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I. INTRODUCTION
In the April issue of the Utah Bar Journal we examined the issue of "new uses" of copyright material in cyberspace. The August/ September issue considered the long-arm of Internet law and the circumstances under which Internet Service Providers enjoy immunity in cases of copyright infringement. We finish our series with a look at recent developments affecting online music including two relevant cases, Bonneville International v. Peters, 153 F. Supp. 2d 763 (E.D.P.A. 2001) and Rodgers and Hammerstein v. UMG Recordings, 2001 U.S. Dist. LEXIS 16111 (S.D.N.Y. 2001).
II. THE "WONDERS" OF A SONG
O wonder!
How many goodly creatures are there here!
- THE TEMPEST, Act 5, scene 1
A recorded song is truly a wonder of the modern world. The first commercial sound reproduction device was the graphophone which used wax cyclinders as the recording medium. The graphophone
was devised in 1877 by Chichester Bell and Sumner Tainter.2 Flat discs, or records, were developed in 1888 by German-American Emile Berliner.3 Today music is estimated to be a $40 billion global industry with the United States accounting for one-third of the world market.4
However a recorded song is more than "a" wonder: one recorded song is, like all works of recorded music, the result of the marriage of two "goodly
creatures" - the musical work and the sound recording. The musical work is the musical composition including the accompanying words,5 while the sound recording is the recording itself, i.e., the work that results "from the fixation of a series of musical, spoken, or other sounds."6
The musical work enjoys all the usual protections afforded "original works of authorship fixed in any tangible medium of expression"7 by copyright law -
reproduction, derivation, distribution, performance and display.8 However, until 1995, sound recordings only enjoyed three of the five rights, reproduction, derivation and distribution.9 The Digital Performance Right in Sound Recordings Act of 1995 (DPRA),10 created a performance right for sound recordings if the sound recording is publicly performed "by means of a digital audio transmission."11
Before considering the digital world of online music licensing, a brief overview of analog music licensing in the offline world will be helpful in providing background and
context.
III. ANALOG MUSIC LICENSING
Mad call I it, for to define true madness,
What is't but to be nothing else but mad?
- HAMLET, Act 2, scene 2.
The "madness" of music licensing lies in the fact that because one "song"12 consists of two "creatures," one needs needs two licenses in order to use it in a film, video, television program or other visual work. An entirely different license is necessary to make a new recording of the "song" for release on "phonorecords."13
All licenses for use of the musical work are granted by the music publisher.14 The license to reproduce the musical work as a new recording is known as a
"mechanical" license. Section 115 of the copyright code (Title 17 of the United States Code) authorizes a compulsory license for nondramatic musical works where the musical work
has already been distributed to the public.15
The term "mechanical" arises from U.S. Supreme Court's 1908 refusal to find that player piano roll manufacturers
had infringed the copyright of the music publishers.16 The court reasoned that the perforated strips of paper (piano rolls) were not copies of the sheet music, but were "parts of a machine which, when duly applied and properly operated in connection with the mechanism to which they are adapted, produce musical tones in harmonious combination."17 Dicta in the case similarly likened the wax cylinder "recordings" of the day to a part "of the mechanism of the phonograph."18 The piano roll decision proved unpopular and Congress recognized these "mechanical" (reproduction) rights in the Copyright Act of 1909.19
Incorporating the song in a visual work.
For this use one needs the "synchronization" or "sync" rights to the musical work - the right to reproduce and synchronize the music and lyrics with the visual images on the film, tape or other media. These rights are negotiated with the publisher.
In addition to a synchronization right, a performance right for the musical work is necessary. In a few instances, such as in the case of making a program for television, the
performance right will be paid for by the television broadcaster.20 If the visual work is to be performed in other venues, the performance right should be included in the sync license.
A third license is required to legally incorporate the song into the visual work - a master recording license21 for the sound recording. The master recording license
allows for the sound recording to be reproduced into the visual work's soundtrack. The copyright to the sound recording is generally held by the record label.
One complexity of
obtaining the sync and master recording licenses arises from the not uncommon difficulty of determining and locating each rights holder. Copyrights may be split amongst a number of
parties. Many songs also have many versions making it indispensable to ascertain the proper artist, version and record label of the recording for which the master use rights are sought.
The very validity of the copyright itself may also present a challenge. The determination of whether a work remains protected or has fallen into the public domain may require
careful analysis. For works created on or after January 1, 1978, the term of the copyright is the life of the "author" (or last surviving "author") plus 70 years. The
copyright for a "work-for-hire" runs the shorter of 95 from first publication or 120 years from creation.22 Works published before 1923 are now in the public domain. While a complete discussion of determining the copyright term for works published or created between 1923 and 1978 is beyond the scope of this paper, a helpful chart highlighting the various copyright protection possibilities for these works has been created by Lolly Gasaway at the University of North Carolina and is available online.23
IV. DIGITAL MUSIC LICENSING
. . . O brave new world
THE TEMPEST, Act 5, scene 1
In the brave new online world, one finds all the analog rights of the musical work and sound recording, plus a new right for the sound recordings - a digital performance right.24 This
right was first created by the Digital Performance Right in Sound Recordings Act of 1995 (DPRA)25 and expanded by the Digital Millenium Copyright Act of 1998 (DMCA).26
Legislative history suggests the DPRA was designed to protect record companies and recording artists from the threats of interactive and subscription digital audio services.27 The more likely the use is to replace one's need and desire to purchase a physical copy of the sound recording (a phonorecord), the more likely the use will require negotiated licenses for the use of the sound recording.28 Not to be ignored are the activities of various industry groups in influencing both the DPRA and DMCA.29 The Recording Industry Association of America (RIAA) has been particularly effective in gaining protections from Congress.30
One way to sort through the various licensing requirements is to consider the matter from the website's point of view - how is the music being used on the website? The
various uses include: a website that wants to include music as an incidental aspect of the site; a website that streams music to users on a non-interactive basis; a website that streams
music to users on an interactive basis; and a website that allows users to download music.31
Website with Incidental Music.
Many businesses may want to enhance their corporate website with music. Even though this type of online use has minimal impact on the market for the music used, it is not exempted from licensing requirements. It is analogous to the music used in a commercial or played over a store's sound system. When it comes to any public performance of even a small part of a song, fair use does not apply.32
Rights must be licensed from the music publisher and the record label.33 From the music publisher one will want to obtain a mechanical license (to cover the reproduction of the musical work onto the servers); a performance license; and, if the music is synchronized with the website's visual images, a synchronization license. From the record label the license should grant both the right to reproduce the sound recording and to digitally perform it.34
When dealing with a small number of "songs," it is likely easier to deal directly with the music publisher and record label. In the event that a large number of
"songs" are slated for inclusion on the website, mechanical licenses may be obtained through the Harry Fox Agency35 while blanket musical work performance licenses can be acquired through the appropriate performing rights societies, ASCAP,36 BMI37 and SESAC.38 The record labels have likewise established the SoundExchange39 to handle digital performance and reproduction (ephemeral copy) licenses for sound recordings.
Website that Streams Music on a Non-Interactive Basis.
A listener may "tune-in" to a number of websites in the same manner one "tunes-in" to a radio station. These websites, or webcasters, have been referred to as Internet Radio and consist of both Internet-only webcasters and terrestrial radio stations retransmitting their signal online. These webcasters include those who offer their services on either a subscription or a non-subscription basis.
Both non-interactive subscription and non-subscription webcasters must obtain a performance license and a mechanical license from the music publisher. As to the license for the
sound recording, a compulsory license may be available. Section 114(d)(2) of the Copyright Act sets out the requirements for the availability of a compulsory license for the digital sound
recording.40 If those requirements are not met, a voluntary license covering both the reproduction and performance of the digital sound recording must be obtained from the record label. SoundExchange administers the compulsory sound recording performance licenses as well as any necessary reproduction (ephemeral copy) licenses.
Internet Radio.
Internet Radio music flourished after passage of the DPRA but was brought to a seeming standstill following implementation of the DMCA. The DPRA was designed to address concerns about the economic impact online subscription and interactive audio services would have on record sales. "[F]ree over-the-air broadcast services" were not addressed in the act.41
Three years later the DMCA, in an attempt to clarify matters, eliminated some exemptions and extended the compulsory license scheme. None of the changes were "intended
to affect the exemption for nonsubscription broadcast transmissions."42
Within weeks of passage of the DMCA, the National Association of Broadcasters (NAB) claimed
terrestrial radio broadcasters who simulcast their signal online were not covered by the DMCA and, therefore, did not have to worry about additional licensing of any digital sound
recordings. This position was opposed by the RIAA and the issue was turned over to the United States Copyright Office.43 The Copyright Office concluded that the exemption for "nonsubscription broadcast transmission" applied only to stations' over-the-air broadcasts in their local markets.44
It was this Copyright Office final rule that was at issue in Bonneville International v. Peters.45 Salt Lake City-based Bonneville International was just one of the owners and operators of hundreds of AM and FM radio stations across the country seeking judicial interpretation of section 114(d)(1)(A) of the Copyright Act.
The court in Bonneville granted the Defendants' motion for summary judgment finding that the Copyright Office had the authority to make the final rule and that the final rule was in keeping with the language of the DMCA.
The holding of the court was based on a careful reading and construction of the words of the Copyright Act as it had been amended by the DPRA and DMCA. Finding that "the
issue of whether FCC-licensed AM/FM broadcasters engaged in streaming are exempted from the public performance right in section 106 of the Copyright Act" had not been directly
addressed by Congress,46 the court upheld the Copyright Office's analysis "that the term 'nonsubscription broadcast transmission' was not intended to include AM/FM webcasting."47
The court agreed with the Copyright Office that AM/FM webcasting is not conducted by 'terrestrial broadcast stations.' . . . While local radio stations are terrestrial in that they are
literally grounded by their broadcast antennae and thereby limited to a geographic area, webcasts are made by computer transmitters which relay signals anywhere in the world, and are
therefore not made by 'terrestrial broadcast stations.'48
The broadcasters had argued that the exemptions granted traditional over-the-air broadcasters in the language and legislative history of the DPRA were carried over to the DMCA. But the
court disagreed with the broadcasters siding with the Copyright Office that the DPRA "exemption was enacted prior to the advent of AM/FM webcasting and that Congress at that time
most likely did not foresee such activity."49 Further, the court found persuasive the Copyright Office's reliance on statements made in Congress during the passage of the DMCA, that "at the time the [DPRA] was crafted, Internet transmissions of music were not the focus of Congress' efforts."50
Compounding webcasters' loss on the digital sound performance royalty issue was the amount of the royalty set by the Librarian of Congress in June 2002 - $0.0007 for every
song heard by every 1,000 people.51 Webcasters had proposed a royalty of $0.0015 per music webcast listener hour.52 The result was that Internet Radio music virtually went offline while the various industries wrestled with the issue.
Fortunately, Congress recently passed legislation that reflects an agreement reached by webcasters and the recording industry to allow the royalty rate to be based on the
webcaster's revenue.53
Website that Streams Music on an Interactive Basis. These websites allow a user to choose what music is streamed.54 A user may select individual songs or create a personalized play list through these services. These services are more likely to have an economic impact on the market for sound recordings. Therefore, all licenses for such websites are voluntary - they must be individually negotiated with the rights holders. A mechanical license and a performance license must be obtained from the music publisher. A master recording license (for reproduction)55 and a performance license must be obtained from the record label.
At issue in Rodgers and Hammerstein v. UMG Recordings56 was whether a mechanical license was sufficient to allow a party to stream the licensed musical works
over the Internet. UMG Recordings, Inc. is a major record company whose labels include MCA Records, A&M Records, Polygram Records, and Mercury Records.57 Farmclub is a subsidiary of UMG Recordings. Farmclub notified the Harry Fox Agency of its intent to obtain a compulsory mechanical license for all of the musical works at issue in the case. In October of 2000, Farmclub began streaming Universal recordings over the Internet. Within days of beginning the service, Farmclub received objections from the National Music Publisher's Association that the musical works were not licensed for Internet streaming. Farmclub claimed that it held compulsory mechanical licenses for every musical work named in the lawsuit.
While there was some issue as to whether Farmclub had actually obtained the compulsory mechanical licenses or had merely requested such licenses, the court found that the
compulsory mechanical licenses sought by Farmclub did not convey the right to stream the musical works online.
It is obvious that Defendants do not want to pay the Plaintiffs the license fee for a record every time one of their customers listens to recording on the Internet. However, the only
license that Defendants rely on here is one that is limited to the distribution of records to the public for which there is an established fee. Defendants choice is to obtain a
license for that purpose and pay the fee or cease their infringing activity.58
Less than two weeks after the court decided Rodgers and Hammerstein v. UMG Recordings, the Recording Industry Association of American and the National Music Publisher's
Association announced a new agreement confirming that mechanical licenses were necessary for streaming music on demand.59 The compulsory rate is still under discussion.
Website that Allows Users to Download Music.
Given the fact that this type of use is poised to directly replace traditional record sales. A mechanical license is necessary to cover the various reproductions of the musical work and a performance license is recommended.60 As to the sound recording, a master recording license to cover the various reproductions is necessary and, like the musical work, a performance license is recommended. The sound recording performance license is clearly necessary where the person downloading the file may listen to it as it is downloading.
A Cautionary Note.
Obtaining the necessary licenses from the various copyright holders is certainly necessary but it may not be sufficient. If the sound recording was made under the auspices of any of the relevant unions, the American Federation of Musicians, the American Federation of Television and Radio Artists or the Screen Actors' Guild, additional union clearances are necessary.
V. Summary and Conclusion
The seven cases examined in this series are certainly not the only Cyberlaw cases decided in 2001. Yet they do reflect the major developments
in the areas of copyright new use, jurisdiction, liability, and online music.
Johannes Gutenberg, the most influential person of the last millenium,61 may well shake his head at
the wonder of the Internet, though he would not be at all surprised by the resulting legal problems.
Footnotes
1. William Shakespeare, The Second Part of King Henry the Sixth, act 2, sc. 2.
2. William J. Strong & George R. Plitnik, Music Speech High Fidelity 303 (2d edition 1977).
3. Id. at 303-04.
4. The Recording Industry Association of America: http://www.riaa.org/MD-Tracking.cfm
5. 17 U.S.C. ¤ 102(a)(2).
6. 17 U.S.C. ¤ 101.
7.
17 U.S.C. ¤ 102(a). While a discussion of the "originality" requirements of copyright law is beyond the scope of this article, "originality" does not require "novelty" only that the work was independently created by the author. Feist Publications v. Rural Telephone Service Co.,
499 U.S. 340 (1991).
8. 17 U.S.C. ¤ 106.
9. Id.
10. Pub. L. No. 104-39, 109 Stat. 336 (amending, inter alia, ¤114 and ¤115, title 17, United States Code), enacted November 1, 1995.
11. 17 U.S.C. ¤ 106(6).
12. "Song" represents all recorded nondramatic musical works of whatever genre.
13 "'Phonorecords' are material
objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be
perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term 'phonorecords' includes the material object in which the sounds are
first fixed." 17 U.S.C. ¤ 101.
14. The music publisher typically holds the copyright in the musical work and serves as the work's agent in promoting use and recordings
of the work.
15. The parties may also negotiate a license for less than the compulsory rate.
16. White-Smith Music Pub. Co. v. Apollo Co., 209 U.S. 1 (1908).
17. Id. at 31.
18. Id. at 21.
19. As of January 1, 2002, the statutory rate for the compulsory mechanical license was 8 cents per
song up to five (5) minutes in length or 1.55 cents per minute for songs over five (5) minutes in length. The Harry Fox agency represents most music publishers in administering mechanical
licenses.
20. Broadcasters obtain a blanket public performance license from the performing rights societies, ASCAP, BMI and SESAC.
21. Also referred to as a "master use license."
22. 17 U.S.C. ¤ 302.
23. Lolly Gasaway, When Works Pass Into the Public Domain at http://www.unc.edu/~unclng/public-d.htm (last visited Nov. 17, 2002).
24. ". . . in the case of sound recordings, [a right] to perform the work publicly by means of digital audio transmission." 17 U.S.C. ¤ 106(6).
25. Richard D. Rose, Connecting the Dots: Navigating the Laws and Licensing Requirements of the Internet Music Revolution, 42 Journal of Law & Technology 313 (2002).
26. Id.
27. S. Rep. No. 104-128, at 14-15 (1995) and H.R. Rep. No. 104-274 at 5-9, 12-13 (1995).
28. Al Kohn and Bob Kohn, Kohn on Music Licensing 1302-05 (3d edition 2002).
29. Kimberly L. Craft, The Webcasting Music Revolution Is Ready to Begin, as Soon as We
Figure Out the Copyright Law: The Story of the Music Industry at War with Itself, 24 Hastings Comm. & Ent. L.J. 1 (2001).
30. Id.
31. There has
been some disagreement as to whether musical work performance licenses are necessary for online download and whether mechanical licenses are always necessary. This article presents the
conservative view, i.e., when in doubt, get a license.
32. A discussion of Fair Use is beyond the scope of this paper.
33. This article assumes that the music publisher and record label each hold the relevant copyright rights.
34. Section 112 of the Copyright Act creates an exemption
for one ephemeral copy to be made provided, among other things, the copy is not kept for longer than six months or kept solely for archival purposes. See 17 U.S.C. ¤ 112.
35. www.nmpa.org/hfa.html
36. www.ascap.com
37. www.bmi.com
38. www.sesac.com
39. www.soundexchange.com
40. The
requirements, influenced by the RIAA, include such matters as whether the webcaster was transmitting in the same medium on or before July 31, 1998; whether the transmission of the sound
recording is encoded with certain information; the length of the program and the time period it would be available. There are also restrictions on how many song can be played, in any
three-hour-period, from a particular album, boxed set or artist. Neither prior announcements or playlists may be made or published. And the webcaster must be proactive in protecting the
copyright holder's rights in the sound recording. The complete list of requirements for the compulsory license is found at 17 U.S.C. ¤ 114(d)(2).
41. S. REP. NO. 104-128, at 15 (1995), reprinted in 1995 U.S.C.C.A.N. 356.
42. H.R. CONF. REP. NO. 105-796, at 80 (1998), reprinted in 1998 U.S.C.C.A.N. 639, 656.
43. In March of 2000, the NAB did attempt to circumvent any Copyright Office determination by filing suit in the United States District Court in New York. The suit was dismissed
and the Copyright Office proceeded with its rulemaking.
44. Public Performance of Sound Recordings, 65 Fed. Reg. 77,292 at 77,292 (Dec. 11,2000) (codified at 37 C.F.R. pt. 201.35).
45. 153 F. Supp. 2d 763 (E.D.P.A. 2001)
46. Id. at 779.
47. Id.
48. Id. at 780.
49. Id.
50. Id. at 780-81 relying on and quoting Staff of the House of Representatives Comm. On the Judiciary, 105th Cong., 2d Sess., Section-by-Section Analysis of H.R 2281 as Passed by the United States House of Representatives on August 4, 1998 at 51 (Comm. Print, Serial No. 6, 1998).
51. 37 C.F.R. ¤ 261 (2002) available at http://www.copyright.gov/fedreg/2002/67fr45239.pdf (last visited Nov. 17, 2002).
52. Webcasters Propose Sound Recording Performance Royalty at http://www.digmedia.org/webcasting/CARP.html (last viewed Nov. 17, 2002).
53. David Ho, Congress Approves Royalty Rate Reprieve For Internet Music Broadcasters, The Associated Press, Nov. 15, 2002, BC Cycle. As of press-time, the law had
not been signed into law by the President.
54. The streamed music is heard by the user without a permanent copy of the music left on the listener's hard drive.
55. Unless the ephemeral copy exemption applies.
56. 2001 U.S. Dist. LEXIS 16111 (S.D.N.Y. 2001).
57. The argument behind this recommendation is that a "transmission" is a "performance." See 17 U.S.C. ¤ 101: "To 'perform' a work means to recite, render, play, dance, or act it, either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible."
58. Id. at 27.
59. Music Publishers Support Landmark Accord with Record Industry For Launch of Internet Subscription Services at http://www.nmpa.org/pr/internet_subscription.html (last visited Nov. 17, 2002).
60. A transmission is considered a performance.
61. Agnes Hooper Gottlieb, Henry Gottlieb, Barbara Bowers and Brent Bowers, 1,000 Years, 1,000 People: Ranking
the Men and Women Who Shaped the Millennium (1998).
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