE US - MPA COPYRIGHT & MUSIC PUBLISHING SEMINAR

CONSENT DECREESSAFE HARBORCOLLECTIVE MANAGEMENT

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CONSENT DECREESConsent decrees are limitations agreed upon by parties in response to regulatory concern over potential or actual market abuses. Intended to promote competition in the marketplace –Songwriter protections from music publishers,

What is their relevance today?

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CONSENT DECREES ADDRESS:Antitrust issues in music licensing of the public performance rights in musical works. PROs were found to have engaged in “significant anticompetitive practices”ASCAP’s actions, “would have resulted in a stifled and stunted music industry”.

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CONSENT DECREE OF 1941ASCAP prohibited from:

Providing an exclusive public performance licenseCharging “unreasonable” licensing fees Restricting membership from direct licensingDiscriminating between LicenseesLicensing Motion Picture TheatersOffering licenses beyond 5 years

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FURTHER - MODIFICATIONSDo not jeopardize safeguards for songwriters, such as the direct royalty payments by PROs and the 50/50 splits Do not jeopardize competition or barriers of entry for independent songwriters, publishers, and small music platforms. Must promote transparency, especially in repertoire, licensing and royalty payments to songwriters. Must not weaken the PROs by making them mere administrative functionaries of the publishers

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WHAT THEY ARE SAYINGThe National Music Publishers Association (NMPA) suggests that movement away from the Consent Decrees and toward a “free” and/or fair market[would result in more competition and higher royalty payments for songwriters and publishers.ASCAP has stated that the Consent Decrees “must be updated, if not eliminated … [as they] exploit certain provisions to the detriment of the songwriters, composers and music publishers who depend on public performance royalties for their livelihoods.” BMI has stated that the Consent Decrees should be reexamined, particularly with regard to their perpetual natureBMI has made three primary or ‘immediate’ requests to the DOJ: To allow publishers to legally withdraw control of their digital rights without exiting

BMI altogether; To allow BMI to license more than just public performance rights - adding in

mechanical rights, lyric display, distribution, reproduction and synch rights to become a ‘one-stop’ rights hub for licensors;

To move the standard rate-setting forum from federal court to a binding arbitration model.

Will BMI be competing as a music publisher and representing mechanical and other rights?

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ASCAP AND BMI MODIFICATIONS OF CONSENT DECREES -DOJQUESTION 1Do the Consent Decrees continue to serve important competitive purposes today? Why or why not? Are there provisions that are no longer necessary to protect competition? Are there provisions that are ineffective in protecting competition?

Competition in the music licensing space-transparent and predictable licensing environment. The smaller licensee and the function of blanket licensesProtections for songwriters-50/50 performing rights income split

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QUESTION 2What, if any, modifications to the Consent Decrees would enhance competition and efficiency?

Direct Licensing of certain rights, i.e. the allowance of partial withdrawal of catalogue would create a more market friendly licensing environment and lead to increased rates and the value of music. How does this effect Blanket Licenses, compulsory

licensing and licensed by virtue of request? Modifications may be necessary but must not lead to chaos in

the market. A world of sync licensing? Transparency as a balance

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QUESTION 3Differences in the Consent Decrees Bundling Rights-Performance, Mechanical and Synch The major publishers have threatened to remove their

entire catalogs from the PROs if the consent decrees aren’t modified to serve their interests. To avoid this outcome ASCAP and BMI advocate for partial catalog of digital rights by the publishers in exchange for the ability to bundle other rights.

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QUESTION 4How easy or difficult is it to acquire in a useful format the contents of ASCAP’s or BMI’s repertory? How, if at all, does the current degree of repertory transparency impact competition? Are modifications of the transparency requirements in the Consent Decrees warranted, and if so, why? PRO and major music publisher coalitions. Lack of

Transparency. Pandora repertory requests to the PRO’s

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QUESTION 5Should the Consent Decrees be modified to allow rights holders to permit ASCAP or BMI to license their performance rights to some music users but not others? Market driven, the value of music Smaller users path to licensing. Who represents the songwriter, the Indie Publisher?

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QUESTION 6Should the rate-making function currently performed by the rate court be changed to a system of mandatory arbitration? Favoring corporations over individuals No class action

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QUESTION 7Should the Consent Decrees be modified to permit rights holders to grant ASCAP and BMI rights in addition to “rights of public performance”? Streamlining music licensing Bundling-unfair? What could be the motivations? Global licensing of digital

rights? The performance right follows the mechanical right X-US.

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CONCLUSIONA matter of survival for the US PRO’sWoeful rate structures-tens of thousandths of a penny per stream? Major music publishers and aggregated Indie music publishers want the right to seek free market mechanisms when licensing their music. Willing buyer/willing seller model1st time in history technological innovation reduces PRO’s to middle man status. Why use them to license Spotify, iTunes etc. if you are a successful songwriter.Writer flight and the emergence of new niche PRO’s Global Music Rights

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SAFE HARBORSafe Harbor Sec. 512 DMCA A service provider shall not be liable for monetary relief if the transmission of the material was initiated by or at the direction of a person other than the service provider;Thus the safe harbors, while imperfect, have been essential to the growth of the Internet as an engine for innovation and free expression.

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NO INFRINGEMENT PROVIDING:SP does not have actual knowledge that the material or activity is infringing; in the absence of such actual knowledge, is not aware of

facts or circumstances from which infringing activity is apparent; or

upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;

SP does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and upon notification of claimed infringement responds expeditiously to remove, or disable access to, the material that is claimed to be infringing.

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SAFE HARBOR & YOUTUBEYouTube to operate an ‘opt-out’ rather than ‘opt-in’ streaming service YouTube has an unfair advantage at the negotiating table, because the company already has a rights owner’s content on its servers.IFPI chief Frances Moore said: “The value gap is a fundamental flaw in our industry’s landscape which sees digital platforms such as YouTube taking advantage of exemptions from copyright laws that simply should not apply to them. Laws that were designed to exempt passive hosting companies from liability in the early days of the internet – so-called ‘safe harbours’ – should never be allowed to exempt active digital music services from having to fairly negotiate licences with rights holders”.She added: “There should be clarification of the application of ‘safe harbours’ to make it explicit that services that distribute and monetise music should not benefit from them”.They amass a body of content they become media platforms which, like traditional media services, may make money placing advertising next to content, or charging subscription fees for access to content. -http://www.completemusicupdate.com/article/trends-why-the-music-industry-hopes-to-put-safe-harbours-on-the-european-agenda/#sthash.f7lBufKi.dpuf

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YOUTUBE AND FAIR USEYou Tube is benefiting from the user-generated sources of content so the DMCA safe harbor provisions should be modified to take that into account.

The DMCA exacerbates the information problem by encouraging service providers not to look at their users’ posted content in advance of a notification lest they acquire “actual knowledge” of infringement (or be sued on that claim) see: Jonathan Zittrain, A History of Online Gatekeeping, 19 HARV. J. LAW & TECH. 253, 256 (2006)

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FAIR USE AND SAFE HARBOR“Fair use is not just excused by the law, it is wholly authorized by the law. The Lenz v Universal Music Publishing Group “Dancing Baby” ruling is in favor of Lenz and thus fair use and establishes that fair use is not just considered an exemption from copyright infringement but a “Right” under the DMCA. Google receives 350 million notice and takedown requests in a single year

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MARTIN MILLS COMMENTS ON SAFE HARBORWe are at the point at which notice and take down must become notice and stay down” – while highlighting a comparison that’s increasingly popular within the music industry in 2014, between YouTube and Spotify.“YouTube says it’s paid out a billion dollars to music rights owners – So what if the real monetary obligation is many multiples higher!! but so has Spotify, from one thirtieth as many users. That economic discrepancy is because of the unreasonable economic advantage YouTube has over its digital service competitors because of its use of the safe harbor provisions,” said Mills.

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COMMERCE AND FREE SPEECHBMG and ROUNDHILL CONTEND:o “Cox has had actual and ongoing specific knowledge of the

repeat infringements by its subscribers,” the publishers’ complaint reads.  “Nonetheless, Cox has repeatedly refused to terminate the accounts of repeat infringers.

o “The reason that Cox does not terminate these subscribers and account holders is obvious – it would cause Cox to lose revenue.”

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COLLECTIVE MANAGEMENTTo grant licenses to commercial users (TV channels, radio stations, online music service providers) on behalf of the rightsholders; and To collect royalties and redistribute with as little deductions as possible to rightsholders.Pretty Simple, right? Bureaucracy and Transparency An accounting function

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THE SKEWED VALUE OF MUSICBMI notes in comments to the U.S. Copyright Office: "When multiple rights implicate both the sound recording and the underlying musical work, it is critical that there be a fair and equitable relationship between the compensation afforded sound recordings and the songwriters and publishers whose underlying works provide the foundation for those recordings. Currently, for the transmission of sound recordings containing musical works, recording artists are paid as much as seven times what songwriters and publishers are paid for the mechanical rights, and as much as twelve times for the public performance right.”May be a function of who gets to the table first

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